26 October 2001

Subjects: economy; boat people; war against terrorism; tax; CHOGM; illegal immigrants; people smugglers; departmental funding; humanitarian issue in Afghanistan and Pakistan.

PRIME MINISTER: Well ladies and gentlemen I just have a couple of comments to make and then I'd be very happy to answer your questions, but the big and important campaign news today is that there's a black hole of $577 million in the Labor Party's budget costing. This is a major error, this puts further pressure on the credibility of the Labor Party's election promises. It means that in reality the deficit is significant, there is a significant deficit, the budget is in significant deficit. The error arises because the Labor Party in relation to Telstra has made an assumption that is not supported by the material in the forward estimates released by the Department of Treasury and the Department of Finance. And what should now happen is that all of the costings should be made available to the Department of the Treasury and the Department of Finances for neutral costing in accordance with the well established budget process. And I'm certain that when they have a look at it that the principles that were applied in the forward estimates will be applied to Labor's costing.

There was no suggestion in the forward estimates that any subsequent sale of Telstra would involve instalment receipts. It was also envisaged and it's clear if you have a look at the papers that you do it in three equal tranches, there's no question of instalment receipts and the Labor Party's admitted in the Fin Review this morning, via its spokesman, that their calculations had been done on the basis of instalment receipts. But that wasn't how it was described in the budget papers. And that is how you find this error and as Mr Murphy pointed out this morning it really matters not in a sense whether there's a full sale of Telstra or not, the claimed savings are simply not there because of the error that the Labor Party has made.

Now we argued before this error was established that effectively because of their use of loans which in reality will turn out to be instalments, I mean I'd like them to spell out when they're going to get the nursing homes to repay the loans they're making, whether they're going to charge them interest, are they repayable on demand, what are the terms and conditions? And if loans are without interest, have no specified period of repayment then clearly they're not loans they're payments. And therefore they should go straight off the bottom line. So that was the problem Labor had with its figuring before this $570 million had been discovered. So Labor now has a major credibility problem. On the basis of its costings if it were to win government and to implement everything it says it's going to implement the budget next year would be in very substantial cash deficit.

JOURNALIST: Prime Minister what would be the extent of that $577 plus what you were saying before about the…

PRIME MINISTER: Well you're looking, yesterday our calculation was if you treat the so called loans on the information available to us, as they should be, as really outlays then you're looking at the $570 odd plus $192. So you're looking at close to $800 million and that is a very substantial cash deficit. And there is no explanation, I haven't heard, there is a deafening silence as far as any real explanation for this is concerned. I mean the forward estimates make it clear, there are no instalment receipts. They make that clear and Labor's admitted that that's the basis of that calculation and this has been pointed out by somebody independent of the Government, Econtech, and they're completely independent of the Government.

JOURNALIST: … fiddled with the budget figures shortly before going into caretaker mode?


JOURNALIST: So the clawback of unspent departmental money, what were the circumstances behind that…

PRIME MINISTER: There is no suggestion that if something's unspent there's an automatic carry forward. It's something where there's always a great deal of flexibility as to what you do, there's no hard and fast rule that if there's something unspent there's an automatic carry forward.

JOURNALIST: (inaudible).

PRIME MINISTER: I beg your pardon?

JOURNALIST: Is the surplus then a true surplus?

PRIME MINISTER: The surplus is a true surplus, of course it's a true surplus because it's there whereas in case of Labor it's not. I mean where's the $570 odd million? It's not there.

JOURNALIST: Prime Minister some of the US military analysts have been saying over the last 24 hours that the Bush administration is trying to encourage you to tour parts of South East Asia…

PRIME MINISTER: That we should do what?

JOURNALIST: That they're speculating that the Bush administration is encouraging you to tour some parts of South East Asia to shore up some support in Malaysia, possibly Indonesia for their action. Are there talks underway about that?

PRIME MINISTER: I have had no such approach. And I have heard of no such suggestion.

JOURNALIST: Would it be a good idea?

PRIME MINISTER: I've got an appointment with the Australian people on the 10th of November. Obviously if I'm re-elected as Prime Minister I will continue to do everything I can to support the Coalition efforts. As to what I might do I don't rule out doing anything consistent with the sort of frame work I outlined last night. But please don't take that as some kind of confirmation however indirect that those reports are correct, I have had no such request from the United States.

JOURNALIST: Can you tell us, have you got any information about when any of our planes, ships or men will be leaving towards Afghanistan?

PRIME MINISTER: As soon as I am in a position to provide some more precise information about further departures I will inform the Australian public.

JOURNALIST: Has the SAS left yet?


JOURNALIST: Prime Minister what's your response to Neville Wran's comments that he laments the introduction of the race card into this election campaign and that this and future generations will regret that. He said, when I saw those three little children in the paper this morning something told me Mr Ruddock was wrong.

PRIME MINISTER: Well can I say this that I was touched by that photograph too. This is an appalling human tragedy and the loss of innocent young lives is always unutterably sad and nobody's got a mortgage on emotion in those situations. I am so sorry for those families and I'm so sorry for those little children. But the suggestion that in some way Mr Ruddock is to blame for that is wrong and it should not be made and it's not justified by the circumstances. Race has not been introduced into this election. And may I make the further point, where does the Labor Party stand on this whole issue? One minute they say their policy on illegal immigration is the same as the Coalition's, and then in the next breath if they think it suits their political circumstances they try and take a different tack. I mean we have had a consistent position. I mean, they are once again going from one side of the street to the other. But I don't want to go back over matters that were canvassed a couple of days ago, however if people imply that in some way that Mr Ruddock who has spoken for the Government with its total support on this issue is in some way responsible, however they may try and dress it up, in some way responsible then they are wrong and I think those remarks merit, any remarks to that effect should be criticised and very strongly criticised. I totally reject any suggestion that we have introduced the race card and can I just make the logical point that if the Labor Party's policy on illegal immigration is as Mr Beazley claims the same as ours then Mr Wran's criticism last night was a criticism of Mr Beazley as well. But of course he didn't say that, he didn't say Mr Ruddock and Mr Beazley are wrong, he said Mr Ruddock was wrong. I think Neville was just playing party politics. But you know dressing it up in fairly indignant tones.

JOURNALIST: Mr Howard have you seen the video of tapes from the HMAS Adelaide that apparently shows asylum seekers pushing people overboard? If not will you see them and do you think it should be released publicly?

PRIME MINISTER: I haven't seen it, I've been told of it by Mr Reith. I've got a lot of things to see at the present time. I don't know that there is a particular need at this stage to make it public.

JOURNALIST: Mr Howard in regards to the deployment, you said last night public support should never be taken for granted. What's your assessment of the current level of community support for the mobilisation of Australian defence personnel?

PRIME MINISTER: Public support in my opinion remains very strong. And I repeat what I said last night, you never take it for granted. Over a period of time false arguments can gain currency and I think there's an obligation on all of us who support the deployment to continue to argue the case and that was the purpose of the speech I made last night and I'm pleased that it has received significant coverage. Many of the points I made I'd made before but it does serve a useful purpose to draw it all together in one presentation.

JOURNALIST: The Defence Association has said that it has concerns about the deployment of Australian troops and the strain that's going to place on our domestic capability to protect Australia. Do you have any concerns or do you feel that they're warranted given your comments last night about possible further deployment?

PRIME MINISTER: Well in relation to my comments last night I was making the fairly self-evident point that there might at some time be in the future a further request. I don't expect it, I don't expect there to be a further request but obviously if there were you would not rule it out in advance or rule out a positive response in advance. You'd have a look at it. But I don't really expect there to be a further request. The Defence Association as I understand it strongly supports our policy and I can only repeat that on the advice given to me by the experts - for about the 10th time I make the comment I'm not a soldier, I'm not a military expert - and I won't pretend to be one but I do rely on the advice of experts and the advice I have is very strongly to the effect that what we are doing is well within our capability.

JOURNALIST: … poll this morning that women particularly are turned off by your decision to send…

PRIME MINISTER: You're referring to that Fin Review analysis?

JOURNALIST: I think so yes.

PRIME MINISTER: Look I think that may, with due respect to that esteemed journal, that may be a somewhat superficial abstraction from a generic poll and I don't think it necessarily proves anything.

JOURNALIST: Is Mrs Denton's concerns about the GST reflected…


JOURNALIST: Andrew Denton's Mum.

PRIME MINISTER: Yes, very nice lady.

JOURNALIST: Is there a concern about the GST reflected in a much wider way among welfare beneficiaries and pensioners and is it people like Mrs Denton who will win on Sunday?

PRIME MINISTER: Well I'm not going to talk about Sunday at this stage. But I guess the real answer to the first part of your question we'll all find out on the evening of the 10th of November. My assessment is that as each week goes by people more and more want to move on from the introduction of the new tax system. I certainly believe that the CPI result that came out a couple of days ago which demonstrated very clearly that the prediction we'd made about the cost impact of the GST was very accurate and when you look at the increase in the pension over the relevant period - 8.1%, 8.2% versus about 6% for the increase in the cost of living - it shows that we have compensated people fully. Then you have to of course make allowance for some of the other measures that have been of enormous benefit to pensioners, part pensioners and self funded retirees.

JOURNALIST: Prime Minister, in light of the new budget realities is the prospect of some form of tax relief for Australian families an option now for your government?

PRIME MINISTER: I have said all along that we would have something to say about the issue of tax in the policy launch and we will.

JOURNALIST: Is it still a live option though…..

PRIME MINISTER: Well we will have something to say about the issue of tax. I mean I won't just be saying we all pay too much tax which of course we do.

JOURNALIST: Mr Howard, in light of what happened this week with the boat people….

PRIME MINISTER: The light of what happened…..

JOURNALIST: In light of the drowning.

PRIME MINISTER: The drowning, yes.

JOURNALIST: Do you have any further worry about turning back boats because they're obviously all in very….?

PRIME MINISTER: Michelle I don't because the Navy has acted humanely in every situation. We will have proper regard for safety and for human life and nothing the Navy has done has put lives at risk. Everything the Navy has done in fact has helped preserve life. They've pulled people out of the water, they've fixed engines, they've provided people with food and blankets and water. The Navy's gone out of its way to help people so any suggestion that what we're doing puts people at risk is…it's the reverse. It's the reverse Michelle.

JOURNALIST: Mr Howard, you said yesterday that you would investigate the allegations about Indonesian police [inaudible] military forcing people….

PRIME MINISTER: Yes I've asked for advice from the Department of Foreign Affairs, from the Australian Ambassador and…

JOURNALIST: Have you had any of that advice yet?

PRIME MINISTER: Well the information I have to date is that at an official level it's being denied. That's the information I have to date. That at an official level it's being denied.

JOURNALIST: And you believe that?

PRIME MINISTER: I can only report to you what I've been told.

JOURNALIST: Mr Howard, were you concerned yesterday that, I know it was a Greens candidate, but someone could actually get up and into the building last night and disrupt your defence address, that someone could get so close to you?

PRIME MINISTER: Well frankly it didn't concern me. It didn't really. We still live in a free open society and in a sense it was a metaphor for what we're fighting for isn't it. You had somebody there who wasn't violent, who was obviously engaged in a political stunt. She got a bit of coverage. I didn't feel threatened by her and in a way isn't that what it's all about? And that's part of what we're fighting…you know what this is about. And if you get people in my situation saying well, you know, this is outrageous and I feel offended or threatened by it I think you're then starting to lose part of the fight. I mean it's just one of those things that happens in an open society. I've got to tell you I did not feel the least bit threatened by that person.

JOURNALIST: Mr Howard, do you support the push to move the CHOGM, the postponed CHOGM meeting to Coolum and if it is moved from Brisbane is it a concession to the terrorist threat?

PRIME MINISTER: I think the second would, if it were to happen, is drawing a pretty long bow. Look there is discussion still under way about all of the details of it but the good news is that CHOGM is very likely to be held in the first week of March next year.

JOURNALIST: Mr Howard, in your speech last night you spoke of precision in the operation….

PRIME MINISTER: Evil precision.

JOURNALIST: No no, the precision with which the coalition would conduct its operations. There's already been a number of civilian casualties. Do you worry that that may begin to undermine support for what the coalition is doing?

PRIME MINISTER: Well I don't believe so. Civilian casualties are almost by definition unavoidable to some degree. The Americans are obviously going to try and limit it as much as humanly possible and I very much regret any loss of life as a result of that.

JOURNALIST: In the past couple of hours…..

PRIME MINISTER: Past couple of hours yes.

JOURNALIST: Four people in Western Australia have been gaoled for six years for smuggling 429 people here. Is a six year gaol term enough for a people smuggler?

PRIME MINISTER: Well I'm not going to make a comment on a term that's been imposed. The question of whether there will be any appeal against that, the adequacy or otherwise of that, is a matter for the Crown law authorities. I don't believe myself in giving knee-jerk running commentaries on decisions taken by courts without getting advice.

JOURNALIST: …argument Mr Howard about the surplus, the $577 million. Are you proposing some independent mechanism to address that issue?

PRIME MINISTER: Hey? It's not our mistake.

JOURNALIST: No. I mean are you proposing some way of independently assessing that particular matter?

PRIME MINISTER: But it's already been independently assessed by Econtech. Econtech has put out a statement. Chris Murphy is doing a running commentary on both of us and he's identified this. Now that's independent. He's doing that himself. He's got nothing to do with the Government. I mean he's known to the Government and he's known to the Opposition in the same way that Access is known to the Government and known to the Opposition. But this has come from an independent source so it's already been done. And I haven't heard from the Labor Party, I haven't heard their explanation because there is apparently none. They have got an error, a black hole of $577 million. And it further drives their putative budget into deficit next year. It's as simple as that.

JOURNALIST: Mr Howard, you're more than halfway through…..

PRIME MINISTER: I can hear a request for commentary coming up.

JOURNALIST: How do you feel that the campaign is going? Are you playing to a packed house or are they walking out?

PRIME MINISTER: Well if some of them go out, I'll tell you what, they're thinking as they go through, past the ticket box, they're thinking to themselves I really shouldn't have done that and they're going to come back.

JOURNALIST: Mr Howard, earlier in the campaign you indicated that ASIO legislation would [inaudible]. It now seems that it will. [inaudible] seems, confirmed again. Are you…

PRIME MINISTER: Well you can't confirm anything in it until the new government has signed off on the legislation.

JOURNALIST: What's your attitude to that?

PRIME MINISTER: My attitude is that we will look at that matter. That's my attitude.

JOURNALIST: It's possible that people won't…..

PRIME MINISTER: No I have said we will look at it Michelle.

JOURNALIST: Mr Howard do you think if the SAS unfortunately incurs casualties during the campaign, will you replace any members of our existing force?

PRIME MINISTER: I'm not going to start hypothesising about that. I really don't think it's appropriate for me to start hypothesising about what we might do in the event of casualties. I hope they don't incur casualties. I know that all Australians hope they don't and I just don't intend to get into that kind of hypothesis.

JOURNALIST: [inaudible] humanitarian situation in Afghanistan and Pakistan, you've said a few times this week that the world's response to Kosovo was something of a model. Does that… behaviour for accommodating these people, does that mean that you would consider temporary asylum, safety asylum in Australia?

PRIME MINISTER: No what I meant by that was that the goal in Kosovo was to stabilise the situation so that people could go back to their original homes.

JOURNALIST: Mr Howard, just on the question of carry over of funds, is this the first time there's been a blanket rule that no funds be carried over?

PRIME MINISTER: My very strong understanding, and I have to put it that way because I'd have to go back, when you say the first, well I mean presumably that applies to all former governments and I'm not going to presume to answer for them. But can I say that what we have done is in line with the flexibility and varied approach that is taken in relation to these issues according to circumstances. There's nothing unusual about it. I actually think it's a very good practice not to let departments imagine that they can have automatic carry overs. It exerts a discipline. If you say to a department look you've got X hundred million dollars to spend this year, it doesn't really matter if you don't spend it, you can get the same amount next year and you can carry over what you haven't spent in the previous year. I don't think that's very good budget practice at all.

JOURNALIST: Would your budget be in surplus if you hadn't allowed them to carry over the funds?

PRIME MINISTER: Our budget is not in deficit. I mean that's the equivalent, if I may say so with respect, that question is the equivalent of saying would you have had a higher surplus if you hadn't have spent something on X, Y and Z. I mean the reality is that our figures are absolutely correct and transparent and in the groove and in accordance with established procedure.

JOURNALIST: Well the answer to that question is yes.


JOURNALIST: That you would have had a higher surplus if you hadn't spent money on X, Y and Z.

PRIME MINISTER: No. The point I'm making Karen is that what we have done is perfectly normal. That's the answer.

JOURNALIST: Foreign takeovers are back in the wind. What's the Government's view of a takeover of Western Mining?

PRIME MINISTER: We will look at it, or the Treasurer will look at it on behalf of the Government in accordance with established foreign investment policy and that takes into account the national interest. But I can't give a commentary on an individual proposition like that. It wouldn't be proper.

JOURNALIST: Given the skinniness of the surplus, isn't it inevitable that any new government will have to embark on a range of expenditure cuts….?

PRIME MINISTER: Well it depends how far you are committed to additional expenditure. And there's no doubt in the world that the Labor Party is spending up big time in this election campaign. We're a little over half way and they are already potentially in deficit to the tune of about $800 million in their putative first Labor budget. Now in those circumstances I don't know how on earth they could meet their commitment in relation to being in surplus without embarking upon either tax increases, welshing on their election promises, or embarking on savage cuts to expenditure.

JOURNALIST: Do you rule out a range of expenditure cuts in your next budget…?

PRIME MINISTER: We will maintain the programs that we are committed to.

JOURNALIST: What will be your theme on Sunday?

PRIME MINISTER: My theme on Sunday will be all about the future welfare and strength of the Australian people. I'll be outlining our case for re-election, and I'll also be throwing forward very much to the sorts of challenges that Australia will have and our responses to those challenges over the next three years.

JOURNALIST: What programs are you committed to?

PRIME MINISTER: We are committed to all the programs that we support.



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