US Free Trade Agreement, Superannuation, James Hardie – Interview with Jon Faine, 3LO

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Australian Competition Tribunal Appointment
August 5, 2004
ACCC Public Liability and Professional Indemnity Third Monitoring Report
August 10, 2004

US Free Trade Agreement, Superannuation, James Hardie – Interview with Jon Faine, 3LO




Interview with Jon Faine, 3LO

Friday, 6 August 2004

8.45 am

SUBJECTS: US Free Trade Agreement, Superannuation, James Hardie


Mr Costello good morning.


Good to be with you Jon.


The headlines today, Howard gives ground to salvage Free Trade agreement,

the Prime Minister this morning before flying off to a Samoan Pacific group

meeting said that he thought he would put the national interest first and look

at the Latham demands in relation to the Free Trade Agreement. Yet again, Mark

Latham is setting the agenda it would seem.


Well, the Free Trade Agreement is in Australia’s interests and whatever

happens, the Free Trade Agreement shouldn’t be derailed, particularly

over an issue which is absolutely incidental and unnecessary.


Well it is incidental and unnecessary from whose point of view?


From everyone’s point of view, that is, we are having an arcane argument

about patent law at the moment which the Parliament has been obsessed with for

the last three days, but the Free Trade Agreement doesn’t change patent

law in any material respect.


Isn’t it more about politics than patents?


Well, if I could just finish that point, that if you think evergreening has

been a problem under Australian patent law, it was a problem long before the

Free Trade Agreement which doesn’t change it. So, the Free Trade Agreement

is coming in and attached to the Free Trade Agreement someone has said, it is

about time we had a look at Australian patent law, and they haven’t actually

indicated where it was defective. But the relevant provisions are not being

changed by the Free Trade Agreement, so the Free Trade Agreement should not

be derailed by an issue which is not being changed through the substance of

the Free Trade Agreement.


But the bottom line here is, Mark Latham has come up with another issue which

has got the Howard Government on its back feet and giving the political initiative

to the Labor Party as we are entering an election campaign.


Well, I will say this, to the degree that Labor was divided over the Free

Trade Agreement, it has been a good strategy for Mr Latham to actually get off

the substance of Free Trade and get on to the rather more arcane technical issue

of patent law…


No, the principle, he came up with an issue of principle, he says, which has

great support amongst the Australian voters.


…what is that principle?


Access, ready access to subsidise pharmaceuticals, regardless of the interests

of the multi-national pharmaceuticals…


Well listen, this is a principle that I have been pursuing for the last eight

years, absolutely. We have taken measure after measure to allow generics and

costing to be done on the basis of generics over the last eight years. Now,

let me make this point, this is an interesting point here, the pharmaceutical

benefit scheme subsidises medicine, as you know, if you are a pensioner you

pay I think $3.80. So, the critical question is what the Government buys it


If the Government pays more for it, the pensioner doesn’t pay any more.

Now, it is just that it costs the taxpayer more to actually get those drugs

and then sell them at $3.80 to a pensioner or another fee if you…


And the cost of running the scheme is enormous.


…and the cost of running the scheme is enormous, right. For the last

eight years who has been fighting to reduce the cost of the pharmaceutical benefit

scheme? The Government and the Treasurer. Absolutely, over the last eight years.

And when we were actually taking measures incidentally, to restrict access to

prescribed conditions to introduce co-payments, we weren’t getting much

support from Mr Latham…




…surprisingly enough, so…


…well, that is election history, all that matters at the moment, as

of today, as of the 6th of August, is that yet again it seems that Mr Latham

comes up with an issue that the Government has to concede.


So, if Mr Latham now supports the principle of containing the costs of the

pharmaceutical benefit scheme to taxpayers, this is not a new principle he has

discovered, but it is one that we warmly welcome his interest in and we would

ask him to continue to support all of the measures that we have been putting

in place for the last eight years to do it.


So we are going to get a Free Trade Agreement with a concession to Labor on

using music, culture, literature, and all of that sort of stuff as well as pharmaceuticals,

is that right?


We are going to get a Free Trade Agreement which protects Australian content

and always did, and we are going to get a Free Trade Agreement which protects

the pharmaceutical benefits scheme and always did. Now, we then have a separate

issue Jon, we have an issue of Australian patent law, now Mr Latham says that

he wants to change Australian patent law so that people that apply for patents

can be subject to criminal offences. Now, an amendment like that won’t

work, all of the advice is that it won’t work, so the world awaits to

see what his amendment will be, which incidentally hasn’t been written

yet. But the patent law issue is separate from the Free Trade Agreement (inaudible).


Last question on this issue, that means you upset the pharmaceutical companies,

they have donated hundreds of thousands of dollars to Liberal Party campaigns

in the last few years, that has all been disclosed, it is out there for everyone

to see, they are not getting anything for their money if you are going to give

in to Labor on that, aren’t you?


Well, I have upset the pharmaceutical companies long before now, because for

the last eight years, I have been facilitating generics coming on to the scheme,

increasing the co-payment which was part of getting the costs back and pricing

drugs, not on the basis of the brand of drugs, but on the basis of generics,



Lousy investment they have been making with their Liberal Party donations.


…well, if they were going to get upset, they would have been upset by

the really substantive things that we have been doing over the last eight years,

not this business.


Just this morning, in the space of a few minutes, I was able to compile a

list if things where it would seem the Government just in the last few months,

has caved in to Latham’s various policy initiatives; politicians superannuation,

children’s literacy, pneumococcal, asylum seeker policy and children in

detention, the baby payment, now the Free Trade Australian content amendments

and on pharmaceuticals. Who is running the country, Mark Latham or John Howard?


Well, do you want me to go through them one by one?


Well no, we haven’t got have time.


Because I could, what, the list you have actually read out was the list that

Mr Latham gave in the Parliament yesterday, so I don’t think he is the

most independent commentator on these things and I could go through them one

by one, but in answer to your question, I think that the Government over the

course of the year has been extremely active on a number of policy fronts. Have

a look at what the Government has done.


You have been putting out bushfires as you prepare to go to the polls. Anything

that is going to cause you pain has been dealt with.


The largest family assistance in Australian history, income tax reductions,

the largest investment in aged care that we have ever seen, an energy statement

which is a blueprint for the next ten or twenty years, the Free Trade Agreement.

You can talk about patent law, but with all due respect Jon, the Government

took the lead and initiated a Free Trade Agreement, which doesn’t, if

I may say so, a Free Trade Agreement which as I said doesn’t actually

change patent law, substantively revolves around cars, beef, dairy, it revolves

around every area of Australia’s goods and services.




Well, it doesn’t revolve around sugar…


Funny about that one. You have got to protect those vulnerable seats up in



Well, no, if we, we would have actually liked the Free Trade Agreement to

include sugar, and if we had of been able to get it in that would have helped

North Queensland even more. The regret is we couldn’t get sugar into the

Free Trade Agreement because the Americans wouldn’t move on the issue.


You have got to spend million to help those farmers instead, separate issue

though Peter Costello if we could move on, I have a number of correspondents

saying, if you are going to be talking to the Treasurer, ask him if he is still

committed to changing the superannuation access age, is he still going to change

the preservation age from super from 55 up to 60, because we have spent the

last 30 years working towards a 55 retirement, if he is going to kick it up

to 60, we need to know.


Well, we indicated that the preservation age would rise in a staggered way

so that people who are currently in their superannuation would be on notice,

that is you raise it over 30 years, as we are doing with the age pension. The

way in which for example we are raising the aged pension for women from 60 to

65 eventually, is that it applies to people born after a certain date which

is say, 1960.




So, that it actually, 1960 to (inaudible) 60 years, 2020, it actually allows

everybody that is actually in a scheme, full notice.


So you say they have fair warning.




So you absolutely rule out making changes that affect people within in how

many years of retirement?


Well, everybody who would be affected is given complete notice.


Well, what does that actually mean though?


Well what it means is you have a birth date, a date from which changes apply.


So if for instance, you are going to change the preservation age from 55 to

60, that won’t apply for what, 10 years, 15 years, or within 10 or 15



No I think it is something like 20 or 30.


…so it is a long lead time.




Alright, so that should reassure people they can’t be planning their

retirement and be affected at the same time.


No, no.


Alright, separately, James Hardie have come under intense scrutiny in an inquiry,

a commissioned inquiry in New South Wales as to whether or not they were rearranging

their assets and shipping them offshore in order to denude themselves of sufficient

funds to meet their commitments to people dying of asbestos over the next however

many years they may crop up. This has drawn the attention of not just the media,

but also the Australian Securities Investment Commission, have you got anything

to say about the display of ethics from the company that we have had paraded

in front of us here?


Yes. If any company has rearranged itself to put its assets out of the reach

of people who have legitimate claims, then I think that is unconscionable.


Well you might think that, what are you going to do about it?


Well, as it turns out, in order to have a company rearrangement, you need

the approval of the court, and in the James Hardie case, the New South Wales

Supreme Court approved their arrangements. Now, it is too early to say…


The commission is casting grave doubts on the basis of whether…


…it is too early to say…


…the court gave that…


…well, no, let me finish. It is too early to say, whether or not the

motivation was to defeat these claims, but if it was, and if the New South Wales

Supreme Court was misled, that is a very, very serious offence.


…do you leave it up to the courts to deal with it, or are you prepared

to do more?


No, we have got a commission of inquiry which will make findings and if the

commission of the inquiry makes a finding that somebody put their assets out

of the reach of the claimants and what’s more, somebody misled the Supreme

Court of New South Wales, that is a very, very serious offence.


But would you legislate to retrieve those assets, chase those assets and get

the money that those dying people would otherwise be entitled to?


Well, we have actually made some inquiries in relation to that, we believe

that you can actually register judgements in the Netherlands in any event, so

it may well be that they can’t escape the net.


And a warning to corporate Australia?


As I said earlier, if anyone wants to put their assets beyond the reach of

legitimate claimants, particularly people that have claims like this, it is

unconscionable and the full force of the law will apply to them.


See you during the election campaign which I suspect is not far off. Peter

Costello thank you for your time.


Great to be here, thanks.