JAUSTRAL A
PRIME MAINISTER
TRANSCRIPT OF PRIME MINISTER ON " SUNDAY" 17 February 1985
E. O. E. -PROOF ONLY
JOURNALIST: On the MX missile decision, the decision to help the
Americans test it, was that the wrong decision and was it a
decision taken the wrong way.
PM: Let me say this it was a decision taken in good faith for
what appeared to myself and Mr Hayden and the then Minister for
Defence, Mr Scholes, for good reason. And then in respect of the
second part of your question was it taken in the wrong way we
have a Security Committee arrangement which must obviously operate
in certain sensitive areas. It was quite clear that not all
decisions in this sort of area are capable of being taken through
the full Committee and Cabinet processes. Now coming up to the
present time, when we were confronted with a situation that the
reaction to that decision, not merely within my Party or on the
Left of my Party, it was an across spectrum reaction,-and as far
as I can ascertain a pretty broad reaction in the community, then
I had to make the judgement as to whether two continuing
fundamental issues of importance to Australia were jeopardised.
One, is the continuing alliance relationship with the United
States and what goes with that that's the joint hosting of
facilities and the availability of ports for their visits on the
one hand, and on the other hand the integrity, the capacfty, of my
Government to pursue its policies in the disarmament field. I was
not going to have either of those two things prejudiced. And it
seems as though they would have been, so we made the decision.
JOURNALIST: So there was a misjudgement initially?
PM: Well the judgement at the time it was made, as I say, seemed
to the Ministers concerned, including myself, to be on balance the
appropriate one. In the circumstances that emerged there were
over-riding considerations of more importance because the
continuing importance of the alliance relationship with the United
States and what it entailed in regard to the bases, which are
important for the strategic deterrence program and verification,
it was important that that continuing situation not be prejudiced.
The MX test was a one-off passing thing. That was a continuing
matter of importance.
JOURNALIST: Mr Hawke on Friday a seniorc State Department official
was reported as saying that Australia was in danger of catching
nuclear allergy, or the anti-nuclear allergy, and that the antinuclear
movement could make you less secure in your pro-American
stance. Do you think his fear is justified?
PM: No. One of the problems in this whole area is statements
being made by certain officials, certain people in positions of
low authority, they like to speak with purported authority. And
I'm not diverted by those things. I've made it quite clear, and
most importantly on my return the Cabinet unanimously endorsed my
position, that the United States/ Australian alliance remains
central and unshaken. Now that's understood by me, it's
understood and accepted by my Cabinet and I guess not
unimportantly it's understood and accepted and welcomed by the
President and the administration of the United States.
JOURNALIST: Do you believe this was an unauthorised statement.
Do you have some information to that effect.
PM: When you have these statements by State officials, State
Department officials or Defence Department officials, I mean they
do it because they want to express a personal attitude often. You
know from your appearances in the United States, your reading of
United States material, that there are differences and strong
differences of opinion not only between Departments but within
Departments. So because one person in one Department says
something you're not entitled to draw any conclusion about that as
an official United States position.
JOURNALIST: One alliance that concerns us that is badly shaken is
that between New Zealand and the United States, clearly, Now if
as seems likely the United States cuts off high level military
intelligence to New Zealand what position does that put us in. Do
we have to quarantine the intelligence we get from America and not
make it available to New Zealand or do we cut New Zealand off as
well. PM: Let me make one preliminary comment and then go to your
specific question. You say that the relationship between New
Zealand and the United States is badly damaged. But I think it's
proper, Robert, to have this position clear. It was put to me by
both President Reagan and by Secretary of State, George Shultz,
that they still regard New Zealand as a friend. And it's
important to say that. They are upset, naturally, by the decision
in regard to the non-accessibility of ports to their ships. But I
believe that the United States is not going to pursue a policy of
massive retribution in respect of the military arrangements
between them. Obviously changes have taken place and in a sense
will continue to take place. But they are not going to fracture
the relationship. And, indeed, it's our decision of the United
States and Australia they we won't take any steps to abrogate
the Treaty, to remove the Treaty. So that the Treaty will remain
there in place. The United States and* Australia will maintain
PM cont : their full relationships in the hope that there can be
a resumption at some subsequent stage of the full tni-lateral
relationship. Now going to your specific question, Robert, about
intelligence. This was discussed by me with the United States.
They have not made a decision as to what they intend to do in the
sharing of intelligence information. Because you'll appreciate,
there's a two-way flow. It's not simply intelligence provided by
United States sources, but New Zealand has a capacity for
collecting information also. Now I'm simply saying that there has
been no decision made. That is a decision for the United States.
JOURNALIST: But would you hope to see a continuation of the
intelligence flow?
PM: Between
JOURNALIST: The U. S. and New Zealand.
PM: Well I think it's not right for me to say that, that's
something really for the United States and New Zealand. Overall I
certainly want to see the highest level of the relationship
maintained if possible in these circumstance between the United
States and New Zealand. So at this stage we don't have to make a
decision as to a residual decision by Australia in regard ', to
information received from the United States.
JOURNALIST: Do you feel that Mr Lange, by his action, has sold
out his country's interests in rupturing ANZUS in the way he has.
PM: I wouldn't make such a statement as that. I have, from the
very beginning, despite misinterpretation and some deliberate
misinterpretation of my letter of 10 January, I have at.. no stage
sought to intrude into the internal affairs of New Zealand. Let
me make it clear, and it's important that Australians understand
this, there is a longstanding, deep, firm relationship between
Australia and New Zealand. And that has not been fractured, as
indeed President Reagan has gone out of his way to say that they
still regard New Zealand as a friend. What is important is that
New Zealand and Australia retain their relationship in the
military co-operation field, because we live and have
responsibility in an area of the world which has some tendency to
increase instability we know the developments in New Caledonia.
Now it is obviously good sense in those circumstances without on
my part wanting to overstate developments and potential
developments in New Caledonia but it makes good sense that
Australia and New Zealand maintain our military co-operation. We
will. ( COMMERCIAL BREAK)
JOURNALIST: Mr Hawke, turning to what is coming up this week,
Cabinet meets on Tuesday and the Indians are restless. How do you
respond to the proposal that will go to the Caucus meeting that
Caucus views should be included in Cabinet submissions and
JOURNALIST cont wouldn't that be a breach of the rule of
Cabinet government?
PM: The Kirribilli Committee has been meeting for some time. I
have indicated it has my full support to examine ways in which
there can be an improvement in liaison between the members of the
Caucus, Ministers and Cabinet. All I have expressed a firm view
about and against, if you like, is one suggestion that was made
about chairmen of Caucus committees sitting in on Cabinet
considerations or Cabinet committee considerations. That is not
on but I am quite open really, Michelle, about any other methods.
This is not something as a reaction to recent events. I have been
conscious of the concern that backbench members of Parliament must
have. It must be very frustrating and anything that is going to
improve the communication and the flow-through and the interchange
of ideas, I am not only relaxed about. I am in favour of it.
JOURNALIST: But you are balancing two matters here, aren't you.
Your reputation you have had unprecedented support in the
business community for a Labor Prime Minister and that has been
based to a large extent on the impression that you are in command,
that unlike Mr Whitlam, you have command of Caucus, and especially
of the Left Wing. Yet now you are having to accommodate more to
Caucus opinion and I think that that is going to diminish-, your
reputation with the business community.
PM: You are setting up alternatives that are not real
alternatives. I don't think it is right to talk about command. I
mean, right from day one I just can't say, here we are, here is a
position. I have got no-one to think about. I have never
operated like that. Never. Previously before I was in the
Parliament that is not my style. I talk and discuss... But I
think there has been a perception on the part of the business
community a correct perception that the principles, the
policies, which I and Mr Keating originally took the initiative
in, if you like, have been accepted. That is the correct
perception. Any fight that Mr Keating and I had at the beginning
about getting a line ' adopted is over. That has been adopted. No
government, I suggest, in post-war Australian history which has
now imposed upon itself a more stringent apparatus and framework
for decision-making in regard to the economy, than we have. And
that has been accepted by the Caucus and by the Cabinet. Now to
the extent that we are now talking about ways in which there may
be better flows through from Caucus. I don't see the business
community as being concerned about that. They know that the
framework which has produced record economic growth, record job
creation, a halving of the inflation rate, a 30% increase in
housing commencements, a reduction in interest rates, an admired
economy they know that those policies are in place and will
continue and the fact that we are going to be having a look at
more discussion processes is of no concern to them.
JOURNALIST: Well just on that, the thing that they would want to
see is a re-affirmation of the trilogy the promise not to
JOURNALIST cont increase the burden of debt spending and
taxation.
PM: Well if I can take the Sabbath as an occasion for reaffirmation
of the trilogy I am more than prepared to do so. I
hereby re-affirm the trilogy on Sunday 17th, is it, of February.
JOURNALIST: And on the Sunday program.
PM: And on the Sunday program. What could be more appropriate.
But let me not joke. That is important and the business community
knows, and the Australian people know, that there will be no
increase in the deficit either as a proportion of GDP, and in fact
there will be a reduction in monetary terms. Secondly, that
there will be no increase in tax as a proportion of GDP. And
importantly, the third and necessarily consequential element in
the trilogy, there will be no increase in the levels of government
expenditure beyond the rate of economic growth. Now those are
fundamental and important and re-affirmed.
JOURNALIST: But that is going to require a tough attitude on
spending, isn't it. It is going to be a tougher Budget for you
this Budget than last Budget.
PM: Yes, but when you say tough, let's get the economic and
political realities right. What does toughness mean if what you
are doing is going to produce a better Australia for all
Australians in the immediate and in the longer term, that you're
going to create the foundations of solid, strong non-inflationary
growth, what's toughness about that. It is adopting sensible
measures now to ensure that all the people of Australia are going
to be better off. That's sensible.
JOURNALIST: It's tough in the sense that you'll have to overrule
Ministers who want to spend money or not impose things like
universal
PM: The important thing is that they, and the Caucus, have
accepted this necess ary discipline. Now in the process itL is true
that some things that some Ministers and that I would like in a
world where you had no constraints of reality well, it can't be
done. But our responsibility which we have accepted more
responsibly and more effectively than any other government in
post-war history is that we recognise the things that have to be
done. We have done them and we have produced the results. We
will continue to do it.
JOURNALIST: Mr Hawke, can I turn to another very pressing
problem that is confronting the Government at the moment. An
important part of your public service is on strike, which is
making things difficult for economic management and very centrally
is being seen as a threat to the Accord. How seriously do you
take that particular threat? And what sort of other pressures do
you see on the Accord in the next twelve months?
PM: I am not overwhelmed by the current dispute in the public
service. I am not pleased by it, but I have total confidence in
my Minister, Ralph Willis, who has reported to the Cabinet and the
Cabinet is giving him support. And the support is for this
position. And let everyone understand it. When we went before
the Commission when the anomalies case was there we indicated that
an increase of the order of 2% would be justified. That remains
our position. We are prepared to help to facilitate a return for
the Commission for a hearing of that claim, but we would be
supporting no more than that and our support for the case being
re-opened would be on two conditions that all bans would be
lifted, and that there be an undertaking to abide by the decision
of the Commission. Now that is clear and non-negotiable.
JOURNALIST: Well what do you say to the union leaders. Are they
unable to understand the importance of the Accord to the economic
recovery?
PM: Well, they believe that within the principles of the Accord
anjd the wage fixing principles at the anomalies provision, as they
argue it, justify more than we put. Now they are entitled to
believe that and try and argue it, but as far as we are concerned
there are not going to be increases of any significance outside
the Commission and outside the principles. And we are not-going
to bend on this. This is not a matter of toughness or being mean
in regard to our own employees. The very centrepiece of the
outstanding success of the Australian economic performance has
been adherance to the principles of the Accord. We have got a
situation now where that has brought manifest improvements. These
people in the public service should understand, as should aJll
people in employment, that their major responsibility is to assist
to create conditions which are going to create more jobs for more
people. And all of us who are in the fortunate position of having
employment, and secure employment particularly no-one has got
more secure employment thant the public servants they have got
to understand that the greater good of the greater number is what
is important. And that is what my Government is going to insist
upon.
JOURNALIST: On another matter connected with the Accord, what is
your present position on the productivity claim. Last year you
suggested that maybe that should be a1elayed.
PM: No, to be precise, Michelle, what we said and this is all
that we said is that we would hold our position, our
consideration of our position until we got into 1985 at the time
that the claim was being developed and lodged-to finally
formulate our position. Now my answer to your question is mne
line with the previous answer I have just given. That we will be
discussing the matter with the ACTU and we will be discussing it
with the employers too. And by the time we go to the Commission
it will be putting a position which we believe is most consistent
with the maintenance of conditions most likely to facilitate
strong non-inflationary growth. Now that may very well be a
PM cont position of not supporting any increase in money wage
terms, but there may be some accommodation, sensible
accommodation, in the area of superannuation.
JOURNALIST: Does it depend on how the unions behave in matters
like the public service strike?
PM: No, let me make it clear that in this national wage case
* that is coming up now as distinct from the productivity case later
on, I don't support and the Government won't support, a
proposition of punishing everyone else because of the attitude of
the public servants. I mean, the logical thing would be that if
the public servants have not come back into the mainstream and are
still conducting their dispute, well they could not expect to get
the flow on from the national wage case.
JOURNALIST: Prime Minister, another issue that we must question
you about, although I know that there is some sensitivity on what
you can say, is the chronic weakness of the Australian dollar
which has been, for the past week or so in condition that some
people in the market describe as free fall. Now there is a very
serious trade deficit opening up which now seems to be bigger than
we thought. Isn't it time for the Government to reconsider its
hands off policy and to consider supporting the Australiag dollar
in the markets?
PM: I appreciate the way in which you opened your question,
Robert. It is difficult and improper for a Prime Minister to make
comments in an area which could affect the level and value of ourcurrency.
So within those constraints, which I am glad you
recognise, let me say these things which I think are relevant.
There has been, as you say, a significant fall. It is ot
something that has got to be looked at as all bad. Indeed, as you
appreciate, there are many advantageous features of a fall in the
value of our dollar vis a vis the United States dollar in
particular and some of our other trading partners to a lesser
extent. And that means that it is better for our exporters and it
makes the position of our own import competing industries slightly
better. So don't let's look at it as all negative. It is
certainly not. The second point I make is this that it does
seem to reflect some transient features. No-one can weight them,
but certainly the non-collection of very substantial reve~ nues, as
a result of the public service dispute has had a lot of money
slopping around in the market. That has had some sort of an
impact. And I would have to say that perhaps the events of the
last week when there was that misunderstanding, if you like, and I
think over-dramatisation of what was happening internationally as
far as Australia was concerned may'have had some passing adverse
impact. My own view, Robert, is that the fall that has taken
place will not continue substantially. There will be a settling
down and in those circumstances the Government believes that the
decision which it took to free up the exchange rate and which has
had manifest benefits for Australia is not something which we
should be precipitately intervening in so that people would start
to have doubts about our adherance to that position. I don't want
to say more at this stage.
JOURNALIST: Mr Hawke, the Government event of perhaps most
interest to the public this year is the July tax summit. Mr
Keating in the last week or so has given notice that he will go
out into the party forums and argue the case very strongly for a
shift towards greater reliance on indirect tax. Do you feel as
strongly as he does about that?
PM: Yes I do. And it is very interesting, Michelle, to see the
shift that is taking place. I notice I mean a lot of my Caucus
colleagues are not totally reluctant to express their view
publicly I notice that Dr Theophanous of the left is reported as
saying he understands the need for it. It is also interesting to
see a number of other quarters where there was opposition that
there is an acceptance of it. Look, the position is very simple
and straightforward. We have got in this country a position where
our marginal tax rates are too high and they are biting in too
early. They are disincentives and people rightly feel that they
have got too high a burden of direct personal tax. So for obvious
reasons of personal hardships, incentives, economic efficiency, we
have got to bring those rates down and bring them down
substantially. Now, everyone has agreed on that. Everyone can
nod their head and say, very wise, Mr Hawke, very proper, very
accurate, hear hear. We have got to understand then, if we want
basically as a community to have government providing the same
level of services in defen'ce, in education, in health, in roads,
in all those services which must necessarily be provided for the
community by the community as a whole via governmenL, then if we
are not going to have the income via personal tax to do that, and
there is a substantial cut in revenue, then if people want the
same level of services basically then there has got to be an
alternative. Now it seems to us that there, therefore, has to be
a substantial increase in indirect taxation. The third point I
make is that it is true that relatively speaking recourse to
indirect tax as compared to direct tax will be regressive. It
will tend to hurt those on the lower income levels more. So we
must, if we do these things, Robert, we must in fact have
compensating mechanisms to ensure that we offset that impact.
JOURNALIST: Prime Minister, thanks for that answer. We have
time only for one last question. What have you had to say to
Susan Ryan?
PM: I said, good-day, Susan. I don't believe that it is
appropriate that I should say on public programs like this what
passes between myself and my Ministers. And I don't intend to do
it. Let me say this, however, that Susan was one of those who, in
the Cabinet on Tuesday unanimously supported my report which, as
you know, referred to the centrality of the maintenance of the
Australian-American alliance and the ANZUS relationship.
JOURNALIST: So everything is smooth there?
PM: obviously must be.
JOURNALIST: morning. Prime Minister, thanks very much for joining us this
PM: It has been my pleasure Robert and Michelle.