BARTLETT:
Let's go straight to Canberra, let's not tempt fate, and catch up with Prime Minister John Howard who hopefully will be there on the other end of the line. Prime Minister, good morning.
PRIME MINISTER:
Good morning Liam.
BARTLETT:
How are you?
PRIME MINISTER:
I am very well, yourself?
BARTLETT:
I am, yeah look I was...
PRIME MINISTER:
Bit weary?
BARTLETT:
Look I was wondering if you were a bit bleary eyed with this morning with the Ashes?
PRIME MINISTER:
Well I am a little bit. I think we've got off to a very good start, although there is sort of a long way to go. But Shane Warne has had a terrific start to this match - he just seems to go from strength to strength. First time he's bowled the first five batsmen out ever in a test match - terrific. He's a great bowler.
BARTLETT:
Prime Minister when you think about it up against it, you know facing an uphill battle, questions about their performance under pressure, the Aussie cricket team are a bit of a metaphor for Telstra at the moment aren't they?
PRIME MINISTER:
Well I don't want to link the two, there are some different considerations. But I have no doubt that in the end all will come well on both fronts. I certainly have tremendous faith in the Australian cricket team, they have great tenacity. But that's not to say they haven't got worthy opponents. The English team is a lot better than any team England has fielded in 30 years, it really is a very good team and it's been a wonderful test series. And as a cricket lover the sight of enthusiastic English crowds and knowing that the young of England are getting interested in cricket again is terrific. So the from the games point of view it has been a great series.
BARTLETT:
You've got more...
PRIME MINISTER:
As long as we retain the Ashes.
BARTLETT:
You've got more of a chance of having a win over in England than you have with Telstra at the moment. Barnaby Joyce...
PRIME MINISTER:
Oh look I don't think I'll mix those two things up, but I'm quite happy to answer questions on Telstra but I won't get into that.
BARTLETT:
Well Barnaby Joyce is saying that...
PRIME MINISTER:
It might rain or something so I don't, I just don't want to hex anything. Praying for rain is still permitted in Australia but not in England for the next five days. We keep praying for rain in Australia but just not in England for the next five days.
BARTLETT:
I'll continue the metaphor 'cause it's pouring down on Telstra. Barnaby Joyce says he might reconsider his support this morning. The question still remains, I mean how can you sell it when 14 per cent of its lines are supposedly faulty?
PRIME MINISTER:
That figure is in conflict with what Telstra had been saying in its regular monthly reports, and the Minister for Communications has written to Telstra to explain the discrepancy because Telstra is required under our community service guarantee that we brought in 1998 to give monthly reports to the communications authority on fault levels and the monthly report for July of this year said that 99 per cent of the services were in working order. Now that is at odds with what was provided to us in this other document which Telstra has now made public and which I'm able to know is the same as the document they provided to us, so therefore I can talk about it. The figure of...
BARTLETT:
Which one do we believe? Do we believe what Telstra is saying internally or externally?
PRIME MINISTER:
Well we've asked Telstra to explain that, I mean that's really a question you've got to ask Telstra. You see, Liam, I don't know the inner workings of Telstra and it really is beyond my...
BARTLETT:
No, but you have the inside....
PRIME MINISTER:
...beyond my capacity to answer detailed questions like that and it is ridiculous in a way that I should be in a situation where I have got to, I mean I'm not complaining about answering any question, but the point I'm making is that it just underlines how absurd the current situation is. But look on that issue I can only say that the 14 per cent is at odds with what we were told and what Telstra reported under its community service guarantee. The Minister has written to Telstra asking for an explanation of that discrepancy. I can't say any more until I know the response to that.
BARTLETT:
Prime Minister, did you make a mistake in not sharing the bad news about Telstra with the other 1.6 million shareholders when you found out about it?
PRIME MINISTER:
No, because the law said I couldn't make that information available. Quite a bit of the information of which you've spoken of course...
BARTLETT:
The Opposition said you could have picked up the phone and called the Chairman, they're right aren't they?
PRIME MINISTER:
No, I'm sorry. I mean the Opposition would say that, I accept that, it's their job to criticise the Government. But I assume that the executives of Telstra obey the law; they're paid to do that, they're paid very well to do it and I just assumed, as all my colleagues did, that if there were things that should be disclosed to the market which had not been disclosed they would have been disclosed. But can I just mention, I mean one of the things that people have talked about a lot as being a shock horror revelation that I kept from the public was the fact that Telstra had been using retained earnings to finance its dividends. Now that has been known in the marketplace for - at least since July of 2004. There was nothing new about that revelation, nothing at all new about that revelation. So a lot of the things that were talked about in that document had already been disclosed in different ways. Now whether full disclosure has been made by Telstra, what ought to be disclosed is something that will be determined by the Australian Securities and Investment Commission, ASIC, and I'm not going to comment on whether Telstra's met its legal obligations or not, that's not a matter for me to determine.
BARTLETT:
Well it's a terribly serious issue though, isn't it? Apart the legalities, what about the morality of it? I mean it's morally wrong isn't it?
PRIME MINISTER:
What's morally wrong?
BARTLETT:
To create two classes of shareholders and you keep the information back for four weeks and give the impression to the general public that everything is going swimmingly.
PRIME MINISTER:
Well I haven't done that, I haven't kept from the public any information that I'm obliged to give to the public, morally or legally. I mean that is an absurd proposition. We have never...
BARTLETT:
You've let them think by implication for the last four weeks that everything's going okay.
PRIME MINISTER:
No, well we would still argue very strongly that with the combination of the customer service guarantee, the investment that is going to be made into Telstra under our communications fund and also under our connect fund, that's the more than $3 billion which is effectively being made available out of the sale of Telstra, when you add all of those things together they do mean that Telstra's situation and the level of service being provided by Telstra...and look, can I just remind you, even though the majority of Australians are against the sale according to opinion polls, those same opinion polls indicate that there has been a significant increase in the level of public satisfaction with the services that are being provided by Telstra. So I reject completely this proposition that I've done something wrong in relation to this information. There is an express provision in the law that says that information provided to the Government by Telstra in the circumstances in which that information was provided could not be made available to anybody outside of the Government. Now that is what the law said and I'm not going to get into the business of breaking the law and I don't think anybody, even my political opponents, should expect me to do that.
BARTLETT:
The Australian Competition and Consumer Commission, Prime Minister, the ACCC, says the details of your sales plan will need to be spelt out more clearly. When will you do that?
PRIME MINISTER:
Well that's something that I'd have to ask my two Ministers about and I can't give a precise answer on that, but obviously any obligations that we have will be met but our sale plan will be spelt out in detail but not before the legislation is passed because until the legislation is passed we can't have a sale plan.
BARTLETT:
The ACCC also says something funny is going on with fuel pricing at the moment. Do you agree?
PRIME MINISTER:
Well I spoke to the Chairman of the ACCC about that just before I came on this programme. And what he was referring to was the fact that there's an unusually large margin between the crude oil price and the ex-refinery price is much higher than it normally is. Now this is something that's happened overseas, it's not something that's happening in Australia. And he said that that's due to two factors, one of them is that the Chinese have placed an embargo on fuel exports because they have supply constraints and they are in fact importing fuel. And the hurricane in the United States, Katrina, has knocked out the refining capacity in the Gulf of Mexico, or a lot of it, and those two things together have led to this abnormally high margin between the crude oil price and the refined price, which is many dollars higher than it normally is...
BARTLETT:
An extra $13 a barrel over the past three weeks...
PRIME MINISTER:
Yeah, that's right.
BARTLETT:
That's an extra $80 million from Australian families.
PRIME MINISTER:
Yeah, I understand that but it's not going to the Government and it's not a product of something the Government has done, it's not a product of something that is being done in Australia. It is a function of the world market. Now Liam...
BARTLETT:
But Australian families are paying for it, does that constitute profiteering in your eyes from the oil companies or not?
PRIME MINISTER:
Well, it would depend on whether the argument they have advanced about the reasons for the premium going up, that's the extra $13, whether those arguments are accurate. I mean there is no doubt that Hurricane Katrina has knocked out refining capacity, there is no doubt about that. And there's no doubt that the Chinese are having a problem because of their booming economy, with the availability of fuel. And that the Chinese are importing it. Now, all of these things are happening on the world oil market. I mean surely you're not suggesting that I can sort of intervene as Prime Minister of Australia and stop that? I can't. So when...
BARTLETT:
But if the oil companies are profiteering I would expect every Australian taxpayer would want you to do something.
PRIME MINISTER:
Well...
BARTLETT:
I mean...
PRIME MINISTER:
Well hang on, I mean it's very easy for somebody, with respect, in your position to say well do something. I mean what are you suggesting I do? I mean, I'll tell you what I have done - I have brought about changes in excise policy in this country which if they had not been introduced several years ago this Government would now be collecting $2.5 billion more in fuel excise then we are collecting. We have abolished the automatic indexation of excise; we did cut the fuel excise. But the reason petrol is at a painfully high level is because the world oil markets are producing high crude oil prices. Now I'd like to think that I could wave a magic wand and send the world oil price down but you know and people who think about this will know that it is not possible for an individual country to alter the world price of oil on its own. Not even a country as powerful as the United States can bring about that change. The combined might of the European Union can't do it. The economic power of Japan, the second largest economy in the world, they can't do it. Now Liam, I can assure you that if it were possible overnight to change the way the oil markets operate every government would be queuing up to implement the policies that could bring about that change. But you have a situation where the forces of supply and demand are working in a very perverse manner and the hurricane has...
BARTLETT:
Perverse for Australians?
PRIME MINISTER:
Perverse for everybody. Not just Australians.
BARTLETT:
When's the last time, when's the last time you personally paid for petrol at a service station?
PRIME MINISTER:
Liam you know as well as I do that since I've been Prime Minister I go around in an official car. That's a cheap shot. But you...
BARTLETT:
Well it's not a cheap shot. I'm asking the question because I wanted to ask you how connected you are to the average Australian motorist.
PRIME MINISTER:
Well I'm very connected, I have children who buy petrol, I have friends who buy petrol and I can assure you everybody is talking to me about the price of petrol. I am very aware of the impact of the price of petrol on the average family, I mean....
BARTLETT:
And you say you can do nothing.
PRIME MINISTER:
No, what I'm saying...Well look there are a number of things I could do, but I don't think they are sensible things to do. I mean the Government could if it wanted to, it could choose to cut the excise again. It would cost for a one cent reduction in excise, it would cost $380 million a year to cut it by one cent. Now I am sure you would regard a reduction of anything less then five or ten cents as derisory as I'm sure you would given the price has now gone to a $1.40. You cut it by 10 cents; you're looking at what $3.8 billion. What happens if the price of oil then dramatically returns to a previous level and then we say oh we're going to put the excise up now to restore the position to its former position. We would be roundly condemned for increasing taxation. This is a....
BARTLETT:
Prime Minister...
PRIME MINISTER:
Well you know, you ask me to explain what we can and can't do. That's what I'm doing. Look this is a very difficult position. I understand the anger of people. I understand the pain they feel. I understand how easy it is for somebody to say to me in my position well do something about it. I'm explaining to you what could be done. I'm also explaining to you why it wouldn't be wise to do that in current circumstances. We are not collecting more excise as a result of the price going up because the excise is fixed on the volume. It's not fixed on the value of the petrol. So we get 38 cents a litre. The Federal Government gets 38 cents a litre whether the price is 80 cents a litre or $1.40 a litre. I think that's a very important point to make. The GST take which all goes to the States does go up....
BARTLETT:
Why don't you freeze that?
PRIME MINISTER:
Well you'd actually have to cut the GST. But a lot of the money that people are spending on their fuel bills is money they are not spending on other items which carry the GST. So it is debateable whether in net terms the states are a lot better off as a result of the increase in the price of petrol. Now none of these things are easy, but you say blithely, which you're entitled to say, well you know, do something. But what are you doing? Well I'm explaining that the cause of it is beyond our control. The causes are world causes. They are not Australian causes. And all the countries of the world are suffering. Countries more powerful....
BARTLETT:
All right, you've said that.
PRIME MINISTER:
Well okay well I think it's worthwhile to say.
BARTLETT:
You've said that.
PRIME MINISTER:
And what could I do? Well the thing that is directly within my control is....
BARTLETT:
All right. Well you're not reducing the excise. You're not prepared to cut the excise and you won't freeze the GST tax.
PRIME MINISTER:
Well I cant. You know that.
BARTLETT:
Okay, all right, we've been over that.
PRIME MINISTER:
Well I can't unilaterally freeze the GST because the GST is there by result of a cooperative agreement between the commonwealth and the states and I don't hear any of the states volunteering to take a reduction in GST. I hear many of them saying the Federal Government should do something, but I'm actually trying to be understanding of their position because I realise that people who spend more money on petrol spend less money on other things. I understand that.
BARTLETT:
Ten minutes to nine. We're talking to the Prime Minister. We'll take some calls Prime Minister. Get some feedback from my listeners. Hello Jean.
CALLER:
Hello. Good morning Liam and Prime Minister
PRIME MINISTER:
Yes hello.
CALLER:
Are you there?
PRIME MINISTER:
Yes I am Jean.
CALLER:
Thank you for talking to us plebeians. I'm afraid Liam's sort of stolen my thunder. He's talked about the petrol for ten minutes. My question basically is petrol prices. The Federal Government is actually placing a tax on a tax with the GST on the excise tax. Now the most vulnerable in our community are the ones who are going to suffer the most. Because giving tax refunds, for example, to people who are lucky enough to pay tax cause they can work doesn't affect the lower economy. I invested my money with a crowd who went bankrupt. They're sitting in jail, I lost everything and I'm now on a pension all right. Now this pension, I could just manage three years ago. I was struggling last year and I can't manage this year. Now, transport costs and food costs are going to accelerate like mad because of the petrol prices. Would it not be better to give pensioners $10 extra a week than give people who are lucky enough to work and pay tax a tax refund? We have hospitals absolutely bursting at the seams and every time I've been there I'm told if you people would eat better, if you had better diets you wouldn't get sick so often, you wouldn't land in hospital. How do you do that when you can't afford to?
PRIME MINISTER:
Well can I just take a couple of....
CALLER:
I mean this is all very, I mean I was only going to talk about petrol, but Liam said just about everything I was going to say, so I've finished up saying other things. How the petrol is actually affecting us lower income people.
PRIME MINISTER:
Can I reply?
CALLER:
Yes sorry.
BARTLETT:
Go ahead, go ahead.
PRIME MINISTER:
You've made the statement that it's a tax on a tax; that's not right. When the GST was introduced the excise was lowered to calibrate, or to equal the amount of GST. So I don't accept the 'tax on a tax' argument. In relation to the pension; it can always be argued that the pension should be higher, but it is increased in line with inflation every six months and in addition to that we've put a further guarantee in; that it shouldn't fall below 25 per cent of Male Total Average Weekly Earnings. Now I think the safety net that we have at the present time is a fair one. I don't pretend it's easy to live on the pension and I'm not unsympathetic to anything that you've said Jean. But the cost of living index does reflect the impact of things you speak of - the impact of fuel, the impact of the cost of food and the cost of accommodation and that flows through the Consumer Price Index adjustment every six months to the pension. So there is that compensation and that adjustment, but it can always be argued in isolation that a more generous pension would be a good thing for people who are receiving it. I can't argue against that.
BARTLETT:
Thanks for your call. Hello Richard.
CALLER:
Yes, good morning. I've got one or two questions for the Prime Minister. The first question is with the excise duty on fuel is it a fixed rate per litre or is it a variable rate per litre?
PRIME MINISTER:
It's a fixed rate. It's a volumetric excise. So it doesn't go up as the price goes up, no.
CALLER:
Okay. Thank you, that was one of my questions. The other question I have, and this relates to the lady who was on just recently, we employ a lot of casual labour in our factory. We are struggling at the moment to keep employees because they're complaining about the cost of petrol. On their wage level, which is a lower wage level, they won't come to work 'cause it costs too much to drive to work. Short and sweet. In the last... we're looking at 30 cents per litre price increase of fuel for income earners who are travelling maybe 20-30 kilometres to get to work, that's costing a lot of money every week, just to get to work. It's better for them not to go. They're actually better off at home on the Dole and not working. So we as an employer are struggling to recruit staff. My question is, is the Government prepared to look at a rebate for income earners, or lower income earners, who travel to work excessive distances? Now, in your position...
BARTLETT:
Richard, let the Prime Minister answer that question.
CALLER:
Yeah.
PRIME MINISTER:
Well Richard, not necessarily in the context of higher fuel prices but we've looked at these things in the past, and it would be very difficult to introduce something like that that wasn't available to everybody. And we think it would be better to continue to provide people with general tax relief rather than have specific rebates in relation to the cost of getting to and from work. It would be very hard for something like that to be administered in an equitable fashion, some people who didn't have to travel very far to go to work mightn't get it and they would complain that they had to, for other reasons and circumstances, have to use their car unavoidably and they don't get it and their mate next door does get it. I think it's one of those things that would be very hard to administer on an equitable basis. And you couldn't introduce it on a temporary basis any more than you can temporarily cut excise. Once you've cut something like that, or introduced something like that, it becomes a permanent feature because there's always a reason why you shouldn't reverse it.
BARTLETT:
Thanks Richard for your call. Hello John.
CALLER:
Good morning. Prime Minister, I'd like to know how far you were prepared to go to allow the talk up of Telstra before you unloaded them on an unsuspecting Australian public?
PRIME MINISTER:
Well I have never advocated that the share price of Telstra be talked up but I have said...
CALLER:
You're talking up the share would surely push up the price. Let's not be naive.
PRIME MINISTER:
Well I haven't encouraged the talking up of the share price, what I've said is that I think the executives of companies should talk up the interest of a company, that is a very different thing...
CALLER:
Wouldn't that talk up the share price?
PRIME MINISTER:
Well not necessarily. I think, look I was reacting to some remarks and I don't apologise for my reaction at all. I was reacting to some remarks that seemed to me and seemed to many people to denigrate the company and I don't think the senior executives of a company should denigrate it. That's my view. And I think that's a common sense view that most listeners of this programme would share.
BARTLETT:
John, thank you. Hello Martin.
CALLER:
Good morning Liam, good morning Prime Minister. Can I just ask Prime Minister that you revisit one of your earlier answers both in this interview and an earlier one where the suggestion was made about reducing the GST on petrol and you suggested that you couldn't do that because people's expenditure on other items is reduced and therefore the Government loses the...
PRIME MINISTER:
No, I didn't say, what I said was that it should not be assumed that because the price of petrol has gone up and therefore the GST collection on petrol would have gone up that that in net terms would produce a lot more GST revenue because some of the items that people could no longer buy because they had to spend more on buying petrol would themselves have carried GST so therefore there'd be less GST collected on those other items and that the net effect on the total GST take might not be very great. That's what I said.
CALLER:
That's right and can I just make the observation that some of the expenditure people may have made on petrol may have come from their savings or from reducing of debt and as well as that the...
PRIME MINISTER:
I accept that, I accept that, I'm not arguing that, I'm just simply saying that if... and I didn't say there was a neat equality between the two, I simply made the point that it should not be assumed that if you had to pay more GST because you're buying more petrol that automatically means that items that you can no longer buy because you can't afford them would also carry some GST and therefore you're paying less GST on them. I'm not saying there's a neat.... I'm not saying it's equal in every individual case, in some cases people would be buying petrol out of their savings. I think in most cases people would be buying petrol out of their weekly income and they would be spending, perhaps they would go out... they would eat out less frequently, perhaps they would buy clothes less frequently, perhaps they would defer the purchase of a household durable for a few months, and all of those things carry GST. That's the point I was making...
BARTLETT:
We'll have to wrap it up there Prime Minister.
PRIME MINISTER:
That's the point I was making. I don't think there's any....
[ends]