AUSTIN:
Prime Minister, good morning.
PRIME MINISTER:
Good morning, Steve.
AUSTIN:
Prime Minister, let me start with something that relates in particular to some people in Brisbane and that';s house prices. You would be well aware that the International Monetary Fund has issued a concern about the short-term outlook for Australia in terms of what the effects on the economy may be at the moment. I wonder if I could ask you to respond to how you see the over heated housing market in Australia?
PRIME MINISTER:
Well, the response is really two-fold. Anybody who owns a house is very happy that the value of that house has gone up, let';s be quite straight about that. I haven';t found anybody in seven and a half years shake their fist at me and say Howard I';m angry with you for letting the value of my house increase. So it is not a problem if you own a house, it is true that to get into the market in the first place it is harder if the prices continue going up. But, of course, the interest rates now are much lower than they were seven and a half years ago, about $430 a month on average around Australia – that';s average around Australia lower than what they were seven and a half years ago. And one of the reasons why housing prices have gone up is that people can afford to borrow more because interest rates are lower. In a sense, we are the victims of our own success and our own prosperity.
AUSTIN:
Now this is something that the IMF has highlighted in their report released they say the appreciation of the Australian dollar, uncertainties about the recovery from the drought and the rapid cooling off in the housing market following the boom of the past three years has led to their concerns being expressed publicly.
PRIME MINISTER:
Like all of these, IMF reports Steve it';s a bit dated. That report would have been based on material some weeks, perhaps a month or two old. It';s fair to say that although there is still a risk of a return to drought conditions in many parts of Australia if we don';t continue to get follow up rains.
AUSTIN:
It';s still in place in Queensland, the drought, of course.
PRIME MINISTER:
Yes, and I want to make it very clear because I know you have a lot of rural listeners, that I fully understand that although things have got a little better there are still a lot of people who are very badly prejudiced by the drought and unless we have follow up rain then it could return. But things are starting to get better on that front. And I think it';s also fair to say that there are other indications, and we are very pleased in the unemployment figure of 5.8, the domestic Australian economy is still very strong, that doesn';t mean to say that we want an overheated housing market – it doesn';t mean that at all. But I think we have to keep this housing thing in perspective. And one of the things the Government is trying to do is to look at things that contribute to unnecessary additional costs for first homebuyers. Things like excessive levels of state stamp duty, the restrictive land release policies of state governments and local governments, those sorts of things. People will say what about the GST? Well my reply to that is the GST doesn';t apply to existing dwellings. If you buy an existing dwelling you don';t pay GST on the cost of the dwelling, you do if you build a new home, buy a new home, you will pay it on the materials and other associated things. So, but on… because we';ve provided a first homeowners grant… a new dwelling or an existing dwelling.
AUSTIN:
You';ve made this point about stamp duty and the states in the past. You';ve said no-one';s complained to you about the rising increase in the value of their home, let me be the first to complain – people like myself are actually being forced to face the possibility that we may be renting for the rest of our lives because getting into….
PRIME MINISTER:
Do you own a home?
AUSTIN:
No, I rent.
PRIME MINISTER:
No, well I';m sorry, I was talking about people who owned a home. I did, to be fair Steve, I did make that point. I said I haven';t found anybody who owns a home complaining to me that the value of it has gone up. I acknowledge, I did acknowledge to be fair a moment ago that if you were buying a home for the first time, higher prices presented a difficulty. I respect that.
AUSTIN:
I think house prices have doubled nationally since 1996, haven';t they?
PRIME MINISTER:
They have and the main reason for that is…. the main reason for that is that interest rates are sharply lower. I mean, people can therefore borrow more and service higher loans and that naturally has an impact on the price that they can afford to pay. I mean, if you can afford to service a bigger loan, you';ll buy a better house, or you';ll add to your existing house – that';s commonsense. My point is that we have, in a sense, become the victims of our own prosperity and success. That doesn';t mean you shouldn';t try to do something about the first homebuyer and I certainly understand that. And one of the reasons why the Productivity Commission';s looking at this issue is precisely to assess those peoples'; situation.
AUSTIN:
Combining those factors with record levels of credit card and household debt, you don';t see any concern about….?
PRIME MINISTER:
Look you';ve always… nobody can ever say that there are no concerns but our capacity to service debt is very strong and the reason for that is that people have high real wages and they have relative security in employment. The threat to debt servicing occurs when people start to lose their jobs because you can';t pay off your loan – that';s the problem. And while ever you have a strong economy which continues to produce more jobs, that underpins peoples'; capacity to pay. I mean, what Australian employees have experienced over the last few years is, in a sense, the treble. They';ve had lower interest rates, they';ve higher real wages and they';ve had job security and more jobs. Now you add those three together and people naturally feel they can take on more obligations, that';s human nature. Now I ask people to not take on obligations they can';t service and they';re always some people who over reach and there';s always some danger in relation to those people. But let';s not be frightened of stability and prosperity.
AUSTIN:
Do you still rule out reviewing negative gearing laws in Australia?
PRIME MINISTER:
I do.
AUSTIN:
Right.
PRIME MINISTER:
Yes, I do. You asked me the question, I';ll give you the answer – I do. And the reason for that is that I don';t think it would help the rental market.
AUSTIN:
It wouldn';t…
PRIME MINISTER:
No, it was tried by Mr Keating in the mid 1980s, he knocked it off for a couple of years and it sent rent particularly in Sydney through the roof because people no longer found it attractive to invest in property … put money into property as an investment.
AUSTIN:
This is 612 ABC Brisbane, it';s 21 minutes to nine. My guest is Australia';s Prime Minister, John Howard, he has agreed to take a few of your calls and I have a few questions to put to you, Prime Minister, in just a moment from people who';ve sent them in earlier on, we';ll take a couple of calls in just a moment. Let me go to something that relating to the Liberal Party here in Queensland, there was the State Convention on the weekend, you attended as did Peter Costello. The Liberal Party in Queensland has had years of difficulty, there';s only one member in State Parliament in the Liberal Party more than the One Nation Party. When they go the state election sometime early in the new year, we assume two of the three Liberal members of state parliament will be retiring. Why is the Queensland Liberal Party, at a state level, not seen as worth voting for to Queenslanders?
PRIME MINISTER:
Well, I don';t think the Liberal Party federally in Queensland is doing badly.
AUSTIN:
State level…
PRIME MINISTER:
No, no, but I mean, I';m the federal leader and that';s my responsibility and I have to say that in Queensland at the last federal election, despite our weakness at a state level, and we are weak at a state level, everybody knows that. And I';ll come to Bob Quinn';s efforts in a moment, and I think they';ve been very good in difficult situations. At a state level we were weak at the last federal poll, but we now have as many Liberals in the federal parliamentary party from Queensland as we have from Victoria. Now that is a measure of the strength of the Liberal Party support federally in Queensland. And along with the National Party, the Coalition holds a very significant majority of the seats in Queensland and my charge, if I can put it that way to the Liberal Party in Queensland, is to hang on to all of the seats that we have. If we can do that, Queensland will have made a mighty contribution to the re-election of the Coalition Government. Now as far as the state is concerned, of course for both parties at a Coalition level in state politics are under-represented, there are good signs, one of the good signs is that they';ve got a coalition, the other good sign is that they';ve got a no three cornered contest agreement in relation to the seats they need to begin winning back for the Labor Party and I think that is a very solid advance. And can I say that in incredibly difficult circumstances with very few resources and all the difficulties of only having a three person parliamentary party, Bob Quinn has done a great job and I';m hopeful, as he is, that the party at a state level will make some gains whenever the next election is held. Now he';s realistic, I';m realistic, but he';s outlined a good policy in stamp duty on behalf of the Coalition for the next state election to reduce it to make the very people you identify with quite rightly… making it a bit more affordable to buy your first property. But federally, without in any way being complacent, the Liberal Party';s in reasonably good shape.
AUSTIN:
18 minutes to nine, this is 612 ABC Brisbane. Prime Minister, John Howard, is my guest, taking your calls in just a moment – 1300 36 0612. As you said, you';re the federal leader of the Liberal Party. Just at the state conference at the weekend, there was a fair bit of discussion about Michael Johnson, the federal Member for Ryan, Liberal in Queensland. Did you give him a talking to? Did you pull him aside and have a very vigorous heart to heart with him?
PRIME MINISTER:
Oh Steve, I talk to all of my colleagues all of the time. I never go into what is involved in those discussions expect to say Michael has my strong support, he';s a very talented, a new energetic member of the federal parliament and I expect him to have a long career in federal politics.
AUSTIN:
It would appear some of his Queensland colleagues don';t feel as confident about him as you do.
PRIME MINISTER:
I can only repeat the party is in a very strong position federally. You ask the Labor Party what they think of our federal performance in Queensland.
AUSTIN:
I';ll take some calls in just a moment, Prime Minister. Let me just remind you of something, that in Queensland here we face the possibility of three elections next year, assuming you are sticking to your word of ruling out an early election this year. There is a real possibility of a state and local government election early next year. Will there be a federal one?
PRIME MINISTER:
Next year?
AUSTIN:
Yes.
PRIME MINISTER:
Very likely next year.
AUSTIN:
Early next year?
PRIME MINISTER:
More likely at the end of next year or towards the end of next year, that';s when the three years will be up. I think it';s a fair bet to say that it';s likely to be a federal election some time next year, but more likely in the second half than the first. Now I';m not giving an ironclad guarantee about that. But look, my preference is to run the full term. Three years is not very long and you';ve got to work damn hard to get there every three years. And the idea that you throw away a third of it for no good reason, quite apart from the fact more importantly the public resents people going early for politically opportunistic reasons. If there';s a public interest reason to go early, and there';s not at the moment, then you would go early. But there is no public interest reason to go early and the fact that the Labor Party is talking about its leadership all the time is not of itself a reason to go early. The public would not appreciate that and the public would properly punish the Government…
AUSTIN:
Sorry, I was just going to say we';ll take some calls if you';re ready to go.
PRIME MINISTER:
Sure.
AUSTIN:
This is 612 ABC Brisbane, it';s 16 minutes to nine if you';d like to call to speak with Prime Minister, John Howard, 1300 36 0612. Phyllis.
CALLER:
Good morning, Mr Howard.
PRIME MINISTER:
Good morning, Phyllis.
CALLER:
I won';t be as aggressive as to shake my fist at you but I';ll certainly shake my finger at you when you say that someone who owns their home has no problem, they';re sitting on a nice little nest egg. We';re on a pension and we would like to sell our homes, go into a unit or a townhouse or something. But we can';t do that because if we do, we';re going to spend the whole amount just on a townhouse or a unit and we';ll have nothing left over if we need to do anything to it. So we';re stuck.
PRIME MINISTER:
Look Phyllis, what I said was that not everybody was sitting on a nest egg. I said people had not complained about the value of their house going up.
AUSTIN:
Phyllis is the first one, I guess.
CALLER:
I';ve broken the mould.
PRIME MINISTER:
Well you';re not… you';re not actually complaining. What you';re really saying is the value of a house hasn';t gone up enough.
CALLER:
No, no, no. I disagree. I think that it is ridiculous that the inflation of the housing prices… what about our grandchildren?
PRIME MINISTER:
Well look, that is a valid point and I';ve acknowledged that. I';m not saying that there aren';t problems for people buying for the first time, but you have to look at it in terms of both existing homeowners and future homeowners and what we have to try and do, and you quite rightly identify in relation to your grandchildren, is to find ways of mitigating the cost of getting into your first home. But we can';t and shouldn';t do that at the cost of reducing the wealth effect and the wealth value of people who have existing properties, there';s nothing to be gained by that. We have to find some other ways of ameliorating the cost of buying your first home.
CALLER:
I think some commonsense has to be thrown into the arena just the same. You know, it';s ridiculous. I mean, you';re not seeing value in the $500,000 you';re spending on some broken down old dump and…
PRIME MINISTER:
No, well…
CALLER:
That';s where we are at the moment.
PRIME MINISTER:
Yes, but you can';t … see everybody';s position is relative. If you have an asset that';s worth $500,000 property, then you want to get full value because if you move out of that you';ve got to move into something else and if you can';t afford to get any less than what you are entitled to have. Now, the most valuable asset anybody has in their life normally is their home. I mean, the only substantial asset I have along with my wife is my home. And that';s a very important asset to me and I think I';m typical of most Australians in saying that and the fact that the value of our principal asset has risen is due in no small measures to the fact that we now have very low interest rates and people can afford therefore to buy more. Now I wouldn';t like, and I don';t think you';d like, and I don';t think your grandchildren would like, interest rates to go up. If interest rates went up sharply, that will certainly have an effect on house prices over time, but it would also have an adverse effect on the rest of the economy… there';s nothing to be gained by that.
AUSTIN:
I';m going to have to move on, if I can Phyllis. Let';s take…
PRIME MINISTER:
Thanks Phyllis.
AUSTIN:
Another call, this is 612 ABC Brisbane. I';m Steve Austin. Prime Minister, John Howard, is here to join us this morning. Let';s take another call. Julie wants to talk about rent assistance…
CALLER:
Good morning, Mr Howard. I';m wondering if you could seriously have a look at the rent assistance, it doesn';t seem to have gone up much anymore. But up here on the Sunshine Coast the rents have just gone sky high and a young couple these days can not rent a house under about $250 and a couple of years ago an average house rent was about $160. My son-in-law brings over just over $400 and $250 a week rent and they are now down in what I would call the very low income and suffering and we do need seriously with so many more people in this situation now. And I';m wondering if you could have a really serious look at the rent assistance.
PRIME MINISTER:
Does your son-in-law and your daughter just have the one income or…
CALLER:
Yeah.
PRIME MINISTER:
It';s just the one income. That is not a big income, I';d agree with that.
AUSTIN:
What does your son-in-law do, Julie?
CALLER:
He is a chainman at a, what do you call it, at a surveyor';s place.
AUSTIN:
Right.
PRIME MINISTER:
Yes, yes I…
CALLER:
He works for a surveyor and he';s a chainman.
PRIME MINISTER:
Yes, yes, well…
CALLER:
But he';s not the only one that only brings home that sort of…
PRIME MINISTER:
No, no, there are a lot of people who are in that situation and…
CALLER:
And he';s a good little worker and… it';s just terrible. They just… I mean, years ago I think it was capped at about $160 if you wanted to pay that much, which was a fair bit of money, then you got a reasonable [inaudible].
PRIME MINISTER:
That would have been under some kind of rent control in that part of Queensland…
CALLER:
And they used to say if you want to go to $200, well that';s an enormous price, you';ll get a five bedroom home for that. But now, you just can';t even get, you can just about can';t get a two bedroom unit up here for $230 and people are suffering dreadful. There are now down in very low income because of this.
PRIME MINISTER:
I can';t, Julie, I don';t know off the top of my head the precise level of rent assistance in that situation. Rent assistance is available in certain situations, whether it';s available in those situations, I just don';t know off the top of my head. But I can find out for you and…
CALLER:
They get rent assistance but it doesn';t seem to have gone up with the amount of rent, like…
PRIME MINISTER:
And I see, they do get it…
CALLER:
They used…
PRIME MINISTER:
And do you know how much it is?
CALLER:
They get $40.
PRIME MINISTER:
They get $40…
CALLER:
Yeah, but it used to be that you could only rent up to $160. Well two years ago, the houses were only about $150 to $180. But now it';s still $40 and they are now having to pay $230-$270 for a house, an average $250. So the rent assistance hasn';t gone up with the price of the rent and it';s…
PRIME MINISTER:
Can I… if you would like to leave your name and address with the station, I will get some more information and write to you….
CALLER:
Thank you very much.
AUSTIN:
We have, we have her number, Prime Minister, so we';ll pass that onto your staff.
PRIME MINISTER:
Thank you.
AUSTIN:
This is 612 ABC, it';s nine minutes to nine, talking with Australia';s Prime Minister, John Howard. We pretty much have enough calls which will take us up to nine o';clock. Let';s take another call, I think we';ll go to Christina who wants to talk about the sheep, the live sheep trade to the Middle East. I think, Christina, is that correct?
CALLER:
That';s right, yes. Good morning, Prime Minister.
PRIME MINISTER:
Good morning.
CALLER:
Firstly, thank you for all you have done for Australia and I sense you';ll be able to continue to do so for some time. But please can you do something about this shipload of live sheep that';s being held up in the Middle East for so long? The Minister keeps making statements, but nothing seems to get done. I believe a team of vets should be sent over [inaudible]. A whole live trade stock really particularly the sheep trade to the Middle East is a matter of shame for a country of our wealth. We';ve got to remember these are living creatures and not just factory product.
AUSTIN:
Prime Minister.
PRIME MINISTER:
Well, I understand how you feel and a lot of people have… well a number of people have raised that matter with me, a variety of people. And I understand the distress a lot of people feel about it. I believe that Warren is doing all he can. The proposition you put to me, well I don';t know whether that is achievable, I can';t say that it is, but I will talk to him about that. I know you can';t look at these things entirely or completely in a commercial sense, but you do have to have some regard to the livelihood of the people who are involved in the trade and it is a valuable trade. But it should also be a humane trade and we have to try and balance those two things. But I do recognise that a lot of people are distressed by this and I don';t dismiss that.
AUSTIN:
7 minutes to nine on 612 ABC Brisbane. Jim, you';re talking to the Prime Minister.
CALLER:
Good morning, John Howard. How are you?
PRIME MINISTER:
Very well, Jim.
CALLER:
John, I';d like to ask you a question about, you know that intelligence that came in a month before the war about, you know, going to war with Iraq. The [inaudible] British intelligence that worked for that office of [inaudible] assessments, whatever you call that, our version of that….
PRIME MINISTER:
… the JIC report.
CALLER:
Yes. Well, yeah that';s right. If I were in charge of our assessment of that intelligence bureau, why would I have not broken a leg to get to tell you what the British were thinking about our increased risk of terrorism if we went to war with Iraq? I mean, surely that';s their job and to say that that was only one of the whole lot of information that came through, surely that would have reared its head above all the others, surely that would have important enough. I just find it hard to believe that that didn';t get through to you and Mr Hill and all the other people. Why wouldn';t that have got through to you? I mean… you got up in Parliament and said that there would be less terrorism if… how can that possibly be?
PRIME MINISTER:
Oh, very easily. It';s making a judgement between short term risks, which we acknowledged particularly through our heightened travel warnings, that the longer term reduction in the risk of proliferation and the possibility of weapons of mass destruction getting into the hands of terrorists. It';s very interesting that people are…
AUSTIN:
Can I ask where are the weapons of mass destruction? We';re still waiting for them to appear.
PRIME MINISTER:
Well the there';s the Iraq Survey Group, which is made up of largely American and British but some Australian scientists, is continuing to do its work. I expect to have an interim report from that very soon. As to what is in that report, I don';t know. But I don';t think that report will be the final word, but…
AUSTIN:
When will you get that interim report, Prime Minister?
PRIME MINISTER:
I expect to get it soon, but I don';t know exactly when. Could I go back to Jim';s question about the JIC report. One of the things that the JIC report said was that the British parliamentary committee which examined the JIC report was satisfied that there was strong intelligence that Iraq had a weapons of mass destruction capability. That';s not received any publicity because it hasn';t suited the purposes of my critics. The very report which is being used to attack me acknowledged, acknowledged that there was adequate intelligence in relation to Iraq';s possession of weapons of mass destruction. Now you asked why wouldn';t it have reared its head and come through to me? You may find it hard to believe and I guess this won';t persuade you but I';ll try – it is not customary in the intelligence arrangements between Australia, America and Britain for these sorts of reports from Britain and America in their whole to go through to Ministers. They are assessed and assimilated and reviewed by our intelligence agency. The truth is that our intelligence agencies were giving us assessments that obviously acknowledged the short-term risks. But also, of course, were the basis of our statements about Iraq';s WMD capability and we reflected the short-term risks in the travel warnings. Both Alexander Downer and I spoke specifically about that in the Parliament. But we made a judgement and in the end it';s the job of Governments assessing all of the intelligence that the longer-term interest of Australia would be served by Iraq';s weapons of mass destruction being taken from her because that would reduce the possibility of proliferation and those weapons fall into the hands of terrorists. In the end, you get a lot of intelligence, it';s never completely clear cut and you have to make a judgement and I made that judgement and I stand by that judgement.
AUSTIN:
How concerned would you be if they don';t find weapons of mass destruction, Prime Minister?
PRIME MINISTER:
Well, I think the best thing I can say in response to that is – I';ll wait until the Iraq Survey Group has finally completed all of its work… can I just say one final thing and that is that if the policies of my critics had been followed, Saddam Hussein would still be running Iraq. I';m not saying that my critics are sympathetic with Saddam. But if Mr Crean';s policy had been followed, Saddam Hussein would still be running Iraq with all the implications of terror and suppression and the murder of political opponents involved in that.
AUSTIN:
We';ll take one more call. John, wants to talk about the first homebuyers. John, good morning.
CALLER:
Good morning. I';d just like to comment on Mr Keating';s policy, Prime Minister, not that I';m a Labor supporter, I support truthful politicians and find you tell quite a few untruths. In the case of Keating, the cycle of interest rates was up around the world and he also said that he';s not [inaudible] how to speculate it to keep the prices down for the young. Now at that time he was then, when interest rates did get to [inaudible] towards 16 per cent, you needed 33 and a third per cent to buy a house. Now interest rates are going one way down, under [inaudible] and therefore anybody buying a house that';s never going to get trapped. Now you';re saying there';s low interest rates and a person can get a house on one per cent, the young ones are borrowing very heavily and then you';ll have to eventually to slip them up/ they don';t expect that to [inaudible], they';re going to start falling off the perches [inaudible] with just a two per cent rise, nowhere near 16 per cent.
AUSTIN:
Do you want to respond to that Prime Minister?
PRIME MINISTER:
Well… I do want to respond but I can';t if he keeps talking and I don';t want to be rude…
CALLER:
You also …
AUSTIN:
I';ll have to go, I';m afraid John. Prime Minister, do you want to respond to that?
PRIME MINISTER:
Firstly, it is undeniable that interest rates were much higher under the Keating Government, they';re $430 a month on average lower now. But what I said about Mr Keating earlier was not a lie. I talked about his policy on negative gearing. John hasn';t addressed that. What I said was that in 1986, Paul Keating knocked off negative gearing and it had a dramatically adverse effect on rental levels, particularly in Sydney and they had to restore it. And that';s the fundamental reason why I wouldn';t go back to it. I haven';t said anything untrue about Mr Keating.
AUSTIN:
Prime Minister, John Howard, you';re heading to Townsville. Thank you very much for your time.
PRIME MINISTER:
Thank you.
[ends]