BYNER:
Let's welcome the Prime Minister of Australia, John Howard. Good morning.
PRIME MINISTER:
Good morning Leon.
BYNER:
Thanks for coming in and spending a few minutes with us. The price of petrol in our news at nine, or oil to the barrel is likely to hit $50 a barrel. Now that's going to have a very nasty flow through effect into the economy, particularly for battlers.
PRIME MINISTER:
Well, it is. This is a very big problem. We don't control the world price. It is having an effect, we hope it is short-lived. Fortunately, there are some offsetting factors, fortunately we have high employment and have just provided family benefits and tax cuts for many people and our economy is strong and wages are good and interest rates are low. So whilst, looking at price of petrol in isolation it's bad news, many of the other things are good news stories. So the one in a way is cushioned by the other. But I wouldn't pretend to any of your listeners that I feel comfortable about this. I wish that I could control the price of oil but I can't. I can only express the hope and the belief that this will still be a relatively short-lived development,
BYNER:
Is there no room to move at all in the petrol excise, which is collected by the Federal Government?
PRIME MINISTER:
Well, the petrol excise is not governed by the price. The petrol excise is 38 cents a litre irrespective of the price of petrol. The GST component, which is levied on the sale of petrol, that goes to the states under the revenue sharing arrangement, all of the GST is given to the states and as GST collections go up, and they do go up when the price of petrol goes up in the state revenue take goes up. Now how long that lasts, of course, is a moot point. And then some of the economists argue that you have what is called, I know this is mind glazing, eye glazing, to have this substitution effect. In other words, instead of spending another $30 a week on something that would attract GST you spend it on petrol and the GST that's collected on the petrol nearly replaces the GST that's collected on the other items. So that in a sense the amount of GST is no greater. Now that's an argument that economists use and it may be right, it may be wrong, it's one of those things that's very hard to prove.
BYNER:
But the other point is that there is also a state tax on fuel, that you collect... you give back to the states...
PRIME MINISTER:
Well that the states. The only tax we get from fuel is a fixed 38 cents a litre and that applies whether the petrol is 90 cents a litre or 1.20 a litre. When the price of petrol goes up the excise collection by the Federal Government does not go up it remains static.
BYNER:
The reason this, I think, is a bigger bunger for the battler is because we've just been told that there are many people in Adelaide who are cowering for the...
PRIME MINISTER:
Particular problem for South Australia because of the electricity price.
BYNER:
You must be concerned about this issue.
PRIME MINISTER:
Well, I am, I'm concerned for ht people involved and it is not easy to fix because if you alter the rate of the excise permanently then, you know, you pull it down, you can't put it back when the price comes down. It's a very very difficult thing... and it's not good policy to make too many adhoc changes in a response to something that may not last for a period of time. But I do understand the point you're making and I do understand that people are getting pretty resentful of these higher prices. But please, I ask them to understand, I hope they are not caused by anything the Federal Government has done, or indeed may I say the state governments have done either. I mean, the state governments and federal governments are not responsible for higher fuel price caused by world development.
BYNER:
Okay, the thing that I think surely the federal government and the state government needs to get together on is, we are now paying the highest price in Australia for electricity. It is an essential item for people. Few if any can do without it, many can't afford to build, surely there is something that can be done.
PRIME MINISTER:
Well, we don't... I mean, I'm not trying to avoid my responsibilities, but the power utilities in this country are under the authority of state governments. That's why we have a federation. You can't have a situation every time something goes wrong the Federal Government's meant to fix it. When it is going sweet and rosy well the state governments run free and tell everybody else to stay away. I mean, you... we either have a federation where state governments are responsible for certain things and the national government is responsible for others and we co-operate in relation to things where we have joint responsibility or we get rid of the federation and just have a single national government and a whole lot of local councils.
BYNER:
I would argue that the national electricity market is partly the problem here because we've got a situation where we have an undersupply in our state, which drives the price up. The people who generate the retail, the power here are actually charging the customers more for the same thing that across the border is paying less.
PRIME MINISTER:
Even if that were true, that would be a failure of state government policy in other states. The difficulty (inaudible) you said it throws up again... I don't think our federal system works all that well on many occasions.
BYNER:
You think so!
PRIME MINISTER:
I don't think it works well at all, I think it's quite inefficient in many ways and I think in a way we have grown and lived beyond the federal system that we established in 1901. I mean, it's very good in many respects but it's (inaudible) particularly given the national character of our economy and I think you do have these sort of residual stand outs. But I have never found a state government anxious to hand over responsibility. I mean, if all the state governments came to us and said, look we want you to take over control, of all control, of all energy markets, everything, we'll vacate the field altogether, that would be terrific. But I don't hear state governments saying that. They want us to pay more but they want to control it because they think there is political relevance at interventions at a state level.
BYNER:
Prime Minister, you talked about the buoyancy of the economy in regards to employment. The fact is underemployment is a huge issue. We have the second most casualised workforce in the world in Australia. You would surely be concerned about that.
PRIME MINISTER:
I don't share that concern, I actually think it's the way many people find more convenient. The alternative to casual employment is no employment in many cases.
BYNER:
Well casual's better than no employment.
PRIME MINISTER:
Of course...
BYNER:
Nobody...
PRIME MINISTER:
And one of the reasons that we have more casual employment is that you still have in parts of the economy restrictive industrial relations laws that make it too expensive to employ people on a permanent basis. And often a small firm has no alternative but to employ people on a casual basis. And, as a result, the only way that some people get work. If we had a freer labour market perhaps some of this wouldn't occur. But at the end of the day what counts is whether people are in work. We are living in a different era now. The idea of starting with a firm and staying with it all your working life is less common now than is used to be and also the desire of people to do that, particularly the young is less common now than it used to be.
BYNER:
I think one of the problems is that unemployment statistics mean that if you work for an hour a week you're technically employed, but very few could live on that.
PRIME MINISTER:
No, they don't. I mean, if you look at the dole and everything, which is a cross check... that's.. it's not as simplistic as that, it really isn't. You know one of the big problems I find with employment now is the shortage of skilled people...
BYNER:
We're about to talk about that.
PRIME MINISTER:
I go around the country, every where I go, employers tell me you can't get staff and we just talked about a mature aged worker and nobody applied. In the years to come, because of the ageing of our population, unless we change our culture about older workers, and I think we should and we are beginning to see the change, unless we see that occurring then I think the big problem is going to be the shortage of people rather than an oversupply.
BYNER:
Wasn't it a terrible tragedy to get rid of tech schools?
PRIME MINISTER:
Yes.
BYNER:
Wasn't it?
PRIME MINISTER:
Well, I thought it was. Perhaps, I mean, when I was in the state education system in New South Wales. We had tech schools, selective high schools, and intermediate high schools and the principle was that you either went on for the leaving year and then went to university perhaps or you became a tradesman. Now there's nothing inferior about being a tradesman, quite the reverse. I think we developed for a generation a cultural prejudice against tradesman in this country and I think it was a terrible mistake. Excellence in a trade is just as worthy as excellence in the humanities, excellence in an electrical or metal trade is just as valuable to a career and building a small business into the future as going to university is. This stupid idea that everybody has to go to university is something that we have got to get out of because we don't need all those university graduates and there are many people who would be fair better going down the technical path, but they have to be encouraged at an early age that it is as achieving and successful and as honourable and dignified as it is to go to university.
BYNER:
A young apprentice rang this programme only a couple of weeks ago and suggested that we give, according to your sentiments, I agree with them 100 per cent because I think there is a snobbery against the trade, it's been there a long time, we've had some incredible examples of that through people ringing this programme. But this apprentice rang and said why don't we support apprentices in the same way as we do young people who have gone to higher learning, because we don't, we let apprentices languish on very low salaries compared to their counterparts doing something that probably doesn't require the expertise that they're going to learn in some years. How do you feel about that?
PRIME MINISTER:
Well the principle of it I can't argue with, in the end it needs to be governed like all of these things by market influences and it depends what firms are willing to pay people and what we can contribute. Part of the difficulty is that there are a lot more careers now that were not seen as good careers a generation ago, young people didn't go into hospitality a generation ago, young Australians didn't like being waiters 30 or 40 years ago, they somehow or other thought that was not something that young Australians did. That attitude has changed and perhaps some of the young men and women who do that now might in other age have become tradesmen. But the point that the young apprentice makes is valid.
BYNER:
Prime Minister before you go, and I know your time is pressing this morning, we've just seen that because of the barrel price of oil, which is what we started with, air fares to go up again (inaudible) already paying a fuel levy. So I think people are cowering and very worried about the flow on effect of so many sectors of the economy as it regards fuel and I know that you've talked about who's responsibility and who's not...
PRIME MINISTER:
Well I'm not blaming, it is (inaudible). The price of petrol is high because the world price of crude oil has gone up. Now I'm not blaming anybody in Australia for that, I'm certainly not blaming state governments, obviously it's not our fault, we are not getting extra revenue. I'm just making the point that there are some world influences that it is very difficult to deal with because we are simply the victims of these world fluctuations and every country in the world is experiencing higher oil prices and relatively speaking our petrol is still cheaper than that in most countries in the world, I think there's probably only two countries in the world where petrol is cheaper.
BYNER:
Okay. Are we, I've got to ask you this question, and that is are we going to have an election before Christmas?
PRIME MINISTER:
Oh I expect so yes. The third anniversary of the last election is the 10th of November 2004 and that is still a little under three months off. Now I haven't encouraged speculation about any particular date, I just point out that for three years, which is a very short period of time anyway, is not up for another three months almost.
BYNER:
So, what is the major policy you will take to the people that you believe makes you a better choice?
PRIME MINISTER:
Who is better able to keep the economy strong, who is better able to keep interest rates down, who is better able to keep low unemployment, low inflation, high business investment and jobs growth. I mean I ask a simple question, who do you really think will keep interest rates down? John Howard or Mark Latham?
BYNER:
Prime Minister, thanks for joining us today, we'll look forward to seeing you again when you come to Adelaide. [ends]