TRANSCRIPT OF THE PRIME MINISTER
THE HON JOHN HOWARD MP
INTERVIEW WITH JEREMY CORDEAUX, RADIO 5DN
CORDEAUX:
It’s with great pleasure that I welcome the Prime Minister of Australia John Howard. Sir, how are you?
PRIME MINISTER:
I’m very well Jeremy, nice to talk to you again.
CORDEAUX:
Good to talk to with you. I see the Council on the Ageing is about to release four reports putting a little pressure as they see it on the Federal Government to give people over 50 a better deal in this upcoming election. What do you anticipate?
PRIME MINISTER:
I haven’t seen the report, I would point out of course that in the last budget we did a number of very justifiable things for older people, the $300 pensioner bonus, the changes that benefited the tax position of self-funded retirees, the extension of certain fringe benefits that are now available to pensioners, the extension of those to self-funded retirees. The other interesting thing I heard on the radio this morning from the Council of the Ageing was that it was very worried about rolling back the GST, it made the legitimate point that if you’re going to rollback the GST you have to get that money from somewhere. And the other point that should be made in relation to social security benefits is that one of the great advantages of the GST is that it provides a secure and growing revenue base for the states to fund the provision into the future of basic services not only for older people but also through the public hospital system and the government schools system for the generality of the community.
One of the great arguments in favour of the GST is that it guarantees the revenue base of the states for years into the future. So it always strikes me as very odd when I hear some people, I’m not just talking about the Council of Ageing, I’m talking more generally, where I hear some people from the welfare sector attacking the GST yet really the GST is the best news the welfare sector has had for decades because it provides a secure revenue base.
CORDEAUX:
Well when it comes up on this programme it is invariably somebody on a pension or small business perhaps, but mostly on a pension who says that the GST is just so bad and they have been affected negatively. Yet when you introduced it or you talked about introducing it in the lead up to that election you outlined very effectively what the big picture was about, what the GST bought to Australians and to welfare recipients into future. I think people have forgotten all about that.
PRIME MINISTER:
Well maybe some of them have and part of my job and the Government’s job is to remind people of that, to point out for example that the pension over the last year has risen by something like 8.1 per cent versus an increase in the cost of living of a couple of percent or more below that. That the GST does as I said a moment ago go in its entirety to the states and that means that in the years ahead the states are going to more revenue with which to fund the police, the public hospitals, the public schools and all of the other provisions of public services and amenities that are so important to our community. A government has got to get its revenue from somewhere and it stands to reason as the Council of the Ageing says that if a future Labor Government were to rollback the GST, which is their policy, they have to get money from somewhere to pay for the rollback. Now the rollback to mean anything has got to be probably several billion dollars. I mean surely we’re not going to come to the election and Mr Beazley stand up and say well here’s my great rollback plan and it’s all going to cost a couple of hundred million dollars. I mean you can’t be serious. He really will have to provide something fairly weighty and significant by way of rollback to match the expectations that he’s created in the community.
Now where is that several billion dollars going to come from? We think it will come from higher income tax, particularly in the light of Mr Beazley’s declaration in the Aston by-election that he did not think income tax was too high. I mean anybody in Australia says they don’t think a tax is too high what they’re really saying is if they get an opportunity they’ll make it even higher.
CORDEAUX:
Right I don’t think if you saw the Sunday programme but they did a poll on their website and the question was are Australians overtaxed and 95 I think per cent, 95 per cent said yes. So Mr Beazley is not exactly in line with that thought. I saw also the Sunday Telegraph that you had committed your government further income tax cuts and to streamline the GST if you’re elected this year. So tax is going to be way up there…
PRIME MINISTER:
Well tax, what I said at the New South Wales party convention was that if we have additional resources available through higher surpluses we would give that pack via lower income tax rather than bigger spending. When I talked about streamlining the GST I talk not about rollback, I talked fine tuning its implementation. I’ve always been willing to respond to people’s concerns about the detailed implementation of this new tax system, that’s why we changed the BAS, that’s why we made some changes to the contractors’ legislation. And we’re ready to further fine tune the administration and the application of the new system, that’s not lifting it on items, that’s not rolling back, its just fine tuning, it’s quite different ‘cause it doesn’t cost the sort of money that I’d been talking about earlier. I mean you’ve always got to be ready to fine tune something but the GST has be difficult to introduce, I know there’s been transitional difficulties and we have been responsive to people’s concerns and I believe as time goes by people will see the wisdom of having made this big change. People concerned about providing money for welfare should welcome the GST because it provides a guaranteed and growing revenue base to fund the services of government and if you’re going to roll it back you’ve got to pay for that rollback and you can only pay for that rollback by lifting income tax.
CORDEAUX:
Now speaking of tax, James Hardy Industries, a company that is 90 per cent Australian owned, has said that it plans to establish a Netherlands based subsidiary and seek listing on the New York stock exchange in a bid to halve its current rate of tax. And here if it does this is a model for all sorts of other Australian companies, The Financial Review sort of lists CSR, Southcorp, Fosters and many other Australian companies, it does like the way the Federal Government is taxing profits made in the United States. Is there anything you can do to keep these head offices and these companies in Australia by adjusting the tax arrangements?
PRIME MINISTER:
Well there are a number of things we can do and I’ll come of some of them in a moment. But can I just make the point that on my understanding James Hardy is in a somewhat unique position because 90 per cent of its shareholders are based in Australia but about 85 per cent of its income is earned in the United States. So I would doubt on that basis that what James Hardy has done would become a template or a model for other companies because I wouldn’t imagine there would a large number of other companies that are in a similar position where you have 85 per cent of your income from the United States with 90 per cent of the shareholders being based in Australia.
This tax position for James Hardy arises under the provisions of the double taxation agreement between Australia and the United States and right at the moment we are trying to negotiate changes to that double taxation agreement. We are conscious of some of these things and where possible we will seek to change the law and renegotiate tax agreements to ensure that the tax treatment is as neutral as we can achieve, irrespective of whether the company is based here in Australia or overseas. We want companies to stay in Australia but we also recognise in a globalised economy that just as a lot of foreign companies are going to come here with big dollars and big activity so are some Australian companies are going to go overseas. We’ve got to recognise that globalisation is a two way process, you can’t expect all the foreigners to come here and no Australian companies to go elsewhere.
We have of course reduced the company tax rate, it’s now 30 per cent, which is much lower than for example the United States, the generic company tax rate in the United States is much higher than ours. And it is in many European countries. So part of tax reform was to cut the company tax rate from 36 per cent to 30 per cent and of course for individuals to cut capital gains tax. But we remain sensitive to these issues and we are trying to renegotiate the double tax agreement.
CORDEAUX:
So you can foreshadow some adjustments?
PRIME MINISTER:
Well I can foreshadow further efforts to renegotiate double tax agreements, I can’t at this stage speculate about further changes to the tax act if we’ve already implemented a lot and when you cut the company tax rate from 36 to 30 that’s quite a big change. We obviously where possible and where it’s affordable would want to make sure that Australian companies are not in any way disadvantaged and I just make the point again that James Hardy’s position is probably atypical that 85 per cent of its income being earned in the United States and 90 per cent of its shareholders being based in Australia.
CORDEAUX:
Prime Minister would you take some calls.
PRIME MINISTER:
Yes certainly.
CORDEAUX:
Hello Leigh.
CALLER:
Oh hello, good morning Mr Prime Minister.
PRIME MINISTER:
Good morning.
CALLER:
This time last year I was thanking you and your Government for the rebate on private medicals, this year I’d like to thank you for and your Government for the benefits that you’ve given to the self-funded pensioners. Especially the reduction in taxes and we’re able to get some of the benefits that fully Government funded pensioners were getting before, so especially in prescriptions, that’s a tremendous help where you raised the threshold there. You were just speaking about the GST and I really appreciate the information you’ve given out this morning on that, I think that if the Federal Government and the state would give more information to the people in the state how much they’re getting back on the GST we’d hear a lot less complaints about it Sir.
PRIME MINISTER:
Well I do think the point you’ve just made is very relevant. I doubt that the majority of the population is aware that every last dollar of the GST goes to the states. Now I say that every time I’m interviewed, Peter Costello does, but there’s a human reaction that because the tax is levied under a federal government plan, we introduced it that we get the money. We don’t. Every last dollar of the GST goes to the states. So every time you hear a state government saying it needs more money from the federal government just remember it’s getting all of the GST and the value of that will rise over future years and in a few years time every state will be much better off as a result of the GST than it would have been if the old formula had continued.
CALLER:
Yes sir. I just feel like the federal government and the state government could get more information out to the people how much the states are getting back because it’s got to be a tremendous help to the states sir.
PRIME MINISTER:
Yeah well that’s a good point. I appreciate that very much.
CORDEAUX:
Thanks. Christine.
CALLER:
Hi. Good morning Mr Howard.
PRIME MINISTER:
Good morning.
CALLER:
I was just interested to see whether the federal government might be considering revisiting the Telecommunications Act with regard to standardising the distance of mobile phone towers from schools,kindies and the like? I ask this Sir due to the precedent that now seems to be set by Mr Downer when he advocated for residents in his where he deemed a distance of over 300 metres inappropriate from a school.
PRIME MINISTER:
He thought that was still too close did he?
CALLER:
Yes he did. And I’m aware the jurisdiction was passed over to the states in 1996 but it seems that they don’t seem to have any standardisation at all and now with Mr Downer obviously perhaps having a change of heart about the appropriateness of the distance of these towers I was wondering if the federal government was considering looking at that distance issue again?
PRIME MINISTER:
Yes I think we handed it over to the states in 1996 and because of that it’s not standard throughout the country. Look can I plead the opportunity to get some more information about that. I can’t give you an immediate answer beyond saying I will have a look at it and if you leave your name and address with the station I’ll write to you about that.
CORDEAUX:
Christine just hang on there for a sec. We’ll get those details off the air. Sally.
CALLER:
Yes good morning.
PRIME MINISTER:
Good morning.
CALLER:
Good morning Mr Howard. Us older people are upset about the politician’s spending. We think that they could cut down a lot and also we would like a referendum on public issues. Is there any chance of that?
PRIME MINISTER:
Well on the question of referenda, we don’t in this country have referendums on a regular basis on particular issues. I suppose one of the reasons for that is that the terms of Federal Parliament in Australia are shorter than what they are in many other countries and what they are in the states. And there people argue that if the federal government is only in office for three years then if people are unhappy with what it’s doing they can throw it out. Other people argue that you elect a government to take decisions and if you require that government to keep coming back with a referendum on every individual issue of any consequence then what’s the point of having a government in the first place. It’s an interesting philosophical argument. Obviously we have referenda to change the Constitution and perhaps on really big issues from time to time governments decide on an ad-hoc basis to have a plebiscite as we did on 1977 on our national song, later our national anthem when people voted in favour of Advance Australia Fair. The question of spending, well, it’s always a hard question to answer. I know to the public at large any salary above the average can often sound high. But if you compare the salaries paid to people in senior management positions in business and people paid for example as senior ministers I don’t think anybody can argue that our senior ministers are overpaid. I’m not arguing they should get higher salaries. I’ve never argued that. I’m simply making the point that you have to compare what our politicians receive by way of remuneration with what is received by way of remuneration for people in senior management positions and I think when you make those comparisons it can’t be argued that they’re excessively paid. From time to time there are lists published in the paper of the cost of travel around the country. It looks a lot. But part of our job as federal politicians is to travel around the country. I mean I couldn’t do my job as Prime Minister of Australia if I spent all of my time either in Canberra or in Sydney where my electorate is located. I regularly visit other parts of Australia. I’m going to Western Australia later this afternoon and I’ll be there for three or four days and there’s a lot of travel involved in that and I have to take some staff with me because I have to carry on the business of government while I’m there. But I wouldn’t be doing my job if I didn’t visit regularly every part of Australia. Now there is an expense involved in that and they’re the sorts of expenses that end up getting published in the paper and people say gee this is outrageous. But all that in most cases is being published is the ordinary cost of doing your job and part of my job is to travel around Australia. I mean people are always saying to me that you’ve got to get out and meet the people and they’re right. I have got to get out and meet the people. I don’t get out and meet the people if I just stay in Canberra or visit my electorate in Sydney, although I do visit my electorate in Sydney on a regular basis as I should.
CORDEAUX:
Prime Minister, I’ve seen the Labor Party on Friday announced that it was, well it announced [inaudible], I don’t know what the word might be, to legislation to force banks to offer low fee accounts if it wins the next election. That’s sort of like re-regulating the banking industry isn’t it?
PRIME MINISTER:
Well it is. Our answer is that you should have more competition and you should allow the Australian Competition Commission, which we do, and also the Reserve Bank to apply a lot of suasion to the banks in relation to their fees. One of the reasons we have lower interest rates in Australia now believe it or not is that we have more competition from companies like Rams and Aussie Home Loans and those mortgage originators that are a fairly recent phenomenon. And they have acted to bring interest rates down. They’ve made a big contribution to bringing interest rates down.
CORDEAUX:
What do you think of Bernie Fraser setting up a new bank?
PRIME MINISTER:
Well fine, fine. I’m in favour of as many new banks as are viable. You’ve got to bear in mind here that they’ve got to be viable and they’ve got to accept the rigorous prudential requirements that the Reserve Bank and the other authorities will impose. There’s always a dilemma here. On the one hand people want the benefits of greater competition but if a knew organisation is established on insubstantial foundations and goes broke then people scream quite legitimately and complain that they have been badly treated and that there weren’t enough safeguards in relation to the investment of their money. Yet those very safeguards who make it harder for a new bank and therefore more competition to come about in the first place.
CORDEAUX:
Now Mr Beazley’s also said that Labor would fast track the republic. What do you think about that?
PRIME MINISTER:
Well I thought we had a referendum a few years ago.
CORDEAUX:
What is it about ‘no’ they don’t understand?
PRIME MINISTER:
Well can I tell you the Australian people understand very well. Look I think what should happen on this republic is that if over the next few years it’s the desire of the people from a grass roots level for this issue to come back on the agenda it will come back on the agenda. But the idea of me or Mr Beazley saying to the Australian public you know you don’t really understand this, I’m going to re-educate you. Can I say to Mr Beazley that is offensive. The Australian public understands this issue perfectly well. They made a decision for a variety of reasons to the tune of 55% a couple of years ago that they did not want to change. Now as far as I’m concerned it’s off my agenda for the time being. I don’t think it’s a big issue with the public. I won’t be running on it at the next election. Mr Beazley can if he wants to. I think the Australian public is more interested in the level of their income tax, they’re more interested in their interest rates, they’re more interested in the place of Australia in the world. At some time in the future the issue may well come back and that’s fine and in the end as always it will be resolved by the Australia people. But I think it’s altogether too early and almost offensive for the people to say well look you were really quite foolish in the decision you made a couple of years ago.
CORDEAUX:
Go back, do it again, and this time get it right.
PRIME MINISTER:
Get it right. I mean, you know, you should understand that I know what I’m talking about. Now this kind of schoolmasterish approach is offensive to the Australian community, even to a lot of people who voted yes. And look this is a very mixed issue. I’ve got lots of friends who were in favour of the republic and lots who were against it. It seems to cut across party lines. But the mail I get on this is that okay we had a referendum a couple of years ago, just let’s leave it a lone for a while so why on Earth is Beazley raising it?
CORDEAUX:
Okay. Bill, hi. Here’s the Prime Minister.
CALLER:
Mr Howard how are you?
PRIME MINISTER:
Very well.
CALLER:
Mr Howard this is not a political question but I would like to have an answer to this question. It takes two-and-a-half years to get a person nominated for an Australia Day Award but if you win a Gold Medal in the Olympics it takes three months. Why’s that?
PRIME MINISTER:
Well I suppose it’s historically one of those quirks of our systems that if you win a Gold Medal you are automatically according to the ??? of the committees that makes these awards, and I don’t make them incidentally. The government doesn’t decide who gets Queens Birthday and Australia Day Honours. We have an independent council that’s currently chaired by the former Governor of New South Wales – Rear Admiral Sinclair – and they make the decision. I don’t make the decisions for awards for Australian citizens. And it’s just been the practice over the years to automatically give it to Gold Medal holders. You say two-and-a-half years. That’s not always the case. I mean I know of I sometimes support along with other citizen’s applications for awards. I sometimes write references for people and I have no ?? where the application has gone in and its been decided upon in a lesser period than 2 ½ years, although in other cases it may take that long. I’m not saying it doesn’t in some cases. But that’s the explanation for gold medal.
Thanks. Bill.
CALLER:
Yes, good morning Prime Minister. The GST. I would have thought that any sensible person who brought in a new tax system would consider a few points like, number one, it should at least generate the same revenue as before and I think the GST may do that. It should be far simpler than the one it replaces. And number three; it shouldn’t disadvantage anybody paying tax. Now there’s no way known working on such a complicated formula as the GST is worked on that it could possibly pass the simpler test. It’s mind-bogglingly complicated for uneducated people. So what do you think of that?
PRIME MINISTER:
Well, I agree and disagree with you. I agree that the tests that you’ve applied are fair tests. The first one about raising revenue I think we’ll both agree it will pass that test over time it will make inroads in the black economy and that will be good for all other tax-payers. I don’t believe in the fullness of time it will fail the more simple test either. I know that there’s always a bit of transitional friction when you bring in a new system like this. But remember that if you were for example in small business and paying wholesale sales tax you’d have to grapple with five rates. If you are dealing with the GST you have to grapple with one. And it has replaced a number of taxes, not only the wholesale sales tax, but the financial institutions duty, stamp duty on share transfers, and in the fullness of time the bank accounts debits tax aswell. So I would argue that it will over time have cleared the more simple hurdle. As for the disadvantage well I can only go back on what is the published official measurements of this. Inflation over the last year or so up 6.1% and after tax income up 8.2%, pensions up 8.1. Now that’s pretty convincing evidence that it has not disadvantaged the generality of the community. So I would argue with respect that, Lance, it has met those three tests.
CORDEAUX:
Prime Minister, just couple of minutes before the news, we’ve got up to our north, political instability, religious instability, economic instability and many many hundreds of millions of people. Are you at all nervous about what’s going on up there?
PRIME MINISTER:
Well I always watch it ??? and closely with a degree of, I suppose you could say, very focussed interest. I congratulate the new President. I wish her well. It’s been difficult. The good thing is that the transition has occurred very professionally. Far more professionally than the previous one. And a lot more professionally than the one prior to that. And infinitely more peacefully than the one that occurred in the 1960s.
CORDEAUX:
Prime Minister, Carl’s got a compliment for you. Carl, what would you like to say?
CALLER:
Mr Prime Minister, I am one of the persons who write a fair amount of letters to you every year and would you believe even though I write to other ministers you are the only one who answers letters – you and your department. I really sincerely like to thank you for it.
PRIME MINISTER:
Well I take it on the back for those ministers who don’t.
CALLER:
I was amazed I wrote one earlier this year I wrote a letter before Christmas to Mr Ruddock the Immigration Minister and I wrote him three letters and he didn’t answer.
CORDEAUX:
He has been rather busy
PRIME MINISTER:
That’s unusual for Philip but thank you anyway. Nice talking to you.
CORDEAUX:
Prime Minister thanks so much for talking to us. Thank you for your time.
PRIME MINISTER:
OK thanks Jeremy.
END
