INTERVIEW WITH JOHN STANLEY, RADIO 2UE, 22 AUGUST 1990
E OE PROOF ONLY
STANLEY: Good afternoon Prime Minister.
PM: Good afternoon.
STANLEY: Well the stage performers I guess like to check
their reviews after opening night and I know that
politicians, whatever they think of the media, like to do
the same on the morning after the Budget. Now your
reviews today you've got ' Keating slashes social
welfare', ' Keating savages battlers', you've also got
another one, ' slugger Keating, old, sick and jobless
hit'. Is that a fair representation of the Budget?
PM: Yes, but if you look at the same one you read from
about Keating savages battlers, you look over to the left
hand column and you get their economic correspondent,
Ross Gittins', ' welcome to Paul's pop gun'. Now that one
page really characterises the reaction I think. What you
have as on the one hand people saying that we've been
tough on the other hand, people saying we've not tough
enough. So that typifies the reviews, in a funny sort of
way it also points to the internal contradictions of Dr
Hewson's reaction. He put out a statement last night
that even Peacock would have been ashamed of at his best.
He started off saying we've brought in further cuts in
living standards, hammering us for that and then goes on
to say that we haven't hit hard enough. So it just goes
to show I think that we've probably got it right. I mean
we've had to do some hard things, but we haven't been
ruthless. STANLEY: Yes, but a lot of people are saying you should
have been tougher particularly at the beginning of a
three year term, when you are this far away from an
election? PM: Yes, that's fair enough. But there is no merit
either economic or political in being hairy chested for
the sake of saying everyone look at my great hairy chest.
I mean what budgets and economic policy are about are
bringing down decisions which are appropriate to the
economic and social needs of the country. And what we
have committed ourselves to last year and this year
is not to plunging this economy into recession. We've
tried to lower the level of activity and at the same
time, however, keep a level of growth there. Now if
you're going to do that you can't just go massively
surgically operating on the economy.
STANLEY: Well you're a punter, a lot of this budget is
predicated on a punt on where the oil price is going to
be during this year?
PM: That's part of it and as you know we've used an
assumption of $ 23 oil prices are in US dollars. Now
just let me make a couple of points on that, I alluded to
it in the House yesterday. I'll just go to it briefly.
The price before the crisis arose was just about $ 20 a
barrel. It shot up to thirty at one point and is now
back to the mid twenties. Now that of itself shows
volatility. The statistics are these. The loss of Iraqi
and Kuwait crude equals about four million barrels per
day. Now this has happened at a time when the stocks in
the world are higher virtually than they've ever been
before. Now those stocks could easily be run down for
quite a period of time at about one million barrels per
day. That would leave about three million barrels a day
to be made up by OPEC and non OPEC, and that's easily
capable of being done and the signs are that they are
doing it. So you could have oil prices peaking in the
December quarter and then running down in the second half
of this financial year. So I think that $ 23 is a not
unrealistic figure.
STANLEY: But if it is wrong, it could push up inflation.
The unions are saying that they would want to be
compensated for that. Should they be compensated through
wage increases or through tax cuts, or neither?
PM: Well that's a speculation as to what might happen.
I think we've shown in the past that there is a
flexibility within the Accord arrangements, both on the
part of the Government and of the trade unions, and I
think the unions have been tremendously responsible in
the way they've restrained wage claims at times of very
high levels of economic activity. We're not going to
abuse the restraint which they have exercised. I'm
confident that if we get a difficult situation arising
that we'll be able to talk through with the unions an
outcome which is in the best interests of the country.
STANLEY: Yes and would it be in wages or in terms of
some tax cuts?
PM: Well we've shown in the past there's a flexibility
in regard to sort of delaying implementation of wage
increases or in looking at tax cuts. We've shown a
flexibility in the past, I believe we'll be able to do
that if it's necessary in the future. Of course I think
its all our hope in that we're going to see an early end
to the crisis.
STANLEY: I want to get onto that in a moment. But on
the question of the budget, can you understand there'd be
a lot of fear and trepidation among pensioners today,
maybe misplaced for many of them, but they
PM: Yes I can, I can. For instance, it's helpful in
trying to analyse a situation like this to look at
experience. In some sense you can go back to the assets
test. Remember when we brought that in, as I've said,
everyone was saying it's the end of civilisation as we
know it. Well of course that wasn't so. It was a
correct structural decision. In this case the two major
decisions we've taken affecting pensioners are the
correct decisions and will not adversely affect
pensioners. If you take firstly, in regard to
pharmaceuticals, by definition no pensioner will be worse
of f. But the fact that price signals will be introduced
should mean that there'll be a very significant cutting
in the unnecessary accumulation of drugs. The rate of
cost increase for the community was unsustainable. The
most important statistic in this respect in the budget
was the one that Paul referred to. It took almost
years up until 1985 for the cost of the scheme to get to
half a billion dollars. It only took another four years
from ' 85-' 89 for the next half a billion. It was
exploding and so we had to do this. And it's interesting
that independent commentators generally have recognised
this fact. But because we're compensating with that
pension increase no pensioner will be worse off. Now in
regard to the deeming, we have a situation there where
unfortunately what was happening in the community was
that so many of our elderly citizens were simply
subsidising the banking system, putting tens and tens of
millions of dollars in low deposit rates with the banks
and the banks, they' re putting three to four per cent
and the banks lending it out at 18. This was against
their own interests. So the important thing is that no
pensioners will lose their benefit cards which are of
importance to them, and why they were doing this sort of
thing. They won't lose that, existing pensioners. It's
a change that had to be made.
STANLEY: Now you've had structural reform in the social
welfare system over a number of years. A lot of people
are saying today, and the expectation was created by your
own government, that micro reform would be the primary
goal during this term and yet we've seen very little of
that in this budget.
PM: Very little in the budget. That is true. But there
are two things to be said. In the areas where we don't
need any change in our Party policy the work is going on.
Substantial work is going on particuarly with Senator Bob
Collins who I think is very quickly earning the respect
of the whole community for the assiduous way in which
he's accelerating reforms in his area and the waterfront
and so on. That work is continuing. But the second
point was that in regard to the telecommunications area
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and anything we might do further in regard to the
airlines, we do need to get a change of Party policy.
I've been quite open about this. And therefore we'll go
to our special Party conference at the end of September.
I believe we'll get a sensible outcome from that and that
will enable us then to quickly move in that area. So the
promise I've made about very significant micro-economic
reform in this fourth term will be delivered.
STANLEY: But the economic benefits won't come through
until the next financial year?
PM: No, it is the case quite possibly that if we get the
decisions I hope to get in September, that we can see
some impact in this financial year. But it would not
have been appropriate or statistically acceptable to
conjecture those figures into these budget figurings.
STANLEY: No, but it is possible that if you were to get
some money from sales of some of those assets it would be
in this financial year?
PM: Yes.
STANLEY: And it could affect this budget with some
adj ustment?
PM: That could happen, yes.
STANLEY: Alright, just on the question of foreign debt.
It's at record levels and then we have Paul Keating back
in 1988 saying we're going to bring home the bacon with
this budget. We've got foreign debt at record levels,
interest rates are still at very high levels
historically. I mean when are Australians going to start
reaping the rewards of all the rhetoric that we've been
hearing about bringing home the bacon?
PM: In a sense we already are. If you look at the
question of debt, and you've got to understand that as
far as the Commonwealth is concerned as a result of the
financial fiscal stringency which we've imposed, we've
changed the situation from one where the Commonwealth,
the nation of Australia in its federal capacity was a
we were a net international creditor. We've done that.
We've been able to significantly pay off large amounts of
foreign denominated debt. In this budget as a result of
what we've done we have the situation where the total
public sector has a zero borrowing requirement. That is
the public, that government is making no demands upon our
savings. Now that's, you know, an absolute essential
condition for tackling the problems that you're talking
about. STANLEY: Alright, now I can't let you go without talking
about the Middle East
PM: Of course.
STANLEY: because that's the principle concern of
everybody. Is there any more news at the moment on
Australian citizens in the Middle East, any more news you
can give to those people who may have relatives or
friends who they haven't been able to keep track of.
PM: I wish that I were able to say to those people, the
relatives and the loved ones of Australian citizens
detained in Kuwait and Iraq that I had good news. I
haven't. I have nothing to add to really what I said in
the Parliament yesterday and that is that we have this
horrific situation where Suddam Hussein, the leader of
Iraq, is pursuing a course of behaviour which is horrific
and unacceptable by international standards of behaviour
and by the codes which should determine the relations
between nations. There is evidence that foreigners are
being dispersed to strategic targets. We've got, at this
point, no evidence of any number of Australians being in
that situation but one would honestly have to say that
that is a possibility and I'd be misleading your
listeners or the people concerned if I tried to hide that
fact. It's our very very strong hope that the increasing
repulsion and repugnance that has been exhibited around
the world will reflect itself in even more determination
on the part of nations to make it clear to Suddam Hussein
that this is not acceptable and that he will understand
that the best interests of his own people can only be
served by withdrawal.
STANLEY: I know hypothetical questions are not really
the types of questions you should ask in these situations
particularly, but a lot of people have been looking at Mr
Bush's situation, a lot of commentators suggesting that
Mr Bush if he were to engage in a strike against Iraq
would regard the hostages as expendable. If he were to
seek your counsel about military action against Iraq and
ask you for your view, what would you say?
PM: A terribly hard question. Fair enough to put it of
course. You've put an hypothesis, I mean I normally
don't answer hypothetical questions, but let me say to
you in that it's an incomplete hypothesis. I mean I
would need to know the total intelligence situation. I
mean if I were being asked and let me interrupt myself
by saying that we do get excellent intelligence, our own
and our allies share much of theirs with us. The point
I'm making is that if I were being asked to give advice
on that most fundamental of questions then I would need
to be in possession of every single piece of information
that was relevant to making a decision.
STANLEY: Do you expect to be consulted?
PM: I would hope that if the United States is
contemplating any significant escalation of action that
we would be. I would hope that that would be the case.
You've got to understand that really as far as the United
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States are concerned there are two aspects of what they
are doing. Firstly they have sent forces to Saudi Arabia
and now to the United Arab Emirates to answer requests
that have been specifically sent to them for forces.
Those forces were essentially sent in a protective
capacity because all the evidence looked as though Saddam
Hussein was going to make a strike against Saudi Arabia
from Kuwait. It looks as though the very prompt action
of the United States in answering those requests has
limited the likelihood of the Iraqis making such a
strike. Now that's one aspect of what the Americans are
doing. The other of course is that they have sent their
naval forces in to attempt to give effect to the
sanctions of the United Nations. It is in association
with the United States and other countries that our naval
forces have gone in that exercise. It would be a matter
really of in what capacity and in what respect the United
States was contemplating any further action, but I've
made it quite clear, and I'm sure that this is what the
SAustralian people would want, that if in fact any upping
of the Australian involvement was to be sought, then I
would obviously consult as widely as I could, not only
within my own Party but I would consult with the Leader
of the Opposition and the matter would go to Cabinet.
STANLEY: Alright Prime Minister, I know you've got a
very busy day. Thank you very much for joining us this
afternoon. PM: It's been my pleasure. Thank you very much.
ends