PRIME MINISTER
E 0 E PROOF ONLY
TRANSCRIPT OF PRESS CONFERENCE, PARLIAMENT HOUSE 2 JUNE 1986
me make a brief statement to the effect that it
is quite clear in the light of the national accounts that have
been available in this last week that the Australian economy has
had inflicted upon it, as a result of a massive decline in the
terms of trade, a reduction in its economic capacity to sustain
standards. I have accepted, in those circumstances, this
Government has accepted, that it was necessary for the Government
to move to make those decisions to adopt modifications of
approach necessary to meet the challenge confronting us, as an
Australian community, as a result of the change of the terms of
trade. We are proceeding to do that. In the discussions we have
been having it has become also apparent now that to give the ACPI
meeting the best chance of taking advantage of those consultative
processes it would be better for it to meet in a framework where
the decision of the Conciliation and Arbitration Commission were
known and where the decisions of the Government were also known.
In those circumstances I didn't unilaterally inform the
participants, but rather approached them and suggested this was
the appropriate course of action and was pleased to say that it
was the unanimous view of the representatives of business and the
ACTU that that was the appropriate course. I will be making an
Address to the Nation next week in which I will be outlining to
the people of Australia the facts of the economic situation
confronting us and the approach and the decisions of the
Government which we regard as not only appropriate, but necessary
to deal with these circumstances.
JOURNALIST: At whose suggestion was the meeting postponed?
PM: We discussed this last night at the ministers, meeting and
it was agreed that this was the appropriate course of action. I
raised the matter. It was agreed and I had the discussions this
morning with the BCA, the CAI and the ACTU and as I say they were
of the same view.
GRATTAN: Had you had earlier representations from the ACTU?
PM: No I had not had earlier representations from the ACTU.
BARNETT: This means that the decision the Arbitration Commission
makes will be on the basis of earlier submissions from the
Government before the seriousness of this present situation was
recognised?
PM: That's a fair comment David, but this point is relevant,
given the normal time table of the Arbitration Commission is
between the end of submissions and the making of decisions
clearly the Government position as to what needs to be done would
be known to the Commission as a result of my statement to the
nation before they would be making their decision so they would
have an appreciation of the Government's view of the situation
out in front of them.
EWART: When do you see the meeting being held now then?
PM: I don't want to put an exact date upon it, but the
determining points Heather are that it will be necessarily after
the decision of the Commission. Now I don't know what date that
will be but one would think that the decision will come down in
the latter part of June. I would think you're looking at an ACPI
meeting probably some time early July. I can't be more definite
than that for those reasons.
LOGUE: Prime minister, were there formal economic decisions
taken last night or are we still facing a serious of options?
PM: what we did last night was to have before us a number of
proposals which are regarded as relevant to a total approach to
this set of decisions we have to take. Some of the proposals
were discarded. That was a minority of them. others need more
work to be done. That is proceeding now and I will have a
meeting of the Ministers as soon as that additional work is done.
May I say that we will have bilateral discussions with the
business community and the ACTU during this week. It is
scheduled that we will meet with business community on Wednesday
and withe the ACTU on Thursday, so I would hope that we would be
in a position, without necessarily going into all the details, to
be able to put some of our thinking to the business community and
the ACTU this week.
HYWOOD: In your Address to the Nation can a clear outline of the
Government's position on discounting, deferral of tax cuts,
superannuation............... PM: We will go to those matters.
CASSIDY: Prime minister to what extent will your Address to the
Nation set policy direction, economic policy directions and
therefore to what extent will it pre-empt any input from the
business community and the trade unions?
PM: Well there are two points to make about which first what
I've already said. We will have some bilateral discussions with
the business community and the ACTU during this week. In terms
of the approach that I've adopted since we came to Government, we
will listen to what they have to say and discuss with them, and
it may be our thinking could be influenced by things that are
said by things that are said by the business community and the
trade unions. But what I want the people of Australia to
understand is that we do face a new economic situation and this
Government is going to make the decisions. And we are going to
do it the same way that we have in the past following the
process of consultation this Government will then make the
decisions. I hope and expect that we may be able to be assisted
as we do that. The second point that needs to be made is that if
you take the wages and conditions of employment area that has
been raised by Greg, in his previous question, in the end the
actual decisions as to wages and conditions of employment are
made by the Arbitration Commission. we will be indicating the
sorts of things that we believe ought to happen. Now in the
period between us making those clear statements and adopting thL
position as to what we think ought to happen, there would be the
opportunity of further discussions with the business community
and the trade unions, in the period leading up to the next case.
The Government will have a clear position and we would hope that
both as a result of what we say and perhaps strengthened to some
extent by the discussions that we have with both sides of
industry, that we may be able to reach a position where there is
a greater degree of understanding there, where the decisions have
to be made.
STEKET: E: Why didn't you realise originally that it would make
more sense to have the ACPI meeting after the National Wage Case?
PM: As you know I've said that I believe that both Paul and
Ralph were perfectly correct in responding in the circumstances
that arose. There was some expression of feeling, particularly
from the business community, that they didn't have the same
degree of involvement with the Government in economic
decision-making as the ACTU and in that context a suggestion of a
further meeting was made and my two ministers properly responded
positively to that. But as the circumstances developed in this
last week with more information becoming available and the
realisation that there is a necessity in those circumstances to
move fairly quickly to make decisions, that in those
circumstances, combined with the desirability of having the
National Wage Case decision available, not to abandon the meeting
but to postpone it, so participants would have all that
information before them, both the Government's decision and
approach and the National Wage Case decision, made more sense.
And I'm very pleased to say that I thought that would be the
attitude of the participants it is.
COSTIGAN: The States are the other arm of ACPI. Do you also
plan to have bilateral talks with the Premiers this week and is
your Address to the Nation, will that be before the Premiers'
Confe rence?
PM: It will be before the Premiers' Conference. Mr Willis, the
Chairman of ACPI, will be communicating with States and the other
participants to indicate this decision and I thought it
appropriate that in the immediate sense I should talk to the
EWART: Shouldn't Mr Willis and Mr Keating have realised at the
time that it would make more sense?
PM: No. You're not going to illicit from any criticism of Paul
or Ralph. They reacted, as I've said from the beginning,
correctly. The circumstances were that the business community
expressed this view and the minister said, sure if you want a
further meeting with further opportunity to discuss this, well
and good and we agree with that. Now as everyone agrees, we've
had a fairly quick development of the situation with the
emergence of the national accounts, there are many important
features of those national accounts, none more important than the
figuring by the statistician which showed that in the 12 months
to the March quarter of 1986 the effect of the decline in the
terms of trade is equivalent to about a 3 per cent loss on the
national GDP. In those circumstances you've just got to move in
relation to them and say all right, we are going to accelerate
the processes of decision-making to get to a position of
refinement of the strategy and that we are doing. The decision
of Paul and Ralph was quite appropriate at the time.
JOURNALIST: The States have been saying that if they are being
called on to cutback in their expenditure the Commonwealth has
got to show they will do the same. will your statement next week
States at the Premier's Conference?
PM: we'll be in a position by the time we meet with the Premiers
to give a clear indication of the extent to which the Government
has moved in its decision-making in regard to its own
expenditures. We will not, in other words, be putting positions
to them from a position of weakness with not already having moved
significantly in our own area.
SHORT: Does this mean you will set out in your statement a
target for spending cuts and a deficit for next year?
PM: I don't think I will in the statement itself, to the nation,
go to that detail. Let me make this point, there will, as we are
thinking about it now, in addition to my actual Address to the
Nation there will probably be an associated more lengthy
statement released which will go in greater details than is
possible or appropriate in an Address to the Nation dealing with
some of the issues there. But you will appreciate that as to the
actual fine detail of budget formulation there is still more work
to be done by us and in our discussion to with the States.
JONES: Will your Address to the national also go to the question
of industry policy and particularly to investment? You said
earlier that you had discarded a couple of options. Are you able
to say what they were?
PM: I'm able to but I'm not going to. And the answer is yes, I
will be going to the question of industry policy.
BARNETT: And what about fringe benefits tax Prime minister. Is
that one of the options you have discarded or might that be
revised?
PM: my decision is quite clear about that. It is another matter
entirely, of course we are going ahead with that.
OAKES: Prime Minister why are you thumbing your nose at the
Parliament? You announcing this statement outside Parliament.
You announced that you were going to make it on a radio program.
Why won't you do these things in Parliament?
PM: I'm not thumbing my nose at the Parliament. I have the
greatest respect for the institution of Parliament, if not for
some of its inhabitants. We are engaging in a process now, in
the light of the most recent information, of looking at a range
of possible decisions which would be relevant to reaching the
most appropriate position for government to, as I say, protect
and advance the interests of the people of Australia. I'm not
going to be rushed and the Government is not going to be rushed
in reaching the best decision by some artificial constraint in
the time table of the Parliament. The people of Australia will
be told by me of the decision and the approach of the Government.
We'll do that as soon as possible and that will follow both the
work that needs to be done, and there's a lot of detailed work
that needs to be done at the official level, and it will also
follow the consultation that I will have with Paul, with Ralph
and the other other Ministers in the Committee. We will meet
with the business community and the trade unions. Now those
processes of the work that we have to do to inform our mind of
the right decision and the consultations we have have got to be
allowed to have the time that is appropriate to them.
OAKES: But Parliament is sitting next week isn't it?
PM: I understood the Reps were rising this week.
GRATTAN: Mr Hawke, wouldn't have made sense to ask the
Arbitration Commission to reopen the wage case to argue this in
detail rather than Secondly, what is left after
all this for the ACPI meeting to discuss.
PM: Well taking your first point, no we don't believe it would
be appropriate to reopen the case. We've put our position in
regard to the current proceedings in the light, as you will know,
of the last three quarters of last year, what the CPI figures
relate to. We've put our position on what we regard the amount
of discounting is appropriate. The Commission, as I've said in
answer to a previous question, will not be unaware of our
thinking before it comes to a conclusion. I don't see any need
for a reopening of the case.
JOURNALIST: How can the Commission make a on something it
will read in the newspapers Prime Minister?
PM: Well, let me say this, I will do more than taking the risk,
if I may say so without incurring any general wrath, I will do
more than taking the risk that they will have to rely on a
newspaper interpretation of what I say. Both the statement I make
to the nation and the more detailed report that will be
associated with it will be sent to the Commission and to the
parties. JOURNALIST: Prime Minister, to take up Michelle's point though,
that by some date in July the Government processes have
been gone through, the ACPI meeting will be meaningless?
PM: No, that is obviously not true, with respect. We will make
our decisions as a Government but in terms of well, for instance,
you take the area of wages and conditions, we will be making our
position clear. But I repeat the Government doesn't make the
decisions as to wages outcome. That is something that is decided
in the Arbitration Commission. So in that area there will be
still room for some discussion between Government and the parties
in the light of an indication of the Government's position. In
the area of let's take industry policy which is also raised. We
will be giving some indications of decisions we are taking in
that area. Now the actual implementation of those decisions for
their full effectiveness will depend upon on the attitudes of
both employers and the trade unions. And far from them not having
anything to discuss in the industry policy area for instance,
they will be in a much better position to make those discussions
meaningful if they have specific proposals before them and they
can say well, look in terms of giving effect to that we think
this would be useful, that would be useful.
JOURNALIST: Can you foresee a need for a second Address to the
Nation after the ACPI meeting if the ACPI is still important?
PM: No.
JOURNALIST: Mr Hawke, how will the Government afford an
investment program without blowing out its August Budget
PM: Well, let me say this, we clearly in looking at the
investment area Greg, two things seem to me to be appropriate in
answer to your question. Firstly, we will not be embarking upon
some program which is going to involve a massive demand upon the
Budget resources. Secondly, you would appreciate that in regard
to investment decisions anything that we do would be unlikely to
have a major effect in 86-87 because there is a time-lag to some
extent in investments as we would hope that it would have some
impact. But it is the sort of thing that would be spread by
nature over a longer period than just one year.
JOURNALIST: Mr Hawke, following up David Barnett's question on
fringe benefits tax, will impact very heavily on the
exports PM: Will it?
JOURNALIST: Yes, it will.
PM: Well how?
JOURNALIST: Well how the economists tell me that
PM: which economist told you how it would impact heavily on the
export sector?
JOURNALIST: Well, from the National Farmers Federation.
PM: Oh, I see, yes.
JOURNALIST: And exports are pretty important part of
PM: They are indeed and to a large extent what it is all about.
JOURNALIST: So this won't be part of the consideration.
PM: No, we have dealt with the question of fringe benefits tax.
I will make the obvious point that Paul has made so eloquently
and consistently that you can't just talk about the fringe
benefits tax as though that is the only thing we have done. It is
part of a package, it is part of an effective package which will
for instance include a very significant reduction in personal tax
rates. It will involve as far as company areas are concerned the
benefits of imputation that has been sought for some time by the
business sector. It is an exercise in stupidity if I may put it
as kindly as I am capable of doing. It is an exercise in
stupidity to talk about the fringe benefits tax in isolation.
JOURNALIST: It is a transfer of a billion dollars from investors
to consumers isn't it, Prime Minister?
PM: I don't interpret it that way. What I do is to say that we
have had imposed upon this country as a result of what is really
something like 34 years out of a total 37 years since 1949 a tax
structure, tariff structure which is the result of a mish-mash of
unprincipled ad hocery of the conservative forces of this
country. The Labor Government my Government has approached this
with courage and with principle and has said we have got to get a
more sensible tax system. We have reached a position which is
endorsed, I believe, by the overwhelming majority of the people
of Australia that they are not going to any longer tolerate a
situation whereby an artificial management of remuneration a
small sector of Australian people are allowed to be remunerated
in a way which avoids them making a fair and appropriate
contribution to the revenue. Now the people of Australia by clear
majority approve of that change. We are not going to be diverted
from rectifying not only an anomaly but something which is
unsustainable in equity terms. We are not going to be diverted
from our intention to rectify that by the understandable
complaints of particular interest groups. I don't complain about
them putting a case but this Government is going to hear and
balance their propositions in the light of the generality of our
approach which is correct.
JOURNALIST: In terms of promoting business investment do you see
the recent heavy engineering tactics as a blueprint in that area
and also do you see any scope for increased protection in imports
as a way of one, promoting business investments and two
PM: two parts of your question first. I don't see it
necessarily as a blueprint. It is something that we will take
into account but I think different industries may require
different approaches but it is something we will take into
account. B, the position of this Government is as you know not
one of being an increased protectionist Government. I and the
Government have said since we have been in that the realities of
the international environment of which we are part require us
gradually through time to reduce the level of protection. But I
say that in the context that all times that we have said that, we
have said that it is appropriate that the community take into
account the impact of such changes to reduce protection upon
those who area at the face of the impact of protection. In other
words as I have said many times before I came into this place and
since I have been in here, it is something that should be in the
minds of everyone. If it is in the interests of the community
gradually to have reduced protection then logic and equity
demands that the community should help those who are at the face
of the impact of that change to meet the burden of it.
JOURNALIST: Is the Government looking for a further delay in the
productivity increase and might you consider excluding the
PM: I am not going to go into the details here of what my
ministers and I will be considering this week and what I put to
the people next week.
JOURNALIST: I was just going to ask you what sort of investment
incentives does the Government have in mind?
PM: Well the same answer there Greg. I am not going into the
details and really we had some initial briefing papers put before
us last night. We are looking for more work to be done.
JOURNALIST: Mr Hawke, you talk about community attitudes and
community interests, to what extent can the Government persuade
the relevant interest groups and to what extent does it have to?
PM: Well, I can't answer the first question because that is a
matter for the future. It will depend in part upon I suppose, and
not in this order of importance necessarily, my eloquence, the
understanding of opinion makers and so on. There is a range of
facts which will determine how the community can be persuaded of
the realities of the new situation confronting them. I believe
and if you want an opinion, and that is all it can be, I say this
that my experience as Prime Minister has been that if you talk to
the people directly and frankly about the facts, they respond.
That is the experience I have had to this point. I have no reason
to believe that they are going to change now. And to the second
part of your question, it is necessary that they do understand.
JOURNALIST: Prime Minister, will you chair the postponed,
extended meeting of the ACPI and how now do you characterise that
meeting as to its significance?
PM: Well, I wouldn't think I would chair it and I think it will
be another important meeting. I mean it is going to occur in the
context of the Government statement of new policy positions which
will be directed towards adjusting to the new circumstances. It
will be useful for the ACPI participants to meet in that context
and in the context of what, Peter, will be an important national
wage case decision. So I think the circumstances within which
they will meet of those two new factors give it a considerable
importance.
JOURNALIST: will you be putting firm Government preferences in
terms of options to these next bilateral meetings later in the
week? PM: We will be making our position fairly clear as to the basic
directions in which we believe changes have to be made.
JOURNALIST: Prime minister, you said the postponed ACPI meeting
would be held early in July..
PM: Well, I think that is right. Let me make it clear we are not
trying to impose a date. What we are doing is to create the
context in which the participants can make the decision as to
when they want to have it. I merely indicated that I thought that
that would be the outcome. If you get a wages decision in the
latter part of June I would have thought they would probably want
to meet sometime relatively early in July.
JOURNALIST: I was just wondering though in terms of the ALP
National Conference, an ACPI meeting at that time might create
difficulties. PM: You can see just how single-mindedly I am concentrating on
matters economic. I can honestly tell you that the thought of the
correlation between when it met and the ALP Federal Conference
had not entered my mind.
JOURNALIST: Mr Hawke, would you be organising a meeting between
Mr Keating and your minders so they can sort out their
differences? PM: I have said all I need to say about that subject.
JOURNALIST: Prime Minister, following up from my earlier
question, if this matter is important which presumably you think
it is and if you don't want to thumb your nose at the Parliament,
what is the problem about bringing the Reps back next week? I
PM: I don't think it would be necessary to do that. The members
of the Representatives no doubt have made their plans to which
they attach considerable importance. The people of Australia will
be told directly as to what we are doing.
JOURNALIST: Should the opposition be given equal time
PM: That is a matter as you know historically for those in the
media to make their decisions about that.
JOURNALIST: That suggests, sir, that you don't think Parliament
is very important.
PM: No, it doesn't suggest that at all. There is no logic in
that imputation at all.
JOURNALIST: Prime Minister, do you see the question of
accelerated depreciation or further accelerated depreciation
playing a
PM: I am not going into the details. I have said before that we
have a number of papers before on which more work has been done.
It would not be fair or appropriate to go to the details of that
at this stage.
JOURNALIST: Prime Minister, just before you go, about South
Africa, what is your position there, the state of play, have you
spoken to Mr Fraser?
PM: Yes I have.
JOURNALIST: And can you report to us what the discussion was
about PM: I won't go into details but I did have a talk with Mr Fraser
last week. He brought me up-to-date. He is off to London I think
today, certainly at the beginning of this week, for a further
meeting of the Eminent Persons Group and they will be considering
a reply which has been received from the Government of South
Africa and will then be, as I understand, finalising their report
for us to consider. I would simply make the point that I shared
views with Mr Fraser on the implications of the most recent
developments, thanked him for the work that he has been doing
which I say unequivocally I think his co-chairmanship has been
outstanding. I hope that there will still be some chance of
processes of dialogue, meaningful dialogue emerging out of the
initiative. But one would have to say obviously that recent and
may I say continuing events in South Africa significantly reduce
ones optimism in that regard.
JOURNALIST: Sir, has Cabinet yet made decisions on the Australia
Card and phone tapping?
PM: No. When I left the Cabinet to come and share my thoughts
with you my colleagues were then at the point of considering the
Australia Card submission and it might not be a bad idea if I got
back and joined them.
ENDS