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Transcripts from the Prime Ministers of Australia

Transcript 7570


Photo of Hawke, Robert

Hawke, Robert

Period of Service: 11/03/1983 to 20/12/1991

More information about Hawke, Robert on The National Archive website.

Release Date: 17/04/1989

Release Type: Interview

Transcript ID: 7570

OLLE: Within the next 12 months and possibly a lot sooner
Australians must choose their next Prime Minister. There
are just two serious contenders for the position and tonight
they're both here in our Sydney studios for job interviews.
The direct comparison should help us ensure the country's
placed in the very best of hands. To ensure the
questioning's in the very best of hands I'm joined by ABC
televisions' Chief Political Correspondents', Paul Lyneham
and Jim Middleton. Last week's economic statement and the
critical weekend by-election have given a sharp focus to the
performance of our alternative Prime Ministers. As we all
know the incumbent won't go face to face with his opposite
number so you'll have to settle for back to back. While
we're talking to Bob Hawke, John Howard is waiting in the
wings, out of ear shot, in the proverbial sound proof booth.
Well Prime Minister that seems as good a place as any to
start. Why won't you debate head on with John Howard? I
mean you've had
PM: I do it in the Parliament when he's prepared to face me
in the Parliament, which is very seldom. I'm not going to
give this man who can't get great standing in his own Party
an additional platform. There is no need to. I'll be
judged on the performance of this Government.
OLLE: Maybe you don't need to but you used to relish such
encounters. I mean are you no more confident about that
PM: Before I was Prime Minister I do a lot of things
differently since I've been Prime minister, Andrew, as you
probably know.
OLLE: It's just that he's just outside there. It seems
like-PM: Look let's get on with it. Why waste time on that.
OLLE: Alright you're clearly not going to move on that.
Let's look at Greensborough. You've won but it was hardly a
terrific result for you, was it, 16% loss of primary votes?

PM: Well let's judge it against the assessments that were
made by the National Party and the Liberal Party before the
by-election. The National Party said and one of the leading
figures in the Liberal Party said they expected a swing of
between 15 and 20%. They got about 5. Now a traditional
by-election swing, given the circumstances of the VEDC, the
Fordham resignation, the National Safety Council of
Australia fiasco and high interest rates, I'll settle for
that win thank you.
MIDDLETON: It is nevertheless an erosion of votes. Is
perhaps one of the problems that you've confused the voters
of Australia? On the one hand you're continuing to ask them
for restraint but by the same token you've just given them
or are just about to give them some more money. That
confusion part of the problem?
PM: I don't know whether it's confusion but it is true that
we've asked the voters to restrain over a fairly long period
of time. But it's also the case that last year I promised
them, to continue after this year to promise them that by
the 1st of July we'd be giving them significant tax cuts
which will ensure an improvement in their real standards of
living. We're doing that in a situation and in a way which
we believe should not involve a significant increase in
demand because the other factors which have had the economy
boiling away will not be there to the same extent. We won't
have the great increase in the terms of trade, we won't have
investment at the same high levels, for example, and we
won't have housing construction at the same high levels so
we're paying for the tax cuts out of the accumulated
decisions we've made before which gave us the significant
budget surplus. So there may be some confusion. They
certainly don't like the high interest rates but the fact is
that we can't have them lower at the moment while we get the
level of activity down.
MIDDLETON: It does sound a little bit like a reward for
being good.
PM: It sounds much more like what it is and that is the
delivery of a promise specifically made last year. That is
that if there was wage restraint during 1988-9 Jim, and
there has been, and if we could negotiate wage restraint
for ' 89-90 which we have done, then I promised that there
would be significant tax cuts from July 1. There is nothing
more complex than that. It's the delivery of a relevant
economic and political promise. That is if we had not done
what we have done, that is promise significant wage ( sic)
cuts, workers having exercised wage restraint, then in the
economic circumstances they would've been able to obtain a
massive increase in wages. So what we're getting is a
buy-off of a massive increase in wage costs by the delivery
of a specific and responsible promise to deliver tax cuts.

LYNEHAM: But many Australians Prime minister believe I
think that we are now closer to the banana republic than we
were in ' 86 when Paul Keating issued that
PM: I don't really believe that and if they do they are
wrong. The evidence is overwhelmingly against that. What
we had then was a massive decline in the terms of trade
which slashes
LYNEHAM: It's worse now.
PM: No. The terms of trade have improved, more than
LYNEHAM: inaudible
PM: But what you've got to understand about the current
account is that that is made up very substantially of a
massive increase in investment. The investment levels of
Australia now are the highest as a proportion of gross
domestic product they have been for the 40 years that
comparable records have been kept. So we're restructuring
Australian industry, there is a massive re-equipment going
on, and that will mean that in the period ahead you're going
to have an Australian sector, an industrial sector, which is
going to be more able to compete with imports and also
provide more exports. And remember that the level of
manufactured exports has increased in each of the last two
years by 20%, we're going to do better than that in the
future I believe.
LYNEHAM: Well if the tax cuts and the wage increases are
not going to fuel demand and make our trading position even
worse, why have you felt the need to urge Australians to
either save that money or buy Australian made
PM: Well obviously we'd be best I mean I don't want to
see demand burst out but for the reasons I've put before the
factors that have been putting demand at a high level are
not going to be repeated. But it would still be better for
Australians for those Australians who can and I realise
not all can to save rather than spend. But it remains
true that obviously with a deficit on the external account
it would be much better if Australians could buy Australian
rather than to buy imports and so I've asked that they do
that. I mean there is just no argument amongst any
economist about that. we'll all be better off if all off us
and myself included you, Australians out there, all your
viewers, if we can spend the additional disposable income
we've got, buy Australian.
OLLE: All that you've said so far Prime minister the
economic statement that Paul Keating brought down last week
has had a somewhat frosty reception I think it's fair to say
across the community. Is the problem that people simply
think that you're giving back what's rightfully theirs

PM: No I think there was some degree of cynicism engendered
by absolutely wrong interpretations as to timing. But I
don't know what you do in this circumstance. When I
promised 12 months ago that I'm going to deliver tax cuts on
the 1st of July I do it then I'm accused of cynicism and I'm
going to have an election. Of course the bloke who talked
about there being a July election is the fellow that you're
going to have on after me. Now what his reasons were for
doing that I'm not quite sure but perhaps it's because he
wanted to shore up his position and they couldn't have a
change of leadership right on the eve of an election, I
don't know. But all it was was the delivery of a promsie.
Now if I hadn't delivered the promised that I'd made 12
months ago I would've ben accused of breaking a promise.
OLLE: Well there's another promise we have in front of us
now. Mr Keating says there's going to be a sharp
deceleration in demand. When and what impact do you think
it will have?
PM: There are signs already Andrew, of demand decelerating.
It is apparent to some extent in the housing statistics. I
think that you'll see in the third quarter firmer evidence
of the decline in demand. So what we've got to do and on
our record we're entitled to be judged that we can do it
is to make sure that we get the level of demand coming back
sufficient to help us on the current account and the level
of imports but not so far back as to stop growth and stop
employment. Now on 6 years performance we're entitled to be
judged as capable of doing that. We will.
MIDDLETON: The Treasurer also suggested there'd be a
halving of demand. Normally one would think of that as
being a recipe for recession and indeed
PM: Not if you know your statistics. Just remember what
the statistics are. In the last 12 months, and this is on
the basis of the national accounts which came out the
previous week, demand had grown by 8% these are the
figures that Paul had in mind demand had grown by 8%,
production, Australian production, had grown by The
difference between the 8% growth in consumption, the 4%
growth in production, was imports. So what he was saying
quite rightly is that you could have consumption coming back
by the sort of order he was talking about and that would
still be consistent with significant growth but more
containable growth. His figures are right.
MIDDLETON: With this big slowing in demand isn't that going
to for the first time put a dent in one of your proudest
records, that of job creation?
PM: It will mean that the rate of employment growth won't
be so high. But just remember what the figures are. In
this last year we've had employment growth of 3.8% which is
together with what we've done in the previous five years
responsible for the fact that we are creating jobs 4 times

PM ( cont): faster than Mr Howard did in his period in
Government and twice as fast as the rest of the world. So
we can afford the rate of employment growth to come back but
still have a situation where we can take account of the
growth in the workforce.
OLLE: So now it is going to be harder for people to find
jobs though isn't it? Who's going to feel the pinch first,
do you think?
PM: You always want to look on the dark side, I know
Andrew, but the point is that you've got to look at the
alternatives. See people are saying that rates of interest
are too high. If you brought back the rate of interest now,
if you eased monetary policy, then of course what you would
do would be to have a flood of imports and then you would
have a situation where you'd have to massively put the
brakes on. In this way we'll continue to do what we've done
for six years in changing economic circumstances. Remember
what happened in 85-86. we lost $ 11B of national income
when the terms of trade turned against us and we were still
able with the cooperation of the trade union movement to
avoid recession and keep employment going. Now we've got an
overheated economy so the task which we will achieve is to
bring back the level of activity sufficient to lower imports
down but to keep employment growth growing. We will. our
record shows that we are entitled to be judged as capable of
doing that.
LYNEHA4: But isn't that one reason why people are confused?
When we were getting poor terms of trade we were told to
tighten our belts. When they're throwing money at us by the
bucket load we're told that we can't handle that, we've got
to tighten our belts?
PM: The-re is nothing difficult about that. If you've lost
$ 11B of national income as we did in our 85-86 period
with a decline in the terms of trade then you're $ 11B
worse off. Now the situation we've got that all economists
it doesn't matter where they are politically recognise
that we've got an overheated economy because with the
turn around of terms. of trade we've had an enormous increase
in income coming into the country, we've got employment
rising, we've got investment at a 40 year high, the highest
it's been since records have been kept for 40 years. Now
those combinations of circumstances have an economy
operating that strongly that we're sucking in too many
imports so in that situation of course you've got to
exercise restraint, get things down. But we can do that in
a way which is increasing the real disposable income of
people because we're doing that, it's a paid for tax cut out
of the surplus that we've been able to generate by the
decisions we've taken up to this point. That is with the
tax cuts that we're giving we will still have in 89-90 the
same level of surplus that we had before and we've done that
all in the circumstance where I remind you of what we've
done in the period. We inherited a situation where the
deficit as a proportion of the gross domestic product was

PM ( cont): We've translated that to a surplus of
Now that 6% turnaround represents a turnaround of
approximately. Now that's enabled us to increase by
26% in real terms the expenditure on social welfare, to move
the proportions of outlays that go to social welfare, from
to 56%, do all those things and accumulate this surplus
out of which we'll pay for the tax cuts. So there is no
pressure from what we've done for an increase on interest
rates because the public sector borrowing requirement will
remain at zero and there'll be no pressure on inflation
because the trade union movement have accepted a wages
outcome for 1989-90 of 6 1/ 2%.
LYNEHAM: And will they stick with
PM: They will, and what I will defend as vigorously as I
can is the integrity of the trade union movement. Every
employer in this country knows, and I think you appreciate
Paul, that they could be getting very very much higher wage
outcomes now. The employers have been knocking down the
door of the ACTU trying to give wage increases. They've
held it to 7% in this last year, they've agreed to 6.5% in
1989-90, they will stick to their bargain.
OLLE: Won't the unions be more tempted to take that money
though if they get knocked back?
PM: Knocked back by whom?
OLLE: When they have to justify their restructuring to
qualify for this
PM: They have given their undertaking and you are entitled,
I believe, you are entitled to judge them on their record.
Every employer, every economist in this country knows that
in this last 12 months instead of getting a 7% increase in
wages they could've gone into double digits. The last three
years of the chap that's coming on after me, when he was
Treasurer, in the last three years under that government,
double digit wage increases under them. In more buoyant
economic circumstances now, 7% and they've agreed to
On their record they're entitled to be believed. It's their
restraint which has produced 1.3 million more new jobs, a
rate of job growth twice as fast as the rest of the world.
They've done that, why shouldn't they be believed now when
they say that they'll agree to Because what you've
got to remember is what we've done is to deliver on average
a 12% increase in disposable income but with only
coming from it from wages. That's the additional cost on
employers, the rest has come from a combination of tax
reductions and increases in family allowances.
MIDDLETON: And you can guarantee that in these overheated
circumstances that if the unions don't restructure as
they're supposed to do, that they won't get that second
round, that second part of the plan?

PM: Quite clearly they've given the promise, and this is
entirely hypothetical. If they weren't to keep their
promises then the situation would change. You're talking
about your fellow Australians, people who could've got much
greater wage increases but have been prepared to have real
wage reductions so that we can have another 1.3 million of
our fellow Australians in work. Why in the name of all
that's fair and decent and reasonable, when they've done
that, when they've put another 1.3 million of their fellow
Australians into work by accepting a real wage reduction
over this period, why don't you believe them now? The fair
and reasonable thing Jim is to say, well my God, they've
accepted a real wage reduction over this period, they've
allowed Australians to have a rate of employment increase
four times as fast as under the Fraser-Howard years, twice
as fast as the rest of the world, they've delivered that and
now you want to be sceptical about their promise.
MIDDLETON: Well there are plenty of employers out there in
the who are battling to get skilled workers. They may
be tempted to have
PM: They've already been tempted. That's what I was saying
before Jim. The fact is that Bill Kelty there at the ACTU
has been knocking employers back, he's been knocking them
back. Why? Because they do have a commitment to a view of
a restructured Australia, one that's more competitive, one
where its workforce through the restructuring process is
going to be multi-skilled, have broad-banded classifications
so that the actual structures in the workplace will reflect
the patterns and processes of production of the modern days,
not of 50 years ago. Now Kelty and the ACTU are committed
to that and they know they can't get that without
restructuring and they know they can't get it without the
commitment they've given us.
OLLE: One of your answers is productivity as well isn't it?
PM: Sure.
OLLE: Why not go the whole hog then as John Howard plans to
do and reward individual effort, be it at the company or
worker level rather than
PM: For one very simple reason. What you're saying is that
you want to do away with the centralised wage fixing system.
OK. It's pretty sensible Andrew to look at history. They
did this in 1980-81. We warned them against it and the
centralised wage system was gone and they went back to a
free run. What happened? A 17% increase in wages, a
blowout. The way in which you've got a real wage reduction
and real wage restraint compensated by improvements in the
social wage in this country is through the centralised wage
system. The employers of this country have been saved,
we've all been saved by the fact that instead of wages
blowing out like that, a la the 17% increase under Howard
and that each year, the last three years they were in
office, double digit wage

PM ( cont): increases, we've got it down significantly to 7
and 6.5% and it's that which has enabled employment growth
to take place. Now why in the name of anything that begins
to be sensible do you want to say Mr Howard and Mr Fraser
messed it up, got double digit wage outcomes under the
previous system, so we think it's a good idea and what did
they do in that? Got the worst recession in 50 years,
simultaneous double digit inflation, double digit
employment, interest rates well above what we've got.
day bills under us haven't reached 18%, they got to 22%
under Mr Howard in April of 1982. So you think it would be
a good idea to say that was beaut then to get the worst
recession in 50 years, let's go back to that.
OLLE: Nevertheless there is a logic isn't there in
rewarding individual effort and penalising inefficiency?
PM: That is what happens. You know how we are rewarding
effort now? We are rewarding it in a very simple way, by
putting more Australians into work. There is effort. How
do you think we've had a 20% increase in manufactured
exports, how do you think we've had a 9.2% reduction in real
unit labour costs since our term in office, how do you think
we've had a 7.4% increase in our international
competitiveness other than by this wage system. And the
reward that's come out of all those things that have been
done have been the 1.3 million jobs and the fact that we can
now compete in markets in a way we were never able to do
before. You don't get 20% increase in manufactured exports
in each of the last two years without there being a system
gradually putting in place which is establishing incentive,
both for employers and for workers.
MIDDLETON: You're fond of comparing your record and John
Howard's record, what about your team's? You've got
PM: Let me say, when I talk about my record it's not just
Bob Hawke. I mean I recognise, as I think you'll
acknowledge, I always speak about the contribution of my
Ministers. I mean, it is a team.
MIDDLETON: Some of your Ministers are looking a bit tired,
Peter Walsh is taking a break, others are talking about
quitting John Button at the next election and so on. we
can't even be sure that you'll be around right through the
next term can we?
PM: You can be sure of me. There's no question you talk
about some of ministers being tired, of course some of them
are. You don't work as hard as they have for 6 years and
stay exactly as fresh as you were at the beginning of 6
years. But there has been basically a great stability
amongst my core ministers, core economic and industry
Ministers, a great stability. You've talked about Button,
Keating, Kerin, Blewett, Walsh.
MIDDLETON: But you won't have all of them after the next

PM: I'm not aware of any that are going of the ones I've
mentioned. And let me say, if you want to talk about
stability just look at my mob, great fellas, they'll be
there, and have a look at the other side.
OLLE: We'll obviously take that up with Mr Howard.
PM: I'll leave it in your good hands.
OLLE: But inevitably, apart from the team thing that we
just emphasised, there are personal comparisons that are
going to be made of the leadership aren't there, between
yourself and Mr Howard. Why is it do you think that people
like you personally so much more than John Howard?
PM: I'm not going to talk about John. I'll attack him
politically and strongly and vigorously but in terms of
personality and so on, that's another matter. As far as-
OLLE: Do you feel when people talk disparagingly of
' little Johnny'? I mean, he's even taller than you isn't
he? PM: No he's not actually as it turns out but that's, I
think, a matter of absolute irrelevance. John Button is
much smaller than his counterparts. What's size got to do
with anything? I've never heard anything so ridiculous.
Look at the size of Malcolm. So what, what does it mean?
It's the most futile and stupid thing, the fact that I'm
fractionally taller than John Howard, so what. It's nothing
to do with it. The only part of your question Andrew that I
can helpfully say anything about is in terms of my own
position. I think what's relevant is this, that I honestly
can say that I love mixing with people. I've been in public
life now for just over 30 years and all of that 30 years
I've made a point of mixing and I enjoy it. For some
politicians it's a chore, for me it's not, I'm lucky. I
love the Australian people, I love mixing with them.
LYNEHAM: Prime Minister, you said when asked to give him a
reference once that he was hard working and loyal. Now you
were prepared to give him a reference but you're not
prepared to look at the other side.
PM: It's not for me to go into an attack on the personality
of my opponent.
LYNEHAM: Do you concede he's tenacious?
PM: Of course he's tenacious. I've said that, he is
tenacious and I congratulate him for his tenacity. But I
would hope that as far as the relations between John Howard
and myself are concerned that we can fight like Kilkenny
cats about our perceived policy differences, where we think

PM ( cont): we've been inadequate, where each other's been
inadequate on policy positions. You won't find me getting
into some personality attack upon John Howard. I don't
think that's the way to do it.
OLLE: Prime Minister, our time is up. Thank you very much.
PM: Thank you very much.

Transcript 7570