ROBINSON:
(Inaudible) ...got the drought affecting the Australian economy, you've also got the general uncertainty in the world economy over Iraq. Where do you see the Australian economy going in the light of Iraq?
TREASURER:
We think that the international situation is difficult. You've got Iraq, you've
got a weak Europe, you've got Japan with problems and of course the United States
has been through recession, so that is not giving much impetus from the outside.
As you mentioned Australia still has a very deep and severe drought. So the
fact that taking into account those factors, the Australian economy is still
growing, we think forecast to grow about three percent, indicates that there
is a great deal of strength in the non- rural economy in Australia and business
investment is still quite good.
But as you refer, the fact that there are these international difficulties and
these climatic difficulties will take a bit of a clip off our growth and bring
it back from what we got used to, around four percent to about three percent
in the forthcoming year.
ROBINSON:
Are you worried about paying for the commitment of Australian troops to the Middle East?
TREASURER:
The commitment of troops will involve additional expenditures. We have already pre-deployed troops and that will have costs over and above our normal base defence funding and I have made it clear to colleagues in the context of the run-up to the 2003-04 budget which I am doing at the moment, defence will have first call on expenditures. So we will have to be tight in other areas.
ROBINSON:
The Iraq policy is not a popular policy with a lot of the public, so is it going to be extra difficult getting that budget round through?
TREASURER:
Well, I would hope that the Opposition will understand that the government, having committed troops, it's the duty of the Parliament to adequately provide for them and I think that will be their attitude. I cannot imagine that they would try and block that particular funding. From time to time you see that they block measures which they think can give them some domestic popularity but I don't think they will be taking an opportunistic attitude towards defence expenditures.
ROBINSON:
Australia of course is part of the Coalition of the Willing, do you have any qualms about going in with the US and the UK if there is no second UN resolution?
TREASURER:
We would like to see the UN Security Council make a very firm statement about the fact that Iraq has not cooperated and has not complied with the terms of Resolution 1441. And we have argued in the Security Council that it should do that and our position is that having seized itself of the matters, having laid down all of the conditions, having demanded compliance and that compliance not having come forward that it is up to the UN Security Council to determine its attitude and we will be awaiting to see what its response is.
ROBINSON:
If there is no second resolution would Australia still go in if necessary under 1441?
TREASURER:
Well we hope that there will be one. You asked me what happens if there isn't
one. Well obviously we will look at the situation then. But as at this moment,
we are arguing strongly for the UN Security Council to take a very strong lead
in this. But let us not lose sight of the point here. The point here is that
a brutal dictator has weapons of mass destruction and the world has got to decide
whether or not it wants to do something about them.
ROBINSON:
Just today the Leader of the Opposition, Simon Crean has accused the government of locking Australia into a timetable for war. Is it locked into?
TREASURER:
The Australian government has pre-deployed troops. Whether or not those troops are engaged in action depends of course whether there is any action and it depends on whether or not the government determines to support such action. Other than that there is nothing that has been locked in and the government will look very carefully at the circumstances as they arise. The Leader of the Opposition habitually makes claims and the fact that he makes them doesn't mean that they have fact behind them.
ROBINSON:
Are you hoping that Australian support for the United States' position here will materially affect the negotiations for a free trade agreement?
TREASURER:
We are negotiating with the US in relation to the free trade agreement. We are negotiating that on trade grounds. We find that they are very tough negotiators with everybody including their friends. The fact that we are friends and allies does not do any damage. I think I can make that point. But we find that even amongst friends, when we get into trade negotiations, that people look to their own trade objectives and interests and we find that with the United States. We do the same incidentally. We look to our objectives and interests and we think that the logic behind a free trade agreement between Australia and the US, is that it will bring benefits to both countries and that's why we hope that a successful round will be completed.
ROBINSON:
Broadly speaking then do you find in your negotiations with other countries in the region, South East Asia, that they are not affected then by the Australian position on Iraq?
TREASURER:
We think that there is an understanding of the Australian position. The Prime Minister has recently been in Indonesia to meet President Megawati Sukarnoputri to discuss and explain Australia's position. We think that our diplomatic efforts in explaining our position through the region has made it clear what our views are and we have gone to considerable lengths to make sure that it is well understood.
ROBINSON:
Have you talked about those matters today with Michael Cullen?
TREASURER:
Yes, the principlal purpose of our meeting was on the economic level obviously. But in the course of meeting him and in meeting other Ministers we obviously had discussions about Iraq and the respective views of both our governments.
ROBINSON:
Have you been surprised by anything you have heard in New Zealand on that?
TREASURER:
I understand the New Zealand position and I think New Zealand understands the Australian position and we have had an opportunity to ensure we put each others' views and I think it has been a very productive discussion, actually.
ROBINSON:
Now you have sorted out the double taxation dividends today I understand from Michael Cullen, at some cost to both countries. What's the benefit then if there is a cost to both countries?
TREASURER:
Well the cost to both countries is in terms of revenue i.e. that we will both collect less tax. Why, because New Zealand shareholders and Australian shareholders will get franked dividends. That is they will get dividends on which they'll get a credit for the tax that the company has already paid. So the revenue will collect less tax. Why, because investors will get a benefit. If investors get a benefit that will be good for New Zealand companies, it would be good for Australian companies, it would be good for economic growth and it will work out in the real economy. So that is where the benefit lies. On the one hand the tax that both revenues previously picked up because it didn't allow credit for the company tax paid will be lost, but the benefit will flow to investors and shareholders and through in terms of jobs.
ROBINSON:
Have you talked about the Qantas-Air New Zealand deal?
TREASURER:
We have obviously had a discussion about where it is up to and the procedures that we will have to go through with the competition commissions on both sides of the Tasman. We will each await the outcome of those decisions.
ROBINSON:
And abide by them?
TREASURER:
Well, we put in place these regulators to look at the competition issues and we are guided by their decisions on competition issues. After that we then look at the broader public interest but we certainly abide by them on competition policy, yes.