PM: New York Interview Transcript

14 July 1999

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP PRESS CONFERENCE GRAND HYATT HOTEL NEW YORK, USA

PRIME MINISTER:

Well, ladies and gentleman, everybody ready to start the news conference? Before inviting questions from you on anything you like, could I again say how very pleased I am at the way in which this conference has been organised. I’d like to particularly thank Peter Charlton and Maurice Newman who really have been the two driving forces behind this. They’re not easy things to organise, fairly late notice in a number of areas through the inevitable circumstances of arranging visits to Washington and they really have done a sterling job. I want to thank my two Ministerial colleagues, particularly Joe Hockey who has specific responsibility for this and Senator Minchin and also Ted Evans the Treasury Secretary who made a major and very well received contribution to the conference this morning. It’s a very important collaborative effort. There has been good cooperation with the office of the Premier of NSW and I was very pleased to have both Mr Carr and Michael Egan the NSW Treasurer present because it is important from our point of view, from Australia’s point of view that we present on things like this we present a united front. We are Australians together overseas working in the long term national interest of our country. Now, any questions?

JOURNALIST:

Prime Minister in terms of the capital gains tax and neutralising the advantage the US has, when you say neutralised does that mean we need to bring our capital gains tax down to the same level that operates here in the United States?

PRIME MINISTER:

Well I was talking generically. I don’t want at this stage to say what is going to be our response to a report we haven’t received but what I was clearly indicating is that if you want capital to come our country and it’s more attractive for that capital to go somewhere else, well you’ve got to ask yourself whether you ought not do something about that and quite obviously aspects of our capital tax at the moment don’t represent an incentive for people to invest in Australia and we do need to look as between specifically Australia in the United States because the great bulk of the worlds capital is generated in the United States. You’ve got to try and achieve as far as possible a degree of neutrality. Now, that I’m not going to get into whether that translates into this or that rate in relation to this or that tax. But I’m stating the general principle and as you would have heard from my speech we have an enormous number of the generics going for us but there are some impediments as far as tax is concerned and we just have to find out how far we can go in fixing them. And then I think you have really a tremendous package.

JOURNALIST:

Prime Minister, in signalling that you’re looking at making the capital gains tax resume more attractive for American investors in Australia, is there a danger that Australian companies could find themselves in a less competitive situation, discriminated against, or will you ensure in whatever you do with Ralph that Australian companies get the same advantages that foreign pension funds do in investing in Australia.

PRIME MINISTER:

Well we won’t be discriminating against Australian companies. If the capital gains tax is reformed well that reform will flow to the benefit of everybody. There’s no way we’ll discriminate against Australian companies.

JOURNALIST:

Prime Minister you mentioned capital gains tax in your speech, you didn’t mention the corporate tax rate. Does that mean you put greater emphasis on reducing capital gains tax as an investment incentive rather than the corporate tax rate.

PRIME MINISTER:

No not necessarily, Glenn. The purpose of my speech was to talk against the background of knowing that other speakers had gone into a great amount of detail regarding the micro and macro economic cast of the Australian economy at the moment. The purpose of my speech was to talk in more general terms. Look, the question of a lower corporate tax rate is obviously a very key element and the debate’s well known and the arguments, some of the arguments for and against have been quite well rehearsed already. I am just conscious that in relation to the capital markets the operation of aspects of the capital gains tax is probably more specifically and more narrowly relevant. It’s not that generally speaking it’s more relevant than the corporate tax rate.

JOURNALIST:

Prime Minister, are you looking at removing the need for US pension funds to use limited partnerships to get capital gains tax exemptions?

PRIME MINISTER:

Oh I’d be amazed if that weren’t one of the things that came up in the consideration in the wake of Ralph. I mean I’m not…

JOURNALIST:

Is it a good idea?

PRIME MINISTER:

I’m not pre-empting anything. Let me make it clear, I quite deliberately avoided today making any specific announcements because I think it derails a rational handling of the Ralph process for me to do that. But I clearly indicated areas that I as Prime Minister think need attention. And I’d be very surprised if that issue didn’t come up.

JOURNALIST:

Prime Minister, I’ve got actually three quick questions, but the first one is about the capital gains tax business. It would have been handy if you’d been able to make your announcement on this visit. How much have American CEO’s mentioned this to you in your private discussions. Is it an issue that is raised like it was this morning?

PRIME MINISTER:

Well a number of them have mentioned it but the question of whether or not Sydney becomes a world financial centre is not going to be governed by whether I make a specific announcement on this visit. Rhetoric doesn’t govern these things. People pay on outcomes. The sort of people that I’m meeting here are quintessentially pay on outcomes they don’t pay on rhetoric. They’re the last mob in the world that pay on rhetoric.

JOURNALIST:

But so are they holding back before you do this?

PRIME MINISTER:

No they just want to know what our policy changes are. They’re not particularly keen, I mean I could make all sorts of flowery remarks, but in the end they pay on results which is good and fair enough by me. We’ve delivered results and we’ll deliver some results out of Ralph too.

JOURNALIST:

And the two other quick questions, one is we now have a new Prime Minister in Papua New Guinea, can you say what you think of this development and the final question is, a more domestic one, there’s a huge controversy raging about the idea of…..

PRIME MINISTER:

Well can we just sort deal with Papua New Guinea a moment and then we’ll move onto whatever other question you want to ask me. I would like to congratulate SirMekere Morauta on his appointment as the new Prime Minister of Papua New Guinea. I particularly welcome it. I think he’s a person who brings a great deal of strength to the position. He’s a very straight forward man. His priority is to put his country’s economy on a sound footing and we would like on a proper basis to help him in that respect but it has to be on the basis that ongoing economic reform is essential. Cooperation with the International Monetary Fund, to implement agreed programs of reform, that is essential. Papua New Guinea does have a special relationship with Australia. We want to give him all the help we can to carry out his reform program and I hope that his election will bring a period of stability and getting on with the job to his country because in recent times there have been grounds for concern about the lack of predicability and stability and the constant debate and speculation about the future government of the country and I particularly welcome his election.

I would want to record that under Bill Skate’s leadership the country did make considerable progress in dealing with the difficult problem of Bougainville. And I would not want his retiring as Prime Minister to go unremarked in relation to that issues but to Sir Mekere Morauta I wish him well, I congratulate him and I hope to be in touch with him next week. I intend to speak to him next week when I return to Australia and I look forward to a very close and productive relationship with him.

JOURNALIST:

With your indulgence the quick final question was, there is a huge controversy in Australia at the moment about talk show host John Laws being paid over a million dollars to go easy on the banks so to speak. Do you think that kind of transaction is acceptable?

PRIME MINISTER:

Well I’ve heard about this and I’ve been briefed on it. I don’t know all of the details and I understand the station is conducting an inquiry. I also understand that other authorities are talking about an inquiry, I don’t want to make a judgement at this stage on the detail of it until I have more information. I must say I was surprised to hear about it and disappointed. I don’t know whether all the claims made are correct. In fairness to the people involved they should be given an opportunity to respond on that but I was surprised. Speaking generally, speaking generically I had always understood it was a fundamental of our system of public debate on issues in our country that people expressed, the views that people expressed were their views on the merits of individual issues and nothing else. And there’s clearly a difference between somebody who specifically endorses a product in a commercial sense and somebody expressing a view as a consequence of a commercial understanding of which the public is unaware, entered into between that person and an organisation about which that view or a group of organisations abut which is expressed. I mean that raises a whole range of other considerations. Now as I say, I don’t know all of the detail of it but it will be plain from what I’ve said what my view is.

JOURNALIST:

There’s impediments. There’s a story that you tell of Australia, the true story, and in the United States which I can speak there is the myth of Australia which often is very, at least in my experiences is very false, the myth being a CEO who asks me isn’t Australia where the crocodile, isn’t Australia the place where the crocodile guy is and the home of Crocodile Dundee. So in America even among top business executives there’s a methodology about Australia the last frontier as they used to say. What kind of marketing is the Government doing to send the true story of Australia and its economic might to the rest of the world?

PRIME MINISTER:

Well I always find those sorts of questions very hard to answer in that I don’t mind some of that mythology because it’s part of the romance and the, you know use that awful cliché the rich tapestry, and it’s not something that you really want to destroy or disabuse people of, I’m quite certain that a lot of Americans have that mythology. I think increasing numbers of Americans recognise that that’s just part and its mythology a nice part of it, just as the wild west and Dodge City and everything is part of the American rich tapestry. I don’t think that is as deeply held by younger Americans. I don’t think that because their access to methods and modes of communication are so extensive now. We don’t have any particular programme to play down Crocodile Dundee and promote Maurice Newman’s outfit, much in all as it’s a noble part of that rich tapestry. We don’t but I think that over time people get a good balance.

JOURNALIST:

Mr Howard I’m just wondering if there is anything to report from your discussions with General Colin Powell and Ambassador designate Richard Holbrooke, particularly on the question of Yugoslavia and the aid workers?

PRIME MINISTER:

Well I have talked about our aid workers with everybody I’ve met of any influence in this country and the reaction I’ve had has been genuine and uniform. There’s a desire where they can to help and nobody has the magic answer. There isn’t a magic answer. We have to persuade the Yugoslav Government to let them go and so far we’ve not been successful. That doesn’t mean to say we won’t be successful but we’ve got to keep trying and we are continuing to try in all sorts of ways. I understand this morning His Holiness has taken up the cause and I appreciate that very much. And it’s consistent with the very strong stance he’s taken on human rights issues effecting the citizens of other countries. We’ll continue at every opportunity to raise it. I raised it with President Clinton. I raised it with Madeleine Albright. I in fact spent some quarter of an hour talking to Madeleine Albright about it at Andrew Peacock’s marvellous function last Sunday night. And we’ll just continue to persevere on every front at every occasion.

JOURNALIST:

Mr Prime Minister, Lisa Dodson from Reuters Television. We understand that Australia has endorsed China’s membership to WTO coming alongside a very contentious lamb ruling by the US. Are we seeing broader trade tensions between the United States and Australia?

PRIME MINISTER:

A broader trade tension?

JOURNALIST:

A broader trade tensions and what are the implications of the lamb ruling for APEC initiatives and I have a follow-up question?

PRIME MINISTER:

Well the American’s support China’s accession to the WTO. The President told me on Tuesday that he wanted China in the WTO and he’s working very hard to achieve that and he’s made that very plain to the Chinese administration so there’s no difference of opinion on that particular issue. The lamb ruling what will it do to APEC? The worry I have is that maybe other countries that are less committed to a more open trading system will use it as an excuse to be recalcitrant. No perhaps I’ll think of another word. Be difficult. I withdraw it immediately.

JOURNALIST:

My follow-up question is that historically there has been a parallel between US Fed moving on interest rates and the RBA. Do you see an interest rate hike in Australia in the near term?

PRIME MINISTER:

I don’t make comments about the level of interest rates either here, in Australia or as the Australian Prime Minister here in the United States.

JOURNALIST:

You agree with Ted Evans though Prime Minister that if the temporary blip in inflation caused by the introduction of a GST gets out of hand that monetary policy would be alive to that possibility.

PRIME MINISTER:

Glenn, I hope you won’t be offended if I invoke my, the question time convention and that is I never when somebody asks me a question at question time which quotes somebody else as a matter of precaution I never accepted that that other person has been correctly quoted so in other words well I’ll. If you want to ask me a question unadorned by reference to what somebody else has said then I’ll be very happy to answer it. But I’m quite certain that what Mr Evans said this morning was sound.

JOURNALIST:

(inaudible).

PRIME MINISTER:

What? You want to ask me an unadorned….

JOURNALIST:

Can I ask you an unadorned question?

PRIME MINISTER:

Absolutely.

JOURNALIST:

If there is an inflation blip as a result of the tax changes do you think it would be appropriate and perhaps necessary at least in the short term to use interest rates to (inaudible).

PRIME MINISTER:

Look Fran I don’t talk about interest rates.

JOURNALIST:

Prime Minister you were high, full of praise for your Labor predecessors both here and in Georgetown in terms of two issues.

PRIME MINISTER:

In relation to a couple of issues two issues

JOURNALIST:

Financial deregulation and tariffs.

PRIME MINISTER:

Where they had strong support from the then Coalition Opposition.

JOURNALIST:

And secondly you were also full of praise for, or you were pleased to have Bob Carr here today, are there circumstances or what circumstances could there be under which in that spirit of bipartisanship you could have Kim Beazley here to sell a bipartisan message?

PRIME MINISTER:

Well I guess the ball is in his court. But you’ve got to bear in mind that Mr Beazley in relation to taxation reform, Mr Beazley has behaved quite differently from how I behaved in relation to financial deregulation, under the Hawke Government and tariff reform also under the Hawke Government, although I wasn’t Opposition Leader in 1991 when the tariff reform statement was made but certainly the then opposition took a very constructive approach under John Hewson’s leadership and I was part of the senior membership of the opposition that participated in that and I was a very strong supporter I remember of the general thrust of the tax reforms that Paul Keating was trying to put through at the summit. Now I’m sure that Mr Beazley would like Australia to become a world financial centre. Specifically Mr Carr was in New York, I don’t know whether he planned his visit around this or whether it was a happy coincidence, but look I do hold very strongly to the believe that as much as possible we should work together when we’re abroad. That doesn’t mean to say we won’t have our vigorous differences at home but Mr Carr likes our tax reforms but I don’t want to, don’t spoil a pleasant sort of, anything pleasant it’s all gone very well but Mr Beazley has chosen to be particularly negative at the moment on our tax reforms. I hope he’s constructive on capital gains tax and corporate tax reform and he’s got a great opportunity and let me say Jim that if Mr Beazley wants to join us in the promotion of Australia as a world financial centre, a way in which he can demonstrate that commitment and join us is to be constructive and positive in relation to business tax reform in contra distinction to his negativity on general tax reform. So the ball is in his court. I mean he can be part of the future on this or he can try and stop the future happening.

JOURNALIST:

Mr Howard are you disappointed that there are moves within the New South Wales Liberal Party to undermine Kerry Chikarovski and have her replaced?

PRIME MINISTER:

Oh look forget it Jim. I mean I’m not going to talk about a State political issue. I generally don’t talk about State political issues. Certainly not here.

JOURNALIST:

Mr Howard you’ve talked about establishing a task force for your push to establish Sydney as the financial centre. Who’s going to head that taskforce?

PRIME MINISTER:

Well there’s a process being gone through. I mean the Ministerial head of it will be Joe Hockey. I mean he’s the public face of it but we have advertised for somebody to head it up in an executive capacity and we’re going through the selection process.

JOURNALIST:

Mr Howard I was just wondering if you had any indications from CEOs that you were talking to last night about whether they’ve got any plans to locate in Australia?

PRIME MINISTER:

Look, look it doesn’t operate like that.

JOURNALIST:

I know it’s a bit early.

PRIME MINISTER:

You don’t have dinner with some of these characters and you know and sit around and talk enthusiastically in the wonderful company of the Consul-General here, and then as they go out the door they say well look you know I’m going to, I’m announcing tomorrow. I mean it doesn’t work that way. But how it does work is that over a period of time you build up credibility. You do what we’re doing marvellously at the moment we’re getting the government and the private sector working together to promote Australia and to promote Sydney but you deliver. I mean in the end you can have all nice dinners and the nice conferences and all that sort of stuff but if you don’t deliver and delivering means getting the generics right which we’ve done and also then addressing some of the specific impediments which we are in the process of doing. Now if at the end of the day we don’t fully deliver we won’t get the reaction. That’s how it works.

JOURNALIST:

Mr Howard what is your timetable for the Cabinet consideration of the Ralph Report? When would you hope to have the fundamental decisions made? And how..

PRIME MINISTER:

Do you want the agenda?

JOURNALIST:

No the timetable but not the agenda and how quickly would you hope that you could get it through the Parliament?

PRIME MINISTER:

Well Michelle I’ve been promised by Mr Ralph the report by the end of July and we will process it through Cabinet as soon as practicable after we receive it. The pace at which it moves through the Parliament after we have taken decisions will of course be determined in part by the attitude of other parties in the Senate. I can’t be any more specific than that.

JOURNALIST:

The Australian dollar has weakened in recent days. Are you concerned about the currency strengths and if the currency were to strengthen how would that affect Australia’s exports?

PRIME MINISTER:

I don’t talk about the level of the currency either.

JOURNALIST:

Mr Howard you talked about in your speech about capital gains how you want to spur investment that you (inaudible) to make some changes with that. I know you said that you don’t talk about interest rates but given that the US rates are expected to go up again later this year and Mr McFarlane has said he expects rates to remain steady, at what point do you become concerned that rate differential may affect Australian investment?

PRIME MINISTER:

Look I’m sorry I do not get into that sort of speculation. I haven’t in three and a quarter years and I don’t intend to start today.

JOURNALIST:

Prime Minister do the American’s share the view of Australians on the ground in East Timor that the Indonesian military is arming the militias?

PRIME MINISTER:

The experience I’ve had in talking to the Americans over the last couple of days is that they regard us as having infinitely more superior knowledge of what’s happening in East Timor and a better understanding than they do. It’s not really, I mean it’s not a question so much of us inquiring as to what their view is, it’s more a question of us perhaps being seen as possessing better and more detailed knowledge. I mean my views on that situation are known and I expressed them yesterday in the speech I made in Georgetown.

JOURNALIST:

Prime Minister does Australia now have evidence then that the Indonesian military is arming the malitias in East Timor?

PRIME MINISTER:

Well Jim I made a statement, a very careful statement yesterday, and it represents what our view is. I don’t get into the detail of what the basis of that statement is except that I thought the statement I made yesterday was justified. That’s why I made it.

JOURNALIST:

Will you raise the issue of Taiwan, Prime Minister, with the new PNG Prime Minister next week?

PRIME MINISTER:

Will I? Well look I haven’t given any thought Richard.

JOURNALIST:

Well would you expect to?

PRIME MINISTER:

Well I haven’t at this stage given any thought to what I intend to speak to him about. He’s not sworn in yet. I’ll talk to him but I’m not going to say at this stage.

JOURNALIST:

Prime Minister just a question back on tax reform.

PRIME MINISTER:

Yes.

JOURNALIST:

How wedded if you like is your Government to the

PRIME MINISTER:

How wedded?

JOURNALIST:

Wedded yes. Yes I’m getting a lot of help here from the Consul-General. To the in terms of reference for Ralph of revenue neutrality and doesn’t that severely constrain the message, the code if I could put it that way, that you’re giving here today that whatever you do you want to drop the rate on capital gains tax and the company rate.

PRIME MINISTER:

Oh look well I mean they’re you descriptions of what, of the code, I don’t enter into that. Look the broad revenue neutrality remains.

JOURNALIST:

Prime Minister just back on (inaudible) we now have the Chinese Government, the American Government and from what you say His Holiness the Pope, suggesting that they will do all they can to free the Australian aid workers in Yugoslavia. What’s your current thinking on the value or otherwise of you personally going to Yugoslavia?

PRIME MINISTER:

I said before that if there were something clearly to be gained by I or somebody else doing that well that would happen.

JOURNALIST:

And nothings changed?

PRIME MINISTER:

Well I don’t have any reason to add or subtract to that. Last question. Thank you. Jim yes.

JOURNALIST:

I don’t want my ABC colleagues here to have the whole of the limelight. When you say the broad

PRIME MINISTER:

That assumes you’ll get a run Jim.

JOURNALIST:

When you say the broad revenue neutrality will be maintained.

PRIME MINISTER:

Yes.

JOURNALIST:

Does that mean that there could be a touch of

PRIME MINISTER:

A nip. No, no, no

JOURNALIST:

A touch of revenue negativity. I mean could there…

PRIME MINISTER:

No, no, no look what Peter said about that remains the position.

JOURNALIST:

Okay.

PRIME MINISTER:

Thank you.

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