TRANSCRIPT OF THE PRIME MINISTER
THE HON JOHN HOWARD MP
INTERVIEW WITH ALAN JONES, RADIO 2UE
23 May 2001
JONES:
Prime Minister good morning.
PRIME MINISTER:
Good morning Alan.
JONES:
Prime Minister before we tackle what by and large seems to a very well received and excellent Budget, can I just ask you one or two questions about this relief package, because we’re getting calls to the programme here, that’s the relief for policyholders that you announced suffering financial hardship as a result of HIH. When will we be able to tell, or how do they know where to go to check their entitlements to that package?
PRIME MINISTER:
Well there is a hotline which I understand is available, is being made available today and people can use. And I will speak to the Financial Services’ Minister when I get into the office this morning to make sure that that hotline is available today and that will be advertised in the media as well. Inevitably because the media is swamped this morning with Budget coverage …
JONES:
Yes.
PRIME MINISTER:
… it’s not very obvious but that will certainly …
JONES:
Okay.
PRIME MINISTER:
… be established and with that going people will be able to ring. But we do have a very comprehensive package and our first concern without in any way taking our eye off trying to find out what happened, our first concern is to help the people who’ve been hurt.
JONES:
Absolutely. Just on that and since you say that, I noticed Professor Roman Thomasik who’s a professor of law at the University of Canberra and he’s written a paper called, Auditors and the Reporting of Illegality and Financial Fraud, he said yesterday auditors have a marketing drive, rather than a watchdog drive – you audit so you hang onto the job. And a Brisbane liquidator says 95% of them go to water if threatened with the loss of business. What can you say to people who are buying shares today, or placing their faith in a business on the basis that it’s audited and therefore they think well it must mean that everything’s okay and away I go?
PRIME MINISTER:
Well what I can say is that most companies don’t get into severe financial difficulties. They are few and far between. They do happen. There have always been companies that have got into difficulty and people do have to exercise judgement. They do have to take good advice and they mustn’t always be lured by a company that, say in the insurance industry is offering …
JONES:
The cheapest products..
PRIME MINISTER:
… premium. I mean in the end people do have to rely to some extent on their own judgement. I mean no government can guarantee that every investment turns out trumps. I can’t do that and nobody who in the future will hold my job can possibly do that. We can when something big like this happens, we can find out what occurred and if you need to make further changes to the law you make them.
JONES:
Just on that but you said, I noticed this week, I’ve said along and I’m quoting you ‘that the book should be thrown at any wrongdoers and that will be the case’. When you tried to reform the financial sector with that Financial Sector Reform Bill in 1998, Peter Costello said it would provide ‘strong prudential regulation to lessen risk and that APRA would provide effective intervention to manage a crisis’. Do you think perhaps you need to tighten up regulatory powers?
PRIME MINISTER:
Well that’s something that the Royal Commission will tell us, will give us advice on.
JONES:
Yes.
PRIME MINISTER:
I can’t make a judgement at this stage, nobody can, about whether or not APRA’s role is, was properly …
JONES:
When do you reckon you’ll have the terms of reference available?
PRIME MINISTER:
Well we’ll have those terms of reference I hope within a few days. I’m talking to people about serving on the Commission. It will be a week or so before that is all announced.
JONES:
There will be a Royal Commissioner?
PRIME MINISTER:
Well I am considering that at the moment Alan. I am not in a position to announce that. I’ve had a Budget to help the Treasurer with over the last couple of days. But I’m working on that, I have talked to a few people about who might be on the Commission. We need to get the right person or right people. We need to take care in relation to the terms of reference. It’s not something that I’m going to do, finish it all in the next twenty-four or forty-eight hours. There’s no reason why all of these details have to be out in the next few days. They will be out shortly but I want to get them right. In the meantime the Securities Commission continues its investigation. The Securities Commission investigation goes on and …
JONES:
But may it be redundant when your Royal Commission begins?
PRIME MINISTER:
My idea is that the two of them will work together. But by having a Royal Commission, in an overall area, role of responsibility you can still work together with the Securities Commission investigation, but the Royal Commission can look at other aspects.
JONES:
It might be that the Royal Commission would find though that ASIC themselves failed in their prudential regulation.
PRIME MINISTER:
Well ASIC doesn’t have a prudential regulatory role, that’s the role of the prudential regulatory authority or APRA. But the Securities Commission is a body that investigates corporate wrongdoing, it investigates some of the reasons for failure.
JONES:
Dedicated according to its Charter to securing honesty and fair practice in corporate life.
PRIME MINISTER:
Exactly and if it finds as a result of its investigation evidence warranting prosecution, then it will make recommendations. Now I have to be careful to respect the processes of the law and there’s been an enormous amount of publicity about this company. But if in the future there is evidence to warrant prosecution I don’t want some defence lawyer saying well this person’s not going to get a fair trial because six months ago on such and such a programme the Prime Minister said, - I’ve just got to be careful about those things.
JONES:
Now you’re not the kind of bloke who runs around beating your breast, but how much of what has happened last night in the Budget derives from the fact that you’ve paid off billions of dollars of debt?
PRIME MINISTER:
Just about everything Alan. I mean the real message out of last night’s Budget is that this nation can now afford to invest in its future, to give proper recognition to people who have built what we have today – that’s the older section of the community – because we have paid off debt. We’ve paid off almost $60 billion at the end of this…
JONES:
Say that again. That’s ‘b’ for billion.
PRIME MINISTER:
Billion. I mean, when we became government, we got into government in March of 1996, we had an accumulated Federal government debt and that was the accumulation of past deficits of the former government, of $96 billion. At the end of the year, covered by last night’s budget, we will have, as a nation, repaid $58 billion.
JONES:
‘B’ for billion dollars.
PRIME MINISTER:
Billion dollars, not millions, not thousands, but billion dollars. And as a result we are paying $4 billion less in interest each year. And people say, where do you get the money to do these things, a lot of it comes from the fact that we’re no longer paying an interest bill of $4 billion a year.
JONES:
Do you think if Kim Beazley became Prime Minister and Simon Crean Treasurer there’d be surpluses, five consecutive surpluses?
PRIME MINISTER:
No, I don’t. I mean, look at what they did when they were last there. I mean, Mr Beazley was the Finance Minister who presided over those budgets. He left us with that huge government debt. I mean, people are entitled to say we will judge you not on what you say but on what you have done or what you do. And when he was last in government we had 17% interest rates, unemployment went to 11% and we had $96 billion of government debt. Now, the real story out of last night’s budget, the fantastic story out of last night’s budget, is that we have been able to do these things because of our past care and attention to getting our economic house in order.
JONES:
And interest rates are a factor in that, aren’t they? I mean, these are things that aren’t printed.
PRIME MINISTER:
It’s a reflection of having repaid debt. If governments don’t go further into debt each year they don’t have to borrow as much money from the money markets and there’s less competition, therefore, the money that is borrowed by the private sector and by households is cheaper, i.e. the interest rates are lower. And we have the lowest interest rates this country’s had for 30 to 40 years. People say to me, what is in the budget for small business. The greatest thing in the budget for small business is a continuation of the climate for low interest rates because low interest rates are the greatest gift that small business has received from this Government. They are also the greatest gift that farmers have received from this Government. When the Labor Party was in office bill rates for farmers, lending rates for farmers were often 22% and 23%. Small business, in the Labor years, was paying 17%, 18% and 19% interest rates. They’re now, in many cases, half that.
JONES:
What about the $12 billion that you’ve already given back in tax cuts? You can see that some of that may have been eaten up by things like increased petrol prices, now increased insurance premiums and things like that.
PRIME MINISTER:
Alan, inevitably the higher prices, of petrol in particular, has taken money out of the pockets of families. I acknowledge that. We have done all we can, affordably, to try and limit the impact but petrol is dear because the world price of oil is high, that’s the reason.
JONES:
Your budget forecasts have the world price of oil dropping back in the next financial year, which would be beneficial to inflation and business costs.
PRIME MINISTER:
Well, it would bring the price down and, of course, if our exchange rate continues to strengthen, that of course has an impact on the price of petrol because the world crude oil price is denominated in American dollars. But the Government has cut the fuel excise by 1.5 cents a litre. And, importantly, we have abolished the half yearly automatic increases in petrol tax that were first introduced by Mr Hawke in 1983 and we abolished that a couple of months ago and the budget confirms the abolition of that as well as the reduction of 1.5 cents a litre in excise on petrol.
JONES:
When you came into government self-funded retirees paid tax after they earned $5,000.
PRIME MINISTER:
$5,400. Just like the rest of us.
JONES:
That’s it. Then you jacked it up to $11,000 and a bit. Now you’ve knocked it up to $20,000 for a single…
PRIME MINISTER:
And $32,000 for a couple. And in addition to that we have extended the eligibility for the Commonwealth Health Card to self-funded retirees, singles $50,000 of income, couples $80,000 of income.
JONES:
Who qualify then for other concession as a result of…
PRIME MINISTER:
And the other important thing out of last night’s budget is that every body who holds a Seniors Health Card will get the same telephone concession, $17 on a quarter which is available to pensioners. And importantly we’ve made provision in the budget, money put in the budget, to negotiate with the states to extend to senior card holders, that’s self-funded retirees, many of the concessions…
JONES:
That they get with the pensioner concession card. Like energy bills or reduced fares on public transport and stuff.
PRIME MINISTER:
…given that these concessions are provided by State Governments with financial help from the Commonwealth to pensioners. Now what we’re going to do is sit down with the states and say right let’s negotiate an extension of those same benefits to self-funded retirees.
JONES:
Now Prime Minister the $14,000 first home owners grant has been tremendously successful in the housing and building industry. However there’s now a hiatus because of HIH and builders aren’t able to start building until that warranty insurance is re-issued. Would you consider as a result of that, that stop gap, in extending the grant beyond December 31?
PRIME MINISTER:
Well Alan it’s too early to make any kind of judgment on that. Obviously…
JONES:
The notion has merit does it not?
PRIME MINISTER:
Well if there were any lasting impact from the HIH collapse, yes. I’m not saying there will be and I don’t want to be taken to making any commitment that we are going to extend it. Look it is working very well. We are working overtime with the states to see that the home warranty insurance thing is re-instated and although there are some builders in difficulty on this there are a lot who of course weren’t insured with HIH. And there were a lot who were insured but have quickly found other insurance…
JONES:
That’s right.
PRIME MINISTER:
So we are working very hard on that.
JONES:
I would be most churlish if I didn’t end by saying to you congratulations on what has been done for war-widows. It’s been a long war. But $86 million to re-instate pensions to war-widows who married before 1984.
PRIME MINISTER:
Alan, you have campaigned long and hard on that and you’ve been very persistent. It was a fair case.
JONES:
Yeah. You made a lot of people happy today.
PRIME MINISTER:
That’s why we’ve done it.
JONES:
Okay. Good to talk to you and thank you for your time.
PRIME MINISTER:
Thanks Alan.
END
