TRANSCRIPT OF THE PRIME MINISTER
THE HON JOHN HOWARD MP
RADIO INTERVIEW WITH ALAN JONES, RADIO 2UE

14 March 2001

JONES: Prime Minister good morning.

PRIME MINISTER: Good morning Alan. How are you?

JONES: Not too badly thank you. Labor need a 9.6% swing to win Ryan, are they going to get it?

PRIME MINISTER: Well at the moment if you believe the polls, yes. But it’s not over and I think the reason why the polls are showing them in a strong position is that there are a lot of normal Liberal voters who want to give us a kick. And I would say to them that if you deliver Labor Ryan then you’ll encourage the Labor Party to believe that all it has to do in order to win the next election is to adopt the completely negative carping attitude towards policy making in this country. Now for the country’s sake in the lead up to the next election we need both sides of politics telling us what they will do if they win the election, not constantly carping. I mean we have an example with this so-called discount of the pension of 2%, which is not a discount at all, it’s just a case of not paying it twice. The Labor Party,s attacked it but when asked will they, in office, increase the pension by another 2% they say oh no, no no we won’t do that. I mean this kind of behaviour will be encouraged if Labor wins Ryan. But at the moment, if you believe the polls, it is in danger for us. I’m going back there today and I don’t take it for granted. We have an excellent candidate in Bob Tucker. He’s had 40 years in the electorate, he’s got small business links there, he’s got family links there, he is very much a local. But it’s very tough.

JONES: The headlines talks about recession, the word’s used over and over again, which I’ve said publicly seems to me to be something of a nonsense. But what is Treasury telling you about likely economic growth for the calender year, 2001.

PRIME MINISTER: What they are telling us at the moment is that the December quarter was a one off.

JONES: Produced by what?

PRIME MINISTER: Produced by some transitional effects from the GST.

JONES: Does that mean because housing starts were very significant before July 1?

PRIME MINISTER: What happened with the housing industry was that in anticipation of the GST there was a lot of furious activity before the first of July and then there was a big slow down and there were some interest rate increases which probably contributed to that. There are already signs that the housing industry is turning around and we have decided to accelerate that turnaround with the doubling of the first home owners grant for new homes.

JONES: I’ll come to that in just a moment. Could I just go back to Treasury, so what are they saying to you about say the next quarter figures?

PRIME MINISTER: Well they can’t put a figure on it, a final figure on it. All they can say is that they are hopeful and they can’t put it any more strongly than that. To be fair the March quarter is not over yet, we’re almost through it. But their advice is that that ought to be better than the December quarter, but they’re not putting figures on it.

JONES: And you still have annualised growth rates, even if those deflated figures at over 2%.

PRIME MINISTER: Oh well of course, I mean, look, you’ve had 8 or 9 years of continuous growth. Over the last 5 years you’ve had on 2 or 3 of those years the highest growth rate in an industrialised world out of Australia. We’ve had one quarter, it’s a disappointment, I’m not trying to walk away from it, but we really do have to keep our nerves, we have to keep our heads and we have to retain a sense of balance. The whole world at the moment is going through a degree of stock market and economic turbulence and in those circumstances to pretend that Australian can completely isolate itself is wrong.

JONES: One of the factors of course may well be that we’ve been belted by floods over the last 6 or 8 months and it’s on again today.There are very significant economic costs to all of that aren’t there, in terms of economic growth?

PRIME MINISTER: Well there are certainly big costs for primary producers, there certainly are, and it can have a fluctuating effect on the prices of many fresh fruit and vegetables.

JONES: Can I just take this question about housing, because I think - the announcements that you made last week there do appear to me to be some niggers in the wood pile. Can I just ask you a couple of straight- forward questions. Will every contract for a new home signed before December 31 get the $14,000.

PRIME MINISTER: Yes, provided it requires commencement and completion within a reasonable time, and those reasonable times we’ll work out with the housing industry.

JONES: Right, now back to the problems. A leading builder told me yesterday that the banks are not playing their part, that they are treating, and I’ll read his words to me, “are treating applicants as if they were not getting the $14,000, the banks are insisting that the applicant is still expected to have at least a 5% deposit, money for legal expenses, and a saving record of 3-6 months”. I’ll read you what he said, “we’re having to turn away couples with good incomes who don’t have a deposit or parents of young families who don’t have a savings record. Not surprisingly many young families are unable to save a deposit while paying rent and rearing their children, if the $14,000 couldn’t be considered the deposit, which I feel is the Government’s intention, and if the applicants can present a reasonable budget that indicates a capacity to repay that ought to be sufficient”. What’s your comment about that?

PRIME MINISTER: Well I’ll take that up with the banks. In the end banks make their own decisions because it’s their depositors and their shareholders money, they make their own decisions about who they lend to. But if they are allowing the $7,000 to be taken into account in determining the deposit they should allow the $14,000 in relation to people who are eligible.

JONES: This is a major builder who says once again the banks in their unwillingness to accept any risk at all are either by accident or design undermining the Government’s most welcome initiative. It then goes on, as it is the $14,000 will go to people who would have qualified for a loan anyway, people receiving the $14,000 can then afford a better home or better inclusions and that has some social merit but it pales into insignificance compared with helping young families who would otherwise remain renters get into a home.

PRIME MINISTER: Well Alan I will take that matter up with the banks. I understand exactly what you are saying and it would seem to me if the $7,000 were being taken into account it ought logically be the $14,000 being taken into account.

JONES: Absolutely, okay well we’ll get back to you on that. Could I just take a couple of other criticisms that have been made therefore by people who have written to me, because they are representative of the kind of people that you’re trying to pursued to vote for you at the Ryan by-election. I have a letter from an engineering company which said judge them by their works. In 1973 the tax act was 560 pages, in 1996 it’s 3000 pages and after simplification in 2000 7500 pages, including the GST. He asked, how is that tax simplification?

PRIME MINISTER: Well the tax act may be bigger, but his tax rate will be 30 cents in the dollar under our current policy from the first of July. His capital gains tax will be halved, he will have, he’s an engineering manufacturer, therefore he would have laboured under the burden of a wholesale sales tax, or his industry would have been affected by a wholesale sales tax which was very inequitable because it only applied to manufactured goods, it didn’t apply to services and it was at three or four rates which was very complicated and the new system is at a simple rate of 10%.

JONES: Well, another writer said to me, we live on a pension and have a small sum invested on which we’re deemed to be earning a certain amount and our pension has decreased by 50 cents in the dollar accordingly. When interest rates fall they are tortoise like in their efforts to drop the deeming rate so we remain deemed at the higher rate, no longer earning enough to pay taxes, we don’t receive the tax concession the GST offers to high salary earners. So the GST offers us no great benefits. We’ve got no home loan so lower rates don’t apply. Each day I pay extra to the GST for something or other.

PRIME MINISTER: Could I just take up the point on the tax concessions - they say that they don’t get the tax concessions available to high-income earners. Are they saying they don’t pay tax?

JONES: No, they’re saying…

PRIME MINISTER: If they do pay tax they get, in fact…

JONES: They don’t earn enough to pay tax.

PRIME MINISTER: Oh look, I’m sorry, they’re saying they don’t earn…

JONES: …earn enough to pay tax. So they don’t receive the tax concessions. They don’t have a loan, so they don’t get the benefit of lower interest rates, yet they are paying, he says, to fill my old Toyota, $36.50, GST $3.50, ten times a year. He talks about the Telstra phone account, one hundred and one, $10.1 four times a year, GST on house insurance, $21.58 and so on. What do you say to people who say, well listen, I don’t get the benefit of the interest rate reductions, I don’t have a home loan, I don’t get the benefit of that, what am I getting?

PRIME MINISTER: Well, he would have got, as a result of the GST compensation arrangements, an upfront 4% increase in the pension. I don’t know whether, you know, how large their non-pension income is but there were some increases in the earnings limits which provided – and those things taken together, according to all of our calculations are more than compensated for the introduction of the GST. In relation to the deeming point, we pushed very hard for those deeming rates to be adjusted quickly so that on the swings and roundabouts people don’t lose out.

JONES: Have they been adjusted since the two reductions that have occurred in interest rates this year?

PRIME MINISTER: I would have to check that, Alan.

JONES: A bloke wrote to me also to say that Peter Costello had written to him that there was no GST on wages, which there isn’t, but he hires people out to farmers for a fee, for example, picking fruit. So he recruits the workers, he pays their wages, he pays their super, he pays their work cover, he pays the payroll tax and then he says, right, here are the workers to pick your fruit, I’ll look after all that managerial side of it. But now he pays GST on all of that. He pays GST on the wages, the super, the worker, the payroll. Whereas, if the bloke employed the people himself he wouldn’t. Are there anomalies here, which are affecting people in their workplace?

PRIME MINISTER: Well, he might think that’s an anomaly but what he’s providing is a service and there is a GST in relation to that because he can get back the GST that he pays on all of the inputs to his business. So, he won’t be any worse off. He doesn’t bear any of the cost of that.

JONES: Can you understand the concern again that someone else wrote to me, also from within this Ryan electorate, that John Moore has forced you, the Government, the taxpayer, to spend $500,000 of taxpayers money on a by-election. Many people feel they are going short. There’s a general election at the end of the year, why didn’t John Moore stay on?

PRIME MINISTER: Well, I know there’s criticism, there always is of by-elections. John had been the member for 25 years. He decided he wanted to go. He indicated to me that his preference was to go and I accepted that there would be a by-election. I’m not trying to point the finger at him. I know that some people are unhappy with it being an early by-election. On the other hand, they’ve got an extremely good local candidate in Bob Tucker to vote for, who sees himself as hopefully, if he were to win, representing the electorate with great energy in the years ahead.

JONES: Another writer says, poor John Howard, he’s delivered unemployment rates of less than 7%, interest rates for housing of around 7%, inflation less than 3% and repaid $50 billion of debt and yet we want to kick him out of Government. What’s the alternative? When Labor was last in power it racked up over $70 billion in debt from deficit budgets, increased petrol excise from 6 cents a litre to 34 cents a litre, introduced six monthly CPI linked indexation to petrol excise, had unemployment rates of 11.4% and housing interest rates of over 18%. But he then ended by saying that John Howard and his GST – and pardon the language, this is what he used – he’s stuffed. So, do you have a challenge, in spite of all of those achievements, of selling the GST? What do you say to people who still don’t understand its merit?

PRIME MINISTER: Well, Alan, I understand big reforms that have a long-term benefit are always difficult to introduce. I had an alternative, I could have walked away from that and perhaps cruised to victory at the last election and, perhaps, be in a better position than I am now to win the next election. But what is the point of being Prime Minister of this country if you lack the coura! ge to put up with the difficulty, the transitional difficulties, of introducing change and reform. Now, I know that it’s been difficult, particularly for some small businesses to adjust but the long-term benefit of tax reform is overwhelming. It has made our exports more competitive. When the system is bedded down it will be fairer and more equitable. It has enabled us to cut capital gains tax in half. It has enabled us to reduce the company tax rate. It will deliver a lot of benefits over time to the economy because it is, in essence, a simpler, easier tax. It is less inequitable than the old wholesale tax system. On the 1st of July the financial institutions duty will disappear, something forgotten, that was part of the taxation package, that niggling amount that is often taken out of people’s accounts. So, sure it’s been tough, sure it would have been easier for me, politically, to have turned my back on reform and done nothing and driven around in a white car and said, isn’t it great to be Prime Minister. But I wasn’t willing to do that. I wanted to actually try and make a difference. I accept that it’s imposing a lot of difficulty and strain. I’m copping a lot of criticism, that goes with the territory, I don’t complain about it but, in the end, I’ve done what I thought was good for Australia and I will accept the judgement of the Australian people when it is made.

JONES: Good on you. Well, one final thing because you’ve been in Brisbane, in the seat of Ryan, $20 million – I can’t interview the Prime Minister in the middle of floods and everything without asking the question again – the $20 million worth of devastation, I know you can see it coming, 60% of farmers on the north-coast are affected, all sorts of difficulties to people who are banana farmers, avocado farmers, macadamia farmers, they’ve lost everything. Peter Beattie in Queensland’s calling for people to donate to the Courier Mail fund to help those affected by the once in a 100-year storm last Friday. His Government’s given $30,000. Surely this means that the thing I’ve been talking about and others are talking about, about a national disaster fund, is needed to overcome this ad-hocery.

PRIME MINISTER: Well, Alan, I could see it coming and fair enough. But as I’ve said to you before we have effectively a national disaster fund. We have emergency arrangements.

JONES: Well, if that’s the case, why is Peter Beattie telling people to donate to the Courier Mail fund?

PRIME MINISTER: Well, it’s always possible to give more on top of the existing arrangements. Can I tell you, I rang Peter Beattie on Saturday afternoon and I rang Bob Carr on Saturday afternoon. I said to each of them, I said you’ve both got problems, our people have got problems with the floods, there are existing emergency arrangements, I want each of you to know that the Federal Government stands ready to provide additional assistance that it can be reasonably asked to provide by your States. And I said, I want you to let me know if there is some further assistance that the Federal Government can provide. I said that to Peter Beattie in a telephone conversation and I said the same thing to Bob Carr.

JONES: Okay, good on you.

PRIME MINISTER: And the Deputy Prime Minister, John Anderson, has been to the north-coast of New South Wales and that is our position. But there are arrangements and State and Federal money is already going in to provide emergency relief for people.

JONES: Good on you. Good to talk to you and thank you for your time.

PRIME MINISTER: Okay.

END