J~~ USYI~ ALIA
PRIME MINISTER
TRANSCRIPT OF PRESS CONFERENCE, CONGRESS HOUSE, DAVOS,
SWITZERLAND
-3-O-JANUARY--9477--P ROOF-O-LY--
JOURNALIST: Mr Hawke, what. reactions -have-you . had
so far to yesterday's speech?
PM: It' s been very positive. People have been very
gracious in their comments, but as in all these things
the judgement is to * be made later on. . I meant what
I said at the beginning of the speech that one doesn ' t
feel like coming half way round the world, or right
round the world, if you think you are talking to people
who are just going to say " well, yes that's nice,
yes that's rational, yes that makes-sense", then they're
not going to do something about it, and I have the.
feeling that what we've been able to do is to state
the issue fairly starkly,-point out the very
considerable limits of the danger involved that it's
not just economic but political. And I would hope
from the reactions I've got that people are going
to go away and talk about the-proposals. I just make
this point, which is relevant to a W. hole consideration
of our prsnehere ' Australia ' does not take, the
view that what we have said. represents the last word
that we know exactly what the paths are through to
solving these very considerable problems. But what
we hope we've done is to state the problem pretty
accurately and to make some, as we put it, practicable
suggestions that may very well be that the merit of
what we've done is to set other minds going about
other ways of getting there. If we've done-that,
we will have judged ourselves to be successful.
JOURNALIST: ( Financial Times)
JOURNALIST: He was referring to last night's agreement
between the EC and the US or. that it was. really where
the future lay world was rapidly-moving towards
managed trade
PM: Well, it's too early, it seems to me ' to make
a judgement as to what's going to emerge through the
various avenues available to the U. S. and the Community.
All we know is that from the discussions we've had
myself to some extent but-my Ministers and officials
more particularly, is that at that level of relevant
officialdom, there is an acceptance of, firstly, the
non-viability of the continuation of the existing
practices in the two countries, and in Japan for that
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matter, the need for change. And thirdly, the
recognition that there is a political hurdle that
has to be overcome. Now, all I can say is that there
is agreement with us on these things, and that your
question, in the end, gets down to making a judgement
me making it, you making a judgement as to what
is the level of political will. Quite clearly, I
can't, with any confidence, say to you that I know
that there will be sufficient political will to get
to the more ideal solution that I've been talking
-a-bout. But---I---ca-n-l--y-hope-t-ha-t-by-a-r-ag-o-I rn-te-res-t-sbeyond
governments that the rational solution, can
get a greater degree of exposure. In the end, the
greatest hope is this that the in ' ternal political
arithmetic of it. By-that I mean-that, whether itbe
in the United -States or within -Europe, the political
arithmetic is entirely opposed to the economic
insanities that are being pursued. In other words,
the majorities in each country are being prejudiced,
and very sorely prejudiced, by policies calculated
to help a minority and in the end, won't be able to
help the minority, so what you're really hoping to
be able to do is to crystallise in the minds of the
decision-makers, the nature of the political arithmetic.
JOURNALIST: Mr Hawke, how much f urther can you take
the line of warning to a country like the United States
that allies like Australia may ' we1 ' d evelop a-totally
negative viewpoint about the alliance?
PM: First you have got to be sure what is the message
that can properly be conveyed,-and once you know what
that message is, then your question becomes relevant
" how far do you take it? just gjoing to the first
part of that analysis. I wasn't trying to convey
last night, nor is it the position, that the point
has been reached in Australia that because of the
action of the United States, Australia has reached
a point of putting into question the elements of the
alliance relationship, because I don't believe that
that is the position. The message that I am trying
to convey to the United States is that we all ought,
sensibly, to take account of the warning signs. For
the sake of some of our friends here from other
countries I'll just mention to them what you know.
We had the remarkable situation last year in our country
of farmers getting in touch with my office, the Prime
Minister's office, and offering -to organise a march
of some thousands of farmers to the-United States
base' in Alice Springs, one of our joint facilities
here, to demonstrate against the existence of the
joint facility. This is, U. S. within our society one
of the most conservative groups, one traditionally
most closely identified with the maintenance of the
U. S./ Australian alliance relationship. But I go to
that to give you an idea of the intensity of the impact
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the decisions by the United States Administration
as seen through the eyes of our farmers, one of our
more conservative groups. What I'm trying to say
is, we want to convey the signs to our friends in
the United States of the impact on internal Australian
attitudes to alliance relationships that flow from
their decisions in this area. As I said in the speech
last night, if you attempt to make some judgement
from that experience in Australia, one has got to
imagine that within the countries of Europe, the
attitudes of ordinary people there. Within the United
and-withi: n-Japarvrwh-en-they-see-wh-at-' s-happening
in trade relationships -between their countries,-and
the tensions that are -developing there, you've got
-to ask yourself-the -question-whether there isn't.-a
process of some gradual dissolution of the ties that
are essential to the -broader -political relationships.
I'm really trying to say, and this is what in my
Australian colleague's question, that it is very
short-sighted if we think about this developing trade
war, trade conflict, and just put it in the trade
and economic box and say " that's the beginning and
end of the problem". We really believe and we have
the evidence that behind my friend's question here,
that it does go to these more fundamental questions.
We are continuing to say-to the. United States " look,
this will impose greater and greater strains upon
this area of the relationship". _ But Iam -not-saying,
at this stage, that we are using that as some part
of the bargaining process because, as you know, we
believe those facilities have-an intrinsic merit and
it would be antagonistic to our perceptions about
security interests to put theft as an issue But you
governmentgo on and on like this,-, and if your own
community builds up an antagonism" ' then that's got
to inform the thinking of government.
JOURNALIST: Mr Hawke, the Financial Times reported
yesterday that France was refusing to allow the EC
to put agriculture on the MTN round. Are you aware
of that and is what is your response?
PM: I wasn't aware of it, but let me say two things.
Firstly that in the processes leading up to the
decisions at Punta del Este, which processes included
discussions between Australia and the Group'~ of 14
with the Community, and with the French. There was
agreement at Punta del Este, that the first time
agriculture was seriously would-. be put on the agenda,
and we would regard it as a breach of the understandings
that were reached at that stage, if there was now
an attempt to take agriculture off the agenda.
JOURNALIST: Mr Hawke, have you gaged any feeling
or reaction at all investment in Australia.
trying to round-up investment here?
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PM: I wouldn't use the phrase " round-up" But we
certainly in the session I'll be having this morning,
will be wanting to convey what is the reality, and
that is that Australia is a very attractive place
for investment, that the fundamentals are there. And
let -me take this opportunity of saying what those
fundamentals are. Firstly, probably the most
politically stable country in the world, at -least
I don' t think there are any that are more politically
stable, a country of vast resources, of a well-trained
popu~ ation. part-o the fastest_ _ growing economic region____
in the world Asia-Pacific and with good rZe[ 1tions--
in that region, and therefore strategically well-placed
as a base for export into -the region. We only
have a population' of 16 million, ' so we can't put
-Australia up in itself an enormous market. But when
you take those other factors into account relevant,
recent developments with the 35% trade-weighted
depreciation of the dollar, we are now in a very,
very much more competitive position and very
importantly, the attitude of our trade union movement
is extremely cooperative towards further, investment,
prepared under its central leadership to talk in advance
with those who are seeking to establish new ventures
so that there can be, in advance, understanding as
to an industrial relations framework. All these things
make Australia very attractive. And what I'll be
trying to -do in-my brief time here -is to project thosefacts
into the minds of people who are considering
investment decisions and to do that with the overall
knowledge that the Government of Australia welcomes
such investment.
JOURNALIST: Mr Hawke, speaking ab~ jut. the willingness
of the Trade Union movement to talk in advance at
what level and within what sort of framework and
what specifics do you think might come out of that?
PM: I want people to understand that this is not
just an Australian Prime minister saying things that
might sound nice. It comes from specific discussions
I've had with the leadership of the ACTU. . And they
have given me an undertaking that should any foreign
investment proposal be in contemplati. on, that they
at the ACTU central trade union level, are prepared,
and not just prepared, but would want to talk with
those interested in such proposals, that they would
undertake to have the relevant unions who would be
likely to be involved, bring them together and in
advance talk with those who are considering the
proposal, so that they could work out, in advance,
an understanding and a framework of the industrial
relations agreement which would operate so that those
contemplating the investment could have the certain
knowledge about the continuity of operations. And
therefore have much more, or the greatest degree of
confidence about the viability of the operation. So
it's not just a concept that I'm putting, but a specific
undertaking. JOURNALIST: Is that the sort of thing that could lead
you to a direct contract system i. n the Union movement.
PM: It would be an agreement the concept of an
agreement within the overall system that we have
in Australia. In other words, you would still have
_-the--basia rate~ s~ lai. down out of the National Wage
Case decisions and so on, but within the pi_: ni-pPT
of the National Wage decisions, there is absolute
room for the negotiation of conditions and arrangements
* for dispute-settling, which -is -an absolutely critical
point, I think, in the confidence of potential'
investors. What they don't want, and quite
understandably, is I'm going to make the investment,
but we're not sure as to the continuity of operations.
Where I think the most significant part of the
discussions can be is to get an actual dispute-settling
procedure laid down so that in the event of some point
of disagreement arising, there is not just a resort
to direct action, but you'd have lines of communication
and di spute-settlement laid down so that the concept
of direct action is not the thing that's invoked at
an immediate or early stage-and in hopefully, not
a part of the relationship at all. It's those sorts
of things which I think can most sensibly be talked
about and, as I say, the ACTU stands ready to operate
in that way. Now if I can pick up your question,
Mike. I've had the discussions with Simon Crean and
Bill Kelty over a period of some weeks now. I've
been in a couple of ad hoc discussidis'and also, within
the framework of the Australian Labour Advisory Council,
we have talked about it has been the outcome of
a number of discussions.
JOURNALIST: Do you expect it to be a formalised
arrangement? PM: Let's say a company wants to come and establish
a new high-tech enterprise. They've got the proposal
in their minds. The normal thing when an enterprise
is contemplating that they talk with Government, they
talk with their bankers or their source of ' finance.
They will in advance have clear in their mind their
finance, what's required to meet Government regulations.
What I've been saying, and what the ACTU agree with,
is it makes sense that in advance, not to wait till
later, but in advance, to get a clear idea of what
the industrial relations framework is going to be
within which you're operating. And to try and negotiate
in advance the circumstances that will apply, including
as I've just said here, sensibly, a sort of
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dispute-settlement procedure so that you're not going
to have some idea in mind of saying " well, I wonder
how the dispute arises" so that you know in advance
that you've got undertakings about how these things
will be done.
JOURNALIST: Mr Hawke, you mentioned this sort of
proposal a couple of years ago in China. Have there
been any advances where
PM: I am aware of-circumstances where-proposed
-operat-ion-s-h--ve-bee. n--disr-ussed-inadance with the
ACTU. I'm not, I don't bring to mind something that
arises as a result of just what I've said in regard
to China, but there are examples of this sort of thing
happening, and what I'm really ' wanting to-do now,
is particularly in an environment -like. -this, is to
say to let potential investors know, Michelle, that
the ACTU is in favour, supports the concept that I
have and is prepared to cooperate, to talk in advance
in regard to those with investment proposals. And
there is no question at all about their preparedness
to do that.
JOURNALIST: system goes just about as far as
it can to guarantee that there won't-be strikes?
PM: As f ar as you can. What investors know about
Australia is that it'Is a free, liberal democracy -within
which the right to withdraw labour is an intrinsic
part of our democracy, as it is in Europe, as it is
in the United States. But part of what I'll be saying
is to tell them about our achievements. In the period
since we've been in office we've more than halved,
significantly more than halved, the" Ae~ vel of industrial
disputation. And there's very few of the OECD countries
which has had a rate of reduction of industrial
disputation that anywhere near matches what we've
done, and that hasn't been an accident. It's been
part of the processes of consultation between Government
and unions, and industry within our country. And
what I'm saying is that what we've been able to achieve
is based upon a principle of negotiation and
consultation and I'm saying today is we're contemplating
coming to get the advantage of that in advance, so
that in making your decisions you've got it there
in place. And if the negotiations are undertaken
in good faith, yes, you do virtually guarantee such
an outcome.
JOURNALIST: Mr Hawke, if the future of world trade
is not as you adambralia last night but rather a drift
towards big cartels. Where does that leave our country?
PM: It's not a happy prospect for our country but
I suppose that in one sense, as disconcerting as that
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might be, I think it's much more disconcerting if
you want to take an overall view for the really poor
and developing countries of this world. You may recall
one part of my speech last night, although I know
every part's still vibrantly in your mind, that one
part where I said that I regarded as one of the more
grotesque features of the world economic scene is
this way in which the majors either directly or through
the institutions like the IMF and the World Bank,
they preach to the developing nations and the debot
nations say " look, there are rational, tough, hard
economic decisions that you'Ive got . to make and it'Is
only--irr -t-ht-way--t-ha-t--you-wiL priosper". A lot of
the messages that they preach are valid. Buit at the
same time as they preach the need for. rationality
and to release the forces of -competition and
deregulation within these countries to whom they -are
preaching, at the same time they -es-chew, they repudiate,
exactly the same principles in regard to themselvesand
their relations with others, which is bad enough
but particularly bad when you recognise that the very
fact of their refusal, themselves to embrace the same
sort of rationality, imposes almost an impossible
condition upon the people to whom they are preaching
to meet their commitments. And it just strikes me
that that's not just a paradox, but an absurdity which
we've got to understand, and it's so relevant to-your_.
question. Sure, if you get that sort of cartelisation
which may suit the interests of-some of the majors,
it's going to make virtually impossible the meeting
of the commitments of these smaller debtor nations.
JOURNALIST: Mr Hawke, one of the difficulties Australia
may have in attracting foreign investors is that they
high inflation CPI do you think that
Government should look again at re-& adjusting economic
policy to try an get inflation down to
PM: Two or three things to say to that. The f irst
is what are the prospects for inflation, what. are
the reasons for the inflation rate that's emerged.
Now, just a very brief historical analysis. When
we came into of fice inf lation was over as you
know. As the result of the policies that we pursued
and particularly the policy of the Accord, we more
than halved that inflation rate. we've got, it down
to 5% an annual rate of 5% within two years. And
the point I make therefore is that the actual
application of our economic policies that were
autonomously within our own control., had got our
inflation rate back very much towards what was happening
in our OECD and partner countries. Then we got hit
by the turn in the terms of trade in the very
significant depreciation which unleashed forces that
took that inflation rate up again, and which saw,
8-
as a result, this last December quarter f igure coming
in for that twelve months at a bit under 10%. So
the point I'm making, Greg, in regard to those who
are looking at the Australian situation and movements
is as to making a judgement as to whether they come
or not, can see that the sort of policies pursued
by the Government have been successful in bringing
inf lation down. And if you look at 1987, that we've
now, we believe, had the final washing-through of
the depreciation, and that we will be looking in 1987
at a declining inflation rate. -Secondly, the point
to be made is that within those processes that
importantly for their consideration, it also produced
an enormous improvement in our competitive situation.
That 35% depreciation in TWI terms,. which is what
has taken place in the early months of 1985, has made
Australian industry much more competitive than it's
been in memory. So I would suggest that a proper
analysis of those factors, taking into account what
you say, that there's been that upward movement in
inflation, should lead to the total conclusion that
now is the time to come into Australia because our
inflation rates will be coming back through ' 87
the gap between us will be narrowed. But the very
processes which have produced -that temporary spurt
in inflation themselves have also improved our
competitive position.
JOURNALIST: Do you think that fiscal, monetary-and
wages policy should be looked at again some sort
of May or June statement?
PM: Greg, as you know, we take the view that you've
always got to be reviewing all.-, the elements of
macro-economic policy. We don't attach any magic
to a particular rate and certainly we've demonstrated
that we are not bound to some almost mystical religious
significance for budget day and that's the one day
of the year you assemble all your tools of
macro-economic policy and get them right on that day.
we've continually adjusted our policies. What has
characterised the more recent period is that we've
tried to ensure that by making the decisions in the
fiscal area and getting our wages policies right,
that we can be moving to a position where we can take
some of the weight off of monetary policy w~ fich had
to bear a fairly heavy part of the burden during 1986,
and we think that we've ' done that. I repeat that
it's our view that as we go through 1987, because
we've got fiscal policy right, budgetary policy, and
because we, I believe, will get a wages policy which
will produce an acceptable outcome in* 1987 that there
will be able to be an easing in monetary -policy during
87, with that being reflected in a lowering interest
rate regimen. The whole purpose of the hard work
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that' s going into wages policy is to ensure, as you
know, that we make the depreciation that's taken place,
and the improvement in our competitive position, that
we maintain that by not dissipating it through a
significantly high movement in wages. So, it's a
constant inter-relationship between these elements.
But -what it will mean in my : judgement, through ' 87,.
is that, having taken the hard decisions that we did
in ' 86, that we will have this sort of framework in
1987 a lowering rate of inflation; a declining
interest rate regimen'through ' 87; and a wages outcome
will be in line with what we said in the -last,
-bu-g--t-woulfdbe-requ1 re-d-a-d-a--reai-wages--outcome
which is better than most of our trading partners-'.
JOURNALIST: ZMr-Hawkewhat would-. you-regard as. acceptable
rate of inflation by the end of this year?-
PM: That's an invitation to suicide, almost. In
an election year " Hawke said in Davos inflation will
be it's not x% Advertisements for the Liberal
Party. So I'm not going to satisfy them. But I will
say this, seriously, Kerry, that there will be a
declining rate of inflation. The rate of inflation
at the end of ' 87 will be lower than 86.
Journalist: Have you had . discussions -with the ACTUabout
applying the industrial relations new
~ investment in Australia...
PM: Sure I mean I've consistently said, not just
in recent months, but all the way along my message
has been to business. I can remember speeches in
which I've said look you're tdlking about an investment
in this country you'll have your finance manager and
you'll -spend weeks and months working out how you
are going to raise the finance, how you are going
to service the debts. You'll have your engineers,
you'l11 have every facet of your corporate structure
in. And in advance you work out all those things
but how often have you had your Industrial Relations'
Manager or whoever responsible in advance and working
. out that part of environment. Yet look at the stupidity
of it, you can spend months and months working out
how you are actually going to acquire the money for
a 50 million investment, how you're going to service
it, how you're going to build it and yet the whole
of it can be rendered useless or the value of it reduced
very considerably because once you ' ye done all that,
got the thing going you haven't worked-out in advance
a sensible dispute settlement procedure with the unions.
I said it just is plain dumb and it is. It's plain
stupid to spend all that time with your finance
managers, your engineers what to build an pnterprise
if you haven't in advance done as much as you can
to ensure that that's going to be continuously operating.
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and it just makes sense in advance to sit down and
talk and get a dispute settlement procedure. This
is how we are going to handle things. I've said that
for years. This is not something that I'm just simply
saying makes sense for people from overseas who are
coming in.
JOURNALIST:.. election
PM: A year is twelve months isn't it? I've got
nothing to add to what I've said before other than
t-e--cl-rif-y--it for-you.-This Go-v m-en--will run its
full term and that means it could. be an election any
time up till April 88. But we'll all be going our
full term and that means an election -either -the endof
' 87 or sometime early I've said that several.
times and I'm not changing it.
JOURNALIST: farmers are aout 2% of the population
( inaudible question)
PM: Let me take the first part of your question.
This time I don't like the analogy of being taking
hostages it conjures up very unpleasant connotations.
But essentially you're right it goes back to answer
I gave earlier about the -political arithmetic. The
political arithmethic just can't be lined up against
the economic decision. It is the case that the large
number, the majority-, -are -being--disadvantaged -beca-use*
of perception of what needs to be done for a very
small minority. That in itself is bad enough if you
like but then as I was trying to say in my speech
last night it doesn't work anyway because in the end
you're not going to be able to protect, in income
maintenance terms, those who most necd. help. A feature
of the system here in Europe is that the minority
of the farmers, the bigger the wealthier farmers,
get the overwhelming proportion of the assistance.
What we're saying is it perfectly proper for governments
to have a concern for the welf are of those most in
need the poor f armers. But it is a lunacy to try
and pretend that you're helping them by an economic
system, which at one and the same time does these
two things directs the great proportion of that
assistance to those withing the farming community
which least need it, but secondly to do it in a way
which imposes a' significantly higher cost and price
structure on the whole community so that here in
Europe the economic growth rates of Europe are lower
than they otherwise would have * been because of this
artificially imposed higher cost and price structure.
That means not only are the growth rates lower but
associated with that the level of unemployment is
higher. And all of that in the name of trying to
protect a very small minority which leads to the
obscenity of people with lower than average incomes
.4 0 amongst the taxpaying group generally paying from
their taxes to look after some farmers with higher
incomes anyway. The whole thing, if you look at it,
is just riddled with economic absurdities. Now your
question is right when it implies that people in
government, your bureacrats,* all of them know the
truth of that. No-one argues that because it's
unarguable. But the political realities are we've
all got to worry about the vote. What needs to be
done is really to mobilise the political arithmetic
of it, to make the ninety percent plus who are paying
-thve-price-under-stand--the--dimens -oin f -t -he-pr ice that's
being paid but not in the process to ignore Ehd-plight
of the poor f armer. The poor farmer is entitled to
have his interest taken into account but it's
infinitely more intelligent to adopt other economic
measures assistance measures which can be targetted
onto the person in need because if you do that, you
will do two things. You will make sure the person
who needs the assistance is getting it and you will
do it at a lower price and in a way which is not
lowering the economic growth of the community as a
whole and increasing the unemployment of the community
as a whole and it's just eminently senseless.
JOURNALIST: clarify -the earlier point have
you received an undertaking form the ACTU..
PM: Yes. Mike it's not something that you should
be very surprised about. It the sort of thing that
has been talked about. It shouldn't ' come as any
surprise to any Australian entrepeuner that if he
were to go to Crean Kelty and ask them to talk about
this and to * get the union involved that Crean and
Kelty and the unions would talk. .; Lt's not a surprise
and they will do it.
JOURNALIST:.. ( inadible question)
PM: I am Michelle because as you'd appreciate, we've
been in Government for four years now and the evidence
is getting through about the changes that have occurred
under this Government the more than halving of
industrial disputation. But I suppose in the literature
and the assumptions there's still something lingering
there about Australian industrial relations. I really
want to tell people here; what we've" achieved
but that hasn't been achieved by accident. It's
happened because we follow a certain. principle and
that that principle is available to them not after
they get there but it is sensible. to take account
of that in advance and to talk and work out to their
* satisfaciton the sought of framework which would be
appropriate for the establishment of their enterprise.
ENDS