E 0 E PROOF ONLY
PM-SCHILVBERGER 3/ 12/ 86
PM I apologise to you and your listeners but I had a very important call before I was
due to leave and then the-traffic was much worse than we thought I'm sorry to
you and I'm sorry to your listeners.
S Can you tell Us about your important call?
PMNo.
S How obout S P. You weren't talking to them by any chance?
PM No I wasn't talking to them but I must say, as is so often the case, I hod a bit of
a giggle about Michelle Grattan saying it's a blow to the Govt. Scxne blow.
S Well, isn't It?
PM No of course it's not a blow. It's been anticipated and when you have an
international agency of that kind keeping you in the top eight sovereign borrowers
in the world and saying as they did that they approved of the policies of the
Aust Govt, welcomed them and said that they were the right policies to deal with
an externally imposed circvmstance. If that ' s a blow lot me hove a few more.
S At the time of the Moodys downgrading you and the Treasurer seemed to indicate that
that's alright S 9 P won't do the same.
PM We didn't s0y anything of the sort. It was expected that dealing with the sam
.1 circumstances you get the 3aMe sort of analysis because what they ore saying is
that there ore difficulties in debt servicing when you hove a dramatic turn in the
terms of trade against you and of course there are-Both Moodys and S& P have spoken
very highly of the economic policies of the Govt to deal with this externally
imposed circumstance end I would welcome the fact that we have this endorsement of
our policies by these agencies.
S. You'd prefer Triple A wouldn't you?
PM Well I don't feel at oll upset because it is -still a very high rating, accept were
in the top eight sovereign borrowing nations in the world, the top eight, and we've
had imposed upon us these .: difficulties a massive turn-uruund In the terms
of trade which creates its own problems and if these agencies say woll look
you're still a very good credit rating and in making that judgement we're going to
tell the world -we think you-' re pursuing the right policies I don't have any upset
about that and I suppose significantly-nor des the market..
S. Now talking about the market , we know we're now sitting on about 65c in the
against the $ US to what extent will you try to keep it there?
PM Well, I'm not OnIn0 Jntn retni1 nf whnt, thp Rpsprvp Rnnk pnlry's onino tn hp
QUm-Llurn Lv uy wc think gncrully the. mmarknt hi ettled nt nn npprnprfntflevel
at this point in time . It is one that represents a very significant
opportunity to Australian manufocturers to compete against imports and to find
export markets overseas they never could have done before.
We're relaxed about the sort of level that it is now. We're not going to be getting
upset about that.
S You do have an input though as to what the Reserve Bank does
PM Yes, well the Bank conducts its operations. There is discussion between the Bank
and the Treasurer and I'm more than hoppy with the way things are going. I'm not
going to cause any other speculation by any further comments on that.
S The tax cuts seem to have been swamped by other issues?
PM You can make that judgement if you like I don't think they've been swamped. The fact
is that peoplr arc going to Fet the tUx Cuts now and they are going to get further
significant tux cuts in July. You know I am always amused by professional
commentators your Grottans and so on , who-sit in the gallery and get overwhelmed
by what they think is the big issue of the day. They're more often wrong than right.
The Aust public, an institution in which I have great faith they are much more
sane and are much more capable of getting things in their longer term perspective.
They might get a bit excited for a while about a particular issue but they in
their doily lives make the judgements aboutwhat's important and I'm quite content
that by the time we go through next year and when these rates are brought down
in the way in which the conservatives never could do because they were engaged
in allowing the tax system to be absolutely rotted and imposing greater burdens on
your average taxpayers the taxpayer of this country will make the right
judgement.
S. When you are critical though of the Grottons and other political observers if
I open the lines now, in fact I did a few moments ago
I listened to your lines
S Well, the very first question was why didnl. t you sack Paul Keating?
PM I heard that.
S Why don't you?
PM There are 16m people in Australia and you get one question why don't I sack PK
what sort of conclusion um I suppvzcd to draw from that? I'll give you the answer
to that person and whoever else might be answering ( sic) it. Because he didn't
deserve to be sacked. He mode a mistake 1 a significant mistake and I said 3o. I
repeat that i was a significant mistake and it is not however a mistake which
deserves socking. There was no impropriety there was no attempt to advantage
himself he is the loser the financial loser through not having lodged his
return. Now I told him he made a mistake . He knows he mode a mistake. Now if we're
going to have an analysis of PK let's have it.
S Did he offer his resignation to you?
PM You know he didn't offer his resignation.
S I wouldn't ask you if I knew. 3/
-3-
PM I don't mind Michael. 1 know you've grown up a bit more than thot,. Don't be silly.
You know that he didn't so don't let us waste time because time is valuable.
S. Yes iti..,
PM You know that he didn't so why do you suggest that you didn't know?
S Here is an issue though that has token media coverage not only media coverage
I suggest to you that people are interested in this and are concerned about it.
PM I didn't say they're not interested. Of course they're interested and I'm saying
to you as PM I didn't ask for his resignation . While he mode a mistake and it
was one I criticised him far there was no suggestion of impropriety and he did
not advantage himself by not putting it in he disadvantaged himself financially.*
Now I wish he hadn't made the mistake .1 believe he certainly won't make that
again but I have to in these things make a judgement and the judgement is
that in terms of the interest of the Avst people this is the man who has been
responsible for the greatest reform in Australia's tax history which will mean
that we've gcto significantly fairer and more efficient tax system as a result of
the changes for which he's been responsible. Now I'm not going to be in a
position of having all those things in the balance sheet which show him to be
a great Tresaurer and say against that yes he's made this mistakep thi3
personal mistake and because of that mistake which Involved no impropriety
no financial advantage but a financial loss I'm going to sock him.
S Will that significant mistake cost you votes at the next election?
PM I don't believe so.
S Are you sure?
PM Well Michael, how can I be sure. You asked me
You're worried about his credibility
PM No I am not. At this time he is down. There's no'doubt about that. Of course he
is down. He is not well regarded for some reasons including that but what I've
said before by the time we get up to the next election in the whole sweep of
tax reform for which this Govt has been responsible we'll be up there agoinst the!
record of John Howardf the worst record of any Treasurer in the history of this
country. They'll be the two contrasts JH , the man who walked out of office with
a top tax rate of 60c in the 1 that's his legacy PK 0Pc in the $. Howard on
the other hand who was condemned by his own Royal Commidssioner as having presided
aver the worst .5 years of' tax avoidance and evasion in the history of this
country which had cost the ordinary taxpayer more than had ever been inflicted
on him before . That was the Fraser-Howard record. Against that the cleaning up of tNK
tax system by PK. A more efficient fairer tax system with all the rorts and the
rants wiped out which hod been allowed to flourish under the Conservatives.
That'll be the record. 4/
S Well, I want to talk more about Lux reform in a moment but there is this question
about rorts and there was this question from a listener a moment ago about the
travelling allowance so-called rort.
PM Well, you know the answer to that. The fact is that what PK claimed in regard to TA
44
was precisely in line 4the findings and decisions of the Remuneration Tribunal.
And in line with the Cabinet decision. You know that. It's the some way that it's
being done by people in the Opposition. Is there any question.... I have not wanted
to roise other people on the other side but you know if you wanted to look at the
Deputy Leader of the National Party Mr. Hunt exactly the same position. But Mr.
Hunt ' s not doing anything wrong. He's doing it in line with the decision of the
Remuneration Tribunal.
S It's not just a question of PK's it's a question whether TA now is a fringe
benefit.
PM The simple fact is in regard to the TA that has been put in question in regard to
Mr. Keating it is not something that he is doing other than in strict acdordance
with the law and what's been decided by an independent tribunal and is what's
being done properly on both sides of the House.
Pnrlirmnnt nn thn APC Whnn nrn jonii fnllnirr nnd lndinn onina fn oni 6nyasihm
-I j ll sl 1 i mi-k10 w,-K-w flai ffualt. Lv Lw L1
PM I don't know. It's not on my agenda at the moment Michael.
S Do you think we can put it on the agenda?
PM Ohi it might get on one day.
S Tax reform. Did you make a mistake with the tax summit which prevented you from
introducing an indirect tax like a consumption tax?
PM No I did not make a mistake with the tax summit because 1 believe the concept of
consultation with the connunity has been one of the distinguishing marks of the
success of this Govt's economic policies. It was appropriate that we try and talk
with and listen to the community. If there hadn't been a summit the community would
still have mode its position very strongly apparent: on the question of the
consumption tax. That they were able to do that within a summit situation where we
got views on a whole range of issues including some of those matters we were then
able to include In the alternative approach and as I've said all along on the
Jssue of tax I think we hove got the best that we can in the absence of on approval
by the Aust community of a consumption tax and there will be a clear distinction
to be made bctwocn the conservatives who had 7h years to put their policy in,
left with a top marginal tax rote of 60c because they are a party which approves of
allowing privileges and rorts to minorities in the community , If you're going to do
that you're not going to have the amount of tax available. We've knocked those rorts
out and have used the proceeds to bring down their top marginal rate from 60 to
49 as it'll be by July of next year.
That's the reform and and that's quite clearly going to be there. for people to
judge between one situotion and the other.
S You and the Treasurer wanted some sort of consumption tax when you went into that
tax summit. When you talk now though of the comunity being upset, they're upset
now with FBT . What difference is that if they'd been upset about a consumption tax?
PM You soy they're upset about a FBT . I have no doubt as that tax settles in, the
arithmetic o' it is going to be quite clear and that is the great majority of
people benefit from the-fact that there is a FBT imposed upon the minority who
previously avoided any tax at all on that port of their emoluments. Now I hove no
concerns about that . We took a battering because we were in the process of getting
the whole thing together . We weren't able to have the benefit of either on
cxposition sy3tem once the tax was in or the opportunity for people to see it in..
operation.. As that goes on' the FBT will be seen as a positive by the great majority
of the Aust people. There's no question about that.
S Can you sec the time where it will be necessary for you to introduce a consumption
tax?
PM No, 1 don't see that.
S After the next election?
PM No I don't see that. I'm concerned at this point with getting these changes bedded
down and I believe as they ure bedded down they will give Aust the best, fairest,
most efficient tax system that this country's ever had. So you are now going to have
incentive back in.' have an uproarious giggle when I hear these posturing fellows
from the Liberals we're in favor of incentive. Incentive in the tax system"
what was their incentiveThey had a very clear system of Incentive. That is an
incentive for the minority, for the privileged saying we'll give you the Incentive
of being able to avoid paying any tax at all. But as for as the: ordinary honest
taxpayer is concerned the incentive the Liberals provided for them was a top
marginal rote of 60c in the $. My Govt has provided real incentive by knocking that
top marginal rate down as it will be by July of next year for a 60c of John Howard,
thot's his Incentive tax rate, the Hawke incentive rate will be 49c in the I
S To be able to maintain that you're going to have to find other revenueparticulorly
as we've got our balance of payments the way they are at the moment.
PM Well, I'm glad that you've flourished as a economics expert , Michael, I might just
add in to you profound knowledge of the subject that you'll find that economic
growth will ensure that our capacity to sustain those rates will be there.
S You hove no doubt that you'll be able to reduce the deficit despite my lack of
knowledge in this area I know that much, you need to reduce the deficit. and
because you've said so
PM What has been our record then in the reduction of the deficit.
S It's gone down.
What I'm asking you is how are you going to maintain it?*
PM It was 59K of MDP when we cce'in that was what we inherited. We've got it down to
under 1 . So the point I'm making my friend is that from the $ 9.6B the 5% GP
the record is having got it down from 9.6 to MD~ to l. 4%. Now I simply soy to
the Schildbergers or this world who soy well what are yov.-going to do. Well I soy
look at what we've done. We've brought it down from 9.6 to 3.5 from of WUP to
1.4 .1 say you just look at the record. I'm entitled to soy we've don* it.
S You're doing well at the moment. You've done It so fa r My question really is what
orc you going to do next time around?
Pki Well, if you don't understand the point I'm really making. I'm simply saying
S I do...
, PM Well, be satisfied my friend that I'm entitled to say there's the record we
came in in ' 83 that's what we've done, I'm entitled to say we'll continue to
do It and we will.
S Can I be blunt and ask you this question, can you give an undertaking now that we
won't hove a consumption tax if you win the next election?
PM Yes I can. I am not concerned with bringing in any more taxes. We've faced up
to this. We've brought AAOthe ronan~ or Luxes that are necessary and I am
satisfied with what we've done.
S An ongoing question, another one that was raised by a listener this morning, is
a prices freeze.
PM I heard the lady in question and you were on the right track in saying we haven't
got the constitutional power to freeze prices. She was wrong in saying the PSA
had brought in a freeze. They've suggested that that ought to happen . They've g6t.
no constitutional power to impose a price freeze. Now what we're doing is toa try and
strengthen the resources of the PSA so that their oversight capacities con be
increased and so their power to publicise the activities of price setters can be
strengthened.
S But would you like to see the states get together and initiate a prices freeze?
PM Well, I'd much prefer a situation in which the price setters in the conununity I the
business community themselves exercise their own powers and hud on attitude
of trying to ensure the lowest possible prices because I think an economy works
better with the minimum amount of regulation provided the players in the scene
play the game according to the right rules. Now therefore I would like to see the
situation where companies in this country did respond to the activities of the PSA
when you have regulation in you're going to substitute the decisions of market
forces for the arbitrary decision of bureaucrats and -ideally I don't think that's
what you want
But that does require for the market forces in fact to be operating.
S What about wage5 now and there is this question the employers are asking right
now is for a wages freeze.
PM Yes, they are So what's new. They've bee,, duing that for 20 years.
S You hove comc forth with your submission saying you'd recommend a $ 10 increase
in the first tier. The ACTU hasn't put forward a figure ot all. Why did you choose
to?
PM Well, because we've looked at what we've achieved in the area of wages policy since
we've been in office. We believe, on'indeed the commentators we've been talking about
agree with us that we've hod on outstandingly successful wages polickhich has been
one of the reasons why we've been able to create the 670,000 new jobs which is
a record in employment growth in the history of this country. Now we think it's the
responsibility of ours to indicate to the Commission the sort of wages outcome
which can be consistent with that sort of record we've had in the past. When we
brought down the udget it wus boned upon an earnings mnvement in ' 86/' 87 of Just
over 4% and we are saying therefore to the Comission the sorts of increases thot'll
be consistent with our Budget planning for 86/ 87 and what we hove in mind for
87/ 88. We think we hove that responsibility to soy to the Commission what sort
of outcome will be a part of the general economic approach.
S Can you see a bigger shift in industrial relations in the future. I mean we've seen
quite a bit in the last few months I suppose with more flexibility that there's
more than relationship between employer and employee rather than the way it's been
hoppcning in recent years?
PM There con be more flexibility .1 mean this is not just a question of hypothesis. I
mean I've been doing things about itin two major woys. Firstly we're giving our
support to the concept of the 2-tier system will allow a greater degree of
negotiation and flexibility between employees and employers . Secondly and most
importantly in that meeting I convened in September of the BCA and the CAI on the
one side and the ACTU on the other and I congratulate themnall for their positive
rcsponse. They come there by request and have agreed now to to work hard now on
improving work and management proctices. This is going to now mear-and it's starting
to happen as a result of that, that more discussions at the workplace at the
enterprise level to eliminate inefficient work and management practices. That's
going to bring employees and management closer together. So in both these ways we've
been responsible for stimulating a greater degree of direct discussion between
employer and employee and that's what needs to happen.
7./
-a-
S The Australia Card. If you lose that in the Senate what's your next step?
PM We'll put it up again. We've said that Michael.
S Is it on issue big enough for a double dissolution?
PM You seekto wont this program for me to come on and.. repeat what I've said publicly
several times. This Parlt is going its full term.
S There's no issue big enough to prompt a double dissolution?
PM Not that I con see. 1 mean I am simply going to put that up again so people will
know our determination our commitment to hove on Australio Cord with photograph
it's what is right, it's what the people want because it is what will be the
most cffcCtive instrument to stamp out social security fraud and tax evasion.
We are committed to that, the people want it . The Liberals and the Democrats
don't wont that. So OK if the Librals and the Democrats want to keep telling the
Aust people that they ore opposed to the instrument which the Aust people know is
the most efficient to wipe out social security fraud and tax fraud let the
Liberals and the Democrats keep saying it because we'll keep giving them the
opportunity to say it.
S Would you like to see the Democrats wiped out at the next election?
PM I am basically as you know a kind generous charitable person I don't want to
see people get wiped out .1 wont to see people follow sensible policies and if the
Democrats are going to make decisions for instance like on the Australia Cord.
they are opposed to the instrument 1 which as I say is going to be the most
effective instrurment to wipe out fraud and tax evasion and on instrument which
is being brought in with the greatest amount of care to ensure the protection
of civil liberties individual rights, and if they make wrong decisions like
that they ore the ones that run risks.
S Cough Whitlom says your reforms haven't been good enough.
PM I'm agoin as I said before a kind charitable person by nature I made the
observation that Mr. Whitlam approves of this Govt sufficiently to accept every
position that we've offered to him and accepts those decisions of Govt
S Why is he having a go at you?
PM I find it rather interesting to observe post politicians some are able to accept
the transition with grace and effectively On both sides of politics you can
think of those who do it and you can think of those who don't . Now X could if I
wonted to I suppose make observations about my predecessor but what good does
that do whut good does that do anyone what good does it do the Labor Party.
what good doe5 it do the people of this country. It would perhaps give some degree
of satisfaction to make some observations. Well, I think there's an onus on
people in life to not just indulge yourself in personal satisfoction. I could
on so many occasions do it about so many people including I might say Gogh
but I don't think that does any good. 9/
S You hove tried to distance yourself on your party now, and the Govt now has
tried to distance itself from the previous Whitlam Govt.
PM Well, you say that. What's your evidence of that. What I've done is to govern
this country according to the needs of the timef ca, nd the needs of the future.
Now if anyone doesn; t understand that 1986 is a change difference from 1972
then they don't begin to understand anything. Govt in Aust in 1986 requires
decisions 4hich ore releuant to the circumstances of this time and what we can
scc is necessary for the future of this country. And I'm providing with my
colleagues, that Govt. If people wont to make comparisons with another era,
another time , well OK let them do that. I will go about the business of making the
decisions with my colleogues that I believe are necessary for the welfare of
this country and according to our resources and our capacity at this time.
I'm not going to succumb to any temptation to get into a slanging match with
* Vnyone whether it's Gough Whitlam or anyone else.
S Are you enjoying the Prime Ministership?
PM Love it.
S How long are you going to stay there?
PM We'll have an election at the end of the full term of this Parlt . I'm confident
the Aust people will make the comparison between 74 years of conservative
govt and the 5 years of our govt . Our record in that time will surpass the
conservatives in every relevant respect. We will hove done better by light years
than they did in every respect in terms of economic growth , EMPLOYMENTinflation,
social welfare, environment, in every issue, the pursuit of peace , in every issue
' we'll be light years ahead of them and I think we will get the verdict that we
should get of another term. I will then enter into, I hope an historic: third
term in terms of the history of Aust Federation . It will be the 3rd successive
Labor Govt and I will then try to do the job that's necessary. Now as to how long,
it's a matter for then, but I would simply say that I'm not one who: wants to
break every record in sight and go on forever . I've been given a great
opportunity and privilege by the people of Aust .1 hope I'm proving worthy of it
I would think that within a period of 8 years or something like that you would
have mode your mark, your contribution then it would probably be time to step
aside for others.
S Has it been harder than you thought it would be?
PM Well, this is a real politician's answer yes and no. I mean yes and no. The
sense in which it's been harder is that I don't think until you ore there that
you can quite understand the never ending demands that are made upon you . A don't
soy that with any sense of burden because the demands are interesting
stimulating and you've always got the opportunity of doing something that's
useful. Bvt it is neverhteless incessant. i
The NO port of the question is that I didn't think there would just be the range
of help thut's available , You've got within the PSI and I've had my criticism of
the PS, and I'm bringing in a lot of reforms making it leaner and tougher and
more efficient but within, let me say, the PS there are some magnificent
resources . Also I didn't reolise that I'd be able to get such a great band of
people around me. Changes have been made but I've continuously had marvellous
people around me. Within the business community within the trade unionswithin
the Aust community generally again I couldn't have imugined in advance the
enormous strength of support that's been forthcoming. In saying people hove been
marvellous in on organisation, they really have been good and they have made
the job easier in that sense than I thought. So that's the sense in which I say
YES and NO.
S Is consenus govt more difficult than you thought?
PM Striving to get as much agreement as you can in a community is a very difficult
process but the results ore worthwhile . We could not have turned the economy
around after' 83 and created 670,000 new-jobs and done all those things and got
Au3Lrullun3 liking one another ugain. Do you remember what' 82 was like
Australians just hated one another they were fighting one another. It was
divided , bitter , the process of getting them to like one another again and to
work with one another again, and to recognise the challenges together that's
beaut. I get enormous satisfaction out of thot. It's not easy but it's worthwhile.
S You're not getting the credit though in terms of opinion polls?
PM I don't govern on the basis of trying to get the opinion polls up . You've got to
take tough decisions on the basis of that's what's necessary you take them.! said
in my address to the notion in the middle of the year what was important to
me was the future of this country and I take the decisions even if it meant loss
of office . People hod gone " Oh will he?" and the answer was yes I did. I got
my head down and we made a series of tough decisions and the polls went down . But
they were the right decisions . Now for what it's worth the polls are coming up
again.
S Couldn't those decisions have been tougher'so that you could have tried to reduce
inflation more so and unemployment?
PM You couldn't hove made any tougher decisions .1 think that were right.
We've got the right sort of mix. I mean you can't just cut the economy off
altogether at the legs . You've got to keep the economy moving but not at such a
high level of activity which is going to suck in imports at an unsustainable
leveJo you had to decide to get just that lee1' of activity which would keep
the employment situation as goj ou could without bringing about an
un~ sustainable balance of paymentsproblem. 11
S S -11-
And I think we hit the balance just about right. Now you see my whole time in public
life has been based upon belief that the Aust people ore decent and sane and
sensible that in the long run they will make the right sorts of judgements.
I have no reason to believe that's going to change. They couldn't quite see Just
what we were about in the middle of the year and they saw the tumbling
and all the gloom. But now they're seeing I think more and more that the Govt
got its head down got its act together got the right sort of policies
they ore starting to 5harpen and the people will make their judgement. I'm not
one who believes that politics is for the doy that you ) ust make that decision
today what you think is going to be the popular one. You've got to make the
decisions which ore right for the longer haul * We hove made them and we'll get
the appropriate Judgement.
S You say you want Australians to like each other but you don't want to shake
Jay Pendarvis by the hand?
PM No I didn't agree with what happened there, and the tactics on both sides.
I think the gentleman you mentioned was at fault I think the union was at
fault and I think it was a process of total confrontation which is alien to
my concept as to how we've got to go about improving this economy. We've got to
try and get the situation where people do co-operate with one another Irecognise
one another's interests . I wasn't going to make a hypocrite of myself in this
mutter.
S It wasn't history.... that's the past?
PM When you have a leader of the Opposition who says he wants thousands of
Mudginberris around the country you can hardly say that that's a thing of the
S post.