PM Transcripts

t 0 TRANSCRIPT OF QUESTION AND ANSWER SESSION, NATIONAL PRESS
CLUB, 7 DECEMBER 1989
E 0 E PROOF ONLY
JOURNALIST: Mr Hawke, as the first member of the Press
to ask you a question, may I take the opportunity to wish
you a happy birthday?
PM: Thank you very much indeed.
JOURNALIST: Could I ask you two questions?
PM: Yes.
JOURNALIST: The first one, we have reports in the paper
this morning that the Indonesian Foreign Minister, Mr Ali
Alatas, said there'd be further talks, Cambodian peace
talks. Can you tell us what status Australia's proposal
for a UN group to supervise elections will have at those
talks? And, secondly, could I ask you that on reaching
the age of 60, does that give you a new perspective on a
compulsory retirement age of 60 for women and 65 for men?
PM: Well, let me take the first. Obviously, I think you
will understand, that it's not open to me to go into all
the details of some of the consultations and discussions
that we've been having on this issue, but I can say
generally this, quite precisely. That there has been a
remarkably, in my judgement, positive reaction to Gareth
Evans' proposal which he's advanced on behalf of
Australia. But we are under no illusion about the
difficulties that are involved in such a proposal. It
hasn't been proposed on the part of the Australian
Government in any sense that here is an easy fix. The
concept of a UN administered body in that interim period
very difficult, but what you have to say against that
is that. -every-other-proposal -thati-s been on the table has
proved equally incapable of bringing the parties to a
resolution. Now I don't say that with any sense of
pessimism, but rather that if we are realistically, as I
say, as Australia going to understand our region and be
part of not being reactive to it to try and help the
shape, then we must first of all understand the nature of
the difficulties, be prepared then to have a status and a
capacity to talk with the major players involved. We
have established that capacity. We are listened to with
respect by the ASEAN countries and there has been, I may

say, within them a quite positive range of response to
the proposal as there has been in other countries
outside, including the French for instance and the United
States. So what we will be doing constructively is to
say, we're not trying to impose something because that
would be stupid, it would be futile, but at least look
and see whether this provides that necessary link. The
whole problem about the resolution of Cambodia is to get
that, that linking period between the state of conflict
now and up to the conduct of free elections so that a
properly conducted election can throw up a government
which will be recognised and effective. It's getting
that bridging point how you have the affairs of
Cambodia conducted in that period and allow that
transition which is a critical issue. And Gareth Evans'
proposal on behalf of Australia is relevant to that, it's
seen as relevant, we'll continue to push it and I think
with a considerable degree of support. Now, on your
second question about retiring ages. I think it's fairly
difficult to project to others on the basis of how you
feel yourself and what you feel capable of doing
yourself. All I'd say on that is that I feel very well,
physically and intellectually and in terms of energy and
any sort of retirement at this stage would be appalling
for me. I think it won't arise. Let me make very
briefly a serious point. I think the community has now
got a somewhat different attitude about the question of
retirement ages. If you look back to the beginning of
the 80s, we were then plagued by massive unemployment,
growing unemployment, the last year before we came into
office another quarter of a million thrown on to the
unemployment scrap heap. In that context people were
then talking about the idea, well it makes more sense to
try and get the elderly people in the workforce out to
create more room for the young. But how things have
changed. With the creation of about 1.6 million new jobs
in this country, there's a change in thinking. The kids
are staying in the education system much longer. Very,
very much longer, more of them. And so the fundamental
structure of the debate and the discussion about how long
W people should stay in the workforce has changed and I
don't think the same sort of considerations about, sort
of facilitating early retirement are as strong as they
used to be.
JOURNALIST: Amanda Buckley from the Daily Telegraph, Mr
Hawke. I want to ask you about the big swing against
Labor-at--the-South Australian--election a fortnight ago.
It's been overshadowed by the big win you had in
Queensland, but it did seem to show a people very tired
and fed up with the Federal Government's economic
policies and I'm wondering how, in the new year, you're
going to better be able to explain a very complicated
message about why interest rates and falling living
standards are in fact a good thing for people?
PM: I think, Amanda, that's for us, for the Government,
a critically important issue. I have tried in a sense

today to adumbrate, if I can put it that way, the answer.
Let me briefly, because I know there are other questions,
go to what I think has to be done. As I tried to say in
the speech here today, Australians have got to understand
and this is not just in terms of the election. It's
true for us as we restructure the future. We've got to
understand that there is, as I say, no one single
yardstick. If we say interest rates are hurting us and
make our judgement on that, then we fail ourselves. I'm
not saying that it might throw me out of office or
someone else, but we fail ourselves as a country if we
just take that, that one judgement. Similarly if we just
say debt is rising, make the judgement on that, you can't
answer it. The Australian people have got to understand
this, that what we fundamentally have to do in Australia
is to restructure our economy. There's got to be more
investment so that industry is re-equipped. If we allow
ourselves to have a profile of exposure in the
international trading system which flows from the fact
that we overwhelmingly depend on exports of primary
products and minerals, then we're doomed to further and
further decline. So, if you're going to restructure the
economy, that requires more investment. It's got to be
the re-equipment of the Australian economy. It means
Australians generally have to be prepared to accept the
decisions which allow that to happen. Now how do you do
it? And this is where you get back to the absolute
centrality of wages policy. What we have done is to get
a bargain with the Australian community via the Accord.
And it's a bargain that in some obvious senses has been
hurting. It's been hurting in the sense that real wages
have moved down, but it's the very movement downwards in
real wages which has meant the increase in profits. So
it's moved from wages, the shares have moved from wages
to profits, from profits to record investment and that's
creating a basis for Australia's future. But in the
process we ' ye now got a level of economic activity which
is so high that we're sucking in imports which, if we
allowed that to happen, would destroy the Australian
economy. Now, therefore, proper government must be about
having the three arms of policy fiscal policy and wages
policy and monetary policy sufficiently tight to bring
down the level of activity to a point in which you can
get a balance between a sustainable level of imports and
a rate of growth which will maintain employment. So the
hurt, yes, is there in interest rates. As I've tried to
say, the things that have allowed that to happen not only
-don' t-hurt, -but -they' re-beneficial. The -massive increase
in education participation, Medicare, the nearly
billion additional programs in social justice on a per
annum basis. All these things are part, they've only
been able to have been done because of a reduction in
real wages and those other moves. Now the question is
Australians, not just in the context of the next
election. Let me go beyond that. Australians must
understand that those are the issues. I just take myself
out of the electoral consideration Let's go past
when it's going to be. If Australians don't understand

that in some senses you can't satisfy every aspect of
your aspiration. You can't have rising real wages like
that, the profit share going down and investment
collapsing. You can't have everything. But what you
must have is if real wages are declining somewhat then
there must be the compensation in these other areas which
are both beneficial in terms of families and are the
building blocks for Australia's economic reconstruction.
Now you are quite right, Amanda, that is not a simple
message. But irrespective of the electoral cycle, it's a
message which if Australians don't understand, if they
fall for the alternative of this three card trick, that
you can have everything, then Australia would be doomed.
To put it in the context of the electoral situation, if
they were to buy the Opposition policy, Australia is
doomed because in the critically important area, that is
of wages policy, well you saw the alternative Prime
Minister, when asked the centrally important question
about the future of this country, that is what will
happen to wages outcomes, that's the central feature
because if wages outcome go like that that the whole
thing collapse. You know what his answer ' who's to
know'. A devastating indictment of any alternative
government. JOURNALIST: Dennis Grant, Prime Minister, from the Seven
Network. We won't let this occasion go by without giving
our best to Mrs Hawke, of course, as well.
PM: Thank you very much.
JOURNALIST: My question is about an important aspect of
the Australian economy.
PM: Yes.
JOURNALIST: The rise and increasingly, these days, the
falls of our Australian entrepeneurs.
PM: Said with feeling.
JOURNALIST: I probably don' t need to Are you
concerned about authoritative evidence that more falls
are on the way? Do you worry at the signals that it
sends to the rest of the world? Are you in the least bit
concerned about the havoc that it wreaks within the
Australian industries involved?
PM: Thank you Dennis. Obviously it would be stupid for
a Prime Minister of a country like this where you have
entrepeneurs whose operations are not only within
Australia but in a number of other countries to say oh
well, I have no concern if some of them are in trouble'
Yes, I do have concern. Concern comes into two parts
Denis. There is you've got to ask yourself the
question intrinsically what does a possible collapse of a
particular entrepeneur mean for the Australian economy?
Does that mean that you're going to have for instance an

enterprise closed down, employment lost and those sorts
of things. So you must ask yourself that question.
You've also got to ask yourself secondly now what sort of
Judgement will the international community make about
Australia as a result of something like that happening if
it does. So those two things you have to take into
account. Now on the first, I would believe on the
evidence and obviously invidious and you don't intend
me to go to particular individuals and empires but as
far as one can see in regard to the areas which would be
in question, if the individuals concerned were to
collapse I believe the enterprises would still go on. I
think, if I may say so, in the television industry there
may be a sort of fining down in some employment areas in
numbers and in perks. And I know that that may be a
matter of individual concern but it is not very relevant
to the national economy. And I hope it won't colour any
people's judgements who may be affected. But I'm making
a serious point that I believe the actual enterprises
would basically go on. So in that sense I don't think we
need have a concern. As to the second point, the
judgements that will be made by the international
community. I think basically, if anything, there might
be some smirks of satisfaction in certain places who've
regarded Australian entrepeneurs as somewhat bumptious
and intrusive. In terms of the judgements they'll make
about the strength of the Australian economy I don't
think it will be disadvantageous.
JOURNALIST: Bob Bowden, SBS Television, Prime Minister.
Assuming your Government is re-elected at the election
next year, you'll have the opportunity to make some
important changes to your front bench. Would you foresee
that Paul Keating would remain as your Treasurer for the
entire duration of your fourth term or would you see it
as appropriate, particularly in the light of Mr Keating's
ambition to lead the Party, that he be given some wider
experience perhaps in a change of portfolio?
PM: Interesting question. It's one which in fact some
time back Paul and I have thrown these ideas around. I
think these points are relevant. He is an outstanding
Treasurer and he enjoys Treasury. I've simply said to
him that if Paul, you, would like in that period to have
some further experience, of course that would be done.
But the choice would be his because if he would prefer
as I think he would -to remain as Treasurer then that
*. would~ be ok.-
JOURNALIST: Laurie Wilson from the Seven Network, Prime
Minister. You said a few moments ago that the
fundamental task facing government was to restructure the
Australian economy. You've been there for some time now
and the Australian people might well wonder why is it
taking so long? Senator Button told us yesterday that
things aren't going to be too easy for another five or
ten years. And John Kerin told us today that he thought
that what Senator Button was reflecting a view that was

kicked around the Cabinet table earlier this week. Can
you be open with us and tell us just how hard you think
things are going to be for the next decade or so?
PM: You're running together two things there. You
started off by talking about restructuring and so on as
though things weren't being done there. Now Button
wasn't talking about that. I just refer you again to
that list that is available here about the restructuring
that has taken place. It's been, as I say,
unprecedented. The task, the fundamental task of
restructuring the Australian economy has been and is
being undertaken at a rate and a size of change
unprecedented in this country. And I'll come to your
second point about what Button said in a moment. But
just let me make this point about the rate and size of
change. You will have heard me say in the Parliament and
elsewhere that for 30 of the 33 years before we came to
office the conservatives were in government. They
established the basic structures and attitudes and
assumptions of the Australia that we inherited. And that
years of inaction, it really has two aspects to it.
Of itself it created the necessity for us to grasp the
nettle and move as we have in this unparalleled way. And
secondly of course that 30 years of inaction provides its
own demolition of the empty rhetoric that they now mouth
about structural reform. Now on the other point about
John Button's observations about the toughness of the
period ahead, that should be seen in the light of what
I've said today. I mean my speech has not been a bed of
roses speech. What I am saying to the Australian people
and I'll say this inside or outside an electoral cycle.
I'll be continuing to say it when I retire hopefully
after the fourth Labor Government. But Australians have
to understand the truth of what I've been saying about
the dynamic changes in the world in which we live. Just
let me very briefly make this point. What happened
Laurie of course was that in that period after the war
when I talked about that decade of lost opportunity, the
conservatives thought it was all just going to fall into
our laps. We just sold our wheat and our wool and our
meat and then we found some more iron ore, we dug that
up, shoved it off and all was easy. But the world now
doesn't need, at the same price level, our agricultural
products. We're battling to sell the damn stuff. We
will because we' re competitive and hopefully change the
international trading laws. But the fundamental thing is
for-Australians -to understand--if-4-hey-' re -going to have
the basis maintaining and improving their standard of
living then they've got to restructure the economy.
They've got to create industries and sectors which are
capable of beating the rest of the world in regard to
imports and also to compete in the export markets. Now
that's going to mean we' re going to need capital coming
into this country and what Button and others, including
John Howard this morning who totally endorsed Button's
comment and he did it and I congratulate Howard for it.
He did it in a non-partisan point-scoring way. He said

these fundamental things are there and are going to
require Australians to understand that in the area of
interest rates for instance, because we're going to need
apples from abroad then marginally, relatively, our
interest rate structure will need to be a bit higher.
That doesn't mean that we can't have it coming down from
the levels it is now. It will come down. But while
those fundamentals are there, while we've got to
restructure our economy, capital from abroad to help us
in that situation while we've got levels of debt, then
those difficulties will be there in relative terms. Now
that's not something which is just understood now, or
something that needs to be said in the context of the
next election. Those things are absolutely fundamental
if Australians, irrespective of partisan considerations,
are going to come to the conclusion that they want to do
what is necessary to provide the best future for their
children. There's no easy cop-out.
JOURNALIST: Steven Burrell from the Australian Financial
Review, Prime Minister. I'd like to take up the
implications of what you just said in line with the
comments of Senator Button, Mr Keating, yourself and now
Mr Howard. It's clear that we're going to have at least
half a decade of tight fiscal policy, tight monetary
policy and very profound structural change. In other
words living standards simply cannot grow at the pace
that Australians have come to accept over the past 20 or
years. What implications does that have for the
survival of the Accord and what sort of modifications may
need to be made to it to make it relevant to your
potential next term of government and beyond?
PM: Steve, that essentially was what a large part of the
speech was about. The Accord is central to the
achievement of overcoming that challenge and
restructuring the Australian economy. Let me try and get
outside the economic jargon if I can so that we get it
down right to the terms of people. What life and the
conduct of an economy is about after all is how do you
best organise your affairs and your activities in a way
which are going to give the greatest degree of
satisfaction to the people in that society? books,
but that's what economics and politics is about. Now
you've got to ask yourself are you just doing in
Australia are we just faced with a situation where we
could make a set of decisions to maximise happiness and
-the--opportunities for. fulfilment.-4ust-within--this group
of 17 million people. Or is it the fact that we live in
a world of over five billion people and we' re
inextricably interwoven with those, so that our
capacities to satisfy ourselves depend upon how we
interact with the rest of the world. Now when you
understand that the answer is, of course, we are part of
the world and increasingly so, then that determines and
constrains the decisions that you can take. OK, now
we'll get it back to the day to day life of our ordinary
fellow Australians. They go to work. Basically people

in this country and we divide it into three groups in
terms of how they derive their income or their capacity
for satisfaction. Three, three groups. There are those
who-employ and so derive their capacity for doing things
that they want to do out of the profit they derive as
employers. There are those who are employed and,
thirdly, and most importantly, which too often in the
past have tended to be forgotten, there are those who for
one reason or another are not part of the productive
process and they derive their income that way, and that
is the young, the old, the disadvantaged. They depend
for their capacity, for satisfaction on what's the
attitude of the community and the preparedness of the
community to look after them. OK. In this Australia in
which we live today and the Australia we're going to live
for the next decade and the Australia that's going into
the twenty first century, the capacity of the ordinary
Australian who's employed, to have his aspirations
satisfied can, if you like, in the immediate sense be
determined by saying I will use my muscle if I'm in a
negotiating position to grab a higher money wage. He
will think that if he grabs a higher money wage, that's
going to enable him to buy some more things which will
satisfy him. And if you replicate that amongst all the
Australians that are working, then what happens then very
simple because the pattern of the past which would be
infinitely sharper in the future is that that is a
certain prescription for recession and for deep
recession. It's what's happened before and the secret, I
mean you look, you know the page of the Budget papers,
what's happened is that we've flattened wages growth,
we've said not by diktat but through the Accord we've
said now there is the second way, the second way in which
this is what the essence of the Accord the essence
of the Accord is there is another way of satisfying some
of your aspirations rather than just getting a massive
money wage increase. The Government is prepared, under
the Accord, to do things which they will be able to do
because of your wage restraint. Therefore, in this
period that you're talking about in five years, there'll
be even more reason for that to be done. I believe that
the trade unions will do it because they will see that to
have now 61 percent of our kids staying on in school is
just about the most fundamentally important thing for
them. We've shifted it, as you know, from the 36 percent
of the conservatives to 61 percent and those kids that
are staying on in the education system are predominantly
. now . coming--from -their-homes,-from-the.. homes -of workers
who previously didn't stay on. Now how do you measure,
in terms of family welfare and decency and building
blocks for the future, how do you begin to measure, ever,
the importance that the kid from the working class family
is now staying on in the education system and wasn't
before and is now going to be able to go on from then
into the 150,000 new university places that we've
created, as against the 26,000 How do you begin to
measure the importance, in terms of welfare for that
family now and into the future and how do you begin to

measure the importance of that as a building block for
future reconstruction? So people get their aspirations
satisfied in more than one way. You can do it
temporarily, but disastrously in the medium to long term
by grabbing more money wages. But in a permanent sense,
you are going to be directing your issues to the real
concerns if, at a reduced level of money wage increase
you enable profits to grow, to go into investment and
create sustainable employment while you're training your
kids, educating them, having a Medicare system which
removes the blight of fear from not being covered.
Looking after your aged, that third group, by putting
another $ 10 billion per annum into social justice
programs. In that way the community is looking after
that third group so employers, workers and those
dependent upon the community get looked after. So the
Accord is central, Steve, and I believe that people will
understand it. Not suggesting it's easy to get the
message across, but I say forget electoral cycles. If we
don't understand that then Hanrahan' s not far wrong.
JOURNALIST: I'd like to turn briefly to the millions of
dollars that the Pilots Federation is potentially facing
in terms of damages as a result of the Victorian Supreme
Court decision, what's view of that decision a couple
of weeks down the track and would you regard it as unduly
provocative to the ACTU for the airlines to try to seek
to collect that money given the support that the general
union movement has given both to your Government in this
dispute and also to the airlines?
PM: Thanks Jim. I want to answer quite directly a
question there. I wonder if you'd excuse me if I just
use that as a peg to hang a couple of observations about
what's been happening in the airline industry and then
come directly to answer that question. Let me say that
if I look back on this now seven years of my Prime
Ministership, I would think probably just about the
saddest, one of the saddest parts of it has been this
whole development within the airline industry, the claim
for the 30 percent and the actions that have had to be
taken to rebuild the airline industry. As I said in my
speech, in that decade from, of the 70s, I think it's
acknowledged that the essence of my approach to
industrial relations is one of conciliation and
consensus, trying to get people together. It grieved me
more than I can say that in this circumstance I wasn't
-able-. to.. play-that. role..--I-mean,. you. had-a-situation
where a group, and I'm not engaging in incriminations
now, but you had a situation where a group made a
decision that having benefited from the Accord that we'vye
been talking about so much because they benefited, the
reduction, negotiated tax reductions as part of the
Accord, pilots they got the benefits of it. In the
area of superannuation they've done enormous and so
on. But they said no we are going outside the system.
Now the simple fact was there that if they had been
allowed to succeed with that claim, it wasn't just the

percent thing for pilots. We know and it was said if
that is allowed to happen then the whole Accord that I've
just been discussing with Steve was gone. That was not
just the pilots getting 30 percent. That was the
destruction of the future of this country that I've been
talking about because the Accord was gone, if the Accord
was gone then we were back into the awful pattern of the
past. So I wanted them not to do it, I asked them not to
and when they were absolutely committed to going ahead
with that dispute and taking on as they'd promised to do
in the, in February to take on the Government, the
airlines, the Commission, the trade union movement, then
firmness, toughness was necessary. I must say that, you
know, looking back that perhaps at some point some of the
language I used may have been better phrased well,
years old? I mean, you can never, 60 years old, I'm not
saying but in 60 years, I mean, if you could look
back I guess there are many times which you would have
phrased some things differently. But, OK, I don't resile
at all from a fundamental point. The AFAP had to be
opposed once that was their position because what you
were fighting was the AFAP as such, but you were fighting
for the Accord and I deeply regret that I, in those
circumstances, there was no role for a conciliator. But
now I come from that background, Jim, to your question.
At no point have I wanted to see the destruction of the
AFAP. I mean that would be anathema to my whole life, to
talk about destroying a union. I think the airlines
almost had to take the action they did and they had our
support. But not from my point of view to exact
retribution. What has come out of that case now is an
independent judicial finding repudiating the pilots
propaganda that here was some conspiracy between the
Government, Hawke, the airlines. I mean that was always
a nonsense, but the propaganda fed out, fed out, fed out.
Now you have a judge of the Supreme Court saying that's
wrong, if anyone was spoiling for a fight, it was the
AFAP. Now I think it's fundamentally important that that
has been established, but let me say this. I believe it
would be wrong for the airlines to collect damages
against the union and it will be my very strong
recommendation to both airlines that they not attempt to
collect damages against the union. What we need now is,
OK they wanted to fight the system, that has been
defeated. I think there's no doubt about that now,
that's been defeated. The important thing is the great
Australian airline industry be rebuilt and that we get
. decent relations -back in -there. -That can happen, but
imposing damages on the AFAP is not my cup of tea and
I'll be strongly recommending to both airlines that they
not proceed to try and get those damages.
JOURNALIST: Geoff Kitney, Australian Financial Review,
Mr Hawke. In your speech you made no particular
reference to the need for Australia to lift its level of
productivity. Given that one of the great criticisms of
the Accord is our poor productivity performance, is it

not the case that one of the great requirements for the
in Australia is that Australians work harder?
PM: Well, Geoff, it's always important to refer to
productivity and I notice that the Leader of the
Opposition, sort of shadow prime minister shadowing a
Press conference because he's not too keen on, you know,
actual ones, prepared a list of questions that ought to
be asked and productivity was one. I'm not saying that
you ask it for that reason. I mean it is a no
seriously, I mean, it's an important question. But I
think these things need to be understood. If you look at
what's been happening in Australia in the period since
the mid 70s that there has been somewhat the growth
in labour productivity and that's in line with experience
in a number of OECD economies. But what you've got to
understand in respect of this period of Government is
that the very significant reduction in real unit labour
costs, and that's at the order of 11 percent, 11.2
percent I think, that signficant reduction in real unit
labour costs has resulted in employers being able to use
labour more beneficially with a given amount of, given
amount of capital just by definition. What has followed
from that, of course, is that that's clearly enhanced the
total productive capacity by the stimulus that's been
provided both to employment, to employment and to
investment. So when you've had this massive increase in
employment. If you have a massive increase in employment
as we have had, and you know the dimensions of it, five
times faster than before, twice as fast as the
industrialised world. Then, when you have that massive
increase in employment, you are going, as a result of
that fact to tend to show lower productivity improvement
figures. I mean, it's just an arithmetical fact. Now,
as a result of what's been happening in this period,
Geoff, what we're going to have is with this enormous
increase in investment that's taken place and as you
know, at 13.5 percent of GDP investment is at the
highest proportion of GDP since records have been kept.
Now that's going into making our industry more efficient
and more competitive, so you are going to have as a
result of the massive increase in employment which has
been accompanied by reduction in real wages, as I've
said, which has allowed profits into investment. That's
creating a situation in which productivity will be able
to increase further in the years ahead. But I then come
to your final point. I don't disagree with the concept
that.-we.--all-ought--to-work--as.. hard-as we -possibly can. I
mean, we've got to understand that out there in that
region of which we are part and you're looking at rates
of growth in the industrialising countries, you
know, averaging eight, nine, ten percent rates of growth.
Now, adding to what had previously been relatively very,
very lowly paid in employment on top of that the
most sophisticated technology and now labour rates are
increasing as we've seen in Korea, for instance. You're
getting competition out there as well as in Europe and
the United States of the sort we haven't seen before. So

we can't be complacent about the fact that we're doing
very much better now than we have in the past, by any
standards doing very much better. But we've got to
understand the world out there is also improving it's
game. So, if we are going to stay up there and try and
get ahead in sectors in which we have natural advantages,
as we do, then we've got to work as hard as we can.
There's one other technical point I think that ought to
be made about productivity measures, Geoff, and I think
you'd appreciate this. That in the last seven years
there's been very, very, very large increases in
employment and growth in the services sector and that
doesn't lend itself to, as you know, in technical terms
is not picked up in productivity measurements in the same
way. Often the assumption in regard to the services
sector was zero. So if, by definition I'm sorry this
is a somewhat technical economic point, but this is a
fact if your economy is growing particularly in the
services area where there is assumption about zero
productivity, you won't get the same reflection of
productivity growth.
JOURNALIST: Robert Hadler from the Australian newspaper,
Mr Hawke. I understand that you and other senior
Ministers are to shortly meet with representatives of the
mining, farming and environmental lobbies. Do you think
it's possible that at that meeting and in the future, the
Government can help to developing a genuine accord on the
issue of sustainable development and that does it require
a more interventionist approach from the Government?
PM: Thanks, Robert. Well, yes, I'm hopeful that we can
get agreement and that gives me the opportunity of
saying, ladies and gentlemen, that when I go back from
here to the office, I'll be holding a very, very
significant meeting which will involve a number of my
Ministers, representatives of industry and the
conservation movement and the trade union movement on the
issue of sustainable development. Now we've deliberately
not wished to publicise that meeting and I'll give you,
and I'll go to tell you the people that are attending,
just give you some idea of the significance of it. Let
me go to that straight away. The people I'll be meeting
will be Lachlin McIntosh of the Australian Mining
Industry Council, Ric Farley of the National Farmers
Federation, Rob Bain of the National Association of
Forest Industries, Phillip Toyne of the Australian
Conservation-. Foundation,. . Judy.-Lambert-of the Wilderness
Society, Simon Crean representing the ACTU and I will
have there my Ministers Kerin, Richardson, Cook and
Button and also attending will be Sir Ninian Stephen, our
Ambassador for the Environment and Ralph Slatyer, my
Chief Scientist. Now you can tell that by any standards
that's a very, very significant meeting. Now we
deliberately haven't publicised it because what we're
about is results and not publicity. I think the fact
that those people have agreed to come and meet with me is
a matter of very, very considerable significance. I

mean, that's just not rhetoric. I mean, the fact that
they are prepared and come to meet together is relevant
to your question. I think it offers some degree of hope
that if we approach this sensibly, we may be able to get
some basis of agreement and that's very important for
Australia because, as I said in the speech, we must not
as a country get into the dichotomy concept of it's
either development or the environment. We've got to have
both and we'll have both in the best possible way if we
can get a basis of agreement and we've got a fair bit of
work ahead of us. I don't think there'll be a magic
outcome just at the end of the meeting today, but I hope
it will provide the building blocks for the future.
JOURNALIST: Michelle Grattan of The Age. Mr Hawke,
you've mentioned that you distributed a very long
document to us on micro reform achievements, but the
Industries Assistance Commission last week, in a couple
of reports stressed that Australia must work a lot harder
and move a lot faster in the areas of micro reform
concerning Government business enterprises and also the
airlines industry. I wondered if you could give us your
comments on those reports? And secondly, there seems
some uncertainty about what the Government envisages for
enterprise agreements under your wage system. Mr Keating
has touched on this but not clarified it. Could you do
that for us?
PM: Yes. Well taking the first point, Michelle, I think
that the IAC reports, if they were somewhat less than
adequate in their acknowledgement of what has already
been done, but I don't quibble about that. On the
substance of that first part of your question, the
Cabinet is going to be considering further submissions,
particularly from Mr Willis under who many of the
Government business enterprises come, as to how we can
make even more efficient the operation of those
enterprises and the contribution that they can make to
the essential infrastructure of the country. We will be
considering further reports from him and I can assure you
that we will be prepared to act. I just, in passing,
before I go on to your second question, make the point
that it's extremely easy for people to sit in boardrooms
or bureaucratic chairs and say do this, do that, do that.
You've got to, if you're going to maximise your chances
as a nation of making lasting non-disruptive effective
reform, try and take the parties who are involved with
you. Now-that-doesn't-mean-, and--I -make it quite clear,
take this opportunity to say it, that doesn't mean that,
that without agreement in every situation, then nothing
can be done. We will try and get the agreement of those
involved for the changes that are necessary and hopefully
we'll always be able to get it, but there may come a
point at which that's not possible. If that's the case
we won't shirk taking the decisions that may be necessary
in those circumstances. But coming to the second
question you asked about enterprise based bargaining.
What needs to be understood, Michelle, is that both under

the processes of award restructuring and under our 1988
industrial relations legislation, both of those provide
mechanisms, such as, for instance, under that legislation
the idea of enterprised based certified agreements.
That's there and that mechanism is provided. So that
under both the award restructuring process and our 1988
amendments, the mechanisms are there and they are
supported by the ACTU for a more concerted move towards
arrangements which better reflect the needs of individual
industries and enterprises. So this is not something
that we have to be persuaded about. We both introduced
the legislation to facilitate it and under the wage
principles in which we've been deeply involved, the
processes for greater orientation towards enterprise and
industry negotiation is there and it's happening. Now
let me, there but go to the next point. The great gulf
between us and the conservatives is that as well as
having the mechanisms for facilitating that sort of
approach, you must, if you are concerned about proper
control and management of the economy and the preparation
for the future, you've got to have a mechanism which
deals with aggregate wages outcomes. So what we've got
is a mechanism under the legislation and under the wage
fixing principles with is increasingly providing the
mechanisms for enterprise oriented wage negotiations.
But at the same time, under the centralised system, which
is giving an impetus to those things, we have the
mechanism for controlling aggregate wage outcomes. This
is where what you witnessed last week was not just some
sad joke about a man wanting to be the Prime Minister of
this country, when asked that central question, will more
of it come out of enterprise bargaining or more out of
system, threw up its hands in hopelessness and said
' who's to know', really, I mean, ' who's to know'. As you
understand, he on that simple question about enterprise
bargaining was saying well I don't know whether this is
not going to blow the economy through the roof. Now
that's the difference. We have the mechanisms for, which
are being employed to move to enterprise bargaining, but
as distinct from our opponents, we have the mechanism for
ensuring acceptable and responsible aggregate outcomes.
How are we going?
BARTON: David Barnett. We're almost at the end of the
first page of questions and we've got a second.
PM: I'll be here for my
JOURNALIST: Are you aware of the views coming from some
economists which associates the blowout in the deficit on
the current account with the rise in the level of
immigration, both of them taking place over the past six
or seven years? Have you given any consideration to
these concerns and have you come to any conclusions?
PM: Good question David. I know that for a very very
long period now in the economics profession there has
been a quite fundamental division of opinion about the

economic impacts of migration. I've been associated with
that debate, followed it over a very very long period of
time and there are those who say that economic
benefit, others who say that it's not. Bringing it to
the present situation David I think you'd have to say
this. That it is the case that where we now have
considerable pressure upon our resources and with high
economic growth rates, high employment growth rates, that
you can argue that higher rather than lower immigration
levels are going to exacerbate demand and to the extent
that that happens that that will put more pressures on
our external accounts problem area. And against that
you've got to, as always in economics, you've got to look
at the other side and ask yourself the question does
Australia need to build up its population so that
enterprises within this country have a larger market so
they get the benefits of larger scale production, the
economies of large scale production, which makes them
more competitive against imports and more competitive on
export markets. And David there is no definitive answer
to that question. I think I would put it this way. If I
were to state my long term view, my medium to long term
view, I would believe that Australia is better off, its
future is going to be more secure and more prosperous, if
we have an accelerated population growth. I think, as I
said in some interview I did recently, that if you look
at Australia and Canada and look at that
approximately $ 8 million difference, there's a sort of
critical mass difference in that area. I know of course
the benefits they have from being adjacent to the largest
market of the United States. But I do think Australia
would be better off with a larger rather than a smaller
population. But I emphasise, that's a medium to long
term view. It's also said in that interview I think if
we are going to even think about that, and I'm saying no
more that that should be a matter of debate and
discussion in this country, then we have to look at the
question of housing. While Australians have a
commitment, as they historically tend to do to the
quarter acre block, separate quarter acre block, that
imposes much greater demands upon resources than a
society which has got perhaps a greater proportion of its
population wanting to be involved in medium density
housing. Now let me make it quite clear so there can be
no misrepresentation of what I'm saying. What we did at
the Premiers' Conference David was to say there let's
look at some pilot projects, let's look at the question
of. regulations -as . to. whether-medi-um.. density housing in
the areas can,-be developed. I happen to think
there's a lot of Australians would prefer that, would on
balance prefer that to the distance they have to go now
in major cities. So if we can get a greater acceptance
in Australia of that sort of concept, willingly, knowing
that many people still want the separate quarter acre
block and are entitled to have it and should be able to
proceed for it. But if we get that sort of change in our
community on housing attitudes then we can, in relation
to your question, contemplate high levels of population

with a greater degree of equanimity. But right at this
time I don't think that it would be sensible to increase
the immigration levels. What we are may I make this
point finally on this question what we are of course
doing is to continuously look at the composition of our
immigration and we hope that we will be getting many
people here under the business migration program who will
start enterprises which will be productive and which in
net terms will obviously benefit our external account
position. We also hope that in the areas of skilled
shortages we'll be getting people in who will help us in
that respect. But we'd still retain the necessity in
this community to have a family reunion program and I
hope that all Australians would accept the necessity for
that component in our immigration program which is
humanitarian. I've taken a little bit of time to answer
that but I want to say that I think therefore David that
if you're really going to address this question you need
to separate the immediate term from the longer term. In
the longer term I am a larger population man provided we
take account of these other things. In the immediate
term I think there is no case for increasing it.
JOURNALIST: Niki Savva from the Melbourne Sun, Mr Hawke.
You've recently from the Access Economics survey of a
billion surge in investment. Have you or other
Ministers studied these figures to determine where this
investment is going, especially given Dr Shand's
remarks earlier this week that much of it is not going
into tradeable industries?
PM: Well the Access Economics itself identifies a number
of these and we have also. I haven't got the document in
front of me but I think you'll recall Niki it's broken up
into, I think I say this subject to recollections
about 30% in manufacturing, and a similar sort of
proportion in tourism, and others in the areas of the
service sector and obviously another proportion into
mining. All I know is that Access Economics has made
this calculation. It said of the $ 90 billion investment
projects which they identify, just under $ 50 billion are
in the category of ' under construction' or ' committed',
the balance in ' under serious consideration' and their
calculation is that of the former two categories ' under
construction' or ' committed', which is just under
billion, that that will produce export earnings in the
near future of the order of an additional $ 5 billion per
annum.-And-they-say that.-if. the--$ 90-billion comes on,
and they see no reason why it shouldn't, that that will
produce export earnings, additional export earnings of
billion per annum. Now we have no reason to question
the accuracy of those figures. In other words whether it
is in actual manufacturing or in tourism, the
contribution to our external account position is on their
calculation $ 10 billion per annum additional. I've had
no analysis put before me which would suggest that those
calculations of Access Economics are inaccurate and I
would be profoundly surprised if the Leader of the

Opposition is going to question the accuracy of Access
Economics. It'd be interesting if he does.
JOURNALIST: Don Woolford from Australian Associated
Press, Prime Minister.
PM: You had your run yesterday mate.
JOURNALIST: You've spoken with pride about your
industrial relations and wages policy and the centrality
of the Accord, yet trade union membership is declining.
The decline is most obvious in the areas where your
Government has been most successful in job creation. Why
do an increasing number of rank and file unionists seem
to be regarding the movement as irrelevant and could this
be one of the costs of your Government's very close
relations with the ACTU leadership?
PM: To answer the last part first, no I don't think so.
If you look at the position of trade union membership
figures around the world what's happening in Australia is
not unusual. Indeed in Australia we have a very, by
world average standards, still a very very very much
higher proportion of workers in trade unions than in
other industrialised countries. So it's not a position
of gloom. I mean if you for instance look at the United
States, it's a devastatingly different, much worse
picture there from the unions' point of view. So no, I
don't think that there is that simple relationship. Let
me say this. I think one of the problems, trade
unionist leadership, and therefore in a sense perception
of workers is that it is the case and you simply can't
argue otherwise it is the case that under the Accord
processes much of the traditional function of trade union
leadership has been changed. Because under this system,
instead of as I was saying in a fairly long answer I
gave to Steve instead of the satisfaction of
aspirations being done purely through the avenue of
increased money wages, and battling for improvements in
conditions and so on, now that is being done through the
social wage area and through the centralised wage fixing
system. And unions give a commitment to a no further
claims position. So it is the case, unarguably it is the
case that in this seven year period the role and
functions of trade unions have changed. Because if you
have commitment, as they've given, to a centralised wage
fixing system, the aggregate outcomes are determined
there -and-they-make-. a commitment--to-no further claims, as
they do, and a lot of their other conditions are
satisfied for the social wage, by definition the area of
activity open to trade unions has by their own decision
been closed of f. Now it may be I mean I haven't
analysed it it may well be that that fact of itself has
had some impact upon the relevance that workers may see
for individual trade union activity. I mean I would like
to see that examined. But the important logical
conclusion that follows from that is that if that is a
factor in declining membership it's not a reflection of

inadequacy on the part of the trade union movement. It's
a great paradox that they are losing members because they
have been so responsible and effective.
JOURNALIST: Tim Colebatch from The Age, Mr Hawke. You
said in your speech a moment ago that your Government
PM: Seems like two hours ago mate.
JOURNALIST: Two hours ago. You said I take it it's
still current.
PM: I was going not to the currency of the speech but,
you know, the physical condition.
JOURNALIST: At the time of it, anyway, you were
committed to a quote unyielding defence of a fair and
efficient taxation system.
PM: Yes.
JOURNALIST: Last week the Taxation Commissioner
published statistics which showed that income
millionaires that's people with incomes of $ 1 million
or more a year were paying a lower rate of average tax
than most of the people in this room. About 29% compared
with say 35% for people around $ 100,000. And most of
that was due to the tax break you gave them, the dividend
imputation scheme.
PM: Dividend imputation, yes that's right.
JOURNALIST: Is that what you regard as a fair and
efficient taxation system? If so, why? And if not, do
you propose to change it?
PM: I certainly don't propose to change the full
dividend imputation for the very simple reason that that
was done to make investment in enterprises more
attractive. We had a question before you'll recall about
the possible collapse of some our big enterprises which
of course impart a reflection of their massive
overgearing. It's obviously very much in the interests
of Australian enterprises and of the Australian economy
generally that you make equity investment in enterprises
more attractive. This is not something to be seen as a
handout to a particular group of people. It is a
fundamental--structural -reform-that-you have a situation
where people find-it more attractive to invest in equity
terms in enterprises in this country. And it may just as
well say, in terms of that simplistic sort of analysis
that was underlying that question, that isn't it awful
that you've had a move from wages to profits. Isn't that
terrible? It's going to the poor workers into the hands
of those filthy capitalists. That sort of analysis, you
know, it's old hat. The trade union movement understands
that it's old hat. The important thing is if you make
these changes, these changes in policy, that they be

related to the overriding goal of the restructuring of
the Australian economy. That's got to be the fundamental
concern that you're about. That's what the Accord's been
about-fundamental restructuring. We don't simply end
the analysis by saying ' wages share down, profits share
up, terrible, terrible, terrible, isn't that awful'. I
mean that would be nonsense because that has been the
means, the root to getting the investment which is going
to involve the restructuring of the economy. Similarly
with the tax changes. Imputation wasn't given to say we
want to provide more money to privileged people. It was
an instrument which was brought in to ensure as part of a
total approach to macroeconomic policy that you made it
more attractive for people to invest in equity terms in
Australian enterprises. That is what's happening. If
you want to go to the question of the overall impact of
our taxation reforms in terms of equity, that is an
argument or debate I'll have anywhere, anytime. Because
the simple facts are, and let me remind you of what we've
changed in that respect. You don't have the statements
now that characterise the end of the previous
conservative administration, the two statements that the
fastest growing industry in Australia is the tax
avoidance industry Costigan or Mathews that
increasingly it's becoming a matter of choice for the
rich as to whether they pay their taxes. That was the
devastating, damning indictment of the conservatives
after seven years. But under us, because we've brought
in the instruments, people are now paying taxes that they
wouldn't otherwise pay. Most importantly of course the
capital gains tax and the fringe benefits tax. Now if
the conservatives were to have their way on that, as you
know that would involve the massive redistribution to the
rich from the poor and middle income Australia that we ' ye
ever seen in this country. And that won't happen.
JOURNALIST: Prime Minister, we're in your hands. We've
got a lot of questions to go. Do you want to go on or
PM: Just a minute. What time is this meeting that we're
having? Say another ten minutes.
JOURNALIST: Peter Rees, the West Australian, Prime
Minister. You spoke of vision in your speech. One of
your former State colleagues, Brian Burke, also had a
vision, WA Inc, which turned sour. How concerned are you
about the electoral impact of that federally given that
Joe--Berinson -revealed. yesterday that * the-losses from WA
Inc will cost the-State's taxpayers $ 446 million? And
what do you think that says about governments getting
close to big business?
PM: Well let me go through it in sequence. Firstly,
obviously if the West Australian Labor Government is
being hurt by what is emerging in regard to that area of
activities, if they are being hurt by that that is not
good for us. I mean, simple. I've got no more to say
about that. I mean obviously if they are being hurt, to

some extent, to some extent we'd be hurt. Although I
think that the West Australian electors would basically
distinguish the federal issues from the state there. I
believe that that would be the case. But marginally,
obviously Peter there must be some adverse spin-off on
us. Secondly, about getting close to big business, well
I just simply don't know what you mean by that. There
are ways and ways of getting close to big business. It
can be done unwisely, it can be done wisely. So if
there's some sinister, you know, covert, unstated
implication in the tail of your question that are we in
an improper way close to big business, answer no.
JOURNALIST: Peter Bowers, Sydney Morning Herald. Happy
birthday Prime Minister.
PM: G'day Peter, how are you?
JOURNALIST: I must say I'm relieved that I get the
opportunity to ask this question while we're still both
on the safe side of
PM: Yes. a bit safer than you mate.
JOURNALIST: Pardon?
PM: I look a bit safer than you I might say.
JOURNALIST: We'll see about that.
PM: We'll see about that. Don't you worry about that
Peter, don't you worry about that.
JOURNALIST: Prime Minister, I've outlived quite a few
Prime Ministers in my time.
PM: By gee if you had to face your bloody electorate
it'd be a different story mate.
S JOURNALIST: I face my constituency every Saturday.
Prime Minister, in keeping with the reflective mood of
your speech I'd like to ask you about migration. Would
you agree that Australia's post-war migration has been
one of the great, if not the greatest success stories of
our time and if so, would you also agree that the
throwing open of Eastern Europe to the West, a miracle, a
peaceful miracle we never believed we'd see in our time,
* offers-us a wonderful opportunity to increase quality
migration from that area? And by quality migration I
mean young people, young couples, young families, with
skills and a future that Australia could well use.
PM: Let me say Peter I absolutely agree and in regard to
the first part of your question about Australia's postwar
immigration program I've said on a number of
occasions that one of the things that moved me into the
Australian Labor Party in my first year at university
when I started thinking about these things was the sense

of excitement that I had about the great adventure that
was being undertaken by the Labor Government of that
period in opening up Australia. And as a student at
university I committed myself then, not only through my
membership of the Labor Party to that support, but I
also, may I say, in those years at university when we had
so many students coming under the Colombo plan, I went
out of my way there to establish mechanisms and so on to
try and ensure that those people who were coming to our
country from Asia also were given the best possible
chance of melding into our society. So for me, yes
Peter, that was one of the motivating forces in me
getting involved in the Labor Party, because I was
thrilled with what they were doing there. And there is
no doubt there was a country at the end of the Second
World War, seven million people. And what John Curtin
and Chifley understood was, as they were fighting during
that Second World War Australia, that it had to be a
different Australia. They didn't want to just go back to
the old. And the essential ingredient in creating the
new Australia was that vast migration program the
dimensions of which are probably best understood by, if
we say and remind ourselves we should never cease to
remind ourselves of the dimension. As of this day four
out of every ten Australians were either born overseas or
the child of a parent born overseas. I mean that's the
dramatic illustration Peter of what you're talking about.
That's the dimension of the economic and social
significance of immigration in this country. And yes
it's the most important thing that's happened. Now going
to the second part of your question. ours is a nondiscriminatory
immigration policy. And to the extent
that people, and particularly young people, from these
countries of Eastern Europe want to come to Australia,
the opportunity will be there for them. But I want to
make this and they will be welcome because I think many
of them would have a great contribution to make. But let
me make this point. I think in the great sense, the
proper sense of excitement that we have about the
momentous, and as you rightly say, hitherto perhaps
unimaginable changes that are occuring there, I would
hope that a lot of these people would say if those
changes are going to be able to have their fullest
flowering that they will want to be part of it. I mean
the great challenge now, I think, for the peoples of
Eastern Europe is to say a) we are going to make sure
that these reforms stick and are extended so that people
will-have-freedom and liberty-and..-that we have a more
competitive economic society in which there can be the
release of talent so that they will feel a political
opportunity and that they will want to be part of making
their countries greater and more significant as they can
with this new-found freedom. And my own judgement is
that that's what so many of them will want to do. But I
repeat, if there are those who want to come to Australia
they will be welcome.
BARTON: Last question from Bruce Juddery.

PM: Couldn't be a Press Club without a question from
you, Brucey.
JOURNALIST: inaudible
PM: declaration mate.
JOURNALIST: So you'll be happy I'll make it a double
header. Prime Minister, in the last few weeks a number
of the Government's senior advisers have dropped little
hints that perhaps some of the assumptions of the Hawke
Government are under question or being re-examined. For
instance, Fred Argy of the Economic Planning Advisory
Council has pointed out that if the real truth that
regulations are to be taken seriously which Germany
would be a basket case and Chris Higgins of the
Treasury has suggested that we can't keep on starving
infrastructure investment further, we're going to have to
start channelling some more money back in that direction.
At the Cabinet level, is there yet similar examination of
the truths of the Hawke years and are we likely to hear
about the results of the re-examination before the
election? And second question, have you had a look at
the terms of trade suffered a sudden sharp downwards
in the last national accounts figures. Are you concerned
about that? If it's a downward trend after two years of
improvement would that mean a complete finish to any
chances of reducing interest rates between now and the
next election?
PM: Well as to the first question, no I have no
apprehension Bruce, that the sort of people that you're
talking about are questioning the fundamental truths. On
the contrary I notice that there is some almost adverse
comments in the Press recently that the Higgins to whom
you refer and the Fraser Bernie Fraser that is
although Malcolm's quite good in his statements most days
-true in support but that there is some criticism
almost that the Higgins and the Frasers were far too
explicitly supportive of what the Government was doing.
So I discern no view amongst the mandarins, or however
you want to describe them, of a disaffection with or predirection
to change direction. As to the second part
about the terms of trade, obviously Bruce, let me make it
clear I'm answering this question I'll come to the
national accounts in a moment if Australia were to
suffer a--continuing-significant-. reversal in the terms of
trade we know that creates problems. God, we've been
there in 85/ 86, wiped what it was $ 11B, I think I
remember that phrase from the 1987 campaign, I guess some
of you remember it too, I mean I had to keep saying it, I
just wasn't speaking to you all the time, wiped $ 11B off
our national income. If that sort of thing happens then
it creates difficulties and economic management has to be
adjusted. But let me say I'm not expecting that. The
best indications that we can have are optimistic about in
aggregate, it doesn't mean that there won't be some

23
elements of our exports that may not have the price going
down, we've certainly had some difficulties about people
staying out of the wool market to this stage, we hope
that's going to be changed. But Bruce, the fundamental
question there is the fundamental response to your
question is we don't anticipate any significant problem
arising from the area that you're talking about. You
mention the national accounts, just let me sort of go to
the of certain trends that can appear over the last
twelve months. If you look at the question of exports
for the last three quarters, March, June and September,
increase in exports and this is in constant prices as
being March quarter 2.1% in June 89, 2.6% in
September 89. So a rising trend of exports against the
situation of imports, 9.3, 1.7, minus 0.8. So if you
look at the most recent sort of figures in aggregate
terms we have an improving export position and imports
coming down. So if you're looking at these external
influences, while you can't afford to be complacent in
any area of economic policy making but I'm not disturbed
by the potential element that you're talking about.
ends
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