MURRAY:
Prime Minister John Howard joins me now. Good morning, Mr Howard.
PRIME MINISTER:
Good morning, Paul. Good to talk to you.
MURRAY:
Yeah, good to talk to you. Can I just put Mark Latham one side for a moment, I wanted to ask you first up today about interest rates. At the time of the Reserve Bank';s increase in interest rates in November you said this, a direct quote – “the case to clobber the economy with high interest rates simply doesn';t exist”. It appears, Mr Howard, that the Reserve Bank board wasn';t listening.
PRIME MINISTER:
Well certainly another quarter of a per cent takes you a little closer to the point where it might be argued that we';re clobbering the economy with high interest rates. I don';t think it automatically follows that two adjustments of a quarter of a per cent each represent any fundamental change in the low interest rate structure this country has. I mean, the reality is that the average mortgage in Australia is still more than $500 cheaper a month to service than what it was seven or eight years ago when we came to office and interest rates in this country are still very low. Interest rates are set independently by the Reserve Bank. We decided when we became the Government to give the Reserve Bank independence in the setting of monetary policy, as does the Federal Reserve in the United States and the Bank of England. And that';s a policy incidentally that has bipartisan support in this country. But since we';ve been in office, interest rates have come down a lot. That doesn';t mean automatically that they will never be adjusted upwards, no Prime Minister can give that guarantee. Clearly, the Reserve Bank has taken the view that the strength of the Australian economy, still going very strongly as evidenced by the retail sales figures yesterday. And the growing strength, the gathering strength of the world economy means that some upward adjustment was necessary.
MURRAY:
The Reserve Bank clearly wants to dampen down the investment boom in real estate and the credit boom. Along the way they hurt families with mortgages, don';t they? Isn';t it too broadly aimed, this.. the way they…?
PRIME MINISTER:
Well, I';m not here to explain the Reserve Bank';s decision. It';s taken independently and if you want some more elucidation on that perhaps the Reserve Bank may go into the detail of it. I simply make the observation that a lot of people, when interest rates fell, did not adjust their mortgage repayments so that the principal benefit of that fall in interest rates was that they had the prospect of paying their housing loans off earlier than would otherwise have been the case. And correspondently, up to a point as interest rates rise there';s no impact other than that the term is a little longer than they might previously had expected. The actual monthly repayment is not varied in any way. I gather that a very large percentage of loans operate that way so movements up and down within a certain parameter don';t make any difference in the monthly repayments. It';s only when they are more marked that that happens. Now, look, nobody likes from a borrower';s point of view to see interest rates ever go up, but even in the best of economic circumstances I can';t guarantee that interest rates are always going to remain at a particular level and neither can the Treasurer, particularly when they are set independently of the Government by the Reserve Bank of Australia. But I emphasise the point again that interest rates are historically very low and the average mortgage or the average homebuyer is $500 a month or more better off than he or she or both of them would have been seven or eight years ago if the interest rate structure at that time had continued.
MURRAY:
Sure, and I think many people accept your argument that those who didn';t change their repayments are well off now.
PRIME MINISTER:
Well, it';s just that they';re not affected. I';m not saying… I mean, I always hesitate…
MURRAY:
… but they';ve been better off for a long time.
PRIME MINISTER:
Yeah, well, they have and I';m not… look, I understand nobody likes to see their interest rate go up except of course if you';re a self funded retiree and you';re living off your investment. I do know quite a lot of people who';ve said – mate, there is another side to this and I';m a retired person and I';ve got a bit of an investment and you cheer interest rates go down, you forget about me. Now that';s the other side of the coin. But the message is – nobody likes today';s outcome, I don';t like it, I';m sure the exporters won';t like it. On the other hand, if you look at the whole picture, the rates are still historically very low.
MURRAY:
Okay, if we could move on to Mark Latham.
PRIME MINISTER:
Sure.
MURRAY:
I mentioned at the start there what Mark Latham has written for the Australian Defence Association. Do you see the new LaborlLeader as a threat to our relationship with the United States?
PRIME MINISTER:
Well he continues to talk in a very irresponsible broad brush way. I mean, this is an article written, what, a few days ago.
MURRAY:
Yes.
PRIME MINISTER:
This is not something written several years ago. This is not something that you can consign to the past. Can I just make one observation about his whole attack on George Bush. It really is a very tribal attack, in the old-fashioned political sense of the word. He';s never attacked Tony Blair – ever. Whenever he talks about Tony Blair there';s a hushed reverence and the reason… why doesn';t he attack Tony Blair? Because Tony Blair is Labor and George Bush is the… you know, a broad equivalent to a conservative Liberal in the Australian context.
MURRAY:
Tony Blair is also a proponent, of course, of the so-called third way…
PRIME MINISTER:
Well, all of this… I mean, all of the vitriol, and there was a personal spleen which is I believe unacceptable in a national leader and an alternative Prime Minister in his attack on George Bush. It';s one thing to attack somebody';s policy, it';s another thing to attack their character. I mean, to call somebody dangerous and flaky is not just disagreeing with their policies. I mean, I… they';re the sort of things you say about Robert Mugabe, they';re not things you say about the President of the United States no matter how strongly you disagree. I mean, I';ve disagreed with the policies of American Presidents in the past, I';ve had some very strong things to say about their trade policies. I didn';t always agree with the policies of Bill Clinton and in many ways, in a philosophical sense he was, I guess, more identified with the Labor side of things in Australia. Although you';ve got to be careful not to overdo these analogies between American and Australian politics. But as for using language like that and the tribalism of the attack is demonstrated by the selectivity of his criticism of Bush but his reverential silence when it comes to Tony Blair. And I can assure you, knowing both of those men very well and having talked to them both in very great detail about Iraq, that their views are… were, are and will be identical. And therefore, it can only be sheer Labor tribalism and therefore it exposes in a sense the hypocrisy of his trying to clothe his current excuse for the language he used.
MURRAY:
Does Mark Latham';s elevation make an early election more attractive to you?
PRIME MINISTER:
No.
MURRAY:
Why wouldn';t it? I mean…
PRIME MINISTER:
Well, there';s no reason, Paul, for an early election. The Australian public wants their Government to serve out their contract. They re-engaged me, if I can put it like that, for up to three years.
MURRAY:
Well you';ve got a hostile Senate.
PRIME MINISTER:
Yes, I';ve got a hostile Senate. Yes I understand all of that. But when you go early, you have got to have a reason that is in Australia';s interests, not in John Howard';s interests. And the last thing I want to do is to say to the Australian people – well, I';m having an early election because I think I';ll do better.
MURRAY:
So you won';t go early?
PRIME MINISTER:
I will only go early if there is a good reason in the Australian national interest to go early, and securing my personal political advantage, much and all as I believe in myself, is not necessarily the same as the Australian national interest. In other words – if I go early, the Australian people will say why, and I will say well, because I think I can do a little better politically. And they say well, we';re interested in the future, we';re not necessarily always interested in your future. And I understand that and I';m very sensitive to that view, and at the moment, unless there is some big event – I don';t know what that event might be – unless there is some big event, we';re going to have an election in the second half of next year, and just exactly when I don';t know. But once you get into that second half, you';re getting very close to the third anniversary and it';s not an early election.
But can I just say this about Mr Latham. He';ll get a honeymoon. He';ll get a big bounce in the polls. I';d be quite confident of that because he gets coverage and he';s new, he';s different and all of that. But then things will settle down and people will start to take a longer look and then they';ll make their judgement. And in the long run, I don';t know what that judgement will be. I mean I have never said that the next election is a shoe in for me. There is only eight seats between the Liberal Party and electoral oblivion, and I don';t think any of our supporters around the country should assume for a moment that the next election is going to be easy. It';s going to be very hard. We';ll be going for our fourth term.
MURRAY:
Prime Minister, Mr Latham has got a longstanding interest in economic policy. For example, he has raised a review of negative gearing on day one in the Treasurer';s position… Shadow Treasurer';s position. Is that worth considering?
PRIME MINISTER:
No. You mean getting rid of it?
MURRAY:
Well he said to review it.
PRIME MINISTER:
But he said this morning that he';s not going to get rid of it, so I mean he';s got a longstanding interest in contradictory positions on economic policy.
MURRAY:
Yeah. Top marginal rates should be reviewed and he wants lower paid workers to [inaudible]
PRIME MINISTER:
Exactly. And he has got the contradiction on negative gearing. He once advocated capital gains taxes on housing. He once advocated taxes to have an impact on development. He has a new proposition virtually every month. Now that';s fine. I think politics is about ideas. But it';s got to be about coherent and competing ideas. It';s not sufficient to produce a thought a day when they don';t fit a logical pattern. Now I was very, very active when I was in Opposition in arguing for one or two very important policy changes in Australia, and the most important was industrial relations. Now I argued consistently and strongly for years in Opposition that we should deregulate our labour market, and that had some impact on the then Labor Party and certainly resulted when we came to office in a further liberalisation of the labour market. But it takes long years to build the momentum for policy change in this country, and if you are really in the marketplace of ideas, you have to be consistent and you have to be persistent, and you';ve got to do it over a very long period of time because it takes a lot of argument to shift public opinion. And I at this stage am not the least bit clear as to what Mr Latham';s stance on monetary policy is, how strongly committed to a budget surplus he is. I mean you can';t cut tax, spend more and do all the things that sound good and generous, and also maintain a rigorous fiscal policy.
MURRAY:
Just finally Prime Minister, you';re off to Nigeria tonight for a visit there. You mentioned Robert Mugabe in somewhat critical terms earlier. Should there now be international action to remove him from power in Zimbabwe?
PRIME MINISTER:
Well I';m rather hopeful that at the Commonwealth conference, those leaders that are closer to him in Africa will understand the strength of world opinion and will bring pressure to bear on him to depart the scene. International action, well that can take a lot of forms. I';m certainly not in favour of any military action, if that is in contemplation – no I';m not. You only undertake that in the most particular of circumstances. I';m in favour of strongly increased international pressure on him to go. I mean there';s only one solution if we';re to have a restoration of reasonable hope in Zimbabwe, and that is for him to depart the scene, and I hope that the people who can influence him most – and that is the leaders of the countries near him – will do that.
MURRAY:
Prime Minister, I don';t think we';ll get to talk again before Christmas, so I';ll take this opportunity of wishing you a very merry one.
PRIME MINISTER:
Well thank you very much Paul and I hope to be in Perth quite early in the New Year and I will have an opportunity then of talking to you. And a Merry Christmas to you and your family and all of your listeners.
MURRAY:
Thanks very much.
PRIME MINISTER:
Thank you.
[ends]