PRIME MINISTER
TRANSCRIPT OF INTERVIEW WITH KEITH CONLON, ABC RADIO
ADELAIDE 20 MARCH 1990
E OE PROOF ONLY
CONLON: Prime Minister, Bob Hawke, good morning.
PM: Good morning Keith.
CONLON: Welcome to
PM: Thank you very much indeed.
CONLON: It's been a campaign that many people are
complaining about in terms of getting off the issues and
now we've got another one. But with the promise that we
will get back to some of the fundmentals that I think the
electorate wants to hear about, have you introduced
racism as Mr Peacock says?
PM: On the contrary. I've gone out of my way to say
that I have not and would never accuse Andrew Peacock of
racism because it's not a warranted charge. What I have
said of Mr Peacock though is that he's engaged in
reckless adventurism.
CONLON: But don't we get back to semantics again? What
you mean is he's really gone into an emotional and
PM: I don't believe that he is racist. But what I do
believe is that you can't make sense of what he's done in
this issue at all. This matter of the Multi-Function
Polis has been on the public agenda for the best part of
three years. He's had the opportunity to be, his
own federal president, Mr Elliott, has made it quite
clear that he is enthralled by the idea, he's vigorously
Urged it, his NSW counterpart has also done it. One week
before Mr Peacock made this decision the relevant
minister, shadow minister, Mr Howard, said that it should
be looked at on its merit and not be sunk in a sea of
hostility. CONLON: Would you accept
PM: If I could just go to this and in the week before
this is what the Opposition officially said in response
in the Sydney Morning Herald to a request as to what
their position was, this is what they said a week before.
' The proposal is unique for Australia and deserves
extensive consideration.' That was the official position
of the Opposition. Then just a few days beforehand they
go off on this proposition.
CONLON: Would you accept Prime Minister that perhaps it
has been ill-sold at the least because what people have
in their minds is not what the MFP proposes, even at this
stage.
PM: Not ill-sold, not ill-sold at least. Look at what
Mr Will Bailey, I mean Mr Will Bailey is no stooge of the
Labor Party.
CONLON: No, but Will Bailey is a person who's going to
read the reports. I'm talking about the electorate at
large.
PM: But what he is saying is right, that this is not a
proposal in regard to which a decision has been made.
What you've got is a set of principles, one of which
principle specifically, Keith, specifically spelt out
there shall be no concept of an enclave. This body of
highly responsible people, top leaders in business and
from Government, have been working on a proposal to do
what? To try and have some arrangement whereby we will
have brought to Australia the very best of technology
from Japan, from Europe, the United States, so that
Australia can meet the challenge of the major issues that
you talk about. What are the major issues? The major
issues is Australia going to be able to be competitive
in the future? Exports, substitute imports what's the
key to doing that? The key to doing that is getting the
best technology married to a better trained Australian
workforce. And you've had the best brains in industry
and the most considerable figures, including the
president of the Liberal Party, John Elliott, working on
this issue.
CONLON: Prime Minister, would you accept that Professor
Garnaut has warned about perhaps a different kind of
enclave from the other people. He suggested that there
is danger with the MFP of it turning into an enclave of
internationalism of excellence amid a sea of mediocricy.
PM: No, but you know, what Professor Garnaut said was in
a-statement which he produced, a statement which was in
outrage against what Mr Peacock had said. And he was
pointing out that in regard to what Mr Peacock had done
was not only dangerous in regard to the proposal for a
Multi-Function Polis, which Professor Garnaut properly
said has to be decided on its merits. No decision has
been made about it. This is why the work is being done.
But Professor Garnaut's point went much further and he
was outraged by what the Leader of the Opposition had
done. He was saying that the approach of the Leader of
the Opposition was very dangerous in terms of the
relations of Australia with Japan.
CONLON: Do you accept in the meantime that regardless of
why it was raised that this issue might be the one that
sees the election won and lost on talkback radio?
PM: I don't believe so. You've got to have a very very
poor judgement of your fellow Australians if you'd come
to the proposal that this could win the election for Mr
Peacock. It is undoubtedly true I've acknowledged this
over the years that in Australia there are some people
who are racist in general and some who are anti-Japanese
in particular. But I would've thought that people who
had that sort of thinking, I wouldn't have had their
support anyway. But I will not, in this election or any
other occasion, compromise the commitment I have to
Australia's future. And if there's one thing that is
absolutely critical Keith to Australia's future, it is
that we be enmeshed with our region. Japan is part of
that. Japan is our largest trading partner. If we in
Australia are going to be able to move away from total
reliance on what we grow and what we dig up out of the
ground to develop our competitive manufacturing
industries, we have to be meshed into this dynamic
region. We've got to get the best technology from there
and other parts so that we can compete. And anything
which directly or indirectly involves a derogation from
that position is the worst thing that we can do for our
children and their children.
CONLON: Let's come to economic management. What do you
say to the people who say it was actually missing from
your policy speech?
PM: I say they don't know what they're talking about,
simply don't know what they're talking about. In a
campaign you have your policy speech and you have your
whole range of other statements. Now in February, the
22nd February, I made a major speech on micro-economic
reform and our program for the future in which I set out
the ten areas of reform in the future period. On the
question of the economic future, it is Hawke and the
Government which has been available to and has answered
all the questions that have been put.
CONLON: Given the concern about micro-economic reform,
about an export culture being developed, about changing
our ways, why wasn't there more of that in your speech?
PM: There was. I mean you take for instance what
could be more critically important to the future economic
structure of Australia than the creation of 50 cooperative
centres of excellence, scientific research
excellence. I mean nothing could be more critical. Here
we are, I'm going to establish and have to be spending
$ 100 million a year within five years on the creation
around Australia of 50 co-operative centres bringing
together the best of CSIRO, our universities and private
industries to get to the leading edge of research, as I
said, to transform excellence in ideas into productive
output. Nothing could be more central than that.
CONLON: No-one would deny that. But it's not the only
central issue. People would say when are you going to
tackle the waterfront, when are you going to get down to
the real micro-economic reform?
PM: The answer to that would be, given in this last week
by the industry itself. I mean have you read what the
industry itself has said in this last week? The industry
has praised the Labor Government, said for the first time
a government has tackled these issues, tackled it
effectively and that the Labor way of tackling it has
proved effective and is to be preferred to the
alternative, the Opposition. That's come from the people
in the industry itself. And look at the facts. As a
result of what we've done, already, by 1992 manning
levels in the Australian shipping industry will be at the
OECD average. All you ever had before was talk and
bluster, no action from the conservatives. We've done
it. CONLON: What about train drivers though.
PM: Now let's go to the waterfront. A plan which is
already producing significant increases in productivity
which will remove 3000 of the elderly people from the
wharves, bring in 1000 younger people, substitute the
system of pool employment which you've got now, which is
not conducive to productivity improvement, and substitute
particular employer/ employee relationships. Now the
people in the industry and the users in the industry have
come out in this last week and praised us for doing that,
said nothing's been done before and that what the
Opposition is talking about would be counterproductive.
You can't have much better than that.
CONLON: While we're talking about productivity, the
Accord is about steady change. Is that a reasonable
description? PM: I think steady change is a fair way of putting it,
but steady and effective change. It's very interesting
that just within the last 24 hours or so the figures have
come out from research the National University which
suggest on their calculations that as a result of the
Accord real wages are some five percent lower than they
would otherwise have been and in regard to employment
that employment is somewhere between 300 and 700,000
higher than it would've been in the absence of the
Accord. CONLON: So we've traded off.
PM: Of course we've done That's what the essence of
the Accord has been, that the trade union movement has
been prepared to substitute higher money wage increases
for lesser money wage increases and improvements in the
social wage. They've taken comfort from the fact, for
instance, that the Government has poured an enormous
amount of money into educational opportunities so that
now instead of having one in three of our kids staying on
in school we have nearly two in three of our kids staying
on. Now for a working man, nothing can be more important
that the Government act in a way which increases the
likelihood that his boy or girl is going to be able to
stay on in the education system.
CONLON: Prime Minister, on the Accord, on apparent
industrial peace
PM: Not apparent, a 60% reduction in industrial
disputes. A 60% reduction. Now that's not apparent.
Not by anyone's judgement.
CONLON: I kept the broad figures. Can I put to you a
couple of questions, particularly for our state-wide
listeners who are concerned about a couple of disputes
that go on. GTS Freight in our Riverland is being
affected by TWU pickets that are in defiance of a federal
court order they're looking for higher wages. There's
an abattoirs dispute which some people say will start
affecting metropolitan meat supplies some time shortly.
There are strikes, lightning strikes happening with the
Meat Industry Employees Union in support of a 38 hour
week. Now are they signs that the Accord really is a
bandaid affair?
PM: Of course it's not. I mean, what do you say to the
proposition, look at the seven years, that under the
Accord you've had a 60% reduction
CONLON: But what about these issues for the state-wide
listeners.
9PM: Wait a minute
CONLON: They don't want to know about the past, they
want to know about now.
PM: This is the present. This is taking the whole of
the seven years. It's not the past. It's taking the
whole of my seven years under an Accord system. Now if
you want to wipe away Keith and say oh well a
reduction, we'll forget that, that's got nothing to do
with it.
CONLON: No
PM: Ok. Well then let me go to the next point.
CONLON: What about these.
PM: Well I'll tell you about these. I'll tell you about
these. If you want a society which is going to be free
of strikes then you move to a left wing dictatorship or a
right wing dictatorship. If you want a society which is
not going to have strikes, that's what you've got to
have. A communist dictatorship which fortunately are
disappearing now, and right wing dictatorships, they
haven't entirely disappeared but let's hope they do. But
in a free society there are going to be strikes. The
question is are we going to have an Australia in which
you have a system which minimises the possibility of
strikes, not eliminates them, minimises them, or
encourages them. And what Australia is faced with now,
you point to these two disputes. I'm telling you, I will
not produce an Australia where there are no strikes.
CONLON: Ok, but what about producing an Australia where
people aren't trying for less hours a week at a time when
you're talking more productivity.
PM: I'm talking more productivity and the answers are
being produced. Have you noticed how the Opposition has
dropped off what was a lie, where they were saying
productivity was stagnant, it hadn't increased. Of
course the figures that are out now from within Australia
and within the OECD show that the productivity
improvements in Australia under this period have been
very very considerable, of the order of three percent per
annum. Now of course you're going to have much greater
co-operation in a situation where the attitude of the
Commonwealth Government is this. That is that there is a
role for Government and the Arbitration Commission to
intervene. Against the words of Mr Peacock last year,
which is still his philosophy, he said that Government
should withdraw from disputes, there's no place, what
Australia needs is the Government out of disputes and out
of wage fixing as such. That is why Mr Peacock would've
let the pilots get their 30%. And if the pilots had got
their 30% so everyone else would've gone for it. In
other words you can go back to what you had in the past,
a free for all rather than a fair for all situation.
CONLON: Can we look at the fourth term, the Hawke term
as you hope to see come Saturday night. The Accord is
based on really a soft landing, isn't it. It'll work for
everybody if the soft landing comes in. Isn't that what
you're saying?
PM: No, the Accord is not based on a soft landing.
CONLON: The goods are, the goodies are, the results
workers are based on a soft landing.
PM: Not based on a soft landing. What we did was
inherited in ' 83 this is what the Accord came out of
the hardest landing this economy had had for 50 years.
We had the worst recession in 50 years in ' 83, the
hardest landing ever had.
CONLON: But this is the next Accord that you
PM: It's another version of the Accord. The Accord is
adapted to changing circumstances. Now for this present
situation, what we negotiated at the beginning of this
year was a lower money wage increase than the trade union
movement could've negotiated. What Bill Kelty and the
ACTU have been doing over the last 12 months is knocking
back offers of very substantial money wage increases,
because they took the view that that would be against the
interests of the economy. We-' ve negotiated a wages
outcome of the order of seven percent. Also as part of
the agreement, instead of a money wage increase, is a
three percent improvement in the superannuation factor
over three years. Which will mean that at the end of
this three years which has been now negotiated that every
worker under an award will be having paid into his or her
fund $ 30 a week by the employer.
CONLON: That's the good news for the people in work.
But what if, as many people are now predicting a
recession comes, the trade-off is out of whack isn't it?
PM: You're simply wrong. Would you point to me the many
people who are predicting a recession. Who are the many
economists or many people who are predicting a recession?
CONLON: I'm not in a position to list them. I'm
asking a question about a recession.
PM: I'm not trying to be difficult Keith. Would you
tell me one economist who's predicting a recession, one.
CONLON: No, I can't
PM: Of course you can't.
CONLON: But I can talk in terms of business confidence.
What about the Chamber of Commerce figures today?
PM: But that's a different proposition about business.
Of course business is saying that activity is slowing
down. But I hope you'll admit to me that that is
different from your assertion that many people are
predicting a recession. You can't name me one economist
who's predicting a recession.
eONLON: No, but I can say that the Chamber of Commerce
today in the Advertiser is reported to find that 40% of
businesses which responded to their most recent survey
expect to cut staff numbers in the next year.
PM: That is not a recession.
CONLON: It's pretty tough if you're one of the blokes
out of work.
PM: Well wait a minute. Let me tell you what the
average rate of employment growth has been under my
period of Government.
CONLON: Excuse me a moment, I've just got someone
playing with my microphone. Just make a bit of noise out
there in the electorate.
PM: The average rate of employment growth under my
Government has been 3.5% per annum. And may I just
contrast that with what the average rate of employment
growth was under my predecessors. It was in other
words I've created, with my colleagues and with the
cooperation of the trade union movement and of employers,
we've created jobs five times faster than they did.
CONLON: But you're also presiding over record
bankruptcies.
9 PM: Not record bankruptcies. We've got a situation
where in that growth of jobs that I'm talking about, 1.6
million new jobs, 93% of them have been in the private
sector, 93%. Now what I'm saying is that the rate of
employment growth will slow down somewhat. The rate of
employment growth will slow down somewhat. In that sense
we will have the soft landing. And that's what's been
expected by the banking industry, it's what's been
expected by economists. There's all the difference in
the world. But in doing what the Government has to do,
we've had to slow down the rate of economic growth. The
simple statistic was in the previous year we increased
our consumption by eight percent, increased our
production by four percent, and that gap of four percent
was made up of extra imports. So we've had to slow down,
had to slow down the rate of growth so that we can deal
with that excessive level of imports.
CONLON: brakes aren't on too hard and it's too late
to take them off.
PM: I'm certainly guaranteeing that. But more
importantly in a sense in an election period I guess
people might say oh well, the Prime Minister will want to
put the best gloss on it. I understand that reaction if
people want to say that. I'm asserting it. After all,
we've been in charge of the economy for seven years and
had record growth. Growth, may I recall, our rate of
growth has been almost twice as fast as the growth in GDP
as under our predecessors, employment five times as fast.
So I have the authority to talk about relative
performance. But in a sense now, more importantly than
what I'm saying Keith, the banking sector, not only here
but overseas, you've got the position where the
assessment overseas is in our favour. You heard what's
been said this morning on AM it's part of your network.
CONLON: Indeed.
PM: And there you had a New York analyst, Lisa Cinstrom,
saying that the market would be shocked by an
Opposition victory, an Opposition victory would be more
negative for the currency. Everybody here is looking for
a Labor victory.
CONLON: Is it sort of the bad news or the bad news
because the Commonwealth Bank has just raised it's five
year fixed interest rate.
PM: What are you trying to suggest from that? What's
the general implication of that?
CONLON: Well, it
PM: What's the general implication
CONLON: That maybe the interest rates aren't coming down
as promised by Mr Keating.
PM: You are the only person in Australia, apart from Mr
Hewson, who's put that. There's not one economist, not
one person in the banking industry
CONLON: Well can you explain to people who are concerned
out there about their mortgages
PM: Certainly can.
CONLON: why it is that a fixed interest rate goes up
at the same that they expect it to come down.
PM: Ok, I'll tell you exactly why. There's a thing
called the prime asset ratio. That was the requirement
that we had upon the banks as to the proportion of their
assets they had to hold and what we call prime assets,
which specifically referred to longer term Government
bonds. We reduced that prime asset ratio. In the result
the banks sold off their longer term securities and
particularly Government five year bonds. When there was
a lot of selling of the bonds, by definition, the yield
on them went up. And that was the security by which the
banks financed their five year mortgages. So when the
cost of that particular instrument went up as a result of
selling following the reduction in the prime asset ratio,
when the cost of their financing instrument went up, they
correspondingly moved up their fixed mortgage rate, their
fixed five year mortgage rate. And in doing it said
specifically, they said it, that it had nothing to do
with what would happen to variable mortgage interest
rates. So there's your complete answer. That's what
happened. And you've had the banking industry itself
saying that mortgage rates will come down, variable
mortgage rates will come down. There's your answer. And
for you to suggest that for a very specific technical
reason why a five year fixed rate went up that that has
any meaning for variable interest rates is, I'm sorry
Keith, but just flying in the face of what the bank
itself said.
CONLON: Did they not also say that mortgage rates will
stay at these levels for months?
PM: No, they didn't. The banking industry is now
saying, the banking industry is saying that it's their
expectation that in the relatively near future mortgage
rates will come down. And why? I mean they're not
saying it because they want to help me politically or
help anyone politically, or to take a political role.
They are reflecting two simple economic facts. The first
is that there has been a reduction in the level of
activity. And with that reduction in the level of
activity, some reduction in the level of demand for
money, but it's also secondly associated with that first
point, been a reduction in the cost of money to the
banks. And they are simply saying there's an economic
fact which follows from fact one and two. The third fact
follows that there will be a reduction in mortgage rates.
CONLON: So on
PM: argument.
CONLON: So on the third fact, how much and when?
PM: As I've said, I'm not in a position to say how
much. I can say, in terms of when, I believe very soon
after the election, in a matter of weeks after the
election. What the amount of reduction will be Keith
will depend upon the decisions that's made within the
banking industry.
CONLON: Is that another way of saying it might be one
percent and then stay there for a long time?
PM: No, it's not a way of saying that at all. I believe
that there will be a reduction in the short period and
the important point is, for the reasons I've put, I think
they'll be sustainable.
CONLON: But is John Howard perhaps the person being most
honest in this campaign by saying that whoever gets in,
interest rates will remain relatively high?
PM: Well it Just depends when you sort of clock into
John Howard and hear what he's saying. I've just noticed
in the paper, I think it was yesterday, that he said
they'd come down by two percentage points in a relatively
short time.
CONLON: Would you go with that?
PM: No depends on who wins the election. Well, no,
that's not a laugh.
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CONLON: Would you go with it with a Hawke Government.
PM: With a Hawke Government I believe that is a
reasonable prognostication. What is certain is that if
there were, and I think this it quite hypothetical, if
the Opposition win it is certain that interest rates
would have to rise. Why? A very simple reason. I mean
again, these are not opinions, it is a factual analysis.
Under the Opposition there would be a wages explosion,
there is no question about that because they would say
off you go boys, use your strength, and wages would
skyrocket fact one. Fact two is that one of the
reasons why we can predict with confidence a fall in
rates is that we have got a budget surplus which we've
protected. We are now four days from an election Keith,
four days from an election and Mr Peacock still hasn't
answered the question, where's the money coming from? He
has got the best part of a $ 7 billion unfunded promise to
the electorate. Now that will blow the budget surplus,
S that is on the outlay side. On the revenue side he's
going to give back billions of dollars by abolishing the
Capital Gains Tax and shovelling billions of dollars into
the pocket of the wealthiest 1% of the community. So by
his blowout on the outlay side and by giving away
billions of dollars he is going to destroy the surplus.
If you destroy the surplus and have a wages explosion
interest rates must rise.
CONLON: Talking promises for a moment. At the beginning
of the campaign I think there was perhaps an
understanding in the electorate that this shouldn't be
about promises, it shouldn't be about hand-outs, about
fist full of dollars and all that stuff because there is
an understanding by the electorate that we are still on a
hard road. Why is it then that we get these sort of bits
and pieces coming out, even as late as yesterday, where
you are really handing out promises with dollars
attached? PM: No. The first thing I did at the beginning of this
year with my colleagues, I said to them we will not be
making a promise of one single cent in this campaign
unless beforehand we have identified additional savings.
The scoresheet was put out at the beginning of the
campaign, there was the amount of savings over three
years and identified for each year which would enable us
to fund commitments. And as I have gone through this
campaign and journalists are probably getting a bit sick
of it almost, but there they accept it, there is the
scoresheet. Up it goes, there was the savings beforehand
and there against that the promises.
CONLON: But that is the other side of the coin isn't it
Prime Minister, that last year we were told things were
as tight as a drum, they couldn't be tighter but now you
find over a billion dollars in cuts?
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PM: In three years, three year's of savings, three
year's of savings not in one year. And we have done
that, not something new, look at what we have done. We
have had four successive years, four successive years of
real cuts in outlays, something that the conservatives
never did. In the last three years because of our
responsibility in conducting the affairs of the
Commonwealth Government we have had a $ 17 billion
surplus. Never been done before and we have used that to
pay off every cent of Commonwealth Government overseas
debt. So I haven't done something new now, before this
election campaign, it is what I have been doing for over
the period of seven years. We believe there were certain
additional things that we should put to the people which
required outlays but I said to my people if we are going
to do that let's find the savings, and we have done it.
Not something new, a continuation of what we have been
doing for seven years.
CONLON: Prime Minister, finally today can we talk about
what might happen after Saturday. Do you see a real
possibility of Ted Mack and Janine Haines on the cross
benches in a very tight parliament?
PM: A much greater likelihood of Ted Mack being there
Keith. He is obviously a remarkable campaigner
CONLON: This is in North Sydney
PM: That is right Keith, against Spender
CONLON: Do you reckon he'll win?
PM: Well the indications seem to be that Mack will beat
Spender. I mean you have got the two things operating
there. You've got Mack who is a proven performer in
getting into lower house seats he got there in the NSW
parliament, and an encumbant who hasn't got a very
impressive record.
CONLON: Well what about I can hardly expect you to
give a completely unbiased opinion about Kingston but
what do you think will happen?
PM: I think that Mr Bilney will win. You have got the
position that has been put very clearly by Don Chipp, the
founder of the Democrats, who made it quite clear that he
thinks it is wrong for the Democrats to be going into the
House of Representatives. Because he said their house
really is the Senate where they have the capacity,
according to his analysis I mean after all he should
know he founded the Democrats it is within that house
that they can honestly, according to Don Chipp, discharge
their function of watching the other parties. You see
you try and get into the House of Representatives
he said you've got to pander to every group. That's, I
think, a fair analysis on his part. And on the other
side you've got Gordon Bilney who's been been an
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outstanding Member. He's been an outstanding
representative. I mean you ask
CONLON: He's got the problem that he's been very good in
Canberra but not so good in Kingston.
PM: All I can say to the electors of Kingston, that
there's no member who more vigorously pursues the
interests of his electorate and does it without fear or
favour than does Gordon Bilney.
CONLON: You mentioned Don Chipp Prime Minister, is it a
bit cheeky using Chippy to suggest that the Australian
Democrats should put their second preferences to Labor.
You didn't get his permission..
PM: Wait a minute. Let's be fair about this. The
advertisement was shown to Chipp. He did not object to
its use.
CONLON: So you asked him after you'd made it.
PM: But before it was put to air. And he raised no
objection to it being used. So let's be fair about that.
CONLON: He was a bit testy about it wasn't he?
PM: No, he didn't appear to me to be testy. I think he
knows, I mean it was very interesting the issues that he
raised, wasn't it, as to what Democrat voters should take
into account in casting their determinative second
preference. Because he knew, he knew that on each of
those issues that Labor was a country mile in front of
the conservatives.
CONLON: It's an interesting election though isn't it
Prime Minister? It's certainly
PM: All elections are interesting.
CONLON: This is perhaps the most interesting for the
apologists who will be still scratching their head maybe
days later. Because this surely is the first time that
you ' ye actually had to spend a lot of money and time
chasing second preferences.
PM: The non-major party vote will be higher in this time
than in any previous election, that's right.
CONLON: Newspoll today says 21%. Do you think it's on
target? PM: If Newspoll is right I'm happy. It will give us a
higher second, a higher two-party preferred vote than we
got in 1987. I could settle for that.
CONLON: It's a kick in the pants though isn't it, 21%
who don't want to vote for either major party.
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PM: It's a kick in the pants up with which I'll be
prepared to put to get an increase in my majority.
That's the sort of kick in the pants that I can cop.
CONLON: Prime Minister, thanks very much for your time
today. PM: Thanks very much indeed Keith, I've appreciated it
very much.
ends