Subjects: Minister Reith; Olympic hospitality; interest rates; petrol prices; Kate Carnell; governor-general.
E&OE……………………………………………………………………………………
MILLER:
Live from Sydney I have the Prime Minister of Australia, Mr John Howard. Prime Minister good morning.
PRIME MINISTER:
Good morning John.
MILLER:
Well welcome to the program. Now you made it pretty abundantly clear in interviews that I saw with you yesterday, and I trust it is correct, that you regard that in the case of Mr Reith now that he is repaying the money the matter is closed. But may I raise with you just a couple of concerns that I’ve been getting particularly from callers over the last couple of days.
PRIME MINISTER:
Go right ahead.
MILLER:
Well the first one is that this case has served it would appear to reinforce the perception out there among many Australians that there is one rule for them and one rule for us.
PRIME MINISTER:
Well whether it has done that or not I don’t know. But I do know this that although he has no legal liability to do so Mr Reith is paying the full amount. He doesn’t have a legal liability to do it but he’s paying it. Now it shouldn’t have happened in the first place. He shouldn’t have given the details of that card to his son. He’s acknowledged that. But he is paying the full amount even though it’s clearly demonstrated that he did not authorise in any way the expenditure of that $50,000, but he’s paying it. So I don’t know how there can be a different rule for him than for other people. He is paying it.
People seem to, with all the talk about it, they seem to forget the fact that he has agreed to pay the whole lot even though it has been determined that there is no legal obligation on his part to pay it and even though the Solicitor General has said in similar cases the card provider carries the cost of the fraud. Now I haven’t myself conducted a personal analysis of what other card providers do in similar cases but that’s what the Solicitor General has said. But please let’s cut through and just remember that Mr Reith is paying it even though he has no legal liability to do so. Now I don’t know what else he can now be asked to do.
MILLER:
All right Prime Minister. Well there would be a feeling out there that while he might not have any legal obligation to do it he would certainly have……
PRIME MINISTER:
But he’s meeting that moral obligation. I mean he’s doing it. He’s not, I mean he has said that he’s going to pay it, he’s going to pay it in full. And there’s a suggestion in one of the papers this morning that he is going to claim it as a tax deduction. Well he’s not doing that. He’s told me that. He’s told me he’s not doing that.
MILLER:
All right. Well that’s what I think is probably an even more important issue here and that is how that phonecard could have been abused for so long without the penny dropping with someone when there were calls being made on it from Finland?
PRIME MINISTER:
Well that is a legitimate question to ask and the person in the end who’s footing the bill for that is Mr Reith and not the Australian taxpayer. Mr Reith was not informed of this irregular use. There had been an arrangement put in place by the former government which for privacy reasons meant that the Telecard bill of a Member of Parliament was rolled into the electorate office bill of the Member of Parliament so that the Member of Parliament when he got it simply had an overall amount and because you use your electorate office phone a great deal you had no idea that there was a surge in usage. Now that is what I have been told, that was the arrangement. Now Mr Reith was not informed about this, so I have been advised, until last year. When he was told about it he said look this is ridiculous, I want an investigation. There was tooing and froing between him and the department. Eventually the department said we think you should pay it. He said I want a police investigation. He came to see me. I sought the advice of the Attorney General straight away. The Attorney General said you should have it examined by the police. It was sent off to the police thereby exposing Mr Reith and his son to possible criminal prosecution if they had been so liable. And the police determined after talking with the Director of Public Prosecutions, or rather the Director of Public Prosecution determined that there was no criminal liability.
Now in the end John the bill is not being picked up by the taxpayer. It’s being picked up by Mr Reith in full even though he himself was not personally directly responsible for the fraud although he acknowledges that the card got out in the first instance because he gave it to his son, the details of it to his son which he shouldn’t have done. Now he acknowledges that. But he’s paying it. I mean we have to get back in the end to the fact that the taxpayer is not out of pocket because Mr Reith is paying it. Now sure I’m concerned to know about why arrangements didn’t exist and I’m told that the arrangements have now been changed so that if you have this kind of irregular use there’ll be early warning signals. But in fairness to Mr Reith he was not told of this until very late in the day after all the damage had been done. And in fairness to him also he’s agreed to pick up the whole tab. So the taxpayer is not out of pocket. That’s the important thing that people should know. The taxpayer is not out of pocket. Mr Reith, although he has no legal liability to do so is picking up the entire $50,000.
MILLER:
Well you’re making that abundantly clear Prime Minister. I think we’ve got the message.
PRIME MINISTER:
Well I feel I need to because I’ve read some papers this morning that would suggest that in some way Mr Reith is not paying the money. I mean he announced on Friday that notwithstanding the outcome of the Solicitor General’s advice he would pay the whole lot. The Solicitor General said on Sunday he’s not liable to pay it but Mr Reith says he’s still going to pay it. He’s not going to claim it off his tax. He’s paying every last dollar in full.
MILLER:
All right. Well, and again you mentioned in there that already the system has been changed so that this sort of thing can’t happen again.
PRIME MINISTER:
I have been told that the system that was instituted in 1991 has been changed so that people are told of what happens to their Telecard account. I mean I for example have been told that since I became Prime Minister the amount on my Telecard account is zero dollars. I haven’t used it all.
MILLER:
Okay.
PRIME MINISTER:
People don’t normally use these Telecards now because they use mobile phones. You’ve got to remember that these amounts go back some years, a period of time when Telecards were more frequently used. Look it shouldn’t have happened. I’m not denying that, Mr Reith’s not denying that. But at the end of the day the Australian taxpayer is not picking up the bill, Peter Reith is, despite the fact that he doesn’t have a legal liability to do so.
MILLER:
Okay. Well is there any truth in the rumour I’ve been hearing from Canberra this morning that all the phonecards within the Prime Minister’s Department….?
PRIME MINISTER:
I mean there’s truth in that and the head of the department said to me yesterday, he sort of basically asked people to just sort of justify the continued retention of them. There’s no suggestion that anybody has behaved behaved improperly. Let me make that very clear. I have no evidence before me that suggests there’s been any improper use of Telecards in my department. People have got to have facilities to do their job but when something like this happens everybody naturally looks to their own arrangements to make certain that the rules are tight so that things can’t happen. All the head of my department has done, so he told me – it’s a matter for his administrative discretion, not mine, he’s running the administrative side of the department – he said look I want you to justify having these cards, having this scheme. He’s going through that process and that’s fair enough. That’s a matter for him. I wouldn’t seek to interfere with that.
MILLER:
Ok, let’s move on shall we. Olympic hospitality. MPs have 28 days to declare what they got from whom. I notice that already Peter Reith has declared that he went to the Opening Ceremony, basketball and hockey games courtesy of Telstra, funnily enough. Was the ministerial level of involvement appropriate? And I’m not questioning your level, because I think your level of involvement was more than appropriate.
PRIME MINISTER:
Well, thanks John. I think the ministerial involvement was appropriate. I saw Mr Reith extending some hospitality, involved in hospitality one evening where he was extending hospitality on behalf of the Commonwealth at the Commonwealth box. Some of the people there were involved in indigenous employment programs. People were being invited along. We had many community leaders as guests of the Commonwealth at various stages, different leaders in different sections of the community.
As far as individual Commonwealth ministers are concerned, quite a number of them did receive hospitality. They received it with my sanction. The one condition I stipulated was that they shouldn’t accept overnight accommodation but they should certainly accept hospitality because there’s a lot of networking to be done at the Games. We had a large number of overseas visitors. It would have been very odd indeed, given the enormous international focus on this country, if all of the senior ministers of the Federal Government of Australia – the biggest international event we’ve ever had in our country – so what does the national government of Australia say oh the ministers are banned from accepting any hospitality. I mean people overseas would have thought we’d have been foolish to have done that. I think the degree of acceptance of hospitality as far as I understand it has been quite appropriate to the circumstances. People are required to disclose any hospitality in accordance with the normal rules. I did attend very regularly, quite deliberately. I saw it as my role as Prime Minister to be there supporting the Australian team. I believe that the team appreciated that very much and I believe that many Australians did as well. I thought that was my job. I admit to enjoying it because I like sport. I like seeing Australia win and I enjoyed the spirit and the competition of the Games as did my wife and if I had my time over again I’d do exactly the same thing.
MILLER:
Alright. Now let’s move on again, this time to the issue of interest rates. Now I realise that interest rates are a matter for the independent Reserve Bank. That’s fine. However, I ask you personally, with the suggestion from the Treasurer this morning that the inflation figures might not be too pretty next week and the thought that that will increase the pressure to increase rates (which to the economically uninitiated mind such as mine seems like pouring kerosene on the fire), would you think that any more interest rates would be appropriate?
PRIME MINISTER:
John I never speculate about future movements in interest rates because whenever a Prime Minister or a Treasurer does that it can have an effect on the markets and that can hurt people. Therefore it’s not a responsible thing for a Prime Minister or a Treasurer to do. The inflation rate next week will be high because of the one-off impact of the GST. What Peter Costello has been doing is reminding people that we were always going to have, because of the impact of some of the price increases from the GST, we were always going to have a kick-up in the September quarter. Then over a period of time it would go back to a normal level as the price effect of the GST was washed out of the CPI system. Peter Costello was reminding people of that so that when it occurs people won’t think it is unexpected, or bad, or out of the groove, or something that we weren’t planning on. I don’t like to see high interest rates. They’re a lot lower now than they were when we came to power four years ago. In the end they have to be set by the Reserve Bank independently of the government as interest rates are set independently of government all around the world. Interest rates are governed by a lot of things – the inflation rate is the most dominant consideration. The Reserve Bank understands that there’s going to be a kick-up next week. The long-term question is how quickly that washes out of the system.
MILLER:
On to another matter that is causing a great deal of concern. I think it’s probably the single biggest issue that we’re getting calls about at the moment, and that is of course the price of petrol. I know that you’ve already made it fairly clear that you don’t believe it is possible to do any change in the excise increase policy, but let me speculate with you and say if things go as bad in the Middle East as they would appear likely to go, and that drives the price of international crude oil up even higher, is there any possibility that under extraordinary circumstances such as those the Government would look at freezing excise?
PRIME MINISTER:
Well, John, I don’t want to once again deal in a hypothetical situation. At the moment, I understand according to the Shell website, that the average price of petrol in Brisbane is 80.5 cents a litre. That was on 16 October. Just as a matter of interest, on 30 June it was 82.9 cents a litre and on 1 July, 82.1 cents a litre. I mention those things because they were the dates on which, before and after the introduction of the GST. Look I don’t like the price of petrol. It’s much too high for comfort. I don’t like it at all. But it’s high level is due overwhelmingly to the trebling of world oil prices because the OPEC countries have put up the price of a barrel of oil. That situation will not be helped by what is happening in the Middle East. It’ll bounce around, there’s obviously been a kick-up in the world price of crude oil as a result of the terrible events in the Middle East in the last few days.
The most intelligent thing I can do is to say that the Government is very sensitive to the impact of high petrol prices on motorists. It’s too early to make a judgement about the impact of all this on our Budget. We’ll have a mid-year economic review in a few week’s time and we may then have a better idea of the impact of the increase in the price of petrol on our Budget. See there are pluses and minuses to this. It’s true that you may collect some more revenue, it’s also true because of the operation of the indexation arrangements for our expenditures that we may have to pay more out through the pension system and unemployment benefits and the like because they are tied to the consumer price index. So until we have all of that added up and subtracted and balanced off, it’s not possible for people to say that we have got a windfall.
People are running around saying there’s a windfall for the Budget – it’s too early to make a judgement about all of that. It really is because when you have an increase in the CPI which an increase in the price of petrol brings about then not only do you collect a bit more revenue through the GST but on top of that you have to pay out more because the pension payments are indexed according to the CPI. And you pay out about 2.4 times as much as you collect in extra revenue so you’ve got to balance these things off and I can’t honestly say at the moment whether the Budget is in total better off, or worse off or about the same as a result of the change in the price of petrol. And on top of that we may find when we do our mid-year economic review that we’ve spent a bit more in other areas than we’d planned to and any extra revenue we’ve got out of the petrol side of things has been burnt up by extra spending elsewhere.
I mean for example more people have taken up the Private Health Insurance Rebate than we ever expected and we estimated a take-up of many percentage points below what has in fact happened and for every extra person who takes up the Private Health Insurance Rebate that’s more tax revenue foregone. So that’s something we didn’t bargain on, we didn’t anticipate. We’ve done, we’re a victim of our own success in that area. We bargained on a very big, on an increased intake but nothing like the more than 40% of people who’ve now gone into Private Health Insurance. And I think we will have to probably pay perhaps $300/400/500 million more to, by way of tax incentives for private health insurance than we bargained on at Budget time.
MILLER:
So . . .
PRIME MINISTER:
Now you’ve got to put that off against any extra revenue you might collect in relation to petrol.
MILLER:
Well do I gather from this then that really what we’re saying here is that you’re going to sit down and do the sums at that half-year review . . .
PRIME MINISTER:
Exactly.
MILLER:
And you’re not ruling out the possibility of . . .
PRIME MINISTER:
No, no I am not saying . . . everything I’ve said before about the ill-wisdom of cutting excise by 4 or 5 cents a litre stands, but I am going further and I am saying to you that there is no argument at the moment. Nobody can assert that our Budget is in better shape because of what has happened with the price of petrol because you have to offset against that other things and it’s just too early to say whether our Budget’s any better than what we expected it to be. It may in fact be no better, I just don’t know at this stage because you’ve got to do all of those calculations. But even if it were better I don’t think running down the surplus at the present time would make any sense because you were talking a moment ago about interest rates. One of the things that influences the level of interest rates is the strength of the Budget and if the Reserve Bank thinks we’re running the Budget surplus down that won’t encourage them to make the right decisions in relation to interest rates. It might encourage them to make the wrong decisions.
MILLER:
All right Prime Minister . . .
PRIME MINISTER:
Or make a decision people didn’t like, I am not saying it’s a wrong decision but a decision people mightn’t like.
MILLER:
All right Prime Minister, the people in Canberra have asked me if I could ask you for your comments on the decision by Kate Carnell, the ACT Chief Minister to step down.
PRIME MINISTER:
Well I understand why Kate has done that and it’s a decision that she’s taken in the interests of the Liberal Party and the interests of good government of Canberra. She’s led a very good government and it’s quite wrong that she’s effectively been forced out by some Independents, just as it was wrong many years ago that Independents forced Nick Griener out as Premier of New South Wales. Canberra’s profited a great deal from the Liberal Government of Kate Carnell. I gather that as a result of this there’ll continue to be a Liberal Government in the ACT and that’s a good thing. There’ll be an election in a year’s time. But if you look at the record, it’s a very good one – jobs’ growth, investment, all of these things. She’s done very well, I congratulate her, she’s put the interests of the Liberal Party and the interests of Canberra ahead of her own and I compliment her on the job that she’s done as Chief Minister.
MILLER:
And finally this morning Prime Minister, suggestions that our next Governor-General could well be a lady and may well be Jocelyn Newman.
PRIME MINISTER:
John, I am not going to comment in any way on that issue. Anything anybody reads about this is pure speculation.
MILLER:
All right.
PRIME MINISTER:
I have no comment of any kind about that matter.
MILLER:
All right well, that’s what the, that’s what the drums are beating. So, finally Prime Minister this has been a time of great push for the Government in terms of the success of the Sydney Olympics. At the same time of course the parade was somewhat rained on by the Reith affair. I mean can you understand that generally people out there still, and there was one caller in fact just before the 8.30 News who put it in a nutshell when she said there is still that feeling out there that is reinforced by incidents like this that politicians in this country are not accountable that politicians don’t care about the wishes of the average Australian and that generally well they feel they can’t trust you.
PRIME MINISTER:
Well John . . .
MILLER:
Not you personally I say.
PRIME MINISTER:
Well I thank you for that. John, if politicians particularly the members of the Government were insensitive to public feeling, Mr Reith wouldn’t have done what he’s done. I mean Mr Reith understands that the taxpayer doesn’t want the money paid by them, that’s why he’s paying it. Even though he’s got no legal liability. Do you know of many people who would automatically pick up an obligation for something even though they had no legal liability to do so? You probably know some people who would do that. But you know other people who wouldn’t. I mean in this particular case Peter is meeting the payment in full. He made a mistake in giving the card to his son in the first place. He shouldn’t have done that. And he’s paying a heavy price for that. $50,000, that’s what he’s paying for it. And the taxpayer is not out of pocket. Peter Reith is out of pocket even though he didn’t run up that bill. But he was to blame in making the card available to his son. Now that was done some years ago. He’s a very good minister, he’s a very effective minister, that’s one of the reasons why the press, some sections of the press and the Labor Party have hit him so hard on this. He’s a very effective minister, he’s done a lot. I mean we’ve got the lowest unemployment rate for ten years – he’s the employment minister. We’ve got a better productivity rate on the waterfront than we’ve had for probably ten or twenty years and that’s the result of his reforms. And he carried them out very courageously. He’s a very effective minister, he gets things done. He made a mistake on this occasion, he knows that, he’s acknowledged it and he’s paying for it. He’s paying for it with the tune of picking up a bill of $50,000 for which he has no legal liability. Now I regret that all this has happened, I didn’t want it, neither did he, but as soon as I heard about it I sent it off to the police. Within two days of hearing about this I commissioned a Federal Police investigation that could have led to Mr Reith being charged with a criminal offence if he’d had a liability. Then when I was told that that wasn’t the case I sent it off to the Solicitor-General to determine civil liability. In the meantime Mr Reith decided he would pay the money anyway and the Solicitor-General said he wasn’t legally liable to pay it. Now in those circumstances yes he made a mistake, yes he should be criticised for that and he has been. But he’s paid the money and your listeners are not paying any of that money, it’s being picked up by Mr Reith. And can I just say that as soon as I heard about the matter I sent it to the police. I don’t know what more I could have done.
MILLER:
All right.
PRIME MINISTER:
And when I got the police report I sent it to the other fellow and I just think in those circumstances correct procedures have been followed but it’s not something I would have liked to have happened. I didn’t want it to happen but it happened and it’s been dealt with.
MILLER:
Prime Minister we’re going to have to leave it there, thanks for your time this morning.
[Ends]