Subjects: Company tax collections, mid-year review, roads funding; APEC; tax cuts; Schools’ funding; Minister Abbott, St Vincent de Paul.
E&OE……………………………………………………………………………………
BONGIORNO:
Welcome back to the program Prime Minister.
PRIME MINISTER:
Good to see you, Paul.
BONGIORNO:
Well, while you're up in APEC, the Treasurer will release his mid-year review on Wednesday. Can you give us any indication how you think the Australian budget and economy is going?
PRIME MINISTER:
Well, Paul, the figures will come out on Wednesday, but I can tell you that the budget's in better shape even than we thought at last budget time. We are going to have a bigger surplus and, therefore, we can repay all the debt we wanted to repay, having balanced the budget and that is really good news. In all of these things there are swings and roundabouts. We have collected or are collecting extra revenue as a result of higher fuel prices through the resource rent tax, but nowhere near as big a surge as some were saying.
But the real bolter has been company tax collections, because company profits last year were very strong so we have a higher base. We are going to be in a stronger budget position and that's very good because it means that we can repay debt. You don't pocket a surplus. You use it to pay back the mortgage. And we had a very big mortgage when we took over from Mr Beazley in 1996 – eighty to ninety billion – and we've repaid a lot of it and we want to keep repaying even more.
BONGIORNO:
Well, won't that in a sense weaken your argument against the states, against the motoring organisations, that you should be offering some relief to hard pressed motorists if your Budget is in the good shape it is?
PRIME MINISTER:
Well, we've obviously … a few of us have thought about the consequences of knowing that our budget position is better. We've decided that we'll be in a position to significantly boost investment in the nation's infrastructure. We think it's better to apply these stronger revenue streams towards strengthening the nation's infrastructure and the particular area where we will direct more resources is the area of road funding. Roads – particularly rural local roads – do need more money. It's always been a responsibility of governments – state and federal – and we'll be in a position to get money flowing into local rural roads almost immediately. And we'll also in any extra funding, we'll be giving some attention to the road needs of the outer metropolitan areas of the major cities. That's also very important. But the critical thing when you're in a situation like this and you find that you are in a stronger financial position than you predicted at budget time is firstly, it means that we can repay all the debt we planned to repay at budget time but …
BONGIORNO:
Why is it important in terms of offering a cent a litre help, say, to motorists?
PRIME MINISTER:
Well, we're looking at the longer term and, surely, what governments are frequently criticised for is ad hockery. Now, nobody can suggest that spending more money on roads in a nation as big as Australia is ad hockery. It's long term nation building. It's always been the responsibility of the national government to make a contribution to the road funding effort. It's also a big responsibility of state governments. But we have a program, which is administered through local government and rural local roads are in bad shape in many parts of the country and this will be a very desirable boost. Now it will be money over and above what we would otherwise have spent. I don't want people to think for a moment we're going to do some putting and taking. It's going to be quite a genuine boost.
BONGIORNO:
Isn't one of the problems, though, is that the roads certainly are needed and upgrading certainly needed, but that will take a while to be seen, the effect of that. Whereas people are finding, especially in regional Australia, that their family budgets have been hit by the fact that they're paying more for essentials.
PRIME MINISTER:
Well, this particular program, Paul, the rural/local roads program, the funds can be made available immediately. There can be immediate action taken to boost the program, and it will be … the details will be announced. John Anderson, the Deputy Prime Minister, and I have discussed this matter and the Treasurer, and one or two other senior people in the government, and John in the course of the next ten days or so will be making a more detailed statement about our intentions. But the figures will all be released on Wednesday, they're still being finally polished and chiselled, but the broad orders of magnitude are there.
BONGIORNO:
Well, okay, I take it from your answer, just to put a figure on it, the budget forecast was $2.8 billion and you're telling us it's a lot better than that.
PRIME MINISTER:
Well, I'm telling you it's better, it's better. I'm not going to start using adjectives. It is better and it's coming off very strong company profits. Now, we're reducing company taxes. No case for giving money back to companies. There is a case, I believe, for making additional provision for investment in the country's infrastructure. And when you think about infrastructure there is nothing more immediately comes to mind than the roads of a nation as big as Australia.
BONGIORNO:
John Howard, time for a break. When we return, can APEC do anything about soaring world petrol prices?
[Commercial break]
BONGIORNO:
You're on Meet The Press with the Prime Minister. And welcome to the panel, Louise Dodson, The Age, and Ian Henderson, The Australian.
Soaring world oil prices are proving a headache for the world's political leaders. Louise Dodson.
DODSON:
Crude oil prices will be on the APEC agenda I believe Mr Howard. What do you expect to get out of it for Australian motorists?
PRIME MINISTER:
Well they're on the agenda as a result of a request from us, that they be put on the agenda. I hope that the meeting will send a very clear message to the oil producing countries that the unacceptably high price of oil, which is causing the high price of petrol in Australia and around the world, that that has the potential to affect economic growth, and that that means bad news for the economies of the world. And I hope that we will be able to add our voice to other voices calling for further boosts to production by the oil producing countries.
DODSON:
Can I just ask a follow up question to the roads funding question. Does that mean the VFT... such a substantial roads funding package, does it mean the VFT project from Canberra to Sydney is dead?
PRIME MINISTER:
I don't think it has any particular implications either way for that. We have an established rural local roads program and we will be giving that a significant boost, and there will also be a capacity to give some more help in relation to road funding for outer metropolitan areas of the major cities. John Anderson and I have talked about it over the weekend, and John will be making a more detailed statement about it before very long. You will get the mid-year economic review from the Treasurer on Wednesday and you'll all then have the precise figures. I've just given you some indication of where it's going and why it is that I'm able to say that it's stronger, it's coming off the back of a big surge in company tax due to the company profit rise which has been very strong.
HENDERSON:
Prime Minister, on APEC and trade liberalisation, do you see multi-lateral forums like APEC and World Trade Organisation as some people would see them, as stalled at the moment? And if you do, do you think that there is an opportunity for Australia to get more involved in bilateral agreements, arrangements – for example if the US put a proposition up to Australia about joining the North American Free Trade Organisation - would you support that sort of idea?
PRIME MINISTER:
Well Ian, I have a very pragmatic view, you take what you can for the good of Australia whether it's multi-lateral or bilateral. The multi-lateral processes are not moving as fast as I would like, that's obvious. And there are a lot of reasons for that, but they're not. The Seattle World Trade Organisation meeting last year was close to a disaster as far as world trade is concerned. As for bilateral arrangements, if there's something in it for Australia, I'll consider a bilateral trading arrangement with any country, including the United States. There would need to be a lot of evidence that we were going to gain. And remember that our best customers in the world remain the Japanese, and I will never do anything to affect the very good trading relationship we have with Japan, that's very important to us. And our relationship with Korea is very important. But I have a very open mind, and there's only one yardstick – will it benefit Australia. And if it benefits Australia I'll grab it. If it doesn't, well I'll have a different view.
HENDERSON:
Would a Gore or a Bush administration, do you think be more inward looking, in either case, than the Clinton administration has been recently? And how do you see the prospects in America panning out for a more liberal view about America's role in the world?
PRIME MINISTER:
Well on trade issues over the last couple of years, the Clinton administration has been disappointing to us. There was lamb, and I think a lack of impetus at the Seattle meeting of the World Trade Organisation. So we would hope that whoever wins, and it's a matter, that's a matter for the processes of the American election. But historically, Republican administrations have had a slightly more out-looking view on trade but there hasn't been a lot in it. And all American administrations look to American interests above all other interests in trade matters, and I suppose that's natural. I put Australian interests first, I suppose you can hardly complain if others don't do the same. So I would hope whoever takes over, that we'll have a more outward-looking face ... we'll need that, if we're to get the multi-lateral process moving again.
BONGIORNO:
Prime Minister, do you think that the APEC is running out of steam and the goal of freer trade by 2010 and 2020 is virtually dead?
PRIME MINISTER:
Well it's lost a bit of time, Paul, over the last, you know, two or three years, I'm not saying it's running out of steam. And we do need a very strong renewed commitment to it from the next American president. And we also need an understanding from countries like Japan that they also have a very important role to play. It's very important to us but, as I said to Ian, if there's something you can get for Australia on the bilateral table, well, I'll go to that table. But the test is whether it's of benefit to Australia.
HENDERSON:
Are there any bilateral propositions up before Australia at the moment?
PRIME MINISTER:
Well, I wouldn't be surprised if we got into some discussion of a bilateral understanding, for example, with Singapore. Now, whether, you know, the pluses and minuses of that, we'd need to look at. Once again, the test is what's good for Australia and that can be the only test in trade matters. It's as simple as that.
DODSON:
When you come back from APEC, Mr Howard - you've talked about roads funding, you've got defence on the boil, social welfare - do you think Australians want that sort of approach, rather than tax cuts?
PRIME MINISTER:
Well, it's not a question of either/or, I mean, we've just had …
DODSON:
You could have tax cuts as well?
PRIME MINISTER:
We’ve just had tax cuts … we've just had tax cuts.
DODSON:
But a new round?
PRIME MINISTER:
We've had the biggest tax cut in Australia's history.
DODSON:
But a new …
PRIME MINISTER:
Twelve billion dollars.
DODSON:
A new round of tax cuts?
PRIME MINISTER:
Well, I have never …
DODSON:
You're not ruling that out?
PRIME MINISTER:
I've never generated any speculation about that but, look …
DODSON:
Does it mean that's off the agenda?
PRIME MINISTER:
Look, Louise, what it means is you do what you can with what you've got. And we gave a big tax cut and we are addressing a lot of these national infrastructure areas in a very serious way. The Australian people support that, very strongly.
BONGIORNO:
Prime Minister, time for another break. Coming up, we'll talk about funding for elite private schools and the trade off the Senate wants. [Commercial break]
BONGIORNO:
You're on Meet The Press. The Senate last week heavily amended the Howard government's new funding arrangements for private schools. Ian Henderson.
HENDERSON:
Prime Minister, $22 billion dollars of federal funds for schools is now in limbo because of a dispute between the Senate and the government over just a hundred and forty-five million. Would you be prepared to countenance directing the one hundred and forty-five million increase in funds to elite category one schools, to redirect that to students with disabilities as the Senate requests?
PRIME MINISTER:
Well, Ian, the description ‘elite’ is class based and wrong. This whole debate has been poisoned by picking out one or two schools and running this elite argument. And let me make … the Kings School has got a lot of publicity, unfairly, but it's got it. Under our funding arrangement, we will fund up to only thirty per cent the cost of educating a child at a government school in relation to the Kings School. In other words, the money that we pay on a per capita basis will represent only thirty per cent of what it costs to fund a child at a local government high school, say Parramatta High; whereas the great bulk of independent schools will be funded at more than double that figure and some up to seventy per cent. This whole debate's been poisoned by the Labor Party and others looking at the dollar increases in relation to a school like Kings, without looking at the outcome. Now if it costs, say eight thousand dollars to … or six or seven thousand dollars to fund a child at a government school and you're only paying thirty per cent of that for a school like Kings. And bearing in mind not all the parents at those schools are wealthy, they're not. A lot of parents who send their kids to independent schools make huge financial sacrifices and take second and third jobs in order to do so. I don't think it is an unfair formula. The existing formula is hopeless, because it provides different funding levels to schools … I mean, I know of schools in the independent sector in Sydney, which plainly have the same resources, plainly have parents from broadly the same socio-economic group, yet their funding levels are quite different.
And this new system has been endorsed by every independent school group in the country – the Catholic schools, the Christian … other Christian schools and what you might loosely call the GPS schools.
HENDERSON:
But can you guarantee that parents will not see their children disadvantaged by an argument between politicians over the money … the total amount of money?
PRIME MINISTER:
Well, I tell you who will be disadvantaged. If the Labor Party and the Democrats block this bill, the parents … hundreds of thousands of parents with children at independent schools and parents at government schools … because this bill sends money to government schools. I mean, for example, in the state of New South Wales, we are increasing our funding for government schools – although we don't have the primary responsibility – at a faster rate than the New South Wales government. And the same applies in the state of Queensland. I mean, historically, state governments have had the responsibility for government schools because it's their … they are their schools and we provide top up funding. But the new formula is much fairer. The old formula was very unfair.
HENDERSON:
So you're not going to compromise with the Senate on this issue?
PRIME MINISTER:
Well … well … because I think it's a … no, I'm not, because I believe that the new system is much fairer. The old system discriminated on … not on the basis of logical fairness, but on the basis of historical perception.
BONGIORNO:
But the perceptions are bad, aren't they, Prime Minister? The perceptions ...
PRIME MINISTER:
Well, I’ll tell you … but politicians have got to deal with realities, Paul. And one of the realities in country areas is that schools once served country areas that were wealthy and they're not longer wealthy, yet those schools continue to be funded on the basis that those districts were very wealthy and that is not fair. And that's the system that the Labor Party wants to maintain. Now, I repeat, all the independent school organisations, the Catholic … National Catholic Education Commission – which is responsible for fifty-seven per cent of all independent schools – they say the new system is fair. Now they have the local parish systemic schools, many of which are quite poorly resourced, so you're not talking here about elite schools. You're talking about the generality of the local parish school and they are very strong supporters of our new funding formula.
DODSON:
In another area of education, tertiary education, we've heard a lot talk about the new economy.
Do you favour either giving incentives to industry for research and new economy, sort of, development, or research institutions or tertiary institutions to cultivate a better culture of innovation
PRIME MINISTER:
Well, I think, Louise, in a sense it's a bit of each. We are right at the very moment looking at options in this area. And we're quite serious about making sure that we have the right research effort. You remember that it was our government that doubled funding for health and medical research. We have very talented scientists in this country. I want to keep them here and I want those that have gone overseas lured back, if possible. So there are some things that we can do in that area, and we're having a very careful look at it right at the moment.
DODSON:
So much bigger research funding for particular scientists?
PRIME MINISTER:
Well, you'll have to see what comes out of the process, but we are looking at it very conscientiously, and …
DODSON:
Will we see it …
PRIME MINISTER:
… trying to separate out, how shall I put it, you know, the unsustainable, unreasonable claims from the rest.
DODSON:
Will we see it this year?
PRIME MINISTER:
I don't want to put a time on it, but you're going to see a lot this year. You're going to see a major defence statement. The biggest review of Australia's defences for several decades. Additional money and you know, a revamped strategy learning from the lessons of East Timor. And that Defence White Paper is going to be released early in December, and is really a landmark event in the history of the defence of this country.
BONGIORNO:
Prime Minister, do you support your Employment Minister, Tony Abbott, when he says that Noel Pearson knows more about poverty than the St Vincent de Paul Society?
PRIME MINISTER:
Well, I saw a report about his exchange with St Vincent de Paul and it was … you know, there's quite a bit of theology in it and I'll leave that to others. I think Noel Pearson's had some very interesting things to say about welfare. I also think St Vincent de Paul is a magnificent organisation. And can I say that it is not part of our welfare policy to hand over government responsibilities to the Vinnies or to the Salvation Army. And we're not doing that. And any suggestion from anybody that we are is wrong. We have not cut the social security safety net, we've kept it. And even people like the chairman of ACOSS recognise that the debate in this country is no longer about whether you have a social security safety net, but rather it’s moved into other areas.
BONGIORNO:
But doesn't it seem a bit rich that Minister Abbott believes that the Pope supports the Howard government's view on social security rather than the St Vincent de Paul Society?
PRIME MINISTER:
Well, I think it was a question of, you know, a dedicated Catholic organisation with a Catholic heritage and a minister of mine with a like heritage having an interesting discussion. And as I say, I think I will leave it to those more directly skilled in that particular branch of Christian theology.
BONGIORNO:
Well now, just briefly before we go. Didn't St Vincent's though have a policy point to make that they can't be expected to do the government's work for them?
PRIME MINISTER:
Yes, but I've addressed that. And we're not asking them to.
BONGIORNO:
All right.
PRIME MINISTER:
I mean, if that's what the Vinnies were saying, then with great respect to a great organisation, they are not fairly representing what the government is doing and therefore I think the Minister may have a point.
BONGIORNO:
Okay. Thank you very much for joining us today on our last show, Prime Minister.
[ends]