JONES:
It's 20 minutes to eight and the Prime Minister's on the line. Prime Minister, good morning.
PRIME MINISTER:
Good morning Alan.
JONES:
Prime Minister, on a matter that you're most probably not allowed to comment on, but interest rates, can you understand the concern that those people listening to you now have in the light of an interest rate increase last month and the high price of petrol now drawing 20, 30 and 40 extra dollars from people's disposal income and the suggestion that tomorrow money, the price of money, might go up again?
PRIME MINISTER:
I can understand that. I can comment to the extent of saying that I am very aware of how much the higher price of petrol is costing people. That is something that's having a direct impact on consumer demand because if you have to spend all those more dollars a week on petrol you don't have it to spend on something else, that's ordinary common sense. That is one of the factors that I am sure the Reserve Bank board will take into account today. I don't know what the bank is going to do, that is a matter that independently it will decide at its meeting today. I never like to see interest rates go up but it has to be recognised that over the longer haul interest rates have been kept at very moderate, indeed low, levels now for a very long time and you can't ever have an economy in which interest rates never move and we've had a very long period of low interest rates and even the last interest rate rise, that attracted a lot of publicly, was only a quarter of one per cent and it still left our interest rates in the extremely low level. But there are a lot of contradictory economic indicators, some of the indicators suggest the economy is going very strongly, some of the indicators suggest the economy is coming off the boil a bit.
JONES:
PM, in the year to February I see figures today that spending, retail spending, cafes, restaurants, and that sort of stuff, fell 10.1 per cent, newspaper job ads fell 4.6 per cent last month. I mean people are saying the economy is slowing.
PRIME MINISTER:
Alan, I was just about to say, my overall assessment is that although the economy is still performing very strongly it has begun to slow a bit. Now that's my overall assessment, it's based on a mixture of the figures plus a lot of anecdotal evidence. I spend a great deal of time asking men and women in business how they're going and that anecdotal evidence over the years, if it squares with the official evidence, then one thinks ones got it pretty right. But when there's a divide between the two then it's a bit more complicated. My take-out is that the economy is still fundamentally very strong, but it has slowed a bit, it's certainly slowed in the area of housing. So anybody who thinks that the economy is boiling over at the present time is quite wrong.
JONES:
Yes, I mean the argument that I see one person is ventilating this morning is that the RBA wouldn't have bothered raising rates last month if it only intended one move, so if it's going to raise rates twice why not act quickly and get it over with?
PRIME MINISTER:
There's no shortage of experts on this subject, Alan.
JONES:
I agree with you. Just on petrol, is there any way that your government can provide relief to motorists? I mean on GST alone the Government claws back about $3 billion a year. So if petrol prices go up by 10 per cent it's another $300 million...
PRIME MINISTER:
That GST goes to the states. We don't get a dollar of that and remember...
JONES:
But could we provide relief beyond a certain point and say that the money, or even the resource rent tax, won't be collected beyond a certain time?
PRIME MINISTER:
Well there a lot of things that you can do but if you do things in that area you have less capacity to do things in other areas and remember that four years ago when we had a problem with the price of oil we did two things - we cut the excise, and the excise goes to the Federal Government, and we also removed the automatic indexation of excise, which those two measures permanently rebated to the Australian motorist what is now moving into billions of dollars over a period of four or five years. They were two very significant moves. We denied ourselves, and quite rightly, the benefit of the indexation of petrol excise and just imagine now the extra money that would have been collected from that, it would have been quite wrong, that's why we took the decision. But I don't think it should be forgotten that we took away from ourselves a device to collect extra revenue and we also cut the level of excise. This is a very painful period, it's not something that we control, we have absolutely no control over the world price of oil, other countries are feeling it, although the price of petrol in Australia still remains low...
JONES:
Let me just ask you that, let me just ask you that, you talk about the pain because the crude oil price, now I get letters, emails every day telling me I've just got back from America and they tell me the extent...
PRIME MINISTER:
America is lower than Australia. But have you got any emails from people coming back from England or Germany who will tell you that the price of petrol over there is more than double what it is in Australia.
JONES:
What they do- but of course, they have a greater dependence on imported oil than we do, I think we've only got a 13 per cent dependence on imported oil.
PRIME MINISTER:
Yes, but it wouldn't make any difference because the price, everybody takes the world price.
JONES:
(inaudible) parity price of it, let me just ask you this you see because you and I have had many discussions about this and you've had to confess at times you've got as much clue about how they set petrol prices as any of us. I mean the crude oil price is about 44 cents a litre. Now there's a long way between 44 cents a litre for the crude oil price and a $1.10, $1.20 or a $1.45 which they're paying in the bush. Who is getting all this money?
PRIME MINISTER:
Well obviously the oil companies are making some out if it and obviously there has to be provision for people who carry it and people who sell it, they've got to have some kind of margin. I don't think anybody could argue that there's a lack of competition at the retail level, there's ferocious competition amongst garage owners, petrol service station owners. But Alan, the retail part of it is very, very competitive indeed, but can I tell you if I had a solution to this I'd have introduced it years ago because I don't like this and I know the public doesn't like it, your listeners don't like it and I know it is soaking up money that your listeners would otherwise be spending on entertainment or perhaps going out a bit more often or other things that perhaps are even more essential than that.
JONES:
To a sensitive matter PM, the pictures today and the newspaper headlines say that there are nine bodies draped in Australian flags, the bodies of the nine Australian heroes, this tragedy has really impacted upon Australians and they're being brought home. They also see the picture of the plane, the helicopter in awful incineration. Are relatives told whether or not bodies have been recovered from that and have they been identified. How difficult it is for families?
PRIME MINISTER:
Well it is extremely difficult as you can imagine. I don't want to go into all of the processes and I don't pretend to know each and every detail anyway. But the military people do try and handle this as fairly as possible. I will be meeting the families this afternoon when the bodies are returned and as inadequate as one inevitably is in a situation like that I'll do my best on behalf of the country to express my intense sorrow at what has happened. This is a heartbreaking thing, it is terrible that nine young lives have been taken of people who are doing good deeds.
JONES:
The age of the helicopter has-there's a lot been made of all of this and I made the point earlier this morning that the helicopter is a particular phenomenon where almost every part of it can be replaced. So the commissioning age is not necessarily relevant to its safety. But nonetheless they did go into service 30 years ago and are expected to stay on duty until 2015. What do you know, what can you say about the safety worthiness of a Sea King helicopter which is already 30 years old?
PRIME MINISTER:
Well what I can say is that they are regularly and very comprehensively assessed for ongoing safety. That it is not uncommon for airframes to be in operation for that period of time. That Air Forces around the world also have Sea Kings that are at least as old as the ones that the Royal Australian Navy has. That the board of inquiry, which will be established by the ADF to look at this accident, will examine scrupulously and openly, and I want to repeat the promise I've given to the families of those who died that no stone will be left unturned in trying to find out the reason for this accident. I don't know the reason, I just don't know and until the investigation is properly carried out it's speculation.
JONES:
Does it highlight though this infrastructure concern that is a wider issue? You're now making moves at Dalrymple point in Queensland where 50 ships are lined up off the coast every day waiting to go to gather coal and you're saying that you may waive provisions of competition policy in order to get the whole port moving.
PRIME MINISTER:
That is a somewhat different thing.
JONES:
Yeah, but I'm just saying here there's a concern that key assets in the defence capability of Australia are very slow or grindingly slow, I think one expression was used, in terms of fashioning replacements.
PRIME MINISTER:
Well it is a slow process, but there are often good reasons for that. You have to be certain that what you're replacing, an existing asset with is a better asset. You also have to make certain that the decision you take is a right one given obviously the huge investment that's made. But can I just make a point that often in the past, and there will be in the future, there have been tragic accidents with new equipment. You can have a mechanical failure with a new asset, you can have a mechanical failure with a new car, you can have a mechanical failure with a new aircraft, it is not automatic that, particularly the functioning of things like motors and so forth, particularly if they're well maintained, that they automatically deteriorate with age. Now I don't know the reason Alan...
JONES:
What I was just saying to you PM I suppose is that accident or not, sorry, accident or not the fleet is clearly at the end of its life and no decision has yet been made on how to replace these helicopters so we've got to be careful that there isn't another capability gap.
PRIME MINISTER:
Well of course and that is why Defence investments are so very hard to determine, you've got to make them years in advance, you've got to make allowance for the fact that technology might change and what in 2005 looks like a terrific replacement for an aircraft that we bought 20 or 30 years ago, in 10 years time when it is meant to come into operation it hasn't been superseded by another aircraft which is even better. That's one of the difficulties we face.
JONES:
Just one final thing for you, the Pentagon in America or Congress in America has announced plans to increase death payments by $250,000 to families of US troops killed in combat zones, that will double to $500,000, the cash that survivors will receive, an immediate government payments and life insurance proceeds. What provisions are there for compensation for families of the nine men and women who lost their lives?
PRIME MINISTER:
Well there are quite significant death benefits, I can't give you the exact figure, obviously they're things that we keep under very regular review. And it's not only the death benefits themselves, but there are ongoing payments in relation to certain expenses and so forth for people who are injured. I mean there are ongoing benefits for surviving dependants as well.
JONES:
I might try and get that from your department if I could so that I can let our listeners know. Thanks PM. And just one final thing on Indonesia, of course, a new era of relationships between us and the very powerful nation of Indonesia.
PRIME MINISTER:
Well yes, it's been a great improvement, it's partly been driven by the tragedies that have thrown us together. It's also though a determination by President Yudhoyono and myself to build a closer relationship, a realistic relationship and one that recognises that we won't always agree. We are nations that have very different histories, very different cultures, we are different societies and we shouldn't pretend that those differences don't exist. But it's always better to try and find the points of agreement, to try and look at those areas where the two nations have a common future and we are neighbours and we do have a common future and I think it's a very bright common future.
JONES:
Any chance to discuss with President Yudhoyono the future of Schapelle Corby?
PRIME MINISTER:
Not in a direct sense because that would be inappropriate, quite inappropriate because she's still before a court and quite properly if a foreign leader came to Australia and asked me to do something about the outcome of a trial in this country I would say well it's not my place to do that because the courts are independent. We did however in discussion have the Attorney General raise the question of some general issues relating to the operation of the mutual assistance treaty under which that witness was sent to Indonesia and also some other related matters. I think that was the appropriate thing to do. We all hope that the right verdict comes out of the court and that is the verdict which is based on the true position. I don't know what happened, I feel for her, I feel for her family, I feel for anybody guilty or innocent in a situation like that, obviously far more if they're innocent. But we just have to wait and see. But the Indonesian justice system has to be respected, just as we ask other people to respect our justice system.
JONES:
Okay. Thank you for your time PM.
PRIME MINISTER:
Thank you.
[ends]