Subjects: Australian dollar; technology; welfare; Governor General appointment; relations with Indonesia; petrol prices;
QUESTION:
Prime Minister, two related questions. Today we saw the Australian dollar go down to 50 cents odd. Some commentators seem to say that the reason is that we’re not a technology driven country. That comment seems to me to be fundamentally flawed and I’d like your comments on that and where you see the dollar going. You also mentioned the expenditure on roads and I wonder how we can get more money put into developing our technology and getting the message out to the world that we are technology driven country.
PRIME MINISTER:
Well I clearly share your view that the argument that in some way the level of the currency is related to a view that we don’t use technology enough, or perhaps to put it another that we don’t use technology enough is a fundamentally flawed proposition, very flawed. By any measure the usages of technology, particularly information technology in this country are extremely high. On some of the measures those usages are second only to the United States and if you look at the deficit on the United States current account in relation to the importation of some information technology it also gives the lie very effectively. I mean the real test of the technological sophistication of a country is the extent to which it applies and uses productively and economically new technology, particularly but not only information technology.
There is a false dichotomy in Australia and elsewhere between the old and the new economy. The really successful companies are either old or new in the sense that they can either be in traditional areas of manufacturing, mining or farming, or in the newly burgeoning service sectors, the really successful ones are those that apply modern technology to their traditional activities or operations. It’s not a question of whether they belong to a particular category.
I won’t comment about the level of the currency except to make the observation I did on ABC this morning that you do have to take a long view. A flexible exchange rate, which I’ve constantly supported from the time it was introduced by the former government in December 1983, the flexible exchange rate was a godsend for this country two years ago. The fact that we were able to take the adjustment on our exchange rate as we sought to shift exports away from Asia markets as they disappeared, into North American and European markets was extremely beneficial and one of the major reasons why we were able to avoid the worst impact of the Asian economic downturn.
I indicated in my speech that I would be saying something in more detail about the issue of research and related matters in the New Year. I think it is a high priority issue. I think there are more things that can and should be done in that area and will be done. I think it’s also important to sift through all of the claims that are being made. Many of them are thoughtful and intelligent. Not all of them fall into that category, and as always because we have the ultimate responsibility of making decisions about how you deploy the hard-earned dollars of the Australian taxpayers we have to be careful to separate out the good supplications from the not so good.
QUESTION:
John Trevorrow from the Herald Sun. Prime Minister, in the next five weeks you’re due to appoint a new Governor-General. Will it be a woman or a man?
PRIME MINISTER:
A distinguished Australian.
QUESTION:
Genevieve Webb from Relationships Australia. Prime Minister, you suggest that we have nothing to fear, that we don’t need to fear the American system where certain sectors of society seem to be abandoned. Just having heard Lawrence Mead, Professor Lawrence Mead visiting from America and speaking on that issue it just felt as though those principles were tied up with your principle of mutual obligation. Do you have a comment on that?
PRIME MINISTER:
Well I do. I don’t accept that at all. The point I sought to make in my speech is that we are more compassionate than the Americans in welfare. I think the American welfare system can be insensitive. I think it is too decentralised and it’s too ad hoc and therefore people can fall through the cracks more readily. The comparative uniformity and consistency of social welfare provision in Australia, certainly so far as social security payments are concerned, is one of the strengths of our system. I mean I’m a great believer in decentralisation in a lot of things but I think in other areas you’ve got to have uniform standards. And I think perhaps our friends in America might take pause to think at the moment that that wouldn’t be a bad idea in relation to the process of counting electoral contests.
But the point I make that distinguishes Australia from the United States is that we do have a safety net and there’s nothing in mutual obligation that undermines the safety net. What mutual obligation is about is the principle that society does have a moral obligation to look after those who through no fault of their own need help. But it is also reasonable of society having provided that help to invite those who receive it, if they’re able to do so, to give something back. Now it’s not in that sense in anyway threatening. It’s fair and it’s balanced and I think it expresses a sense of reciprocity which is quite strong in the Australian community.
When we do respond in detail to the McClure Report can I tell you there won’t be any cherry picking of what is in McClure. We’re not going to sort of take the bits that might expand the boundaries of mutual obligation but in the next breath say well we’re not going to make extra provision. I’m not interested in building any copycat of a system tried elsewhere. I actually believe in this area we’ve been more successful at getting a balance than most other countries. I’m quite proud of the Australian way in social security, and there’s been contributions made to it by both sides of politics. Not everything the former government did in that area I was critical of it. I supported a lot of it. And equally I think the responsible approach from the budget point of view that was taken years ago by the Menzies Government in relation to many social security issues meant that we built an affordable system in contrast to the potentially unaffordable systems of many of the European countries. So I think we have a lot to be quite positive about in this area because I think we have built something that’s quite distinctive and better.
QUESTION:
Michael Gordon from The Age. Just a follow up question on that. When will we see the Government’s response on the McClure Report? Can you comment on the reports that divisions within the Cabinet are delaying a response. And finally within the four principles you outlined are there any areas of welfare where the principle of mutual obligation should not be applied, cannot be applied?
PRIME MINISTER:
Well I don’t think you apply the principle of mutual obligation where a person is clearly unable to give something back in return for the help they’ve provided. I mean that is the constraint. I was careful to say in answer to the previous question that what mutual obligation says is we have a moral….the first part of mutual obligation is the moral obligation of society to look after those who need help. The second part is to say to those who’ve received the assistance if it is reasonable to do so will you please give something in return. So obviously if it’s not reasonable to ask we won’t be doing so. Cabinet didn’t discuss the issue yesterday.
The timing, look I’ll be discussing that with the Minister but I think we’ll be saying something about it before Christmas. We’ll be saying something about quite a lot of things before Christmas.
QUESTION:
Prime Minister, Damon Johnson from the Herald Sun. You’ll be facing an election at some point next year. Can you commit to serving out a full term as Prime Minister? And if I could have a second question, Peter Costello is starting a trip through northern Queensland today or tomorrow. There has been long term speculation about his leadership ambitions. Do you accept the political wisdom that he is the Liberal leader in waiting?
PRIME MINISTER:
Well on the question of how long I remain in the job, that is ultimately a matter for the Australian people. I said on the occasion of my 61st birthday during an interview with Philip Clarke of 702 in Sydney, I said that if the party wished me to do so I would lead it to the next election, and the current indications are that the party does wish that to occur. And I said that at some stage during the next term I would reflect upon how long I intended to remain. That’s what I said then. I spoke perhaps then of being something in the order of 64. That’s exactly what I said. I said no less and I said no more and I don’t intend to. I think in something like this you ought to just be open about it otherwise you have the absurd proposition that somebody has to insult the electorate by saying that he or she will never contemplate retirement. Or alternatively you have the ridiculous position that somebody resigns at the beginning of a campaign. I mean you know, why can’t we all be adult about something like this and recognise that nobody goes on forever. But equally you ought to recognise that I am in very good physical condition and I’m enjoying the job immensely and I think this Government under this Prime Minister has got a lot of puff left in it.
QUESTION:
Prime Minister, Ian Henderson from ABCTV. You expressed the view after meeting President Wahid in Brunei recently that relations with Indonesia were on the mend. What does it say about the state of our relations with Indonesia that our Ambassador is allowed to be roughed up in Sulawesi and more broadly, is Indonesia a safe place for Australians to be these days?
PRIME MINISTER:
I think in answer to the last question all the information we have to date is yes it is. That was a very regrettable incident. It’s a big country, there are suggestions that the people involved in the incident were militia or related to militia from East Timor, that was the report on The World Today on the ABC and there are some suggestions to that effect.
Look it was a very regrettable incident. I note that the Indonesian Foreign Minister has apologised to the Ambassador for the incident. Our relations are not easy at a diplomatic level, there’re much better at a grass roots level. That was to be expected. You can’t go through what we went through without recognising that fact. But, they will gradually improve at a diplomatic level. The President is welcome to come to this country at any mutually convenient time. As to when he does come is ultimately a matter for him. But once again, we have to be realistic and recognise that the improvement in the relationship will take time. But I think it is better than it was six months ago and I think that in six months time it will be better still.
QUESTION:
David Cumming from the RACV. Can we just talk about excise for a moment. Pre GST Australians in Victoria were paying 43.7 cents per litre flat tax on petrol, within that excise component there were two distinct areas, 35.8 cents per litre was Federal tax and 7.9 per cent was a state franchise fee which was declared illegal by the High Court, collected on behalf of the Commonwealth and rebated back to the States. On the first day of the GST, federal excise increased to 37.7 cents per litre. The Federal Government has maintained that excise has decreased, which you have been putting to the public, and I would like to ask you, why are you continuing to say that when the facts are otherwise? Secondly, if you intend to continue down the track of indexation do you realise that Victorians will be paying roughly 50 cents per litre in Federal, as in full petrol taxes next February, compared with 43.7 cents last June. What do you intend to say to the electorate about that considering you didn’t have a mandate to increase excise in July this time last year?
PRIME MINISTER:
Well David, I’ll analyse that last figure. I am not going to accept on the run whether that is exactly right or wrong but yes ,the first part of your question, yes there was, on the first of July because of the new taxation arrangements, there was a disaggregation of the federal excise that was collected and we all know that because we agreed to collect the excise that, or the franchise fee that was declared invalid by the High Court of Australia, but under the new arrangements that was subsumed into the deal with the states in relation to collection of the GST.
Nobody likes the price of petrol being high and everybody knows that anybody who is attacking the price of petrol and attacking the federal government’s revenue take from it is on a relatively easy wicket at the present time and there is no shortage of aspiring batsmen when it comes to that particular subject. I have got to deal with the reality. The reality is that we factored in certain increases into our budget. People are saying to me, including your organisation that what we should do is to take out the GST spike as it’s called, others are saying we should freeze the February indexation collection altogether. There are various combinations of them.
We are collecting, so we are told by the Treasurer, we are going to collect more in our budget this year than we expected. That is not due to petrol excise, in fact the excise collection is lower because the usage patterns have changed. There is an increase in the petroleum resources tax. Any increase in GST collection will have an effect on the transitional financial arrangements we have with the States. But because we are going to collect some more money we have decided to boost road funding.
We take the view and we thought about it a lot, we looked at excise freezes, we looked at all of the combinations that have been put in front of us. We considered it. We had quite a lengthy debate about it and we decided that it was a better long term investment in the future of this country to put the additional money that I will announce with the Deputy Prime Minister on Sunday into roads, than into a relatively small reduction in the excise on petrol of say one or two cents a litre that could disappear overnight, quite literally. I mean this is a little chart that I happen to have with me which shows, I mean that’s not you know ’98, ’99, 2000. It’s not even the 21st, 22nd, and 23rd of November. It’s 8am on the 16th of November in Sydney, 12pm on the same day and 4pm on the same day as well. These are the, I think it’s called an intra-day petrol price Sydney average 16th November 2000. Now I hold it up to sort of illustrate the extreme volatility even within one day of petrol prices. Now we did think about this and we know that we’re going to continue to get attacked by your organisation, by the Labor Party, by state premiers, by state opposition leaders, and yes everyone. Name them all. They will continue to attack us on this issue. Now I understand that because it is an easy hit. It’s a very easy hit because nobody likes the high price of petrol. But we actually had to decide, are we going to spend some extra money on a relatively small but important and valuable, I mean I don’t deny that, any reduction in excise would be welcome, I know that. But we took the view that from a long-term point of view an investment in roads that would last for decades was better for the country.
I think you’ll find when the announcement is made on Sunday that we’ve adopted a very fair approach. And people who’ve made silly remarks about favouritism are going to look rather foolish. Now that’s our decision. It hasn’t been arrived at lightly. We think it is the right decision in the country’s long term interests. We believe it is. Now ultimately, as in all of these things and I don’t see this other than quite respectfully to the Australian people, ultimately the Australian people will be the judge of that. But that’s the decision we’ve taken. Now we can have an endless debate about what particular figures mean. We acknowledge that the price of petrol is higher than it was some time ago and we acknowledge that there are some consequences of that from a revenue point of view. We acknowledge that our budget is in better shape and we’re going to use some of that enhanced condition to enhance the condition of Australian roads rather than to have a discretionary reduction in excise. Now we’ve thought about it and we’ve made a very deliberate decision to do that because we think that’s better value for the Australian people. Now it’s ultimately as in all of these things for the Australian people to judge.
[ends]