MITCHELL:
In Sydney, Mr Howard, good morning.
PRIME MINISTER:
Good morning Neil, how are you?
MITCHELL:
Well thank you Prime Minister. You know today, your government will take $50 million in tax out of the pockets of motorists just today?
PRIME MINISTER:
I won't argue with your calculation.
MITCHELL:
That's horrendous.
PRIME MINISTER:
Well you can't ever look at tax take in isolation from what the money is spent on. I could say today the government spends hundreds of millions of dollars helping people.
MITCHELL:
Do you accept that since petrol prices have gone up this year, it's the equivalent of a 2% rise in interest rates since January?
PRIME MINISTER:
I haven't done that calculation but I don't argue for a moment - I don't argue for a moment that petrol price increases aren't painful, I understand that.
MITCHELL:
Do you accept they're inflationary?
PRIME MINISTER:
If over a very long period of time, these high prices were sustained, then that could be inflationary. The evidence to date is that they are having very little effect on inflation.
MITCHELL:
Can they ever go high enough where you will agree to cut taxes on petrol, will they ever get to that level?
PRIME MINISTER:
Neil I am not going to hypothesise about those things. It's a difficult issue, I don't have the luxury of proposing solutions for which I have no responsibility to deliver. I am conscious of that what I say on this really matters in the sense that I am the Prime Minister and we are in government and when people have problem about something, there's a natural inclination, fair or unfair to say to the government what are you doing about it? I say to the Australian public, the high price of petrol now is due overwhelmingly to world circumstances. Australia is not immune, our prices and this is of no comfort to the motorists, our prices are still lower than those of comparable countries except the United States.
MITCHELL:
How much... sorry.
PRIME MINISTER:
So I am not pretending for a moment that this isn't a difficulty but in order to put it in the proportion, a 1 cent a litre reduction in excise would cost hundreds of millions of dollars a year. To make a difference through say a 10 cent reduction in excise, you are looking literally at billions of dollars a year and once a cut is made, even if the price were to go down, you couldn't have a situation where the excise was then to be increased. That would not be something that in practice would ever occur and government's have ongoing responsibilities. If we significantly cut our revenue take, we have to commensurably cut the expenditure we outlay on certain items.
MITCHELL:
Would you look at say cutting petrol tax instead income tax?
PRIME MINISTER:
Well we don't have any current proposal to cut income tax. We've just cut income tax. Obviously we make revenue decisions, normally at the time of the Budget but sometimes we make revenue decisions outside the framework of the Budget.
MITCHELL:
Yes but you made it clear that you want to cut income tax, that's a principal it's a point of principal. Would you (inaudible)...
PRIME MINISTER:
What I...
MITCHELL:
mix instead? If it's inflationary it could be disastrous for the country.
PRIME MINISTER:
Well Neil, I can assure you and all your listeners that we are monitoring, following, analysing this issue the whole time. It's occupied a lot of my thought and time since I returned from overseas at the weekend. We did scrap a very tiny increase in excise that would otherwise have gone ahead on the 1st January next year. I also made some announcements yesterday about ethanol and other alternative fuels which over time might help a little bit. And I am looking at different ways in which the government can be of help recognising that there is no easy solution. If you are not the government, there are a million solutions because you don't have any responsibility for delivering them but we did if I may point out, we did four years ago get rid of the automatic indexation of excise and we also cut excise by 1 « cents a litre. Now if those measures had not been introduced, petrol would now be 6 « cents a litre dearer than what it now is.
MITCHELL:
How...you said you wouldn't quibble at the $50 million a day...
PRIME MINISTER:
Well I can't, I mean the point you make is, the point's valid of course on a daily basis, any government, in any circumstance whether petrol is expensive as it is now or much cheaper, collects millions of dollars a day. Equally, every day the government spends millions of dollars on pensions and education and on health and looking after the elderly and putting our...
MITCHELL:
We all pay tax for that. We understand that but do you know what the annual figure is and what government with GST and excise takes out of petrol.
PRIME MINISTER:
Well the annual federal excise collection figure is about $14 billion.
MITCHELL:
And how much in GST?
PRIME MINISTER:
But in addition to that or offset against that, is that that's the gross collection and then there are some rebates, under fuel rebate schemes and so forth.
MITCHELL:
And then there's the GST.
PRIME MINISTER:
Well I don't know the precise figure in relation to the GST. I am not arguing for a moment Neil...
MITCHELL:
And the resources rent tax...
PRIME MINISTER:
Look Neil there is a lot of revenue collected by the government from a number of sources including petrol.
MITCHELL:
And there is no room in all that revenue, in the well up to more than $14 billion (inaudible) double that, there's no room for a floating taxation system where by you could at least keep petrol down a little, a couple of cents a litre, no room for that.
PRIME MINISTER:
Well Neil, can I say two things about a floating taxation system. My experience in dealing with these things is that once tax is reduced in the name of giving temporary relief, there is near 100% resistance to it going up again, when the reason for the relief has disappeared. So I have to with great respect, dispute the capacity on political grounds for any government to have a floating tax.
MITCHELL:
But once petrol hits a $1.20 you could just start to reduce your excise take...
PRIME MINISTER:
And the idea is if it goes back below it, it goes up again does it?
MITCHELL:
Yes that's right, so you you'd think (inaudible) $1.20.
PRIME MINISTER:
Well can I put it to you Neil that the public would never accept that.
MITCHELL:
I think they'd accept anything that gave them relief Prime Minister.
PRIME MINISTER:
Can I also point out to you that we do not collect extra excise as a result...
MITCHELL:
I understand that, you collect extra GST.
PRIME MINISTER:
Well states collect the extra GST. Have you asked Mr Bracks whether he'd...
MITCHELL:
Yes I have asked him and he says will you at least sit down with the states and say can we do a deal here and get the GST tax off a tax.
PRIME MINISTER:
Well it's not a...look we cut excise four years ago, we got rid of the automatic indexation of excise and we were very heavily criticised for that by a lot of economists who said we were crazy to give away a revenue source and we did it because we did not want a situation where if petrol prices went up again, we would be seen to be increasing the rate of excise at a time when it was going up. Now we gave that away and as a result petrol is now 6 « cents cheaper and I do not believe that the present excise regime, given all of the circumstances that we have is unreasonable. Can I just remind your listeners that petrol in New Zealand is $1.39 a litre.
MITCHELL:
Yes but New Zealand is a tiny country (inaudible) drive in this country.
PRIME MINISTER:
Well Great Britain, $2.00
MITCHELL:
Tiny country.
PRIME MINISTER:
Germany.
MITCHELL:
Small country.
PRIME MINISTER:
True this is a bigger country but be fair, the great bulk of the people live on the eastern seaboard, and the great bulk of the people don't travel on a regular basis from Melbourne to Brisbane, or Melbourne to Sydney.
MITCHELL:
Oh I think you'd find the kilometres travelled (inaudible) in Australia are significantly higher.
PRIME MINISTER:
Yes but I don't... France $2.30. Only in the United States is petrol cheaper, only in the United States. Of all the countries...
MITCHELL:
If you're driving a truck from Melbourne to Brisbane, you're paying for petrol. If you're driving from Paris to Lyon, you're not paying as much.
PRIME MINISTER:
Well it depends how often you do it. I mean it's not just a question of the distance between the two places, how often do you do it.
MITCHELL:
James, go ahead please James.
CALLER:
Yes good morning Neil, good morning Mr Howard.
MITCHELL:
Yes James go ahead.
CALLER:
Well since the price of petrol have just been skyrocketing up the last couple of months, I've now had to stop fortnightly visits to my daughter and only see her once a month.
MITCHELL:
Well, she lives a distance away, does she?
CALLER:
She lives in Shepparton and I'm in Melbourne.
MITCHELL:
Okay, well there's an example Prime Minister.
PRIME MINISTER:
Neil, I understand that this is beginning to affect people. Thank heavens it is occurring at a time when unemployment is at a 30 year low, where wages have risen very strongly, where we have just cut taxation and where interest rates are historically low.
MITCHELL:
But the interest rates have been undermined by petrol prices...
PRIME MINISTER:
Neil you cannot be, with respect, selective if you are to remain fair. You can't just look at the painful area of high petrol prices and ignore all of these other things when you're looking at the overall situation of people. Now if you're saying to me is this difficult, are you aware Mr Howard that this is painful for ordinary Australians? My answer to both of those questions is, yes I am. What are you going to do about it Mr Howard? I do not believe that the solution is to have an adhoc reduction in excise. To be noticed, let alone appreciated and accepted as a genuine response, you would have to have a significant reduction. And given the level of... the price of petrol now, a significant reduction in my opinion is 5 to 10 cents a litre. 5 to 10 cents a litre is billions of dollars in excise revenue. Now,look I understand how people feel. It is not the fault of the Government. I mean I'm prepared to accept blame and responsibility where something is a direct consequence of government policy. But this is a direct consequence of world circumstances. If it were so easy to fix, George Bush, Junichiro Koizumi, Jacques Chirac, Gerhard Schroder, Tony Blair, they all would've fixed it. So this idea that somehow or other...
MITCHELL:
Have they all got a tax level the same as ours?
PRIME MINISTER:
Many of them much higher, much higher.
MITCHELL:
Peter, go ahead please Peter.
CALLER:
Mr Howard, how are you Neil? Mr Howard I'm in the local transport industry and I believe what you're saying is just paying lip service. You do not understand. If you understood you'd do something about it. I'm paying an extra $250 to $300 a week, and I don't any of the rebates or any of that stuff that a lot of the transport operators get. And it's coming straight out of my pocket mate, I've got four kids and I've got a mortgage, and you're just paying lip service. You're saying you understand. You don't understand. None of you do, Bracksy doesn't understand, you don't understand. You're just paying lip service mate, that's it.
PRIME MINISTER:
Well mate, I don't think I'm paying lip service. I am very conscious of how people feel about this. I'm not surprised that you speak as you do. But it is a problem not caused by a decision of the government. I'm not responsible for a world over, excess of demand over the supply of oil. I'm not responsible for Hurricane Katrina or Rita and the price of crude oil, and look I could... if we were on camera I could show you graphs that clearly indicate that as the price of crude oil has gone up, so has the price of petrol at the bowser. Now, mate I'm... I do understand that I'm not just paying lip service, but there is no easy immediate solution to this.
MITCHELL:
We'll take a quick break, come back with more for the Prime Minister, including the ethanol solution. Is it? The Prime Minister is in Sydney. Mr Howard just very quickly, there's a lot to get through, the ethanol idea that you're going to put to the petrol companies next week. Where's the guarantee that they'd bring prices down?
PRIME MINISTER:
Well ethanol is cheaper.
MITCHELL:
(inaudible) might make more profits.
PRIME MINISTER:
Well I don't think they will be allowed to do that.
MITCHELL:
How would you control that?
PRIME MINISTER:
Well we'll be talking about this next week.
MITCHELL:
So you'd look at regulating the price.
PRIME MINISTER:
I don't think it'll be necessary to regulate because I think the focus will be so heavily on the use of ethanol and I believe for a combinations of reasons that that won't occur.
MITCHELL:
You don't believe that motorists have a right to know how much ethanol is in the petrol they're buying?
PRIME MINISTER:
Well that's... I mean at the moment we have labelling.
MITCHELL:
(inaudible)
PRIME MINISTER:
No, no the European practice is that anything up to an ethanol blend of 5, what's called E5, which is 5 percent ethanol is not specifically labelled. I think I'm right in saying, I think I'm right in saying that there are some things in petrol now that are not specifically advised.
MITCHELL:
Are you concerned...
PRIME MINISTER:
I think there are quite a lot of additives in petrol now of which motorists are not made specifically aware. It's a question of proportion and degree.
MITCHELL:
Do you agree that anything over 10 percent is unsatisfactory?
PRIME MINISTER:
Well we would be very cautious about anything over 10 percent, but in the end you've got to rely on scientific evidence.
MITCHELL:
We'll take another call, Ian go ahead please.
CALLER:
Hi Neil. Prime Minister my name's Ian Murray. I work as non-violence trainer. I'm the person who helped the (inaudible) Scott Parkin to plan a workshop, that were to deliver on the day that he was swept off the streets and detained without charge. So I know that the workshop that we planned to hold had nothing whatsoever to do with violent protests. In fact we're both deeply committed to non-violence and we were planning to teach the exact opposite.
MITCHELL:
What about throwing marbles under horses and things like that?
CALLER:
That's ludicrous.
MITCHELL:
(inaudible) I've seen it happen myself.
CALLER:
Sorry.
MITCHELL:
It's not ludicrous, I've seen it happen.
CALLER:
Well it's a ludicrous tactic and Scott and I would never advocate something such as that. It doesn't fall within our definition of non-violence. So Prime Minister I'd like to know why a man who advocates only peaceful methods of protests, has been locked up in solitary confinement for five days and then thrown out of the country?
MITCHELL:
Prime Minister.
PRIME MINISTER:
Well we had advice which I am aware of the substance of that advice and on basis of that advice he was removed from the country. He has no right to be here as a foreigner. He had a visitors visa.
MITCHELL:
Are you willing to say what the substance is?
PRIME MINISTER:
No I'm not because it is a long standing practice not to disclose advice of that kind. The Leader of the Opposition was briefed on the substance of the advice. And I am quite satisfied on the advice I have that it was proper that he be removed.
MITCHELL:
Presumably he won't be allowed back in the country?
PRIME MINISTER:
No if the circumstances of that advice continue to obtain.
MITCHELL:
Prime Minister, the Governor General offering advice in a speech last night on how the War in Iraq in being fought. Two points, one would suggest it's not going too well, secondly is it the role of the Governor General to do this.
PRIME MINISTER:
Well I don't think he was suggesting that it wasn't going too well and I would defend the right of the Governor General as a former very distinguished decorated soldier. He won the Military Cross in Vietnam. He's a former Commandant of the SAS. I think a bloke in that situation with that background surely can at a military dinner express a view about the tactical aspects of counter insurgency warfare. I don't see that as straying into the political field. I think if we're saying it's wrong for him to talk about those sorts of things, we're applying an unduly restricted view. You can't expect the Governor General when he goes to things, to stand up and simply say it's nice to be here and I like you all.
MITCHELL:
Do you agree that it is not going well in Iraq?
PRIME MINISTER:
Oh look I am not going to get into detailed debate about military tactics.
MITCHELL:
Well what about the general principle? (inaudible) not going well in Iraq?
PRIME MINISTER:
Well I think the general principle is that progress is being made with the training of the local forces, there's no doubt about that. There is still very, very concentrated terrorist activity in and around the Sunni triangle. There have been a couple of incidents in the South which has previously been pretty free of violence. I hope they're not repeated. It's tough, but its all the more reason therefore that we stay the distance. Because if we give up and the place lapses into total chaos, that will put enormous pressure on neighbouring countries and it will be a very bad outcome for the West if that were to occur.
MITCHELL:
Sir John Wheeler in his airports report says he's particularly concerned about one regional airport. Do you know which airport it is?
PRIME MINISTER:
No.
MITCHELL:
He hasn't named it.
PRIME MINISTER:
No, well I can't offhand tell you what that is. But he was generally quite satisfied.
MITCHELL:
But he named one, well he hasn't named, he mentioned one regional airport which is of concern because I hope that's being addressed immediately.
PRIME MINISTER:
Yeah well I'm sure it is. But I cannot offhand tell you the name of that airport. But I am satisfied from what he said that the arrangements were appropriate and he said it was a question of balance and proportionality when it came to regional airports.
MITCHELL:
Will the security increase, which is obviously going to continue, add to the cost of airline tickets?
PRIME MINISTER:
I was asked that the other day. I can't guarantee that they won't go up but I don't believe that the changes we've made as a result of Wheeler's Report of themselves would justify an increase.
MITCHELL:
Would you support Robert Doyle's plan to cut the Scoresby tolls in half for a number of years here in Melbourne?
PRIME MINISTER:
Well that really is a matter for him.
MITCHELL:
He's done a deal with Peter Costello though hasn't he?
PRIME MINISTER:
Well I don't know that he's done a deal with the Federal Government. I mean, we are the one party in all of this, the Federal Government, that has been completely consistent. We committed money under a Memorandum of Understanding with the Victorian Labor Government and they broke that Memorandum of Understanding and as a result, we have to now consider and I'll discuss with Peter Costello and Warren Truss what we do in relation to that money. But I can assure your listeners that we won't see this as an occasion in any way to dud the Victorian public.
MITCHELL:
The other state issue, a car park levy in this town - $40m a year it's going to take out on permanent car parking in the city. Do you think that's a good idea?
PRIME MINISTER:
Well I don't know all the local arguments. I guess it's designed to reduce traffic congestion is it?
MITCHELL:
Yeah.
PRIME MINISTER:
Look I don't really want to buy into it because I don't know enough about it.
MITCHELL:
Bird Flu. Have you got an update on that?
PRIME MINISTER:
Oh well we have got an update on that. We have reissued our avian influenza travel bulletin and travel advice and we have helped the Indonesians with medications in relation to this. And we're in very close contact with Indonesian authorities and I saw this morning the Chief Medical Officer say that it didn't automatically follow that this occurrence in Indonesia was a direct threat to Australia. Now he's the doctor, he's the expert in the area. But Tony Abbott and the Government are watching this like hawks because we are very sensitive to the possibility of these outbreaks and one of the issues that's going to be on the agenda at the APEC Meeting in Korea at the instance of Australia and the United States are in fact the possibility or the threats of pandemics.
MITCHELL:
Do you travel with that anti-viral preparation yourself?
PRIME MINISTER:
Well a doctor often travels with our party. I don't know whether he's got that or not. I never ask him what he brings along. I always think it's slightly intrusive. You never know what he might carry in his medicine bag.
MITCHELL:
I don't want to dwell on this. We've had enough of him, but does your wife deserve an apology from Mark Latham?
PRIME MINISTER:
My wife is a very self contained person and she's not somebody who goes around asking for apologies from people she knows she'll never get.
MITCHELL:
And the Swans or the West Coast Eagles?
PRIME MINISTER:
Well sentimentally it would be great for the game if the Swans were to win. I think on form the West Coast Eagles go in the favourites.
[ends]