TRANSCRIPT OF QUESTION AND ANSWER SESSION, NATIONAL PRESS
CLUB, 19 JULY 1990
E 0 E PROOF ONLY
JOURNALIST: One particularly topical area of differing
regulations is non-bank financial institutions. What is
your reaction to recent calls for uniform regulations and
do you think the recent troubles in Victoria are
attributable, at least in part, to inadequate regulations
there? PM: Thanks, Don. That's obviously a very, very relevant
and timely question in relation to the sorts of things
I'm talking about. Let me say this, that I think it's
neither necessary or practical or efficient for all
deposit taking institutions to be supervised centrally
and particularly by the Reserve Bank because, as you will
appreciate, there is indeed a myriad of small
institutions around the country. In fact some
institutions indeed operate exclusively at a local level,
regional level, even at the level of a firm and they are
in no sense, those sorts of small institutions, part of
the national financial system. It should be noted that
many building societies that did want to operate at a
national level have done so by making the change to
banks. However, having said that, I think it ought to be
said that, doubt if anyone in the country would argue
against the proposition that non-bank deposit taking
financial institutions must be effectively supervised and
that this should be done in a uniform basis in this
country. I believe that the Commonwealth and the States
need to work together to develop effective uniform
supervision and I say here, quite unequivocally, that the
Commonwealth will assist in that process where it's like
other areas that I've mentioned in the speech today. I
think, to be precise, that this issue should be on the
agenda for this first Premiers' Conference that I've set
and, indeed, I think there should be and I will undertake
that there will be prior discussions on this issue so
that we can come to a consideration of it at that
conference well prepared.
JOURNALIST: The Australian Manufacturing Council found
that the level of return required by an Australian
company raising funds in Australia for a no risk
investment in Australia to be at least 20 percent
compared with about 10 percent for a Japanese or German
company raising funds in their own country for investment
in Australia. In these circumstances, what's the
rationale for privatising OTC, Telecom, Aussat, Qantas,
Australian Airlines or any other Government business
enterprise? Surely, in the present economic
circumstances, privatisation of these assets would be the
sale of them abroad, rather than presenting an
opportunity for Australians to become their owners. Do
you think constitutional reform would overcome, would
remedy the impossible situation of Australian companies,
as identified by the AMC?
PM: Well, let me take the last part first, David.
Obviously I don't accept that Australian companies are in
an impossible position. That proposition is repudiated
by the evidence. If you want to look at the and I
don't want to bore you with statistics, you know I'm
capable of doing that, so I refrain from it, but I ask
you to recall, without me going to the detail the move,
that is the dramatic move that's occurred in this country
over the last seven years, the move from wages share to
profit share, that we've had investment at record levels
and so on. I can go through those, but you know them,
I've given them before. I don't want to take up the time
in repeating them. I'm simply making the proposition,
David, that it is an inaccuracy to say that Australian
companies are in an impossible position and, indeed, it's
a matter of a very considerable pride to me to be able to
look at a range of Australian companies which are in fact
in the manufacturing sector showing their compacity to
compete internationally, take on the best in the world
and beat them. Now that, however, having said that
David, I'm not saying that with any sense of complacency
because it would be absurd for any Australian Prime
Minister, or any political figure in this country, to
just sit back and say that we haven't got challenges we
have. Now, you led into that question by talking about
the issue of privatisation. Now I don't want to go into
any detail about that other than to say this, that I
don't think on either side of politics that we should
allow ourselves to be locked into assumptions and
attitudes of the past. And I say this to my own Party
and, with deference, I say it to the other side of
politics, it's absurd to be approaching, in my judgement,
the question of the ownership of public assets on the
basis of some blind ideology of the Right that public
ownership is intrinsically bad or, on the side of my
Party, to say that it is necessary to have in public
ownership today, everything that was there in the past.
I think what we've all got to do is approach this issue
in terms of saying, well, there are priorities for
Government and there will be increasing demands on
Government for services in the field of health,
education, welfare and so on. And particularly, we must
in this country remember that one of the most important
statistics is the aging of the population and with that
aging of the population there are going to be demands
upon the services of Government, which the private sector
will not provide. Nor is it proper that we expect of the
private sector that they will. So my judgement about
these things is a quite non ideological one. It is based
upon the premise that I believe that governments should
put themselves in the position to be best able to
discharge those functions which only they, the
Government, will discharge and consistent with a
protection of the public interest. Now, if you have that
framework, then it seems to me that there are some
institutions which are currently publicly owned that
would stay within public ownership because the public
interest is best protected in that way. There are others
that should not remain in that form. Now, I think if we
make the right decisions, as a community, according to
those criteria and on both sides of politics we are
prepared to adopt that approach, then we'll all be better
served and included in that will be the creation of a
better environment within which Australian companies are
going to be able to prosper.
JOURNALIST: Following up from Don Woolford's question,
the Treasurer has claimed that supervision of building
societies has been tight in all States. How can this be
reconciled against the fact that Pyramid was involved in
relatively high risk investments for some time before its
difficulties were revealed and, secondly, you talk about
working towards a unified national approach that is
obviously something that's a fair way down the track.
The problems show no sign of stopping yet. In fact,
there has been increased nervousness in New South Wales
with the Aust-Wide group. What can you do now to restore
investor confidence?
PM: Well, the first thing I can do is to just remind you
of what the Reserve Bank, which is, after all, the
Federal Government's relevant institution in this
respect, we've had the situation where the Reserve Bank
has announced its intention to assist banks in providing
liquidity to building societies that might, might be
adversely affected by the fall out from the Farrow
collapse in Victoria. So the Reserve Bank has said that
and we should, in answer to your question, emphasise that
as the first point. And going on from that to the rest
of your question, what Paul has said and properly said,
that there should not be panic, there have been different
approaches in different States and my answer, which I
gave was to the effect in which, I repeat, I believe that
while it is not appropriate for the people of this
country to expect that the Federal Government is going to
overtake the, undertake the supervision of every deposit
taking institution. I mean, it's just unrealistic in
concept. What we do need, however, is to make sure that
there is effective supervision. By definition, it must
follow that not every State has been as effective as
others in that supervision. So what I was just saying,
in answer to the question was this, that we ought to put
this on the agenda and not simply have it on the agenda
for the October Premiers' Conference, but ensure that
work is done and I will ensure that that is undertaken,
so that we can, as Premiers and as a Commonwealth,
discuss what are the most effective sorts of forms of
supervision to have within the States and to try and get
that uniformly applied around the country. Now that's
the challenge that's before us I think it's one that's
easily capable of being met.
JOURNALIST: Prime Minister, do you have any sympathy
with a suggestion from the EPAC paper today from Dr Ken
Wiltshire, that what should be done fairly early in the
piece, perhaps at the first Premiers' Conference, special
Premiers' Conference, is that an inventory be drawn up of
areas in which there is overlapping and then a Senate
Committee be charged with the job of overseeing the
dismantling of this duplication and the assurance that
efficiency is on-going?
PM: No, I don't think there's a need for the Senate
Committee, I'm not here to denigrate the Senate and all
it's good works, but I think that the process that I have
suggested is the appropriate one. That is, I've
indicated in very specific terms, I mean, whatever one
says about the Hawke speech today it can't be accused of
being unspecific, I've said now here are the areas, here
are the processes that I see as appropriate. I've
written, as I say, to the Premiers today, asked them to
put on the table what they want to talk about. Now noone
knows better than the Commonwealth and the States
where the problems of duplication and overlap occur. Now
we will, before we meet at the end of October, as a
result of the processes that I've established and the
request I've made to the States to nominate a person to
work with Mike Codd in getting the papers prepared for
the conference. By the time we get to that conference a
great deal of work will have been done, Paul, in
identifying very precisely, the areas and the nature, the
dimension of the problems and then our responsibility, as
leaders, then will be to say alright, here we can
identify the areas of problem, now what are the things we
want to work on first? What are the priorities? And may
I say, in that respect, that I want to emphasise again
what I said in the speech, I don't see and will reject
any proposition about saying we're just going to have one
long inquiry and wait for a report at the end of that
process. What we should do is to say we are going to
work on it case by case, deal with it issue by issue and
more than, by definition, more than one issue being dealt
with at a time and where you're in a position to make
decisions, make them and not wait for the end of some
long unspecified period. Now, if the Senate wants to,
you know, address this issue I'm not here to say, you
know, don't look at it. But I think the reality is that
it is the Commonwealth and the States working
cooperatively together, as I have proposed, that is the
proper process of dealing with this problem.
JOURNALIST: Prime Minister, you have promised that no
oil exploration will threaten the Great Barrier Reef.
Greenpeace today have asked you to clarify this pledge.
How can you ensure that any exploration near the Great
Barrier Reef Marine Park, particularly in the event of an
accident such as an oil spill, will not threaten the
reef? Would you need to look at legislation or special
regulation in this area?
PM: Let me make these points. As you will have seen
from the press today I've already indicated that I will
not countenance, simply will not countenance any drilling
which would in any way endanger sensitive marine
environments. That's not Just the Great Barrier Reef
area but also there's the Lord Howe Island, there's the
Shark Bay area in Western Australia. Now let me, before
I go on from that, let it be understood that of course no
drilling is proposed and wouldn't ever be contemplated
no-one would be silly enough to put it up in our presence
that there would be any drilling within the Great
Barrier Reef Marine Park. But as to exploration in the
Coral Sea or other places near environmentally sensitive
areas, it may simply be that exploration is too risky.
So what I'm saying is that any proposal that may be made
in the future, any proposal to be made in the future,
would be subjected to the strictest scientific and
environmental analysis which assess relevant
considerations such as, without being exhaustive, ocean
currents, tidal movements. Let me say this, that at
least, at least a year before any permanent area in the
Coral Sea was considered, I say even considered for
release, we would ask the Great Barrier Reef Marine Park
Authority for a full assessment of the proposed
declaration before any such exploration could even be
further contemplated. Now I hope in spelling that out
that I've made it crystal clear to everyone in this
community, whether they be in the exploration industry or
whether they be ordinary Australians concerned with the
environment, that this Government will absolutely ensure,
and rigorously have the processes to ensure that there is
no way that these sensitive World Heritage areas can be
endangered. JOURNALIST: Could you just expand on your comment here
in the speech that the imperative of national economic
management need not preclude worthwhile change in
Commonwealth-State financial arrangements?
PM: I'll try and put the setting for this. I think it
is true that the States themselves accept and understand
that in this modern day and age that there must be a
central responsibility for macro-economic management.
You can't in this interconnected world have a situation
where Australia hasn't got within its national government
a capacity for the control of the macro economy. They
accept that, and as you know, when they were given the
opportunity for getting back into the income tax field,
which was offered by my predecessor, they didn't take
that up. Now having said that, the real challenge is to
try, and it's a political and economic challenge, is to
try and this imbalance that we have, this vertically
integrated imbalance we have in the area of fiscal
responsibility. Just a few statistics of interest in
this regard I think. If you look at the total Government
revenue raised in this country, the Commonwealth raises
77% of it and spends 50% of total government expenditure.
The States raise 20% of all government revenue and they
spend 40% of all government expenditures. There's the
imbalance and the other statistic, which is interesting,
is that 51% of all States' government budget revenue
comes from Commonwealth grants. That briefly is the
problem. You have this imbalance between revenue raising
responsibilities and obligations and the expenditure
pattern. What therefore we've got to try and do, it
seems to me, is to make sure that we don't do anything
that is going to in any way effectively derogate from the
capacity of the national government to conduct microeconomic
policy, but to do what we can to give the States
some opportunity of having a greater sense of involvement
in their revenue raising. There may be a limit to how
far you can go there but that's why in fact I've
announced today that we'll get out of BADT, the Bank
Accounts Deposit Tax that's currently bringing in some
$ 400 million. We will get out of that, obviously with
the adjustment of the FAGS, the Financial Assistance
Grants, because we're not here FAGS and BADTs, and
FIDs. But the States are not expecting a bonus out of
this. But what that will mean now, that by us getting
out they will be able to operate that tax and put it at a
level which they believe is consistent with their needs
and with their other economic considerations. So that's
the challenge we've got and I think that what I've said
is indicative of the fact that we are serious about this
approach. May I say Paul, when I raised these matters,
really adumbrated them at the Premiers' Conference, there
was a very very positive approach from the States. In
other words they accept the sincerity of what we're
about, that is to get a more effective co-operative
basis. But they also, that's within the framework where
I'm sure that they accept the fundamental point I make
about the need, in terms of the interests of every
citizen in this country, to have the capacity for macroeconomic
management firmly in the hands of the national
government. JOURNALIST: Prime Minister, is there any basis, I should
say is one of the reasons now for the push for reform in
both Federal-State relations and the Constitution
anything to do with the fact that some of the greatest
impediments to change I'm talking about Joh Bjekle-
Petersen and Premier Gray of Tasmania, are now left the
political scene. Have we in place now a set of Premiers
that you will find personally conducive to change,
including Nick Greiner?
PM: I guess one should say they politically de mortis
nihil nisi bonum, which means for those that are
politically buggered, don't say anything ill. So Joh and
Robin have departed the scene and I speak no ill of them.
I just speak positively and say that I believe there has
not been a more propitious time, looking at the States,
and may I say looking at the Federal Government as well,
there hasn't been a more propitious conjunction of
political circumstances that we have today. I think the
quality of leadership at the States is high. I think
there's a very serious commitment to the processes of
change and there certainly is at our level. Let me say
in fairness, so that there'll be no implication that I'm
simply reflecting on the fact that there's an
overwhelming majority of Labor Premiers, let me say in
fairness to Premier Greiner that both at the Premiers'
Conference and in the observations that he's made and the
attitude he's expressed, I believe that in Greiner we
have a very responsive Premier. So it hasn't happened
because of the changes to which you've referred, but
having said that I don't think there's ever been a more
congenial political environment for change of the sort
that I'm trying to initiate.
JOURNALIST: Victoria's become something of a disaster
area for the Labor Party both at a State level and
federally. What do you think John Cain can and should do
to try to revive State Labor fortunes there and what will
be your strategy to try to get a better result federally
in Victoria next time?
PM: I can't embrace the exact language of disaster area
Michelle. Let me say this, that it would be absurd for
me to try and deny the fact that Labor's fortunes in
Victoria are not low. They are. But what I have to
suggest to John Cain and his government, and obviously it
will be something that I won't address via the Press Club
but more directly in private conversation with him.
JOURNALIST: ( inaudible)
PM: Likewise.
JOURNALIST: I want to just clarify something in your
speech in relation to your willingness to make the issue
of untied grants a matter for review. Now in parts of
your speech you acknowledge the need, a continuing need
for uniformity, or the drive for uniformity in the
delivery of services. On the other hand you recognise
the frustration of the States about the fact that some
of their grants from the Commonwealth is now in the
form of tied grants.
PM: It's just over 40 per cent Milton, now.
JOURNALIST: Right. And the reason of course for those
tied grants has largely been the drive by the
Commonwealth Government to achieve uniformity in the
8
delivery of services. But at the same time it's the
strings attached to these grants which of course has led
to a lot of the overlap and duplication. How do you
resolve that sort of dilemma?
PM: Just to give you some idea of how this picture has
changed over the years, as I said interjection to
Milton, it's just over 40% of our payments to the States
now are tied grants. And that's quite a massive
increase. If you go back to 1948-49 it was then only
So that's a very, very significant increase. Now
obviously we want to have a situation that if in a
particular area we believe that there are certain
standards and approaches that ought to be kept, but that
the delivery of a program is better done by the States,
then the challenge that we'll have in these discussions
is how, through discussion, we can get an acceptance of
certain standards and concepts, without having for them
the stringencies that are associated with funds being
tied. So that will be one area. There may simply be
other areas that will come out of discussion Milton where
we would simply come to the conclusion well it's best
that we're out of it. You deal with that as you will.
But as I say, in other areas where we think we have a
responsibility for having some sort of national standard
or approach, it will simply be a question of saying well,
can we get an acceptance of these sorts of standards, but
without the stringencies of a tied grant? Now I don't
think that that is beyond intelligent and committed
political leaders to achieve. And it's also, the other
side of it, there may well be some areas Milton, in which
the States may say, I don't know, that their view is that
it's better that they be out and it will be over to us
and then that sort or problem doesn't arise.
JOURNALIST: There seems to have been a fairly
conspicuous silence from Government members this week in
response to the increasingly loud calls from senior
members of the Government controlled airlines. I wonder
if you could tell us what your position's been on the
calls from Australian Airlines in particular, from Mr
Harris, involving a 50 sale of it's island resorts as
well as partial buy out or equity swaps involving foreign
airlines? PM: Well I haven't been exactly silent on this issue
over the years, but I'll really just do two things. I'll
refer to the answer I gave earlier here Palita. I think
both parties have got to be prepared to look at these
issues without the blinkers of the past. I think that
certainly applies to my side and the other side of
politics on this issue. I have said before I think, that
running airlines, having a total government involvement
in running airlines, is not my sense, is not my sense of
proper priorities. But I have gone out of my way to make
clear that I want to conduct this discussion within the
Party. There are signs that that discussion is going
ahead in a fairly constructive way at the moment and not
9
just in terms of the committee that has been set up to
consider some of these issues at the federal party level.
And I think there are groups right throughout the Party
who are discussing this issue quite constructively and
rationally and I welcome that. But I don't think I would
help those processes by going any further than that.
JOURNALIST: Another national issue of micro economic
reform is that of telecommunications. It seems that the
Government is headed towards some form of megacom
arrangement in that area combining Telecom and OTC as the
major player, with competition from Aussat and perhaps
some private capital from overseas. Many critics have
suggested this is a second best solution and that
competition would be enhanced if OTC became the basis of
the second player. Do you agree with some of this
criticism and do you believe the Government could be
ambitious in it's reform of telecommunications?
PM: Let me make it clear what the ambitions of the
Government are in this area. The ambitions go to what
you deliver. And I'll give you this assurance as to what
will come out of the processes of consideration by the
Government. I can guarantee that out of the processes
that we are going through there will be across the board
effective competition to Telecom, involving both
appropriate interconnection arrangements into Telecom's
network which is a critical issue for anyone who knows
anything about this. And there will be also a
pro-competitive role for a regulatory agency. And the
third guarantee I give is that in regard to rural and
household users, they will not be disadvantaged. So
there are the three ambitions. There are the three
commitments. Now there is obviously discussion around
the issue of possible co-locations of the three existing
carriers, vis a vis any new private competitive forces
that may come in. Now those issues will be discussed and
decided within the Cabinet and the Party in the very near
future. But I repeat Steve, the three things that are
important, which I eluded to at the beginning, will be
delivered. ends