NEWS CONFERENCE, PARLIAMENT HOUSE 19 JANUARY 1989
E 0 E PROOF ONLY
JOURNALIST: Prime minister, is there any chance of a
national housing summit as proposed by the Australian
Democrats? PM: No, I don't think there's any purpose in holding such a
summit. JOURNALIST: You don't think there's a housing crisis?
PM: Well for those people who are having difficulty in
acquiring houses, for each person there is a personal
crisis, a desire to obtain housing. But this Government
since we've been in office has tackled the problem of
housing in a comprehensive way. We've brought in the First
Home Owner Scheme which is recognised by the industry and by
the recipients as the most imaginative scheme that's been
ever brought in by any federal government to provide the
opportunity for people to acquire their own homes. we've
provided record sums of money, record real increases in
funds for public housing and we will continue to do what we
can to assist the acquisition of homes by the people of
Australia. We've also taken the initiative as you know in
approaching by letter directly from myself to all the State
Premiers to take imaginative action in the area of making
more land available, more public land available for housing.
And in that area we are ourselves examining the capacity
that the Commonwealth has to make more land available. so
in these ways we have been over the last six years directing
our attention to this issue and we'll continue to do so. At
the moment of course there is a relatively tight monetary
policy which is necessary to deal with the overall economic
situation confronting this country. What you've got to
understand is that the problem that this Government has to
deal with is the problem of an economy which is, if
anything, operating at too strong, too high a level of
activity. I have noticed some observations which suggest
that we are relying solely upon monetary policy. Well like
so many observations that are made in certain areas of the
media, that is a nonsense. Monetary policy in a sense is
the swing instrument of policy. We have in place very very
firm fiscal policy which is evidenced by the fact that we
have budgeted for and will obtain a surplus of at least five
and a half billion dollars in 1988/ 89 and there will be zero
public sector borrowing requirement. So there is very firm
fiscal policy in place, it will continue, and we have a firm
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PM ( cont): wages policy in place. But the problem of
course at the moment is that at the high level of activity
that is taking place you have imports coming in at quite a
high level which is adding to the problem of our external
accounts. But I'd make the observation in regard to that
area of Australia's affairs that capital imports are running
in the last 12 months at about double the rate of other
imports, which is a reflection of the high level of
investment that is taking place in this country. In fact,
in 1988/ 89, as I think the Treasury release yesterday
indicated, we will have the highest ratio of investment to
GDP in 35 years in this country. At the same time as that
is taking place in creating a stronger economic base for the
future we have a quite strong performance in the export side
in both services and manufactures. In regard to services,
if you look at the figures over the last two years, we've
had, in the last two years in regard to services, increases
of 9.4 and 13.9%, and in the export of manufactures in the
last two years of 32.5% and of So if you look at the
structure of the problem with which we're dealing, while it
is true that there can be no complacency about the external
situation there are elements of it which should give us
confidence for the longer term both on the imports and the
exports side. On the import side, as I repeat, capital
goods imports running at double the level of consumer
imports over the last 12 months which will be creating a
stronger economic base for the future. We are seeing a
significant performance on the export front. I've referred
to the significant increases in the exports of services and
of manufactures. We shouldn't overlook the fact that in the
12 months from July to December as well, there's been a
increase in the volume of rural exports. Part of the
problem we've had in the first six months of this financial
year of course is that we've had fairly low levels of stocks
as far as primary products are concerned, but now it looks
as though we're starting to see the end of that problem.
We're hopeful that in the second part of the financial year
we will continue to get a strong export performance. So I
give all that background to make the point that where you
talk about the relatively high level of interest rates that
is a necessary part of the proper conduct of economic
management for Australia but it is not a situation where the
Government is in any sense relying solely on monetary
policy. It is necessarily tight but it is a part of an
overall strategy of economic management which, as I say,
sees as well very strong and tight fiscal policy management,
and also in the area of wages.
JOURNALIST: If as you say the economy is, if anything, too
strong, do you agree with Senator Button's comments of
yesterday that if demand remains to buoyant interest rates
will have to be even higher?
PM: He said, as I saw of the paper, that you might have to
look at that but I don't see any need for that at this
point because, as I say, it's not a case of the Government
relying solely on monetary policy. If you were in a
situation where that's all we had to rely on then you may
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PM ( cont): see more immediacy about some need for tighter
monetary policy. But you've got to understand, as I repeat,
that monetary policy is associated with very tight fiscal
policy, the achievement of a significant surplus, the first
time this has been done for a very very long period of time
and also in the context of a responsible and tight wages
policy. I think the most interesting thing of course at the
moment in this area are the observations that are being made
by the Opposition. I'd certainly recommend to the people of
Western Australia that they should take account, as they go
up to an election on 4 February, of what the Opposition in
this country is saying about what should be done. You have
the remarkable combination of Professor Hewson who says to
go ahead with tax cuts would be madness. Certainly he says
in the absence of strong expenditure cuts. So the people of
Western Australia ought to know that the spokesman for the
Liberal Party is saying that tax cuts ought to be out the
window, at least in the absence of very very strong
expenditure cuts so they ought to be asking the
spokespersons for the Liberal Party where are the
expenditure cuts going to be made, where abouts in health,
housing, education and so on are the Libs going to be
advocating the sort of expenditure cuts as a condition of
tax cuts. And from the National Party we have the
multi-millionaire McGauran coming up with the magnificent
proposition now that what we should have is tax cuts on
interest earned from household savings. Well isn't that a
lovely proposition from the multi-millionaire McGarran and
his rich mates. The most regressive proposition you could
imagine tax cuts for them on interest from household
savings. Well for the ordinary person in Australia today
that's not offering much but it's certainly offering an
enormous handout, as I say, to the multi-millionaires, the
National Party and their mates. That's the alternative
economic policy that you've got from the Opposition in this
country. It's the sort of thing that ought to be taken into
account and I'm sure will be taken into account by the
electors in Western Australia on 4 February.
JOURNALIST: Was Mr Kerin right this morning when he said
that the current account deficit would come in at around 12
billion dollars?
PM: Neither John Kerin nor I can be precise, obviously, as
to where the current account deficit will come in. All we
can say is that of course the figure that we talked about at
budget time of nine and a half billion will be exceeded.
There's no doubt about that.
JOURNALIST: Given that Mr Hawke, can we still afford tax
cuts on 1 July?
PM: Yes we can afford tax cuts and they will be delivered.
They will be delivered by this Government because the
capacitor has the capacity to deliver them, because it is in
possession of, and it is the sole political party in this
country in possession of the range of economic policies
which can make responsible tax cuts possible. We can do
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PM ( cont): that because as distinct from the wordsmiths of
the conservatives who talk about responsible fiscal policy
and so on, we've delivered. They simply had a continuing
deficit in their handling of the public accounts. We have
by successive, responsible and relevant expenditure cuts
created a situation now of significant surplus. So we've
budgeted for a surplus of five and a half billion that
will be achieved. And because we've done that and because
the Labor Party alone in this country can conduct a
responsible and relevant wages policy, we therefore have the
instruments, the range of instruments in the conduct of
economic management within which we can deliver responsible
tax cuts. Let me again make the contrast between Labor and
what it will do and what's being offered now by the
Opposition. The Opposition, the only way they talk about
tax cuts is to say tax cuts generally out but tax cuts for
the rich in terms of tax cuts on interest. Well that's all
right for the conservatives who want to look after the rich.
We will bring in tax cuts on 1 July and they will be
targeted at the lower and middle income Australians who need
and deserve the tax cuts and we'll be able to deliver them
responsibly because they will be delivered within the
framework, as I say, of an overall economic policy directed
towards the interests of this country.
JOURNALIST: Mr Hawke do you rule out any further spending
cuts if the current account deficits remain high?
PM: What we have said, I've said it, Paul Keating has said
it, is that the action of this Government over six years now
where we have successively in Budgets and May statements cut
back in the expenditure areas, brought a situation where
there is not much room left now for significant cuts. Any
major cuts in expenditures would cut into to the services
provided for ordinary Australians. Now that's neither
economically or socially responsible. There may be some
room for some further savings, minor savings, but not of the
sort of order that we've been talking about in the past.
JOURNALIST: May Mini Budget, nothing as big as the May
Mini Budget, but perhaps some cuts announced before the
Budget? PM: Well we have not believed to this point that you need
to have a May statement sort of approach which has, in the
past, involved significant cuts on the expenditure side.
It's quite clear that we are going to have to be announcing,
at about that time, what we'll be doing in the area of tax
cuts. We'll be announcing them at around that period, we'll
be having discussions now with the trade unions, with the
business community which will deal with the issue of wages
and at all times we've made it clear. There has never been
any question about this. We've made it clear that the
question of tax cuts will involve a wage tax trade off and
so we will be watching what happens to wages. We're fairly
confident that there will be responsible attitudes adopted
in the area of wages and if that happens then we will be
announcing, as I say, about that time the tax cuts which
PM ( cont): will come into effect from 1 July. Now at this
stage, as I've said, neither Paul nor I have thought that it
would be necessary to put that within an overall package of
significant expenditure cuts. But what the conduct of
economic policy by this Government has shown over the six
years now nearly that we've been in office, that we continue
constantly to monitor the economic situation and we will
continue to do that.
JOURNALIST: On wages policy Mr Hawke, do you share Mr
Morris' concern which he expressed yesterday about the
possibility of a wages breakout because of the spate of
increases in executive salaries?
PM: You've got to be concerned about this. In the private
sector, there is no doubt that there has been a fair bit of
evidence of significant increases in executive salaries.
And this is a matter which has been raised strongly on the
Economic Planning Advisory Council, both by the ACTU and by
the Government and, to be fair to the representatives of the
business community there, they acknowledge the problem that
does exist. They would argue, they do argue, that generally
speaking the increases that have taken place have been, as
they would put it, competitively necessary but they do
acknowledge that where the trade union movement sees fairly
significant increases in executive salaries in the private
sector, that that does create some pressure. But
nevertheless, having said that, if you look at the record of
the period we've been in Government and look at the attitude
of the ACTU, it is beyond arguing that the trade union
movement of this country has been responsible. How
otherwise could you have a situation in which there has been
the cut in real wages that's taken place. It's only because
of the restraint that the trade unions have exercised that
we've been able to create over one and a quarter million new
jobs and have a rate of job creation which is more than
twice as good as the rest of the world. So that is an area
of trade off in the past, there has been a trade off of wage
increases against higher employment growth and I'm sure the
trade union movement will continue to see the validity of
that approach. Having said that, I repeat what I had put
last year and I take this first opportunity in 1989 to
repeat it. During 1988/ 89, the financial year 1988/ 89,
there will be wage increases associated with the principles
that have been laid down by the Commission which will mean
that in combination with the reduction in the inflation rate
which will characterise 1988/ 89, that there will be a
maintenance of living standards for Australian workers and
their dependents. Then it means that when you take into
account the continuing fall in the rate of inflation that
will go on into 1989/ 90 and the wage increases that will
take place and the tax cuts that will take place, targetted
most particularly at lower and middle income groups that you
will see, as a result of the policies of this Government, an
improvement in the living standards of the Australian
people.
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JOURNALIST: What about the timing for any cut in the top
rate? PM: Well, that's a matter to be decided. What we've made
clear is that our overwhelming priority will be the lower
and the middle income groups. I've stated that, Paul
Keating has stated that and that remains the position of the
Government and that will be unchanged. The question I
believe that we will have to consider will be this, as to
whether there will be any cut for the top rate at the time
of those other cuts which will operate from 1 July or an
indication of later cuts. So there is need for cuts in the
top rates at an appropriate time and the appropriate time is
something that we will decide during the early months of
this year as we address this whole question of tax cuts.
But I repeat our primary emphasis will be for the lower and
middle income earners of this country.
JOURNALIST: Have you personally seen any of the US
Government's intelligence about the breached chemical
weapons factory
PM: No I haven't had the opportunity of seeing that
material myself yet. I will be seeing the material that's
been made available to Mr Duffy in his capacity as acting
Foreign Minister, but I have total confidence in the
assessment that's been made by Mr Duffy on this issue.
JOURNALIST: You are visiting four countries in Asia in the
next few weeks.
PM: Yes
JOURNALIST: Will you be raising the chemical weapons issue
with any of those countries, or in one of those countries
specifically there is an allegation that one of those
countries is manufacturing chemical weapons
PM: Yes, I'll be raising it in all the countries that I
visit because following the initiative that I announced in
New York in the middle of last year, our diplomatic
representatives in the region have raised with all
Governments our concern on this matter. Let me make it
clear that what we wanted to do is to raise the
consciousness of Governments in this region generally of the
need to pursue an effective policy calculated to bring an
end to the manufacture and the possible use of chemical
weapons so that's been done already in all these areas by my
diplomatic representatives following the initiative that I
announced in New York last year. I will take the
opportunity personally of pursuing that initiative. Let me
make the final point on that, that at all points from when I
raised that, this was not seen as a substitute for work that
needs to be done on the general international basis and
Australia will continue to play a leading role in the moves
that thankfully seem to be gathering momentum
internationally to move to a new convention in this area.
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JOURNALIST: Do you believe the wages forecast in the Budget
will be met?
PM: Substantially I think it's possible that it might be
slightly over the Budget forecast, but the important point: I
believe is that the trade unions are seized of the
importance of a continuing restraint in this area. But
consistent with the sort of scenario that I have put and
that is in this financial year a maintenance of real
standards and a move then as we move through ' 89 to an
improvement in standards. Now we have always said that
there would be wage increases associated with the whole
restructuring process. That is going to be something that
we're seeing really in Australia substantially for the first
time that the whole concept of wage increases are going to
be associated with moves to increase productivity in this
country. In that process it may be that the outcome for
1988/ 89 will see the wages movement slightly above the
forecast for the Budget but not in a way which will in any
sense undermine the strategy of the Budget.
JOURNALIST: Mr Hawke has your office completed its
re-examination of Mr Sarich's proposal and what's your
feeling about it? Are you inclined to
PM: No well the various Departmental people have been
looking at this. I haven't at this stage received the
report of their consideration. In this area what we want to
achieve if it's possible is a position where Mr Sarich will
manufacture in this country. We have already as you know
provided a considerable amount of assistance and you've got
to strike the right balance between how far you can go in
providing assistance to private enterprise in this way. For
the purpose of maintaining in the country, you're maximising
in this country a manufacturing investment, but without
creating a situation where you're going to unjustifiably
subsidise some private operator. Now I'm waiting to get the
report. we'll make a decision on the basis of that report.
JOURNALIST: Mr Hawke you've talked about the private
executive salaries but is the Government concerned about
PM: Well let's look at the situation there with the OTC
story you know. Where the most publicity as I understand it
recently has been about Australia Post and that basically if
I may say so has been a beat-up. In this period of
December/ January no-one's to blame in the media but it's a
quiet time and you get beat-ups as you know. I find most of
them pretty amusing actually. In the case of Australia Post
what has basically been happening there is that there has
been a legitimate office restructuring, some new positions
have been created and some people have been promoted into
those new positions and increases in salary have been
associated with those promotions but basically the pay
levels in Australia Post are very much related to the APS
and I don't see any movements there that are going to create
undue strains.
JOURNALIST: What about the judges salary?
PM: Well the judges salaries as I've said all along, you've
got, with judges you've got a very difficult situation.
We're not going to allow the decisions we take in that area
to upset the restraint that we want to see exercised in the
general area of wage fixing in this country and judges have
to understand that, that they can't be treated in isolation
from the general area of wage fixation. They would argue
perhaps and I could understand it, that there area special
considerations applying to them and in some senses there
are. We can't ignore the fact and we will not ignore the
fact that at the level of the Federal Court there has, over
recent years, been some difficulty in attracting people from
the Bar to the Bench because of the very high levels of
remuneration which are available to legal professsion. Some
of the salaries which they earn are almost mind boggling if
I may say so. But nevertheless that does create a problem.
Now we've got to take that into account and we will. But I
can assure both the judges that on the side of the judges
that we will try and get an outcome which meets some of
their legitimate concerns and I can also say to workers
generally in this country that we will attempt to handle
this is a way which they can see is just.
JOURNALIST: Will you making a decision on this before the
end of the wages negotiations
PM: The actual timing of the decision as to the judges
salaries, I couldn't give you that now but we will be going
into discussions with the trade union movement and I repeat
also with employers as we talk about the wages round in the
very near future. So it will at least be the case that
before we've made a decision in regard to the judges we will
have started some of the discussions with the trade unions
and the business community.
JOURNALIST: Are you confident that Mr Hand's administration
of Aboriginal Affairs due to report the Inquiry is due
to report next month?
PM: Yes I've indicated on the floor of the Parliament and
outside of the Parliament that I have confidence in Mr Hand.
Let me make it clear. I think that Mr Hand is one of the
truly outstanding Ministers for Aboriginal Affairs that this
country has seen. He has the level and type of compassion
which is appropriate for this portfolio but it's not a blind
or a soft compassion. He has and I've seen the evidence of
it, he has a capacity to be tough where toughness is what's
required. You've got to understand in my judgement at
least that when you're dealing with the question of
Aboriginal Affairs, when you're dealing with the question of
dispensation of very substantial amounts of money around
Australia for so many organisations and individuals in the
Aboriginal community, there are going to be pressures and
difficulties. You can't always apply exactly the same sorts
of standards of accountability or involvement that you may
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PM ( cont): in other areas. That doesn't mean that you just
have an open slather and Mr hand certainly hasn't done that.
We have shown as a Government that we've got nothing to
hide. We want to have every possible inquiry into any
allegations that have been made and the various instruments
that I have established for this purpose will go about their
business and we'll receive reports. If out of those reports
there is a need to adopt some changes in approach to funding
then we will of course do that. As to Mr Hand himself I
have total confidence in him.
JOURNALIST: Do you anticipate any Ministerial changes
before the next election? Specifically do you think Mr
Holding will remain a Minister this year and when's the
election going to be?
PM: I don't anticipate any further changes at this stage.
I have nothing on the plate. Yes I think Mr Holding will
remain a Minister. And when will the election be? Well I
can say to you what I think I've said it publicly before
that really you're looking at a sort of period of the latter
part of this year through to May of next year. That's
essentially the period within which an election can most
properly be held. It is the case that you could have the
House of Representatives going up until November of 1990.
But that means you would have to have a half Senate election
by the middle of the year and then a House of
Representatives election. It would be a pretty bold Prime
Minister that would try and pull that one off and I'm bold
and aggressive but I don't think I'm that silly. So that
really means that the outer limit is about May of next year
than the earlier limit of, say, the latter part of this
year. JOURNALIST: Are you still confident that you can conclude a
treaty negotiations with the Aboriginal community by that
time?
PM: I have never asserted, said that is what will be done.
I've said that is an objective. Now the important thing is
process. I believe that the interests of this and future
generations of Australia will be very well served if we can
get a treaty or compact the word has never worried me
but a basis of understanding between the Aborigines of this
country and the non-Aboriginal population. I am absolutely
convinced that the best interests of everyone, both
Aboriginal and non-Aboriginal, would be served by the
achievement of that outcome. There is no point in rushing
it or trying to force it upon people, particularly in a
situation where you have such may I say vicious
misrepresentation by our conservative opponents about the
nature of such an agreement. Now what needs to be done is
to allow the processes within the Aboriginal community which
are going on, we want them to say to us what sorts of things
that they would like to see covered by such an
understanding. Then, in the relatively near future, I think
Mr Hand will be coming to me with recommendations as to how
we should develop the process within the non-Aboriginal
-1 0-
PM ( cont): community of discussions about this issue. Now
it would be nice if those processes could comfortably
produce an outcome of such an agreement within the life of
this Parliament. That's certainly what the Government would
like to see, I understand it's what the churches would like
to see, who've concerned themselves with this issue and if
it can be done well I certainly would be very proud to be
associated with it. The important thing is to do it in a
way which is going to mean that the people of Australia
both Aboriginal and non-Aboriginal are content and secure
and happy about the process. If it takes longer than the
life of this Parliament so be it.
JOURNALIST: Prime minister while George Bush has got a
fairly tough economic decisions to make early in his
Administration, what's your measure of the impact or the
potential impact on us of the decisions he has to make?
PM: Let me put it this way. There is no doubt that within
the United States and in the rest of the world there is a
developing understanding of the need for the United States
to tackle the twin deficit problem and until that is done
then you are going have a distorted interest rate and trade
pattern internationally which can adversely effect us. Now
the important thing is that that is clearly understood and I
know from personal correspondence that I've had with
President-elect George Bush that he is aware of this. I
believe that he's going to address the issue in a way which
is more than simply a confection or superficial I think he
will handle it in a way calculated to deal effectively with
the problems. Now let me say only one thing beyond that and
it's this that some people historically have argued that if
the incoming Administration in conjunction with the Congress
was to tackle the budget deficit seriously that that could
lead to a significant decline in the economic activity in
the United States as they brought the budget deficit down.
I have never believed that that simplistic analysis is
accurate because I would think that if both the business
community within the United States and internationally
formed the judgement that the incoming Administration was
serious about dealing with that problem then let's give very
very considerable boost to confidence. So my judgement is
that the interests of Australia are very much served by the
incoming President effectively tackling these problems and I
have reason to believe that he will.
JOURNALIST: Do you know when you'll meet him?
PM: Sometime this year. I can't be certain at this stage
but we have a very, very good personal relationship as you
know, we're in communication with one another and will
continue to be so.
JOURNALIST: Mr Bond's comments regarding support for
Premier Dowding and also liking Premier Dowding to Margaret
Thatcher. How damaging have they been to this State Party
and in particular your Party?
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PM: Well I hadn't found them damaging to my Party
federally. As far as the State of Western Australia is
concerned let me say this. It's crystal clear that if you
look at the range of issues which have to be dealt with by a
State Government then the interests of the people of Western
Australia will be significantly better served by the return
of the Dowding Government than by a resort to a disorganised
confrontationist group who form the Opposition over there.
In what has already been a fairly brief campaign they've
demonstrated overwhelmingly their incapacity to work
together. They are at odds on fundamental issues. For
instance in the area of industrial relations you've had the
humiliating prospect of the National Party coming out and
saying what their policy would be and then a public brawl
and scrap between the National Party and the Liberals with
the National Party having to partly pull back but with the
loaded gun up there over the Public Service in that State.
So they have shown a total incapacity to offer any cohesion
in that area and now in the very area which they've said was
going to be their heavy artillery against Labor in the area
of the Development Corporation, a total conflict between
them with the Liberals saying " we're going to scrap it" and
" oh no, no, no we're not. We're going to keep it". Now
they chose the ground. They said the issue of the future of
the Development Corporation was central, the central issue
for the people of Western Australia to make up their mind on
and they can't make up their own minds about it. They are
fighting one another with the Nationals saying " we'll keep
it", the Liberals saying " no we won't". Now the fact that
Mr Bond has made the obviously correct observation with the
best interests of Western Australia could be served by
continuing Labor than resorting to this into this mish-mash
of uncoordinated unsophisticates is not surprising. You
would expect him to state the obvious and I'm confident that
the West Australian people will come to the same conclusion.
JOURNALIST: Mr Hawke what did you think of the cricket?
PM: Now this is the last one. I think the first item on
the next Cabinet meeting will have to be consideration of
proposals for new rules for rain interrupted one day games.
The present situation is entirely unacceptable.
ends