TRANSCRIPT OF THE PRIME MINISTER
THE HON JOHN HOWARD MP
RADIO INTERVIEW WITH ALAN JONES, 2UE
14 May 2001
JONES:
Prime Minister I took a couple of calls from listeners this morning and I asked them if they had a chance to ask you a question, what would they ask you. So before we look at this HIH question, can I just raise the first one with you in relation to banks. Alan a caller said he’d heard you make a comment on the weekend about profits, and he argued, as many of my listeners are arguing, that this is depositors money and charges levied on customers that enables them to make profit, he wanted to know at what point are profits obscene and at what point do banks stop sacking people and closing branches?
PRIME MINISTER:
Well, that probably varies according to who you are. What I said on Friday and I repeat now is that I believe in a community where people can make a decent profit provided they trade fairly and provided they pay their taxes, and provided they treat their customers fairly. Now, I think the banks in the past have not met their social obligations. I’ve said that repeatedly. I am beginning to see a slow change in the attitude of the banks. The ANZ, for example, put a moratorium on further branch closures in rural areas just two years ago. The Westpac bank responded to community pressure about not paying the $14,000 home savings grant to people in regional areas. I see a change, I think there’s still a long way to go.
JONES:
Look this caller said to me, he lives at Dural or somewhere, you’re a New South Welshmen, there is no bank between Hornsby and Gosford or Castle Hill and Windsor.
PRIME MINISTER:
Well I’m not arguing with him, he obviously knows, I mean I don’t know whether that’s absolute, I just don’t know because…
JONES:
If you can understand his point about service vis-a-vis profit?
PRIME MINISTER:
Of course, now you’re asking me at what point, well it will depend a lot on the circumstances. You’ve got to strike a balance, if you don’t have profitable companies you’ll have a sick economy and we’ll all be worse off. I mean we must understand that, we mustn’t lapse into a populist criticism of profit making as such. What we must demand of companies such as banks that make big profits is that of course they pay their taxes, which they do, and that they’ve got to maintain their social obligations. And I believe that banks are realising that now. I believe that community pressure, including the pressure exercised through programmes such as your own is having an effect on banks. I’ve talked to senior banks leaders in recent months, they increasingly recognise, and have told me they recognise, that they have to change their attitudes and I think we are beginning to see the turn around and we’re beginning to see a greater responsiveness.
JONES:
Could I just, I want to come to the HIH thing in some detail in a moment, but I’ll tackle one very simple question which is not easy to answer. Jane mentioned about where her super was and the small fund with which she had super and she said well I’m wondering whether my superannuation fund had any money invested in HIH. How do all these people in superannuation know? Will they ever know?
PRIME MINISTER:
Well they ought to know from the people who run the fund where their money’s invested. That’s not terribly hard.
JONES:
They’ll get a return, it won’t tell them specifically.
PRIME MINISTER:
Well they can ask. And they should.
JONES:
And if their money is invested, if their superannuation savings are invested with HIH.
PRIME MINISTER:
If your superannuation saving is invested in an investment that goes bad well you do run the risk is losing something. I mean there’s no, I mean, that’s the sort of hazard that people have. I mean I’m very sympathetic when that occurs but I can’t, and no Prime Minister, can guarantee that every single investment made by every superannuation fund and every company in Australia, will be absolutely safe and will bring a guaranteed return.
JONES:
Okay, I’m come to the HIH in a minute.
PRIME MINISTER:
See we effectively stand behind the deposits of people who put their money with banks through the lender of last resort facility of the Reserve Bank. But no government in the history of this country has ever held out that it will stand behind every single investment. I mean no government could afford to do that.
JONES:
Bruce rang to say that he thought you were the best man for the job of running this country. But he said, does the Prime Minister think that the effect of the GST on self-funded retirees and small business will cost him the next election?
PRIME MINISTER:
Well, ultimately that is something the Australian people will decide. I know there have been some transitional challenges with the GST for small business, we’ve changed the forms, we’ve tried to meet those concerns, we continue to be ready to finetune the implementation of the GST. And we are very sensitive to the fact that self-funded retirees, unlike homebuyers, don’t enjoy interest rates coming down. One of the things that have hurt self-funded retirees in Australia is low interest rates. Most people applaud low interest rates, but if you are a retired person living on the interest from your investment and the interest rate goes down you certainly don’t cheer. And we have all perhaps not sufficiently appreciated that lower interest rates are not good news for self-funded retirees.
JONES:
So will you have something for them in the budget?
PRIME MINISTER:
Look I’m not going to start talking about what might be in the budget.
JONES:
Terry asked when you’re going to do something, and I asked him what he meant by ‘do something’, about the hoons and hooligans at Port Hedland detention centre.
PRIME MINISTER:
Well we’re certainly not going to do what Mr Beazley does and basically side with the people who riot and demonstrate. I mean every time there’s a riot and demonstration Mr Beazley says you should have an inquiry. That infers that the authorities are in the wrong and the rioters are correct. I mean I applaud the tough stand that Philip Ruddock has taken. These people have come here illegally, they are treated humanely, they are treated far more humanely in that detention centre than they were in the country from which they fled. And there is no way that a government I lead is going to bow to the intimidation involved in those riots. And I really think the attitude that Mr Beazley is taking of in effect siding with the rioters is wrong.
JONES:
Mr Beazley called your party a dysfunctional mess at the weekend. One of my listeners rang up about that, with a smile on his face, and said if it was a choice between being run by a dysfunctional mess or a mess of dysfunctionals. I don’t expect you want to comment on that.
PRIME MINISTER:
No I certainly don’t.
JONES:
When, on that business of illegal immigrants, a caller asked what would happen if 100 Aussies arrived illegally in say Japan, Thailand, Singapore or New York and proceeded to create havoc.
PRIME MINISTER:
Well they would be put in a plane and sent back here.
JONES:
So why don’t we do that?
PRIME MINISTER:
Well except that we would take them back if they were Australian citizens, whereas the people that have come here illegally, the countries from which they came, won’t take them back. That’s the problem. And that is the critical difference. I mean we are a humane country, even if we’ve got our own citizens who are behaving like hooligans overseas, we respect their rights as Australian citizens and we take them back. Now that is the difficulty that we face.
JONES:
Right, finally I just want to ask, I want to get onto this HIH, but another caller said this, so far put it in writing for me. You’ve given into the media, this is you, the Labor Party, the whips in your own party and the National Party in saying that you’ll put Pauline Hanson last on Liberal voting tickets, and you know you can’t win the election without the Hanson preferences, what are you going to do to get them?
PRIME MINISTER:
What I’m going to do is ask potential One Nation voters not to waste their vote but to vote for us. And to point out that the legitimate concerns they have, and most of the concerns of One Nation voters are the concerns of Australians, they’re not bigoted concerns. There are a few people who fall into that category but, and I won’t get their support. But the great bulk of people who are attracted to One Nation are concerned about their economic future, they’re concerned about the pace of economic change and what I will be saying to them in order to get their first preference votes, I’ll be saying to them at our policies are better able to address their concerns than the policies of One Nation.
JONES:
Okay, HIH. Now you’d have to concede, would you not, that if someone is investing in an audited company they’re entitled to believe that that is a guarantee, at least to some extent, of their income. Now these books were audited in October, the joint’s gone under, now today they’re saying by $4 billion only a month later. Someone has dramatically failed.
PRIME MINISTER:
Well that’s certainly has to be the case and just exactly who it was and how it happened, how it was allowed to happen is something that I can assure you and your listeners the Government will establish the mechanisms to find out.
JONES:
Do you think you failed, I mean, your government?
PRIME MINISTER:
Well we have a regulatory authority which is charged with the day-to-day responsibility of supervising this organisations.
JONES:
With people like Ian Macfarlane, Alan Cameron, Don Mercer, all on the board.
PRIME MINISTER:
Well they are the people on the board, that’s absolutely right. But Alan there will be no question left unasked in relation to investigating what happened. The first priority is to establish as best we can in a short period of time the extent of the damage and we have already begun that process and we will know more of that when we get the report of the liquidator. We’ve had a suggestion of a levy from the Insurance Council, that is an issue that the Government will consider. The state governments, or most of them have indicated that they will meet their statutory obligations in relation to things like third party insurance and building insurance and I welcome that because they are legal responsibilities. I mean it’s the law of the state that requires you to take out this insurance, therefore if the insurance you are required to take out falls over, it has to be the responsibility of the state government to pick it up.
JONES:
Just on the levy, I mean why should people with fair dinkum and effective insurance policies fork out for those who haven’t? I mean those ….
PRIME MINISTER:
Alan, that is one of the issues you’ll have to take into account in looking at a levy. But bear in mind that if you are to provide a safety net for hardship cases if you don’t have the levy then the general body of taxpayers will have to pick it up through the Budget.
JONES:
Well many people would say, and are you short of money in the Budget to be able to do that? Many people would say this is a national disaster.
PRIME MINISTER:
Well I know that, that is one of the issues, but bear in mind that …
JONES:
There will be an awful outcry Prime Minister if you start levying insurance holders …
PRIME MINISTER:
Well there would also be a lot of people who would say we would rather the government spend whatever the amount of money is on something else and raise the additional resources through some kind of levy. Now these are things we have to consider. Neither choice is easy because if you need a lot of money to provide safety net support for people then you have to get it from somewhere. You either have to dip into the Budget and therefore delay spending money on something else, or you have to have some kind of levy.
JONES:
Well Arthur Anderson’s were the auditors. They were paid $1.6 million last year and $1.7 million before that and they signed off in October. Do they have professional indemnity insurance? Or is it with HIH? And shouldn’t those people whose advice failed, in a professional sense, on behalf of insurance companies be made to pay?
PRIME MINISTER:
Alan I can only talk generically in answer to that, I can’t sound as though I’ve made a judgement about the liability of the auditor, that’s not a proper thing. I have to be careful of what I say. Generally speaking, of course professional people who give very negligent advice should pay for it.
JONES:
Well they audited HIH’s books, signed in October as a true and fair statement of the accounts that they had net assets of $939 million, six months later the insurer is worth at least $2 or $3 billion less.
PRIME MINISTER:
Alan, I understand that but I can’t give a response which indicates that I regard the auditor as having failed its duty, that is a matter for other authorities to investigate ...
JONES:
Well let me just ask another question because you can’t, the prime minister can’t be expected to be on top of everything, that’s why he’s got ministers.
PRIME MINISTER:
He can’t be expected to have knowledge of everything.
JONES:
No knowledge of everything I meant, that’s why you’ve got ministers.
PRIME MINISTER:
… which he has reasonable knowledge.
JONES:
Right, that’s why you’ve got ministers. Now you’ve got a minister in charge of this, a young bloke and a new bloke, Joe Hockey.
PRIME MINISTER:
He’s a good man.
JONES:
Right, well in March last year, in March last year, the group, HIH’s principal actuary warned that HIH faced dire consequences unless it changed its accounting policy. In June, brokers began withholding business from the company fearing it wouldn’t meet its obligations. In October the company’s credit rating was downgraded to junk bond status. Did Joe Hockey bring to the government a warning that there could be one hell of a mess in prospect.
PRIME MINISTER:
Well all of the information I have in front of me indicates that Joe Hockey was the proactive person in seeking advice and explanations from the regulator about what was happening with HIH.
JONES:
And the regulator? The APRA with people like Macfarlane and Cameron and Mercer and those people on it didn’t see smoke, didn’t see fire, and the view and the nation are down the tune, the tune of $4 billion. It is not possible for people to believe Prime Minister.
PRIME MINISTER:
Well I’m, once again I can’t make, because of the legal constraints that apply in a situation like this, I can’t give answers that infer that I’ve made a final judgement as prime minister on culpability in this when I don’t have all of the information in.
JONES:
But ASIC goes after people doesn’t it?
PRIME MINISTER:
… I am sorry Alan, please, look I share all of your concern, I share all of the concerns of your listeners, but I have to respect the processes of the law. I can’t declare that somebody guilty of …
JONES:
No I understand that.
PRIME MINISTER:
… being negligent. I can’t detect …
JONES:
But see what’s happened, you know this Prime Minister, you’re left with it now, you’re going to belted over the head about this.
PRIME MINISTER:
In the end Alan if something goes wrong anywhere in the country, people will blame the Government.
JONES:
That’s it.
PRIME MINISTER:
No matter what happens.
JONES:
But on one serious note then because I know we are running out of, I just want to reinforce with you, you do though understand though don’t you that as a result of all of this, which I call negligence, you don’t have to call it that, I’m calling it, rank negligence …
PRIME MINISTER:
Let me say this, I mean people have clearly failed in their obligations at various stages and I am not …
JONES:
Hundreds of ….
PRIME MINISTER:
I can’t, I can’t personally apportion …
JONES:
Right but hundreds of sick and disabled people have lost income protection …
PRIME MINISTER:
I am aware of those …
JONES:
Some businesses have gone broke. I mean $2 billion worth of constructions on hold. Businesses are facing collapse and I mean, how, where do these people go to get redress?
PRIME MINISTER:
Well Alan we as a Cabinet will be looking at this issue today. We’re having a meeting. We will be looking quite comprehensively at this whole issue and I would expect coming out of that meeting today there will be something further said about the issue. I am very aware of the tragic individual cases, particularly with salary maintenance, with people who have been injured and they’re on salary maintenance and the insurance for those things has disappeared.
JONES:
Okay.
PRIME MINISTER:
I am aware of all of those things. We will be certainly discussing this thing at length.
JONES:
We’ve got to go to the news now, thank you for your time.
PRIME MINISTER:
Okay.
JONES:
Thanks for your time.
END
