MITCHELL:
But first in our Brisbane studio is the Prime Minister. Mr Howard, good morning.
PRIME MINISTER:
Good morning Neil.
MITCHELL:
Just wondering quickly if you've had an update on the Solomons overnight, what's happening there?
PRIME MINISTER:
Well the situation remains calmer and better than it was before the reinforcements arrived. There were some arrests overnight. The situation is still tense and there's still the potential for further trouble. We are going to send another company after discussion with the RAMSI authority, that's the Regional Assistance Mission to the Solomon Islands, that's the acronym, the authority in the Solomons. There were discussions between the authority and the Government late last night and as we speak 110 more Australians from a detachment based at Holsworthy in Sydney will be going and they will arrive in the Solomons later on today.
MITCHELL:
Why is that Prime Minister, is it that dangerous is it?
PRIME MINISTER:
Well in these situations it's better to have more than less. I believe very strongly that one of the reasons why our initial intervention worked effectively was that it was very big and it sent a very strong message. It's far more desirable to deter trouble makers in a situation like this than to fight a pitched battle. And if they think there's overwhelming force, they won't try trouble in the first place.
MITCHELL:
So how many people will we have there?
PRIME MINISTER:
Well we will have, this is another company of soldiers, 110. There's the 110 that went the other day. We had some 70 additional police and then we've had several hundred police there, so we'd be getting close to what, if my maths is alright, four to five hundred.
MITCHELL:
It's a long term commitment too isn't it?
PRIME MINISTER:
It could be.
MITCHELL:
So do we turn them over? Do we sort of...
PRIME MINISTER:
Oh yes, these people always go on rotations. Just how long they'll be, three or six months is a matter for the military and police authorities to work out. But it's not free of danger, I have to say that. I hope there are no injuries or fatalities but we did lose an Australian Federal Police officer more than a year ago. And we've got somebody injured in a Brisbane hospital and I hope to briefly call and say hello to him when I leave this studio before going to the Gold Coast.
MITCHELL:
You've talked about the anguish before of sending troops to Iraq. Is this as difficult a decision?
PRIME MINISTER:
No its not as difficult in the sense that we're not fighting an army, there's not an enemy army there it's civilian disorder that we're fighting. But any kind of situation like this does involve the possibility of injury and casualties. I don't want to over dramatise it because it is different from Iraq and Afghanistan. There you're facing deadly weapons and there's a track record of certainly people being killed, military forces of other countries having been killed and a lot of Iraqis having been killed; it is quite different from that. But nonetheless, the situation clearly got out of control a couple of nights ago. There's been a lot of damage done and I want to make absolutely certain, the Government wants to make absolutely certain, that we send a very clear message that we are serious, that the other members of the partnership, New Zealand and others are serious. There is an approach being made in New Zealand to add to the forces that she's already sent and I hope that that's responded to. So the people who are tempted to go on rioting and looting and burning and doing violence to people, they will understand that we are quite determined to stop that happening. We're quite determined to defend the democratic process in the Solomon Islands, to restore law and order.
MITCHELL:
And presumably you'll send more if you need to.
PRIME MINISTER:
Yes. There's no point in doing these things in half measures and I said the other night, and I'll repeat it here this morning, that we have to shoulder most of the burden. Australia is the biggest bloke on the block in the Pacific. We're in a stronger position than anybody else, both size and militarily and economically. And whilst we expect countries like New Zealand to do their part as well, we must accept the major part of the responsibility. The rest of the world will look at us and say well this is something for Australia to sort out and it's also in our interests in the long term. We do not want failed states on our doorstep. Failed states create vacuums, vacuums attract people with bad thoughts and not good intentions.
MITCHELL:
Do we have a role, in a sense, as a policeman in the Pacific?
PRIME MINISTER:
Well I hesitate to use words like that because they sound patronising and presumptuous. We are dealing with independent countries. The question of whether they got their independence too soon is now academic because it's happened. We can have an academic debate about that but it's not going to achieve anything. We are there to help and our help will be provided on conditions and one of those conditions is that there's a progressive elimination of corruption. Corruption is an endemic problem in Melanesia and we've made some progress but there's still a long way to go. We need to have our aid also tied to sensible economic growth and development. We're not going to invest in projects that are a waste of money, but it will take a long time. When you have an entrenched culture of patronage and corruption in a society, it takes a very long time to root it out.
MITCHELL:
And this will cost Australia big time.
PRIME MINISTER:
It will cost a lot of money yes. But the alternative is, we do nothing, nobody else will have either the stomach or the capacity to do anything and we will have a series of failed states in our region. And other countries, not necessarily with the interests of the region or Australia at heart will seek to exploit that. Now I don't want that to happen and I don't believe the Australian public wants it to happen. And this is something though that we have to see as not being solved in a matter of weeks, or months or even a couple of years. It's one of these things where over a long period of time we have to bring about a change of attitude.
MITCHELL:
Does it mean we could have troops there for years?
PRIME MINISTER:
Well I wouldn't think that we would have troops in the numbers that we had over the past couple of years there for years but we could from time to time have a significant military presence in different parts of the Pacific. And I think it's one of the reasons why I have been saying for years that this country will have to continue to spend increasing amounts of money on defence because this is our patch. Nobody else can be expected to shoulder this burden. We can't ask the Americans or the Europeans or anybody else. They'll say well this is the Pacific, it's next door to Australia and Australia is a strong, wealthy, prosperous country and it's got to shoulder its burden. And I think that's a fair thing for the rest of the world to say. I don't complain about that.
MITCHELL:
Okay, on to local issues back home in Australia. Do you believe small businesses should carry the cost of increased petrol prices without passing it on to their customers?
PRIME MINISTER:
Well it depends on the circumstances. I don't want high petrol prices being used as an excuse, and this is a point that Peter Costello was making, an excuse to rip off the public.
MITCHELL:
No. you're saying don't pass it on. Now do you believe that the rises (inaudible) passed on?
PRIME MINISTER:
Well I would like to the maximum extent possible, if people can afford it, for the increased costs to be absorbed. But some people can't afford it I understand that, it's a question of degree and that was the point I understood Peter to be making and I agree with him.
MITCHELL:
Not the way I read it. However will you ask the competition commission to monitor prices that are going up, allegedly because of petrol price rises?
PRIME MINISTER:
Well I did do that and they monitored what was happening...
MITCHELL:
I don't mean the petrol prices, I mean price rises that flow through.
PRIME MINISTER:
Will we ask them? Well let me look at the ramifications. I'll examine that. I'll take that on board. We can have a look at that.
MITCHELL:
Okay, and the other point is as you said, you told me a couple of weeks ago you asked them to monitor petrol prices.
PRIME MINISTER:
Yes they did. They did and their finding was that the increases in the petrol prices in Australia were justified or overwhelmingly due to the increase in the price of crude oil. That in fact the rate of increase had been proportionate to the increase in the price of crude oil. They didn't find any evidence of anti-competitive profiteering and their argument also, well their analysis, has also revealed that the rate of increase in the price of petrol has been a little slower in Australia than it has been in some comparable countries. We have the fourth cheapest petrol in the world. Now having said all of that, that's no comfort to motorists listening to this interview and I'm not pretending it is but it is a fact that I ought to mention. These prices are very painful.
MITCHELL:
Is it inevitable there will be price rises? I mean the dairy industry, some of the other wholesale industries, the delivery industry, the couriers even. I was talking yesterday to a bloke who was in a small business and runs his own driving school, just one car. He's had to put up his prices. It's all going to flow through.
PRIME MINISTER:
I do worry that there will be some inflation coming out of this. Of course I worry about that. That's why it's a concern to the Government.
MITCHELL:
And that puts pressure on interest rates.
PRIME MINISTER:
Well it does. Although another argument in that debate of course is that to the extent that high petrol prices dampen economic activity, or produce economic activity that is less than it might otherwise be, then there will be less inflationary pressure in the economy. It's a bit of a cross argument. But clearly high petrol prices are undesirable. They are overwhelmingly due to the price of crude oil around the world. There's no argument about that and if you actually look at our levels of tax compared with most countries, ours are much lower, not that that's of any comfort to people, but I do have to say that in defence of the Government's position. We don't get extra excise because excise is levied...
MITCHELL:
Well no, but a lot more GST comes in. A lot more GST comes in.
PRIME MINISTER:
Well the GST goes to the states. Well it does.
MITCHELL:
Well I understand that but why can't you sit down with the states and say look, you're getting all this extra money out of the GST on petrol, let's do a deal.
PRIME MINISTER:
Well can I say that they will argue and I have to say with some justice, that if you have to spend more on petrol, then you're spending less on other things, which are subject to GST. So the gain you get from the GST on petrol is in part, at least, offset by the lower collection of GST on say, restaurant meals.
MITCHELL:
So is GST revenue down this year?
PRIME MINISTER:
Well the GST revenue, I haven't seen the final figures. I'd be surprised if GST revenue were down, but that's not necessarily because of higher petrol prices. There are a whole combination of reasons why it might not be down. Look Neil..
MITCHELL:
It might be up in fact.
PRIME MINISTER:
Well I haven't seen the final figures. It could well be up because the economy's doing very well. But the problem, and I know this is what you're alluding to, the problem about giving a tax cut in relation to petrol is that to play with excise, taking a cent a litre of excise would cost somewhere in the order of $300 million. With present high levels, people would say anything less than 10 cents is chicken feed. So you're looking at an enormous amount of revenue, and what happens if the price goes down? Do we then increase the excise?
MITCHELL:
What about taking the GST off excise. There's 3.7 cents a litre.
PRIME MINISTER:
Yeah but Neil we'd then have to compensate the states for that under our agreement.
MITCHELL:
Well how big's the surplus you're heading for?
PRIME MINISTER:
Yes but Neil, what about other things. What if the price goes back....
MITCHELL:
True but...
PRIME MINISTER:
I'm sorry.
MITCHELL:
I'm sorry go on.
PRIME MINISTER:
We cannot just look at petrol. It's not the only issue that the Government has to deal with and the reason why petrol prices are painfully high at the moment is not the level of taxation, it's the cost of crude oil around the world. Now we did cut excise several years ago, and we removed the automatic indexations, in other words, it doesn't keep going up as a percentage.
MITCHELL:
I just find it red hot when the Treasurer says small business should absorb the cost increase of petrol prices, yet governments be they state or federal, are getting more because the petrol prices have gone up. I find that massively... ridiculous.
PRIME MINISTER:
Well the Federal Government is not getting more excise.
MITCHELL:
No the GST.
PRIME MINISTER:
The GST. But I have to say again that if instead of going out to a restaurant once a fortnight and spending a couple of hundred dollars including some GST on restaurant meals, you have to spend more on buying petrol which is subject to a GST, the net GST collections as a result of the fuel price increase do not automatically go up. It's what the economists boringly call the substitution effect. Sure you collect more GST on the petrol, but because people don't have enough money because of the higher petrol charges, the prices to buy restaurant meals, you collect less GST on restaurant meals. Now that is a legitimate argument and as you know, I'm not one to stick up for the states instinctively on these revenue things, but I do think that is an argument that you have to bear in mind.
MITCHELL:
Prime Minister, when did you last fill up a car with petrol yourself?
PRIME MINISTER:
Well I haven't personally filled up one, but don't imagine for a moment I'm not aware of the price of petrol. I have children who own cars and who talk about it. So of course I haven't. I mean I think you know that. I mean it's a fair question to ask me, but I think you know that because I have a chauffeur driven car like Mr Beazley and Mr Bracks...
MITCHELL:
And Mr Costello.
PRIME MINISTER:
And Mr Costello. Of course we do.
MITCHELL:
But people get this perception. How do you really know what the pain is?
PRIME MINISTER:
Because we talk to a lot of people and we talk to a lot of consumers. And of course they're unhappy with the high price of petrol, but I do believe that most of them understand that the high price of petrol at the moment is a result of the high price of crude oil around the world. It's gone up massively over the last year and the increase in petrol has been proportionate, prices in Australia, have been proportionate to the increase in the price of crude oil. And it is, no relief of pain I know, it is markedly cheaper, in fact the fourth cheapest petrol in the world.
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MITCHELL:
We haven't got long with the Prime Minister left so well take a call and then I have some other quick questions. Liam, go ahead please Liam.
CALLER:
Yes good morning Mr Prime Minister. I'm a small business person in the transport industry, and since June or July of last year my petrol bill has gone up between $1200 and $1400 per month-which is a lot of money. Now I think I may have a solution to this if you just give me a second. The State Government in Victoria actually give a rebate to people that use, that put in solar energy and tanks and so forth. What would stop the Government from giving people a rebate if they convert to gas? It would create employment, it would keep the petrol price down....are you there?
PRIME MINISTER:
Yes I'm listening.
CALLER:
It would keep the petrol price down because there would, you know, we wouldn't be using it, we wouldn't be held to ransom by the other countries and people, it's a much, a much cleaner way of going around.
MITCHELL:
Okay so you're talking about a rebate to change to gas?
CALLER:
Exactly.
MITCHELL:
Okay Prime Minister.
PRIME MINISTER:
Well like everything I'd have a look at it. I think in the past gas has been taxed at a lesser rate than petrol. I think off-hand that's still the case, that although the differential is being gradually phased out for I think good competitive reasons, it's still infinitely cheaper but let me have a look at some of the other implications. If the gentlemen wants to leave his particulars I'll get in touch with him.
MITCHELL:
Thanks Len, if you just hang on, we'll get your details off air. Just quickly Annette go ahead.
CALLER:
Hi, I was just listening to that and it just amazed me that the Prime Minister must be a little bit out of touch because if he thinks the average family with one income coming in, three young children, goes out once a fortnight to spend $200 on a meal, when you actually go to visit your grandparents over the Easter period, and that's two day trips, that was two tanks of petrol and that cost us $140.
PRIME MINISTER:
No I don't think, I mean obviously lots of situations are different but I don't think the point, the argument you've made and the comparison you've given necessarily alters my argument at all. I mean people are in different situations. I know how much it costs to fill a tank of petrol and you mentioned a figure of $140, well there's GST on that and, but the $140 is not all attributable to the increase in the price of petrol over the last year. I mean the comparison is the extra, is the GST you pay on the restaurant meal and the increase in the price of petrol, not the GST you pay on the meal and the total.
MITCHELL:
Okay thank you Annette. We have several things, I'll try and be quick with the Prime Minister. Last time I asked you, I think you indicated you were still considering your future, now you're saying I'm not considering retiring. When did it come back on the agenda?
PRIME MINISTER:
Nothing has changed Neil.
MITCHELL:
Oh that was a bit stronger wasn't it? I am not considering retiring.
PRIME MINISTER:
No, no, no, look, situation normal, I'll stay in this job as long as my party wants me to and it's in the best interests that I do. I was actually asked a question, would I consider retiring to Currumbin, a beautiful spot in Queensland, in fact a place where my wife and I honeymooned back in 1971, and they said are you thinking of retiring at Currumbin? And I said I'm not considering retiring, I mean what else do you say? You talk in the present tense, I mean, come on this is just this game, I know you like playing it, but it is a game and situation normal, no change, next question.
MITCHELL:
Tax. Do you believe Australians want tax reform or tax cuts?
PRIME MINISTER:
They want to pay less tax.
MITCHELL:
What's wrong with tax reform? The former chief justice says we need massive reform. The Tax Commissioner says we've got a long way to go and we fool around with tax cuts.
PRIME MINISTER:
Well can I tell you that my hunch is that if we produced a plan which was elaborately labelled tax reform and given a tick by some of the experts and it resulted in no Australian paying less tax, they wouldn't be very impressed.
MITCHELL:
But reform would have to result in people paying less tax?
PRIME MINISTER:
Well not some of them. I've read a lot of reform plans and a lot of them involve a rearrangement of the tax burden. In fact most of the reform plans that are put to me, and to the Government, are from people who want to rearrange the tax burden, basically get somebody else to pay a bit more so they can pay less. Now that is fundamentally how this thing works.
MITCHELL:
But do you agree with the Chief Justice we need massive reform?
PRIME MINISTER:
I think massive is an overstatement, I don't agree with, was that Anthony Mason? Well on this occasion I don't agree with him. I think the reform of the tax system is always a work in progress. You never get to that finishing line, it keeps receding, you have to keep going after it. I think we've had a lot of reform. I'm in favour of further reform and nobody should suggest that further reform is off the agenda. I noticed some people construed that from the speech I made the other night.
MITCHELL:
Well will there be reform in the next Budget?
PRIME MINISTER:
Well I'm not going to speculate about the next Budget.
MITCHELL:
Well you've speculated enough to give us an indication of tax cuts?
PRIME MINISTER:
No, no, well I'm not going to speculate, we'll wait and see what the Treasurer says on the ninth of May. But the point I made the other night, and the point I will say, is that we're not going to undermine the Family Tax Benefits system. We're not going to do what the Labor Party tried to do at the last election, take an axe to the Family Tax Benefits system because we think it's a great system. The OECD says that our family payments system is more generous to low income families than any system in the OECD. Now I'm very proud of that and it's a Liberal Government that's given a better deal through the tax system for low income families than a Labor Government could ever dream of.
MITCHELL:
Prime Minister the Treasurer was rightly boasting yesterday about tearing up the mortgage, no more foreign debt.
PRIME MINISTER:
Absolutely.
MITCHELL:
How much will that save us in interest payments?
PRIME MINISTER:
$8 billion a year on average.
MITCHELL:
So what's in it for us?
PRIME MINISTER:
Well we've been able to afford tax cuts, we've been able to afford massive increases in health spending, we've been able to afford increases in defence spending, we've been able to afford increased spending on roads, we've been able to afford increased spending on aged care. That has been made possible because we no longer have a big mortgage and we're not wasting money paying interest on the mortgage.
MITCHELL:
And the future, what's in it for us in the future? The mortgage is gone as of today.
PRIME MINISTER:
Well the interest savings go on because when you pay off your mortgage you have permanently available the $1500 a month or $2000 a month, or whatever it was, or $800 a month.
MITCHELL:
So we've got permanently available the $8 billion?
PRIME MINISTER:
Well of course we have got it.
MITCHELL:
So where will it be next year? You're not going to build more roads.
PRIME MINISTER:
Tune in, well tune in, tune in on the ninth of May.
MITCHELL:
Tax cuts?
PRIME MINISTER:
Well, tune in. I don't want to speculate.
MITCHELL:
Twelve day weekend in a building industry in Victoria, tying Easter and Anzac Day, that's a bit rich isn't it?
PRIME MINISTER:
Well I don't know what the trade-off was.
MITCHELL:
They're RDOs and all this...
PRIME MINISTER:
Well I just don't know. The industry has a track record of being accommodating but if there are genuine productivity trade-offs, I'm not against it, I'm in favour of people making deals at the enterprise level that are based on productivity. If there's extra things in it for the employees, I'm certainly in favour of that providing there's a productivity basis. But given our attitude to IR, I don't want to be heard to be saying everything has to fit a particular pattern. Our whole approach is that you work it out at the enterprise level, what suits you best, you ought to do.
MITCHELL:
This maybe an area where this doesn't involve the Federal Government, but I was talking before nine o'clock about the six families, the five families in Mildura who lost the six teenagers in that awful accident in February, awful crash in February. They're $40,000 short on funerals. I think it's a state responsibility and I'm trying to get the state to pick it up, but is there any area the Federal Government can get involved in that that you can think of?
PRIME MINISTER:
Well let me talk to Joe Hockey who's the Minister for Human Services and to Mal Brough. Off-hand I think it is an area of, through what might loosely be called the family and community services at a state level. But if there is a situation where in the past the Federal Government has helped with that, well we'd want to do it on this occasion. But off-hand I don't think it is.
MITCHELL:
Fair enough. Would you like to see Jeff Kennett back in politics?
PRIME MINISTER:
Well that really is a matter for him and for the Parliamentary party. Jeff was, in my view, a very effective Premier of Victoria. I don't think he's ever got politics out of his system. I don't think you ever do when you've been right at the top and you go abruptly. He didn't expect to go and a lot of people didn't expect him to go when he did. I'm not privy to his personal intentions.
MITCHELL:
Would you like to see him in a Federal seat?
PRIME MINISTER:
Well if he wanted to have a go. Look I never say no.
MITCHELL:
Did you say if he wanted to have a go?
PRIME MINISTER:
Yeah. Well my hunch is that he doesn't. I don't think he's interested in the Federal political scene. That is my hunch. I haven't talked to him about it recently. I see Jeff occasionally and we always just have a pleasant conversation and I get the impression he's enjoying life, but I also get the impression that he's never quite got politics out of his system and I understand that and I don't think there's anything odd about, you know, the fact that from time to time, the possibility of it comes up. But that really is a matter for him. If he wants to return to the colours that's a matter for him.
MITCHELL:
Criticism of the English syllabus from you in the papers. There's no need going through all that again because we've talked it before and I understand your problems. Would you look though at linking funding to the teaching of what you consider to be appropriate English syllabus?
PRIME MINISTER:
Well I'd be reluctant to do that because I do believe that if the states are to have sensible functions on their own, setting the syllabus and so forth for the teaching of English ought to be one of them. And it does vary a bit. I was interested in the reaction of the state education ministers. There was only one of them, the Education Minister from New South Wales, who actually addressed the substance of my complaint. She actually said well in New South Wales we have compulsory Shakespeare in years 10 and 11 and we do this and do that and I thought at least she was addressing the issue.
MITCHELL:
What's your favourite book by the way?
PRIME MINISTER:
Well my favourite book of recent literature, The Bonfire of the Vanities is one of my favourite books of recent literature. I enjoyed some of the Dickens books.
MITCHELL:
What about Shakespeare?
PRIME MINISTER:
Well Macbeth, Julius Caesar are my two favourite plays.
MITCHELL:
Sorry I know we've got to move along. Just a couple of quick things. Kim Beazley in trouble yesterday. Can you name the Victorian Liberal Senators.
PRIME MINISTER:
Oh yes, I'll have a go. Kay Patterson, Rod Kemp, Michael Ronaldson, Julian McGauran and Mitch Fifield and Judith Troeth.
MITCHELL:
Michael Ronaldson?
PRIME MINISTER:
Michael Ronaldson. He's back in the Senate.
MITCHELL:
Who's he replaced?
PRIME MINISTER:
He actually, I think, effectively replaced Bin Tchen, who had been a Senator from Victoria. Michael was the Federal Member for Ballarat.
MITCHELL:
Did you do some research on that?
PRIME MINISTER:
No.
MITCHELL:
You must have known I was going to ask that.
PRIME MINISTER:
Well I always try and prepare for you Mr Mitchell. But I do have a reasonable recall of my colleagues, I can assure you of that. But look, can I just say to you, I can understand anybody in Mr Beazley's position just getting stumped on a name. I don't think there's any big deal on that to be quite honest. But the problem he's got is that he's been running around the country slandering my colleague Alexander Downer for not having read 68,000 cables a year and understandably when he can't remember the name of one of his Senators, people remember what he said about my colleague.
MITCHELL:
I know you need to get away, but if Jason Gillespie can make 201, you could have made 50.
PRIME MINISTER:
I could have. I think, I could have. It was a great performance.
MITCHELL:
It was great. Thank you for your time.
PRIME MINISTER:
Okay.
[ends]