Transcript - Howard - Radio Interview

TRANSCRIPT OF THE PRIME MINISTER

THE HON JOHN HOWARD MP

RADIO INTERVIEW WITH ALAN JONES, 2UE

Subjects: economy, ministry changes, current account deficit, trade issues, lamb exports, manufacturing industry, foreign aid, industrial relations reform, community violence, senate reform, business tax reform, Collins Class submarines, republic referendum

E&OE……………………………………………………………………………………

JONES:

Prime Minister good morning.

PRIME MINISTER:

Good morning Alan.

JONES:

Prime Minister, you said in Parliament last week that Australia has an economic self respect, quote: 'that I do not think I have experienced in the 25 years I've been in public life'. How do you measure that?

PRIME MINISTER:

I measure it by the straight statistical achievement. I also measure it by the greater respect and deference that is paid to Australia's economic performance by other countries and other leaders. I measure it by the fact that against all predictions we were not overwhelmed by the Asian economic downturn because we put our house in order. And I measure it by the fact that the prospects of this economy remain very strong, and also by the fact that we've been able in the last few weeks to put through the biggest shake up of our taxation system at least since World War II. So when you can do those things the rest of the world takes a bit more notice.

JONES:

Everyone likes to be recognised for their achievements. You've never sought that sort of recognition but do you wonder whether people fully understand the nature of the reform that's been undertaken in the last few years? I mean gun laws, native title, and the battle on the waterfront, trying to sell Telstra, the budget surplus, and those sorts of things. Do you think that's fully understood by the community?

PRIME MINISTER:

I don't think in those terms. I don't think people specifically think gee it's a good thing that the budget's back in surplus. But what they do think is a good thing is the fact that partly because the budget is back in surplus they're paying $320 on average less a month on their housing mortgage. The benefits of good policy are understood and supported by the community when they are translated into benefits for them. And the goal of the Government and the goal of the Prime Minister is not to sort of list any personal achievements but rather to deliver good outcomes for the Australian people and the thing that pleases me most about our economic record is that we have been able for most Australians to deliver good outcomes. Their real wages are higher, their mortgage interest rates are lower, there are 400,000 more jobs. All those things are tangible benefits. Now there are some people who aren't getting that. I accept that. And there are some sections of the community who are still suffering and we have to work even harder to help them, and there still great pockets of injustice and inequity in our society and no Prime Minister even at a time when things are going strongly should ever lose sight of that fact.

JONES:

You also said in the Parliament that tariff reform was one of the five main areas of economic modernisation. You don't yet have a minister for trade to replace Tim Fischer.

PRIME MINISTER:

I'll be announcing this morning at a press conference before I go that Mark Vaile will become the minister for trade. The ministerial arrangements will involve him going to the trade portfolio and he will do a very good job, as did Tim Fischer. And I'll be making Warren Truss not only a Cabinet minister but I'll be recommending to the Governor General that he take over the agriculture, fisheries and forestry portfolio. And the newcomer into the ministry will be Larry Anthony. It will be a third generation Anthony in a ministry and he'll become the minister for community services.

JONES:

Yeah, he's a first class young man Larry Anthony.

PRIME MINISTER:

He's a very impressive young man. I think they're good changes. I will work well with both John Anderson and Mark Vaile. Mark will do a very energetic job in the trade portfolio and Larry will bring a great deal of commitment and enthusiasm to the community services portfolio.

JONES:

Now on the question of trade though, does it worry you when you're talking about modernisation that we are stuck with this $1.9 billion trade deficit for April, marginally better for May, but the last 5 months have been absolutely horrendous? If we are constantly going to live in deficit on trade, how do we pay for that deficit?

PRIME MINISTER:

Well we historically run a current account deficit. We have for most of our existence because we're that kind of country. We need to export to survive. It depends on how big it is. It's too big but it's manageable, and it's manageable because we can service the debt far more easily than we could 15 years ago and it's also manageable because we have a budget surplus and we have low levels of inflation and low levels of interest rate and we do not have to close the economy down as happened in the 1980s in order to control the size of that trade deficit.

JONES:

But you'll be talking to Prime Minister Obuchi and President Bill Clinton. They don't have this view about level playing field if it's likely to interfere with their own domestic position, and the position you're talking to Clinton about, the lamb…

PRIME MINISTER:

We haven't got an answer on lamb and lamb is quite a watershed as far as the Americans are concerned. They are telling the rest of the world there should be more open trade but they are….

JONES:

Don't practice it.

PRIME MINISTER:

Well that's what I said to president Clinton. I had a conversation with him three weeks ago and I put that very proposition to him. I said President, if you close down our lamb exports to the United States you will send a terrible signal to the rest of the world. You'll be saying that we talk one thing we do another. Now he's very conscious of that. I'm still not overly optimistic about what the Americans are going to do but we are still in there punching and we haven't heard yet, and I'm hopeful the Americans will at the last moment see the wisdom of not interfering with a market that we have worked very hard to win. I mean the reason why I argue for more open markets Alan is that this is a lamb market we didn't have a few years ago and as an exporting nation we have to win market share overseas if we are to expand. And if we get markets overseas than obviously people have got to have some capacity to trade into this country. Now there is no such thing as a level playing field as Tim Fischer was fond of saying, and you have to constantly make pragmatic judgements in the best interests of Australia and that's what we try to do on each issue.

JONES:

Billy Wentworth, whom you know well, wrote the biography of Jack McEwen, and he wrote: 'for 2 years McEwen was in the sweat box of international negotiation. He saw Australia's trade competitors at work, he heard them say one thing and watched them do another. He moved from a stance of real hope for a world in which big and small nations would transact business on a basis of fairness and equity, to one of skepticism that the big would ever give an inch to the small. And he was utterly convinced, not from theory but from practice, that the much vaunted level playing field in world commerce was a myth'.

PRIME MINISTER:

Well I don't know that I disagree with that conclusion. I would make the point though that our economic performance now is just as strong if not stronger than it was at the time of McEwen. I mean we have an economy now whose fundamentals are stronger than they've been since the late 1960s.

JONES:

But this is a big issue because…..

PRIME MINISTER:

[inaudible] ……McEwen's contribution to this country, but let's keep it in perspective.

JONES:

Yeah but the Manufacturing Workers' Union are saying today that manufacturing is at its worst post war level since the recessions of the 70s, 80s and early 90s. It says manufacturing exports to Asia have been cut by 40% but imports continue to rise. And they talked about a Comalco aluminum plant in Queensland getting $100 million in Commonwealth assistance but Australian firms excluded from the deal. Now while ever we continue to support international companies and leave Australians high and dry how can we sponsor a manufacturing industry, or growth in manufacturing employment.

PRIME MINISTER:

Well, I'll say a couple of things about that. First is that any loss of manufacturing exports to Asia is not due to tariffs, it's due to the Asian economic collapse. And you can't blame tariff changes for that. As far as that Comalco project in Queensland is concerned, well, that hasn't come to fruition yet and the question of whether or not there will be foreign firms or Australian firms, therefore, can't be resolved.

JONES:

But we are giving assistance to foreign firms, why don't we do that for Australian firms?

PRIME MINISTER:

Alan, hang on, hang on. We give assistance, Alan, to Australian-based projects. And when you help an Australian project you help jobs. I mean, one of the…

JONES:

Foreign jobs.

PRIME MINISTER:

Well, no, no, I mean…

JONES:

The profits are repatriated overseas.

PRIME MINISTER:

Well they do employ Australians and they pay Australian tax and the company pays Australian tax. And we've just decided to give some assistance to the establishment of a pulp mill by the Pratt organisation in Tumut and that is going to generate hundreds of local jobs. I mean, you have to remember that when you assist a project, even though there may be some foreign investment in it, that it does generate jobs here in Australia. And all of those things that you've mentioned would generate Australian jobs and those Australians will pay tax and the company will pay tax.

JONES:

Well, one of the pluses you mentioned earlier on about achievement and we talked about the waterfront reform and there's a second slice of industrial relations reform, if you're introducing it where do workers of Oakdale colliery and others fit in? There's talk today that at least 3,000 employees of dozens of companies have lost an estimated $30 million in entitlements in the past few years.

PRIME MINISTER:

Well, that is a result of some companies going bankrupt and their money not being available to meet redundancy and leave entitlements. And this is a problem. Two of my Ministers, Peter Reith and Nick Minchin, who met industry people and union people a couple of weeks ago are coming back to Cabinet with proposals to make changes in this area. I think we do need changes.

JONES:

Is it urgent?

PRIME MINISTER:

It is quite urgent, yes, but it's got to be handled carefully because there are implications. If you go too far in one direction there are implications for the ability of people to generate enough cashflow to run small businesses.

JONES:

But should liquidators and secured creditors get their money ahead of workers?

PRIME MINISTER:

Well, that is the issue that's got to be resolved. If they don't then to the extent that that has some impact on the amount of credit that is available for small business, that could in turn have some impact on the capacity of those businesses to employ people. This is an issue that in addressing this I think quite serious matter, this is an issue that has to be resolved. I should say in relation to Oakdale that as I've foreshadowed, I think when I last spoke to you about this, that we have been in touch with the Australian Securities Commission and the Australian Securities Commission is investigating the circumstances of what's happened. Now, I'm not raising any expectations in relation to that but you will remember…

JONES:

So how do they pay their mortgages, Prime Minister?

PRIME MINISTER:

I beg your pardon?

JONES:

How do they pay their mortgages?

PRIME MINISTER:

I am acutely aware of that but I'm also acutely aware of the fact that the capacity of small businesses to finance their operation would be reduced if they are forced to put aside money that they might otherwise invest in the operation of those businesses.

JONES:

But if they're using employee entitlements as part of their cashflow they've got to be pretty crook to start with.

PRIME MINISTER:

Well, many small businesses do that, Alan, that is the…

JONES:

We went through this before. It's not their money to use.

PRIME MINISTER:

Well, all I'm saying, I mean, I agree with you that it is a very difficult situation and these men have a lot of justice on their side. I'm simply making the point to you, though, that if you make a permanent change to the rule for the future and you prevent many small businesses from using money that they habitually use now in the cashflow daily operations of their business, that is going to have an impact on them. Now, whether that is regarded as wise practise or not, it is the reality, and you and I often talk about the need to deal with reality rather than theory. Now, the reality of many small business operations is that they do use money that is theoretically entitled. It theoretically is meant to be earmarked for a future liability, they use it in the daily operations of their business, otherwise they would have to borrow more from the bank and many of them would, therefore, go out of business.

JONES:

One of the phrases being used beneficially in the last couple of days by your Employment Minister, Tony Abbott, is about moving away from the culture of welfare. I think there is widespread understanding of exactly what he's saying on that. What about the culture of violence, how damaging is that and what prime ministerial initiatives do you take to try and turn that around?

PRIME MINISTER:

Well, I think it's one of the most serious things in our community. The greatest thing we did in relation to that, of course, were the gun control laws. And whilst I don't want to claim too many benefits from that I do want to make the point that we've already seen a drop in the number of deaths, homicides related to the use of guns. I think you need, constantly as a community, to be encouraging the habits of civility and courtesy. I think we do as a society have too much violence through video games, too much violence on television screens, in the end, the best regulators of this appearance. I think we teach our children to acquire the habits of violence too early and too often. And as a society we are not quick enough to condemn violence when it occurs.

JONES:

You've been talking about further reform. You say the job's not done, no Prime Minister ever gets to the top of the mountain, there's always another hill to climb. Given that the Senate already has challenged you on the tax reform, will challenge you on new industrial reform, has challenged you about youth wages, has been intransigent over the full sale of Telstra, doesn't seem committed to a 30 per cent corporate tax rate, how much is reform of the Senate part of reform which remains to be done?

PRIME MINISTER:

Well, I think that's something that will attract a lot of debate in the months ahead. Once again, I've got to deal with the here and now. Reform of the Senate inevitably conjures up the notion of constitutional change and you know how difficult that is in this country and you know how a country can get diverted from the day-to-day needs of things with a debate about constitutional change. I think what you have to do with these things, Alan, is you have to achieve what you can with the existing mechanisms but recognise that they're not perfect. And if the opportunity for change, beneficial change which is fair to all parties, presents itself in the future you try and bring it about.

JONES:

So if the Labor Party are prepared to support a capital gains tax change, would you introduce that into the Senate quite separately from corporate tax change?

PRIME MINISTER:

Well, I think it's too early for me to speculate how I will handle the tax.

JONES:

But we do need a change to capital gains tax, don't we?

PRIME MINISTER:

Well, we certainly need to remove some of the disincentive in the capital gains tax and I can assure you that whatever is needed to get that through we will undertake.

JONES:

I mean, our marginal rate, capital gains tax, as you now, is about 49 per cent. In America it's less than 20 per cent.

PRIME MINISTER:

That's right.

JONES:

And it is a disincentive, isn't it?

PRIME MINISTER:

In a global economy if it's more attractive to invest in the United States than it is here, well, the investment will go to the United States. That's one of the realities of life.

JONES:

Just two quick ones before you go. The navy apparently is going to submerge you on a Collins Class submarine to prove they work, are you aware of that?

PRIME MINISTER:

Well, I've read that and I'll give some consideration to…

JONES:

Will it be one of those that needs $600 million to fix it?

PRIME MINISTER:

Well, that is a disappointing project. I think the concept way back may have been a good one but I'm glad that John Moore had the foresight to get a couple of outside experts to have a look and really reveal the extent of the problem. We are optimistic that when we get the new weapons system and that when the defects are fixed that it will be a first class piece of equipment. But I can't disguise the disappointment I feel about the way in which the project has been handled.

JONES:

And finally, Australia becoming a republic, is that part of your urgent programme for change?

PRIME MINISTER:

No, it's not. I am not in favour of a republic because I think the present system works well. But I promised the people that there would be a vote on the issue and I'm keeping my promise.

JONES:

Good on you. Okay, good to talk to you, talk to you when you get back.

PRIME MINISTER:

Okay, Alan.

© Scoop Media