TRAN'SCRIT OF IM'ERWrl WITH-GWXJFM NEGUS, 2UE/ 3AK, 12 JUNE 1986, E 0 E PROOF ONLY
N. After all the blood sweat and tears of the last few weeks on the economy
yoii must feel pretty let dollntg~ s universally actoss the country
today, at aeast on page one, what you put to us last night has been
thoroughly rejected.
Well let's say this that some union spokesmen have, some business
spokesmen, have the editorials have, been like the curate said, partly
good, partly bad. I think the ground work has been laid and I think a
number of them quite correctly say the time for judgement is along the
.4I track. And the first time for judgemnent, I guess, will be tomorrow
night.
N. But you say some oF the unions have been negative in their response.
Simon Crean is already saying that discounting is not on, which would
appear to put you back in square one, because that's the cornerstone of
what you have been getting at?
I'm not back at square one, the position of the Govt. is quite clear.
We have made the judgemnent as we see the economic situation now. But
4hat
in addition to the discounting involved and the delay in this case,
lo further case betore next year, that there will need to be further
A discounting the next case. That's the Govt. position.
iN. So where does that leave you with the unions, because M~ r Crean is
making it very clear, and of course the left wing unions are, that
discounting, so far as they're concernedg is no longer negotiable?
H. Well if that's what they say, I think we'll have to see what the Arbi.
Comm. says because afterall neither Govt nor the Ubions. make the decisions
for the Comm., the Commission makes it's own. I hope that they, in
regard to this caselwill be impressed with what we're putting-that there
should be the discounted And the positive finding on the
II productivity. The alternative and this is what the business community
of this country has just got to have the good sense, begin to understand
that they couldn't possibly in the absence of this system have a 1986,
calender 1986~ with no more than a 2.3% National Wage Case decision.
That ' s all it will be.
on the union front, Simon C. has said that he thinks it's askingj a bit
much for the unions to make any further sacrifices. Now youtako
L4. them last week, obviously you didn't get very far?
I. well, it's a slow process. All I'm saying is that we are going to adhere
1 on our judgement of the economic situation as we see it, to the
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proposition that there needs to be-a further discount. The simple and
unavoidable economic fact is that the world, by it's reduction in the
prices they pay us for what we have to sell the world, has marked down
our national income by We are 3% less able to sustain the standards
of the past. NOW it's no good us trying to say that it hasn't happened,
I wished it hadn't. But that's what's happened to our National Economic
capacity as a result of that fall in our export prices. i ea l wi,( uaou.
Simon Crean can't wish it away, George Negus with all his great powers
can't wish it away. And so if George Negus and Bob Hawke can't
wish it away, noone else can.
N. But being very serious about it, are you asking Australians, the
great bulk of Australians, those 6,000,0000 of them that are trade
unionists at least, to take a cut in their living standards? I
H. It was there in the speech, we will have to reduce our standards for
the time being, it's there right at the very beginning of the speech,
you can'-t say it more clearly than that.
N. But their argument is that they're being asked to take the full force
of tlis?
H. Well unfortunately the fact is that wage and salaries earners constitute
the overwhelming proportion of our national income and our nat. expenditure.
so by definition it's amongst those of us who are employed that the
lowering of standards will have to take place.
N. on another though you're asking unionists to front up to the
Arbi Comm and have the full force of the Industrial laws come upon them,
but you're simply requesting business to help?
H. Well the constitutional and institutional fact is that we have as a
Govt as a society, the institutions' . to deal with wages and salaries. We have
no constitutional or institutional framework to control business. r
what we've got to do is exhort themand I certainly say this to the
business community, if as a result of what I'm saying and if as a result
of the AC. decisions we get this restraint in wages that I'm talking about,
there is an overwhelming onus and responsibility upon the business
community to respond in the area of their own incomes and salaries,
2 iirectors' fees firstly. The onus upon them I believe, in the area of
prices, to exercise price restraint, and thirdly to take advantage of
the improved investment climate to increase their investment so we
can broaden our export and import competing base.
But you can see the point, all you can do is exhort, as you say,
exhort business to do that? k
TO act6 I a o r9 g , ht AtreO & t rO e a( X. t S e tel i n s tit cie h e t walt h' wagUel
The fact is George that there are the institutions to deal with wage
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and salaries earners and we've got to use them,
N. Would you liXe-to have thegal power to contr6l things like prices
and executivesincomes and fees and profits?
H. Well I don'tthe concept of price control is sensible and indeed, I must
that. we haven't been pressed on that point by the representatives
of the trade unionmovement, they're not really seeking price control
as such. What we want to see is an economy which is freed up so that
there is enough competition to ensure that those forces do bring
about price restraint. In the areas where there's not'sufficient
competition we will try respond more to anything that the Prices
Surv. Auth. puts to us to see that their Aers in this area are
improved. Now what the business communitj 7does have to understand, I
is that the alternative to cooperation by them on this front, if they
get this sort of restraint, the alternative is if the restraint's
not exercised there will be a break away from the centralised wage
fixing system and you'lll get a return to the period og the past ( AltJ$ AS:
a free for all) Let's quantify it. Under the, under our conservative
opponents they had that sort of system and they had a wages explosion
of about 17%. Under the Liberals the average wages increase, earnings
increase~ was over 11% per annum. We've got it down to And that's
in a period of high economic growth. So it's quite clear that business
would be confronted if this system breaks down, with chaos. Much
higher wages o,' tcome, and then an eventual slow down and breakdown in
I activity. The whole community has got to understand the facts. The facts
are that there is this cut back in our Nat Economic Capacity. There's
one of two ways that the economy will adapt to what the world has dqe.
Either in this cooperative and measured way that we're talking about
where we recognise the factSand still keep growth going, by holding
back our standards and expectations, we do it that way. Or the other
way is chaos where you have an attempt to keep up pre-existing standards,
keep up your levels of expenditure by further borrowing, in that situation
your exchange rate collapses interest rates go through the roof and the
economy grinds, not merely to a halt but goes backwards. 1J,-d 0 1ttd
Mr Hawke you say that some union leaders and some business people
reacted negatively, I have to put it to you that if you look at any
paper in the country and I've seen the Sydney and Melbourne papers at
least, they have rejected what you have put to them almost out of hand.
Tinsel and trust package. Tub thumpinq. Not even a modest molehill.
Unions and Business rejects Hawkes plea, Biggest fizzer since Halley's
Comet. etc. I mean you can hardly feel encouraged by that sort o. " 1
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n. well you see I have a somewhat more balanced view about the people of
Australia, some of the statements you included there are those of the
leader of the opposition, what can you expect from him. I'm siiplY, L,|
saying that on my reading of the Australian ptudb leCi& Oict IA" s~ Ak hat the ordintazrry d
rank and file worker will understand that in these circumstances that
there is need for further restraint. I believe that people have to
make statements to their constituencies, including may I say the business
leadWLS. Let me give you an example. I find the representatives of the
Business Council coming out, in the reactions in this mornings paper,
and condemning us for saying that there should be a positive finding
by the Arbi. Comm. in the superannuation caser Now that's not what they
tell us privately, they quite clearly outline it that it's much more
sensible that this be done because they know that if it's not done
in a controlled way over two years by*: the Arbi Comm that it would come
in anotier way. So there is all the difference in world between
things that some people feel they have to say publicly to what they
really meall.
N. But could I put this to you
H. As the actual decisions are taken. As they see the firmness at : the
Premiers Conference, the firmness in the Budget, see I hope an Adbitration
decision which reflects the sort of approach which is sensible, as these
things actually come into place, I believe, the reactionswill be
positive.
N. Could I put this to you. I talked to a lot of people this week and
over the last couple of weeks about the flipp-flopping that's been going
on in the economic policy arid the discussions you've been having with
all sorts of people and ordinary blokes are saying to me. " I used to
think Bob Hawke knew what he was doing, now I'm nbt at all sure" Other
people have said it sounds like he's trying to make up his economic
policy as he goes. And this whole thing is just an economic cosmetic
effect that he's giving us here. Not any real policy. Does he really
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know what he's about?
i've had discussions with you beforetthis question of what people say
to you. I could just as easily say to you some of the things which have
been said to me, which are quite in the oppositEdirection and from some
very substantial people. Now that would be putting my quotation, my
reference against yours9I don't think that get's us very far.
But people would be a bit intimidated talking to you: the3 might be
only interested in saying the right thing?
I've never noticed that, I ' ye never seen you being intimidated.
People talk very frankly to me. I get to the point which is this.
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People will make the judgemuents and they will be entitled to make the
Judgements in terms of the delivery or non-delivery in the weeks and the
months ahead and they can start making theirjudgement as from tomorrow
night on that, after the Premiers' Conference.
N. You say delivery or non-delivery, you'd have to acknowledge that at this
point at least, the whole economic exercise that you've been going
through has damaged you politically?
H. No I don't aceept that. I think the judgements will be made about me
And thisqovt. in the terms of what we have done. I just a~ sk you to
remember we're now talking after we've been in Govt for a little over
three years and I will stand on the record of achievement of this
Govt. in any forum anywhere. The...
N. Even though people are saying we' re facing a recession you will say
you'll stand on your record?
H. We're not facing a recession in terms of what we've been able to do
in the economy. What has happened is, as the most recent Nat. Accounts
say,-it has marked down the international world because 6f the lower
prices they are paying for our products has marked us down by 3%.
That's where our problem has occurred, now we have to make the'internal
adjustments again to meet that challenge.
Can I ask you this, is it possibly the case that for many years nowp
say at least the last ten, Australians have been expecting too much
that we are in the long run an extremely materialistic country
and now we're paying the price?
H. Well that is a far too simplistic a statement, what is the correct thing
is that over a fairly long period there has been a gradual deterioration
in our termis of trade and * we haven't, successive governments haven't made
the adjustmentswhich are necessary to diversify our economic structures
so that the composition of our exports are better able to protect us.
Now that's been going on for some time, and because every now and
then something~ happens and you get a lift people say well it's going
to be all right. Well. it isn't going to be alright if we simply adopt
that attitude. we've got to face up to the fact, now, that with this
decline in our National Economic Capacity, brought about by this fall
in our export prices we can't simply go on expecting to maintain the same
standards by borrowing more,,
You've talked to me this morning about the possibility of chaos if this
ihole arrangement with the unions is not worked out on discounting
and future national wage cases; last night on TV you talked about us
living in a time of crisis it's a pretty bleak picture of Aus. that
you're painting7
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H. ' No, ryou're emphasizing part of what I said. I said I belidve that
Australians have the capacity to meet this challenge. I mean just let
me go back to the point I made. Do you 4i~ exber what it was like
in February ' 83. ; 1just before you took office) We had the worst
economic crisis for So years, we had double digit unemployment and
double digit inflation, the oountry in absolute despair.
M. So why are people saying now that we ' re going down the gurgle hole and
f ast?
H. Well~ can you have a 30% depreciation in you currency a-14% decline in
your Lerms of trade in the last year, and 9% decline in your terms of
trade since last June avu*. say that's not having an adverse effect
upon you? I mean that is a massive impact in a very short period
imposed fromi outside on this economy. ( Negus overtalking) including the.
thatfactandadjust it's policy settings accordingly.
F nly sworking out this whole discounting and national wage
problem with the unions the keystone of this whole thing, and if that
doesn't work out over the next few weeks and months is the Accord in
strife, and is your whole economic strategy in strife/
* well ok'viously the question of wages is central to what happens to our
macroeconomic atrategy. We've got to have a lower wages outcome.
X believe that the next important point, in working it out is the
Commissions decision.
~. How do you tink the trade union movement would feel hearing an old
ACTU President like yourself, telling them that they're the blokes who've
got to vop all this7
I think that the overwhelming rank and file will understand. I believe
that the leadership of the Trade Union movement will come to understand.
But I repeat it's difficult and I understand it. It is difficult for
the trade union leadership to be in virtually anything other than
the position they're adopting now until they see the decision by.-
the Commission.
Could you blame them for thinking...
At this stage there has been no national Wage Increase in 1986. If they
were not to get anything in this case that would mean nothing in 1986.
Now they can't therefore finalize positions. If they get the 2.3%
and some sort of indication that the superannuation will come over
will spread over a period of some two years, then that creates a
different framework within which they can formulate their position.
Finally, You couldn't bl~ ime them in many cases for thinking that Bob
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Hawkess got into bed with business and has sold out the union movement?
u. well then they ought to look at what the business community is saying
you can't have it both ways. The business community's not saying that.
Mr Hawke thank you.
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