Subjects: Strike in Victoria; COAG meeting; petrol prices; banks; education funding; Fiji.
E&OE……………………………………………………………………………………
MITCHELL:
Mr Howard good morning.
PRIME MINISTER:
Good morning Neil.
MITCHELL:
Now these wildcat unionists are blaming your industrial laws for this power strike.
PRIME MINISTER:
Well they always do that. Unionists always blame Liberal governments. This is happening under Mr Bracks’ government. Instead of giving us opportunistic grandstanding lectures on the price of petrol, Mr Bracks should be looking after his own backyard. Instead of stunting on the national stage he should be worrying about what is occurring in his own state. I have no doubt that unions in Victoria regard the Bracks Government as a much softer touch than the former government and Mr Bracks should tend to his own affairs, do something that he can have an influence on rather than grandstand about petrol prices. And to suggest that it’s due to our laws is quite ridiculous.
MITCHELL:
Well it’s what the unions are saying. They’re saying that because the negotiating period’s being cut.
PRIME MINISTER:
Well they always say that. I mean unions always blame Liberal governments because Liberal governments stand up for free choice in the workplace rather than handing over monopoly bargaining positions to unions. This has been a long running difference of opinion. All over Australia in the last four-and-a-half years under my Government we’ve had record low levels of industrial disputes in Australia, record low levels. You look at different states of Australia: New South Wales has fewer strikes than does Victoria even though it has a Labor government. One of the reasons for that is that the Labor government in that State is not regarded as quite as soft a touch as Victorian Labor governments always have been.
MITCHELL:
So you think that the Victorian people are in for a tough time?
PRIME MINISTER:
Well can I say I hope not and I sympathise with what the Victorian people are going through at the moment. In a modern economy, I mean this seems absolutely absurd to me, a nation that has just pulled off one of the great achievements of our age and that is running in a superbly efficient way the Games should have to put up…..if the citizens in the second largest city should have to put up with this kind of inconvenience. I mean it really is an affront to commonsense.
MITCHELL:
Is there anything your government can do? You do run the industrial relations system.
PRIME MINISTER:
This is the behaviour of a union which regards the industrial climate in the state of Victoria as being more benign. I’m not seeing this kind of thing happening in other parts of Australia. So to suggest that it’s in some way related to the national industrial relations scene is ridiculous. Mr Bracks should spend more time dealing with these sorts of issues than giving pious lectures in a politically opportunistic way to me about petrol prices, although I acknowledge that petrol prices are too high. They’re too high because the world price of oil has gone up.
MITCHELL:
It seems as if you think the Victorian unions are rabid.
PRIME MINISTER:
Well they have a record over the years and it’s got a lot to do with the historic fallouts from the break up of the Labor Party years ago and the fact that Labor governments in Victoria have always been more compliant to unions than Labor governments in other parts of the country. That’s an historical fact.
MITCHELL:
What can Steve Bracks do about this? I mean it’s a wildcat strike, the union movement condemned it, the union leadership’s condemned it.
PRIME MINISTER:
Can I say one of the reasons why I think you’re going to get more of these sorts of things is that the union movement in Victoria senses it has a more compliant government.
MITCHELL:
But this isn’t the union movement. It’s a wildcat strike.
PRIME MINISTER:
But Neil it’s a well understood fact that the behaviour of individual parts of the union movement often reflects a broad union view of the attitude of a government towards the union movement. I mean this government is regarded as more benign and accommodating towards the union movement than was its predecessor, and than is some Labor governments in other parts of Australia. And in those circumstances it’s not surprising that you get this kind of conduct.
MITCHELL:
Mr Howard you’re setting a scene for an interesting meeting with the Premiers today. I mean in the first five minutes you’ve taken Steve Bracks’ head off. What sort of atmosphere are you going to have in that meeting?
PRIME MINISTER:
Well I’m just making the point that over the last 48 hours all we’ve heard from Mr Bracks is opportunistic lecturing on petrol prices. I mean he knows and every Premier, Labor or Liberal, knows that the price of petrol is high in Australia because the world price has doubled over the last 18 months. That’s why it’s high and they’re being quite opportunistic. They never acknowledged that. I mean what they’re asking for is that the February indexation adjustment be frozen. Now if you did that, the impact of that on the price of petrol would be less than two cents a litre. I can’t imagine the Australian motorist, although they would like that, they would like petrol to be on average always two cents a litre cheaper, they wouldn’t see that as solving the problem. They want a reduction of 5, 10, or 15 cents a litre and you’re only going to get that if you have a fall in the world price and that adjustment of less than two cents a litre would cost on a full year basis up to $600 million. And all I’m saying is that the Premiers all know this and hitting Canberra on petrol is an easy political mark.
MITCHELL:
It’s a very important one [inaudible].
PRIME MINISTER:
It is a very important one and I am very conscious of that, but I also have a responsibility not to give in to opportunistic calls. I also have the responsibility to devote resources to other very important things. This country for example has to put a lot more money into defence. We have to put more money into roads.
MITCHELL:
Do you expect that your promise that petrol prices would not go up as a result…..petrol tax would not….
PRIME MINISTER:
No I said….what the commitment was that the price of petrol need not rise as a result of the GST.
MITCHELL:
Do you expect it has?
PRIME MINISTER:
Not as a result of the GST. I expect it’s risen because the world price of oil has gone up quite dramatically.
MITCHELL:
Do you think that you’re getting $2 billion extra in unexpected….
PRIME MINISTER:
I don’t expect that for a moment. We are getting some additional revenue because….
MITCHELL:
How much?
PRIME MINISTER:
It would be several hundred million dollars, no more.
MITCHELL:
Well why not give that…..
PRIME MINISTER:
Well hang on. We’re getting that but in addition we for quite legitimate reasons have to pay out more money for the tax rebate on the private health insurance membership because that policy has been more successful, far more successful than we anticipated. We will be paying out $600 million more to the retired people of Australia under the retired persons savings rebate under the new tax system. In other words there’ll be $600 million more available than we anticipated for retired people. Now those two items together are about $1 billion. Now there may be some contras on the other side. We may find when we do our mid year adjustment there could be some revenue increases in other areas. I don’t know the final figures. But I do know this, that you can’t just isolate the several hundred million dollars more you’re going to collect in Resources Rent Tax because of the higher petrol prices without also taking into account the fact that we have to outlay additional monies on the other side of the Budget. Now, …
MITCHELL:
Look, I’ll just quote you some of the commentators. Terry McCrann claims that John Howard’s claim the Budget can’t afford a freeze on petrol excise tax is utter nonsense. Utter nonsense fiscally. That is what a lot of commentators …
PRIME MINISTER:
Well, I can only … I mean, that is rhetorical comment.
MITCHELL:
Well he goes into detail.
PRIME MINISTER:
I’m going into detail. Neil, I know that the price of petrol is very high at the moment. It is very high because the world price of oil has gone up and I can’t change that. Steve Bracks can’t change that. Nobody can change that in this country. You could have a small cut in the price of petrol at a very high cost to the Budget. I suggest to you that the motorists of Australia would not regard a reduction of less than two cents a litre in the price of petrol as being a satisfactory answer to the problem. I suggest to you that most people listening to this program would say, well if the Government really wants to make a big impact it’s got to cut it by at least five cents a litre. That would involve about $1.7 billion. Can I also suggest to you that at the present time to run down the Budget surplus at all, and certainly to any significant degree, is probably going to put upward pressure on interest rates. It is probably not a smart thing to do in the eyes of the currency markets. I mean, I’ve got to take all of these things into account. I know how critical people are of the price of petrol and I have to say I think all of the Premiers with one exception, the Premier of South Australia, have behaved in a completely opportunistic way on this issue.
MITCHELL:
(inaudible) discussions around petrol today at the Premiers’ Conference just a waste of time?
PRIME MINISTER:
Well I have always said that this is not the forum to raise it.
MITCHELL:
But you agreed to discuss it today.
PRIME MINISTER:
Well it’s always been possible for the Premiers to raise it if they want to. But over the last 48 hours you’ve seen the most shallow, opportunistic campaign on this issue. They know, they are intelligent men, I give them full credit for that, they know that the world price of oil is the driver of high petrol prices. I heard one Premier yesterday say well don’t start linking the world price of crude oil with the price of petrol in Australia. I mean that is the reason why you have to link it.
MITCHELL:
But these same intelligent men are saying that you have got an extra $2 billion as a result of the excise increase and also the Rent Resources Tax.
PRIME MINISTER:
Can I tell you that is absolutely wrong.
MITCHELL:
Even with the Resource Tax?
PRIME MINISTER:
No. When you say excise, you mean over and above what was in the Budget?
MITCHELL:
Two billion.
PRIME MINISTER:
No, well that is just wrong.
MITCHELL:
What do you reckon? Several hundred million?
PRIME MINISTER:
It is much closer to $500 million.
MITCHELL:
Can’t we have that back?
PRIME MINISTER:
But what about the $1.1 billion extra I’ve got to find for the private health insurance rebate and the savings ..
MITCHELL:
Are you going to have a surplus?
PRIME MINISTER:
Well I would expect, well I’ll tell you what, we need a surplus.
MITCHELL:
But $500 million’s not going to make a difference to the surplus is it?
PRIME MINISTER:
No hang on. We need to have a substantial surplus to repay debt. And incidentally the surplus doesn’t sit in the bank. The surplus doesn’t sit in the bank. The surplus is used to repay debt. So every time you generate a surplus you don’t waste it or dissipate it. It doesn’t moulder in the bank. It is used to repay debt. Neil, if we don’t have a solid surplus, we’ll be marked down by the foreign exchange markets and that …
MITCHELL:
Is it that fragile? Does it come down to $500 million or $1 billion and they’ll decide on that basis whether to trash the dollar?
PRIME MINISTER:
No, they don’t just decide but all of these things are building blocks in a perception. Now the perception of Australia at the moment is that we have a strongly growing economy, which we do, we have low inflation, we have a very progressive Government in terms of economic reform but there has been upward pressure on interest rates and its always been in my mind the most important responsibility of the Government, economically, apart from generating jobs and we’ve done a very good job of that, to keep pressure off interest rates. What the Premiers are really advocating is just sort of political opportunism. It’s an easy hit.
MITCHELL:
OK.
PRIME MINISTER:
Can I just say one other thing Neil? If we have some additional resources and we have, not because of petrol but because of other factors, additional resources, I think the Australian public would rather see them invested in something of long-term value such as additional roads. Certainly they want additional resources spent on defence, people want additional resources devoted to science, people want additional resources devoted, as we’re going to, to tackling the problem of salinity and water quality.
MITCHELL:
The point of it is, it’s unequivocal. There will be no reduction or drop in the excise in February.
PRIME MINISTER:
No.
MITCHELL:
And if there’s money to be spent, it will be spent in other areas.
PRIME MINISTER:
We have no intention of doing that because we don’t think in the long-term that is going to make any appreciable impact on the price of petrol. What is needed to secure relief in that area is a reduction in the world price of crude oil. That is the reason for the current controversy and I put a far higher priority on things like – if we have the capacity – things like road funding. Certainly we are committed to putting extra resources into defence.
MITCHELL:
But Mr Howard, that sounds to me like you are gathering the war chest and that we get to election time and we’ll have money for roads, and we’ll have spending on …
PRIME MINISTER:
When you say I’m gathering the war chest, I’m, Neil, I’m damned if I do, I’m damned if I don’t. You ask me a question. I equivocate and I don’t give you and your listeners some idea of my priorities, I’m accused of being secretive. Then when I try and give you an order of magnitude, if we have the capacity, I’m accused of gathering a war chest. Look, it’s not as crass as gathering a war chest. I happen to think that spending money on national infrastructure is very important. I happen to believe …
MITCHELL:
Do you know people are saying, critics are saying, you’re doing that so you can buy an election. Collect all this money, don’t give us a petrol excise cut, then buy an election.
PRIME MINISTER:
But they are people who’ve been calling for additional road spending for a long time. You’ve questioned me on your program.
MITCHELL:
Yep, sure.
PRIME MINISTER:
You campaigned very hard – what the Geelong Freeway.
MITCHELL:
Yes.
PRIME MINSITER:
You’ve asked me about the Scoresby Freeway, you’ve asked me about a whole lot of things on your program. You’ve been doing that for two years. You haven’t been doing it in the shadow of an upcoming election. People have been asking for additional commitment in areas like roads for a long time. I’m not saying we can doing any of these things. I’m just trying to paint for you and your listeners a picture.
MITCHELL:
OK, if we make a couple of quick calls and see what’s the reaction to what you said. Rhonda go ahead please. Quickly.
CALLER:
Very quickly. I am a Liberal voter. I won’t be any more because I think everything you have said is a load of tripe. I have got a small business. GST. We are no better off. I don’t care what you say. Petrol is absolutely disgusting. You say unemployment, the economy is better. It’s not. What about the 45 year old that can’t get unemployment benefits that are out of work?
MITCHELL:
OK Rhonda.
PRIME MINISTER:
I don’t think she is a Liberal voter, but anyway.
MITCHELL:
Another call. John, go ahead please.
CALLER:
Good morning Neil, Mr Howard. Mr Howard, do you know how much a litre of petrol costs or better still a litre of diesel.
PRIME MINISTER:
Of course I do, I see it every day. It varies. In Queensland it’s about nine cents a litre cheaper than what it is in Victoria. The weighted average capital city price is about 91.3 cents a litre, according to the latest Shell website. It’s nine cents a litre cheaper in Brisbane than it is in the other States and that is because the Queensland Government subsidises the price of petrol and one of the observations I’ve made in the face of the calls of Mr Bracks and others is that if the States believe it is such a problem why don’t they just dip into their budgets and subsidise it like Queensland does.
MITCHELL:
That’s an interesting point. Peter Costello’s saying Steve Bracks could drop the price . . .
PRIME MINISTER:
He could if he wanted by . . . he could because the States apart from Queensland have at their disposal under the new arrangement about $1.6 billion that they could use to cut the price of petrol. Now they have chosen to give higher priority to other things. Now I am not necessarily criticising them for doing that but they’ve got a nerve saying that I shouldn’t have that same freedom, haven’t they?
MITCHELL:
To other things, the National Australia Bank, profit eight record profits on the trot, would you ever look at regulating them to force them to provide a basic cheap service?
PRIME MINISTER:
We don’t like that sort of regulation because it doesn’t in the long run work. But I would have to echo the concern that a lot of people expressed that banks sometimes don’t understand the perception of the community that charges are going up at the time when they’re making big profits. Australian banks are profitable.
MITCHELL:
This is very profitable. Closing branches, putting people . . . .
PRIME MINISTER:
I understand and I would have to echo the warning of others to the banks about that. I am not a regulation man, I don’t like regulation because it’s costly and it doesn’t work.
MITCHELL:
They haven’t listened to you have they?
PRIME MINISTER:
Well some of them I have to acknowledge that I was told by one of the banks, the ANZ several years that they weren’t going to have any more closures. I remember having a meeting with the Chairman in Melbourne. And I saw John Macfarlane the Managing Director on the 7.30 Report last night make that point and I have to agree with him, to my understanding the ANZ has kept its word in relation to that. Now I am not kind of necessarily singling the ANZ out for particular praise but let’s give it credit where credit is due. The banks do have to if I can use that biblical expression heal themselves a bit on this. They’ve got to exercise some discipline, internal discipline. I’m, as somebody who is fundamentally against regulation, I really don’t like regulation because I don’t think it works, I do ask the banks to understand that there is a lot of anger in the community about these charges. I don’t want them to not be profitable, I think profitable banks is good for the country because it means our deposits are safe and it’s in our interests to have profitable financial institutions, but they’ve got . . . I’ve got to deal with perceptions, I mean I’ve just spent twenty minutes dealing with both the reality and the perceptions of petrol prices, that’s part of my daily job you have to and can I say to the banks they have to as well. And I say that with good will, not with malice.
MITCHELL:
Okay, Westpac profit later today.
PRIME MINISTER:
Yes.
MITCHELL:
David Kemp – how is this possible that he’s threatened to cut . . .
PRIME MINISTER:
Well I’ve had a look in . . .
MITCHELL:
Public schools in Victoria if he doesn’t get to open them?
PRIME MINISTER:
Can I say that I have examined this and there was an agreement that was entered into back when the Labor, Federal Labor Government was in power that where the federal government provided money there would be some acknowledgement of the federal government’s role in the spending of that money. And I understand that the thing is being sorted out with Victoria. We don’t want to withhold funds but on the other hand we don’t think it’s reasonable that if we make money available the state government claims all the credit for spending it.
MITCHELL:
What’s more important, the result or . . .
PRIME MINISTER:
Well I think you’ll find in Victoria the result is that it will happen and I think you need commonsense on both sides, but that also involves the Victorian Government not claiming credit for something it hasn’t done.
MITCHELL:
But Prime Minister how petty is this?
PRIME MINISTER:
Well . . .
MITCHELL:
[inaudible]
PRIME MINISTER:
Well in the end can I say I, I mean I want them . . . the money will flow and commonsense will prevail.
MITCHELL:
And flow regardless of whether David Kemp will . . .
PRIME MINISTER:
The money will flow.
MITCHELL:
You agree it was petty?
PRIME MINISTER:
No look . . .
MITCHELL:
For the Minister to say they couldn’t have the money to do things it did need unless he got credit?
PRIME MINISTER:
Well what he’s told me is different from that.
MITCHELL:
I’ve seen the letter, have you?
PRIME MINISTER:
Well I have been told, I have been told that it started when the Victorian Government sought to claim credit for something it hadn’t done that’s what I’ve been told.
MITCHELL:
“I’ve determined to reduce the allocation unless I get an assurance official openings are being arranged and they’ll be held in a reasonable timeframe.”
PRIME MINISTER:
Well I understand that but I also ask you to accept that if a state government gets money from the federal government and then claims it’s made it available that’s misleading isn’t it?
MITCHELL:
Sure but I think the children . . .
PRIME MINISTER:
Well look in the end.
MITCHELL:
Are more important than the politicians.
PRIME MINISTER:
In the end getting the money to the children is not only more important than the sensitivities of either state or federal governments, it is, I agree with that completely. And in the case of Victoria I will ensure that it happens.
MITCHELL:
Thank you. Fiji, what’s happened over night will Australia be involved?
PRIME MINISTER:
Well not directly, I can’t see that occurring but it’s very disturbing. It does appear that the forces loyal to the government have re-established control, lost perhaps 11 lives on both sides. It’s a reminder of what happens when you encourage mutiny. It’s also a reminder that the stance that we have taken regarding the jury as still being out on a return to democracy in Fiji is also valid. It’s a very unhappy country but as Alexander Downer said last night once you sanction by your passivity the use of armed force to throw out a constitutionally elected government you create a huge problem.
MITCHELL:
We’ll take one more quick call for the Prime Minister. Alex, quickly please?
CALLER:
Hello Mr Howard?
PRIME MINISTER:
Yes Howard?
CALLER:
I just think, I don’t know who’s advising you but you coming on the radio this morning and attacking Steve Bracks the way you have you’re attacking all of the Victorians and I don’t think you’ll gain any extra support in Victoria by the way you’ve come on the radio today. All it’s been is bagging us, bagging our education system and I think it’s really unfortunate. You’re supposed to be our Prime Minister uniting our country but you’re sort of dividing the Victorians against everybody else.
PRIME MINISTER:
Well that assumes that every Victorian agrees with Mr Bracks and I mean look let’s be realistic Alex I mean Mr Bracks has been giving lectures instead of looking at his own patch.
MITCHELL:
Mr Howard thanks for your time. You’re going to the Melbourne Cup?
PRIME MINISTER:
No, Parliament’s sitting unfortunately.
MITCHELL:
Derby tomorrow?
PRIME MINISTER:
No I’ve got unfortunately a longstanding Liberal Party commitment in Sydney. I can’t, much and all as I like sport, I can’t attend every sporting event.
MITCHELL:
Thank you very much for your time.
PRIME MINISTER:
Thank you.
[ends]