PRIME MINISTER
TRANSCRIPT OF NEWS CONFERENCE, ORCHARD HOTEL, PERTH
13 MARCH 1990
E 0 E PROOF ONLY
JOURNALIST: How much more difficult does the Democrats
decision on preferences going to make your task in
Western Australia, particularly in seats like Stirling
and Cowan?
PM: If it were to stick, it would obviously I think have
some marginal impact but I doubt very much whether the
Democrats can in all seriousness stick to this decision
because it obviously means that the Democrats are asking
people to accept that it makes sense for a Democrat vote
to be a vote for an enlarged uranium mining industry, for
a uranium enrichment industry, for mining in Kakadu Park,
the abolition of the capital gains tax. Now if the
Democrats of Western Australia are saying that's what
they really believe in then their proposal could stick.
But if they don't believe in those things, if they are
against mining in Kakadu Park, if they are against the
uranium enrichment industry, if the Democrats in Western
Australia are against those things, then they can't
expect people to give a Democrat a primary vote and then
a preference to the Liberals and Nationals who are in
favour of all those things.
JOURNALIST: Prime Minister, has the banking industry
blown any hope of interest rates coming down two
rises Spencer on the AN this morning say he doesn't
believe there'll be any change.
PM: The Commonwealth Bank is of course, in regard to
fixed rate, it has no impact upon variable rate mortgages
and~ is so acknowledged. All the statements of the
banking industry remain in line with what I've been
saying, that they expect conditions are such that
mortgage rates will come down.
JOURNALIST: That's not what they said this morning,
Prime Minister.
PM: Well
JOURNALIST: for some months.
PM: Who said that
JOURNALIST: Mr Spencer said home loan, home loan
interest rates will probably remain steady for some
months, there are no immediate plans
PM: This is the man from the Commonwealth Bank?
JOURNALIST: That's correct.
PM: Yes, but I'm saying, if you listen to my answer I'm
saying that the banking industry generally is saying that
they will come down. I just do not accept that what he
said. Let's just go to the, what's being said by the
bank industry more generally. I'll just read you a
number of statements from the Age, Age of 20 February,
the economist the conditions already exist or are
falling for an easing of rates, Sydney Morning Herald, 6
March, housing interest rates should fall to 16 percent
by according to economic forecaster, BIS Shrapnel,
12 March, the ABC's PM Program, within Australia almost
everything points to lower Bankers Trust, I
wouldn't be surprised if the current Government's reelected
we see another drop in short term interest rates
within a couple of weeks after the election, another
percent or so. So there you've got it. These are what's
being said by the market generally and simply because you
have a decision here in regard to the fixed rate mortgage
of the Commonwealth Bank and one statement of the
Commonwealth Bank simply does not-negate what the banking
industry generally has been saying. The banking industry
has not changed its statement or have the economists
generally changed their position, that as a result of the
policies in place under this Government there is
expectation that interest rates will fall. I believe they
are correct.
JOURNALIST: Prime Minister, these comments certainly
suggest a revision of those earlier quotes
PM: They don't suggest anything of the sort, because
that statement, just one person in the Commonwealth Bank
has come out in relation to a position of a fixed
interest, five year fixed mortgage and that is determined
by what they in fact, the interest rates on those five
year securities, particularly the the five year
Government bond and the fact is that that decision
doesn't in any way affect what will happen to their
variable rate mortgages. There is no position from the
banking industry as a whole, or economists generally
which changes what they have been saying and nor should
there be because the conditions are unchanged. The
conditions are that the level of activity is easing and
that the cost of money the banks is falling, the two
conditions which will bring about a fall in interest
rates.
JOURNALIST: Regardless of what it applies to Prime
Minister, surely when the country's biggest bank takes
that sort of action it does not send a positive message
PM: On the contrary, do you understand the difference
between a fixed five year rate and variable rates. I
mean, if you don't then you're in difficulty.
JOURNALIST: I certainly do. It hardly sends a positive
message PM: On the contrary, you may be trying desperately from
your position to send a different message to what the
banking industry generally and economists generally are
saying.
JOURNALIST: ( inaudible)
PM: Just a moment. Those statements that I have read
out, which are based upon sensible propositions, have
been unchanged by anyting that's occurred in the last 24
hours. Those statements by banking industry generally
and by economists are not plucked out of thin air because
they decided they wanted to go on AM or be reported in
the newspaper, wanted to see their name in print, they
were based upon two propositions, the two propositions
are unchanged or do you suggest that are? One, that the
economy is slowing, two, that the cost of money to the
bank is declining. Those two fundamental propositions
are the two propositions upon which economists and the
banking sector have said that rates will come down. They
haven't changed.
JOURNALIST: Sir, Mr Spencer was not discussing fixed
interest rates, he said indication rates might fall, was
crystal ball gazing, I believe they will probably
stay somewhat where they are
PM: He said that and against that I have read out to you
the statements, extensively, I mean, I will go on with
them if you like but I don't think you want to be
I've read out the statements from within the banking
industry and economists as to what their expectation is
and I repeat they haven't made those on the basis of
deciding whether on day X they wanted to see their name
iTrprint. They made the statements on the basis of two
fundamental propositions which remain unchanged. I mean,
to refute that position that has been put by economists
and the banking sector you would have to point to two
things haven't changed. You would have to point to
evidence that the economy was not slowing down, do that
if you can. Secondly, you would have to say that the
price of money in regard to variable rate mortgages is
going up you can't because that is not the case. The
two fundamentals remain unchanged.
JOURNALIST: Well why did the Commonwealth put up what is
essentially a long-term rate?
PM: For a very simple reason. I mean, if you can't
understand this you have a little bit of difficulty and
no wonder then in those circumstances you can't
understand it, you get a bit excited. The fact is that
in regard to the fixed five year rate, basically financed
by instruments, fixed term instruments, five year, and
basically the Government five year bond rate. Now when
we make decisions to reduce the par ratio, the private
asset ratio, then there was not so much need for the
institution they sold off it is a simple basic
arithmetical economic fact. If there is an increase in
selling of f of bonds the price falls, the yield rises.
So the yield on the five year term bond rose and that was
relevant to one thing, it was relevant to the cost they
paid in the financing instrument for their fixed five
year term. Now, lets
JOURNALIST: Mr Hawke, you'll appreciate that a lot of
people won't believe what any politician said on interest
rates until home loan rates actually do fall?
PM: Well I suppose you'll always get people out there
who won't believe what politicians say. I mean, even
whether it is interest rates or who is going to win the
footy. There's a bit of scepticism about politicians..
suggest, by the end of this campaign, there will be a bit
of scepticism about political analysis too if they look
back over what's been said.
JOURNALIST: Mr Hawke, Mr Keating earlier today said that
in his judgement monetary policy would be being relaxed
now if it wasn't for the convention of not making major
decisions during a campaign period. Does that mean that
if Labor's re-elected there'll be an immediate easing of
monetary policy?
PM: I would believe, and let me read so that you have
the whole text as to what Mr Keating said. I'm not
implying that you're going to but what he said which
is relevant he got asked the question are you saying if
it had not been for the election the conditions were
there for immediate ease in monetary policy. He
said, answer, that would be my judgement, but I would
nee~ d to talk to my own advisers, including the Central
Bank, and it's which is consistently in line with
what the Treasurer and I have said in a period before the
election. we would obviously discuss these matters
with the Reserve Bank and its Board. It's judgement and
the judgement I share with the, the Treasurer that the
conditions are there, the conditions are there. I share
Paul's judgement completely, but when we, when the
election's over and we're back there in the decision
making process, we'll obviously have a discussion with
the bank and we would be putting the position obviously,
as the Treasurer has.
JOURNALIST: Prime Minister, you appear to have been
careful with your language during the campaign
PM: Always careful with my language
JOURNALIST: Whenever you've been asked about interest
rate falls you've said the banks say interest rates are
coming down. Are you prepared to say that you guarantee
that there will be interest rate falls after the election
or are you still relying on banks
PM: What I am saying is consistently in line now with
what the Treasurer has put today the we believe and I put
this quite clearly, the Treasurer and I believe that the
conditions are there for a reduction in rates. I mean,
we are not living in a vacuum, we are living in a real
Australian world and that real Australian world is
characterised by these facts that there has been two
easing in the prime rates, that's happened, so the cost
of money to the banks is decreasing. Secondly, we're
living in a world where the evidence is increasing that
the economy is slowing down, that is that the purpose for
high interest rates has been effective. That is we have
had interest rates high to get a slowing of the economy
and the economy is slowing down so when you take these
facts into account then what I am saying is that we
believe that we have got the circumstances for a
reduction in rates that you're talking about.
JOURNALIST: So no guarantees though?
PM: Well I agree completely with what the Treasurer said
that we will discuss this matter with the Reserve Bank,
but we..
JOURNALIST: But you're saying the banks
PM: No I am not saying that because I have made it quite
clear and I'm sure Paul did as well that during the
election campaign, Tony, it was a bit much to expect that
they would bring them down during the election campaign
in a sense that very different position
transcript, something I said some time back, they were in
a difficult position that if they brought them down they
would be accused of trying to help the Government, if
they didn't bring them down, they'd say you should have
brought them down....... rather difficult position. So I
indicated from the beginning of the campaign that I
didn't expect that they would be coming down during the
campaign. JOURNALIST: Are they helping the Opposition by
PM: No, no, I certainly don't make that accusation. I
repeat I think that they are in a rather difficult
situation in an election campaign. I mean, damned if you
do damned if you don't sort of thing. I am simply saying
that I believe that the circumstances are there once the
election is over and we win, for them to come down. The
opposite of course is true, in the hypothetical situation
of a coalition....... but in those circumstances obviously
the interest rates would be set to rise because you must,
you don't need to be an economist to know this, you must
have a situation of rising interest rates if you have a
wages explosion and a blowing of budget surplus. And you
must have a budget surplus blowing exercise because we
still have the situation where the Opposition is trying
to bribe the electorate with this six billion unfunded
set of promises and that means from that source that you
either float a surplus or have massive spending cuts
which of course they will not detail. And on the other
side of the budget outcome you have given back billions
of dollars under their capital gains tax proposal. So
inevitably what the markets can see in that hypothetical
situation would be a position of rising interest rates
but under us they will come down.
0 JOURNALIST: Mr Hawke, how soon after the election would
you envisage having these discussions with the Reserve
Bank? PM: Well I think they would happen I would imagine
that the Treasurer would be having them reasonably,
reasonably soon after the election.
JOURNALIST: So then we could assume that reasonably soon
after the election-
PM: Well you can't, you can't make any assumptions other
than what I say, in the end, what I say and one's got to
be very circumspect about this, I'd say no more than
this, which I've already said and I'll repeat it again
and it should be quite clear then, so it's fruitless to
go any further. What I say is this that we had high
interest rates to get a slowing of the economy because,
at that level of activity, the economy could not sustain
the level of imports that went with that level of
activity. Next I say that all the evidence is that those
high interest rates are working, that the economy is
slowing down. Third, I say that you have had, as a
result of discussions that we had with the monetary
authorities earlier this year, a lowering of prime rates.
And it follows from those things that I've said that, in
the judgement of the Prime Minister and Treasurer, the
circumstances exist for a lowering of rates. After the
election we will have a discussion with the authorities
on the basis that the Treasurer and I have that view.
Nothing could be clearer than that.
JOURNALIST: But people want some indication of when we
can expect interest rates
PM: People have got the clear indication from what I've
said and that is
JOURNALIST: No they haven't..
PM: On the contrary. The election, as I understand it
and I don't think anyone can change it, is 24 March. The
decision then is obviously one for the Treasurer and
myself to have discussions, as I've said, we'll have them
quite quickly, with the authorities and we will be
putting to the authorities what I've just said that
it's the view of the Government that the conditions are
there for a reduction of rates. Now you really are, are
battling say that you can't understand timetables on
that and the thrust of the Government's intention.
JOURNALIST: I'm not saying I can't understand
PM: Well
JOURNALIST: I'm saying people want..
PM: Well, all I'm saying to you is that if you
JOURNALIST: ( inaudible)
PM: All I'm saying is if you faithfully transcribe and
transmit to the public what I have unequivocally said,
timetables shouldn't be difficult to understand.
JOURNALIST: Mr Hawke, regard to, if I can take you back
to the Democrats decision, regardless of the wisdom or
otherwise of that decision, what effect do you see that
having on the, on your prospects here in Western
Australia and on the overall outcome?
PM: We, I believe, are going to win the election and
I'll say that as I've always said during this election,
not with complacency or cockyness. I've always had that
view, as people who've been travelling with me or been in
Canberra before we started, people know that I've based
that view on a very simple proposition, that I have faith
in the intelligence of the Australian electorate, the
majority of the Australian electorate will understand the
very important distinction in prospects for Australia
that flow from voting for us or voting the Opposition.
I've always been steadfast in my thinking on that and in
regard to Western Australia, and I've been over here
before, I have said consistently and I repeat again on
thris visit, that I don't think that West Australians are
mugs. The proposition that West Australia was going to
be a different land on the electoral landscape is a
proposition which never convinced me because it meant a
very simple thing. It meant, implicitly, people saying
that West Australians-were mugs, that because they were
upset about some aspects of earlier West Australian State
Labor Government activity, that they were going to kick
themselves in the backside by voting against Federal
Labor. They were going to vote for the abolition of
Medicare, they were going to vote for the abolition of
the capital gains tax and the loss of billions of dollars
from the public revenue to be shovelled into the pockets
of the wealthy few, that people in West Australia were
going to do that to themselves to punish for the previous
actions of Western Australian State Labor Government.
Now I've never believed that when it got to the ballot
box on 24 March, that West Australians would do that.
Never. And I've said that consistently and I've got no
reason to believe now. Now you've got to ask well,
with the Democrats, the Democrats have said at this stage
that they are going to suggest that preferences go
against sitting Members. I mean, intellectually, a
brilliant concept, isn't it? I mean, intellectually
brilliant concept our idea of how you cast your
preferences is vote and give your effective vote against
sitting Members. If it's Labor against them, if it's
Liberal against them. I mean, the, the intellectual
basis of it is staggering. But more importantly than
that I believe that the Democrats will erode their vote.
The Democrats in the eastern States, the Federal
Democrats are appalled by the decision. They're appalled
by it for the obvious reason, that it makes nonsense of
all the propositions that the Democrats have put about
what they believe in. That they have this fundamental
belief against uranium mining, they have a fundamental
belief against mining in Kakadu, very fundamental here in
Western Australia because they were cast votes in favour
of those things. So I believe that in fact people who
may have been going to vote Democrat, that is if the
Democrats adhere to this position, just think very
seriously about any wisdom in adhering to that advice.
JOURNALIST: Mr Hawke, what will be the effect on your
credibility of the report of Senator Richardson's office
fudging answers to the
PM: Now, I was hoping that someone would come to that,
hoping someone would come to that. Now, the, the fact is
that the answer was yes to an increase in fundings for
urban public transport. Should have been a qualified
yes, I concede that, but the answer, quite clear. This
was the answer the Hawke Government has provided
million per annum for urban public transport. Over the
next few years the Hawke Government expects to increase
the attention given to urban public transport needs.
We've delivered on that already because in the, in the
policy statement you know that what I've done is to
commit $ 85 million extra funding for urban public
transport over the next three years, so we've delivered
on that. If you think that there's going to be any move
to the Liberals as a result of that little story, it
means that you think that people are going to say, yes it
is the case that Labor answered yes to 65 of the ACF
questions and the Libs answered yes to only 32 and that
this little story is going to change those fundmental
statistical facts and that somehow people interested in
the environment are going to vote, either directly or
indirectly, for the conservative parties who opposed the
saving of the Franklin, opposed our decision to stop
mining in Kakadu, opposed our decision to stop logging in
the Daintree and opposed our decision to save the tall
forests of Tasmania, I mean, it's a joke.
JOURNALIST: So the impressions of fudging answers
doesn't have any negative impact?
PM: Well, I've said it would have been more appropriate
to have a qualified, yes, I think that would have been
more appropriate. But the fact is that we have delivered
in terms of the indication of doing more for urban public
transport. $ 85 million and, as I say, fully funded.
JOURNALIST: Prime Minister, just come back to the
interest rates for a moment... are you saying that the
statement by the Commonwealth Bank this morning doesn't
throw a spanner in the works even psychologically of the
expectation that interest rates are going to come down?
PM: I'm saying it doesn't because, in fact, that was
made in the context of a decision by the Commonwealth
Bank in regard to fixed rate mortgages five year fixed
rate mortgage and that is financed by a particular
instrument and the yield on that instrument has gone up.
There is nothing being changed by anything in the past 24
hours which affects the fundamentals of why interest
rates should go down. That is firstly, that high
interest rates have had their effect and the economy is
slowing down and, secondly, that the cost of money to the
banks has declined. Those are the two fundamental facts
unchanged by anything that's happened in the last 24
hours and those are the two fundamental facts which
underlie the basis of the judgement by economists, the
banking industry and the Treasurer and the Prime Minister
that rates will come down.
JOURNALIST: Mr Hawke, what is the Government's forecast
for inflation
PM: I beg your pardon.
JOURNALIST: What is the Government's forecast for
inflation over the next three years?
PM: Over the next three years? Well, our inflation
forecast for the next year is public, it's six percent
and our judgement is that it will come down after that.
We haven't put out an estimate for the period after that,
but obviously I should put why I think it will go down
further. My answer is this that under the wage tax
agreement that's been negotiated with the ACTU, the
pipeline outcome as you appreciate, Steve, at the end of
this next period will be lower than the one to which
we're going. So it's a legitimate expectation for that
reason that the inflationary rate should come down and I
also think that we're going to have the situation..
that period of increasing competitiveness in our industry
but what Paul and I have been trying to make clear is
that we're going through this restructuring period and
one of the features, one of the facts of the growth in
debt has been this enormous increase in investment in our
industry. Now what we've got are the fundamentals of the
Australian economy changing. We've got more people in
employment with each passing year they're becoming
significantly better trained and educated, you've got
restructuring going on under the award system. Now it's
very difficult to overstate the impact of the sorts of
things that you and I are talking about of, of those
changes in restructuring. I means that your workforce is
going to be more efficiently employed and the training of
your workforce is going to be much easier because you're
not going to have it stultified by an award structure
based upon the concepts of 50 years ago. The award
structure is going to reflect the realities of modern
day processes. So you're going to have better
trained workforce, better structured workforce, working
with better equipment. And these things, together with,
as I say, with wages outcome, all those things together I
believe will lead to a decline, decline in the rate of
inflation. JOURNALIST: The reason I ask the question is because Mr
Paul Keating on the weekend said that the Government
would deliver real wage increases for the next three
years. Given that we don't have inflation forecasts out
that far..
PM: Funny thing that he should be saying that?
Obviously what Paul stated was based upon a set of
assumptions the same as I'm making that the
fundamentals that we've got in place, including the wage
fixing arrangements which will lead to pipeline in
that next period, plus the as I say, these
fundamentals that I'm talking about should lead to that
result. Of course, as far as the welfare of Australian
workers, wage and salary earners with dependents are
concerned, there are the two things that we talk about
standards. I mean, there are standards, present
standards, which are reflected by what happens to wages
and taxes and prices
JOURNALIST: Mr Hawke,
PM: Just let me finish those present values, but
very importantly what is emerging now in the campaign as
an increasingly important issue is their future welfare.
Because now we have the situation where Mr Peacock has at
last, made it absolutely clear what was to some extent
had not been before as to the future welfare.
Wage and salary earners in this country have just got no
choice as to what they do. Because Mr Peacock has said,
explicitly, his words, we're not in favour of award
superannuation. They're remarkable unequivocal
statement by the Leader of the Opposition who wants to
become Prime Minister we are not in favour of award
superannuation. So as Paul has indicated, now what that
simply means for an employee aged 35 years who expects to
be working for the whole of the normal working life, that
is a straight statement from Mr Peacock to that person
that he knock a quarter of a million dollars off him in
superannuation. In other words, under Labor, there's
another fifteen dollars a week going to be paid into
superannuation under what we've agreed and Mr Peacock
says no, that's out. So both in terms of present
standards and, importantly in terms of the future, choice
is stark because Mr Peacock is saying if you vote for us
we will be knocking, in respect to that, reasonable sort
of person a 35 year old, out $ 250,000 down the
drain. JOURNALIST: EPAC apparently has got consumption tax on
the agenda re-elected. Now does this reflect the
you know, opinion in non-political circles that it's
necessary and could this be, you know, part of your
thinking, if not
S PM: This is a beauty. I mean, it's a good one to finish
on with the half an hour up. I mean, I've had some long
bows, some long bows in this election, but this has got
to be vying now for the blue ribbon prize for the longest
bow in the election. That EPAC has mentioned the
consumption tax, therefore it's on the hidden agenda of
the Government. My friend, let me tell you this that
when I set up EPAC I meant what I said about EPAC. That
is that it would be a body in which the Government would
have representatives from big business, small business,
the States, local government, welfare organisations and
that there would be discussed in EPAC a whole range of
issues and that the Government would not seek to put any
inhibition upon what was discussed in that body. That's
why it has been a very useful institution over the life
of this Government. Now, it's quite appropriate if the
director of EPAC has gone on the agenda a mention of the
consumption tax well and good. That's in line with the
way EPAC is operated. But if you want to talk about
consumption tax and the likelihood of how it might come
in under either a Labor government or, we'll say this
hypothetical question, of a conservative government,
let's look at the facts. The President of my Party is
not advocating the bringing in of a consumption tax but
Mr Elliott who, if you look at his statement in May of
last year, said that of course he discussed the question
of economic policy of the Liberals with the then Shadow
Treasurer, the Shadow Treasurer, Mr Peacock, he has
been urging and urging and urging and he's not without
influence, he says so you have Mr Howard, now one
doesn't know how much influence he has with Mr Peacock
because they don't trust one another, but he's in favour
of a consumption tax. Dr Hewson's in favour of a
consumption tax, he tried to get it into the Economic
Action Plan. The Liberal Party is riddled with
consumption tax advocates. Not my side. OK, last
question.
12
JOURNALIST: Mr Hawke, could I ask one more question on
that EPAC paper?
PM: Yes.
JOURNALIST: They also raised the issue of
privatisation, could you can you tell us whether or
not you'll consider at least some sort of selling off of
Qantas and Australian Airlines?
PM: I've got nothing to add to the answer I've given.
Let me, if we're going to go through this historical
exercise, well that's alright with me, it's the last one.
The position is quite clear. What the people of
Australia are faced with is on one hand the conservatives
who have an ideological hatred of the public sector, an
ideological hatred of the public sector, and I reject
that. I have the view that there are things which must
properly in this country be in the hands of the public
sector. There will never be any flirtation under a Hawke
Labor Government with privatising things like the
Telecom, Australia Post, as there is such flirtation
under the conservatives. Because the people of
Australia, particularly the people of non-metropolitan
Australia, would pay an extraordinarily heavy price if
the conservatives were allowed to inflict their
ideological obsessions upon the people of this country.
In one area I said that it is appropriate that the
questions of funding of the public sector should be
looked at, and that is in regard to the airlines. Now I
simply have said there that the process is being
investigated by a committee of the Party. I'm in no
great hurry about the reception of their report. I'll be
interested to see what they've got to say when it comes
but JOURNALIST: ( inaudible)
PM: Well, you've got to get some idea of my priorities,
and I'm not jumping up and down. I mean, I don't get on
the phone every morning to the secretary and say when
am I going to see that report. It just means what
I've been saying this, in terms of the management of
the Australian economy, is a peripheral issue. What will
determine the future of this country is whether you've
got, first of all, an effective wages policy. Secondly,
whether you've got a government which is going to be
prepared, with ongoing terms, to fund its outlays. And
thirdly, whether you've got a government which is going
to be prepared to undertake microeconomic reform and I
recommend to you to look at what's reported in today's
Press, by the meeting of the interest concerned with the
Australian waterfront. All the talk that's been going on
from the conservatives about how they would get in and
take action to fix up the waterfront. The interests, the
users, the shippers, they had their meeting there
yesterday and they said quite clearly that the Federal
Government was to be congratulated for what they were
doing in this area, that that was the only way to go
about it and that the Opposition alternative was
hopeless. Now it's these things that are going to
determine it it's wages policy, it's the broad settings
of macroeconomic policy, a commitment to proceed with
microeconomic reform those are the are the questions
that you raise possible privatisation enterprises is
totally on the periphery of the future welfare of this
country. ends
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