TRANSCRIPT OF UNEDITED INTERVIEW WITH PAUL MURPHY, PM
PROGRAM, 8 NOVEMBER 1990
E 0 E PROOF ONLY
MURPHY: Prime Minister, just before coming to your
statement to Parliament this afternoon, yesterday you had
a win with inflation down to 6% which surprised
everybody. Today the other side of that figure, if you
like, unemployment is up to So isn't the hard
reality, the fact that the economy is in serious trouble
still, in fact quite serious trouble?
PM: The fact is that what is happening to the economy is
what was necessary, unfortunately, to deal with the preexisting
situation where the simple fact was that our
expenditure as a nation was increasing by 8% and our
production by That was untenable and any responsible
government had to slow the level of activity down
otherwise the rest of the world would've imposed a
solution on us which would have been devastating. So we
have had to have tight monetary policy last year.
Through this; year we've now on five successive occasions,
Paul, reduced interest rates and we are now seeing that
slowing down in the economy which was necessary but it's
a slowing down which is going to not lead to the
devastation of the economy but during next year we will
see economic recovery taking place, and sustainable
economic recovery. If we hadn't done what we have done
in slowing the economy down the world would've done it
for us but in a much more ruthless fashion in a way which
wouldn't have allowed us to be continuing with the
processes of reform that were typified by the statement I
made in the Parliament today.
MURPHY: You seem very confident that there will be an
upturn in the first half of next year. Why are you so
confident that that will happen? A lot of other
commentators say that we're in decline for the rest of
this decade.
PM: That is nonsense, in decline for the rest of the
decade. I mean that's so absurd on its face as to hardly
warrant any comment. The fact is that certain things
will be happening now in this period ahead that I've
talking about which will lead to improvement. In that I
mean let me refer to them. The fact is of course that
I've said there have been five successive reductions in
interest rates during this year and they will start to
impact. There's always this lagged impact in monetary
policy and what we're seeing now is the effect of the
high interest rates of 12 months and more ago 12 to 18
months ago. Secondly, we will have the impact to
activity coming from the tax cuts which will flow into
consumers pockets in January and we will have the wage
increases as well. We'll have the rebuilding of stocks
that will take place during the stock cycle. All those
things are going to be positive factors in leading to
what we believe the recovery in ' 91.
MURPHY: Do you expect the unions to stick to the deal
worked out between them and the Government or do you
think the latest CPI figure and its size will cause them
to want to renegotiate?
PM: Well I just don't know. We're meeting with them a
meeting which was scheduled at any rate tonight, the
Australian Labor Advisory Council meeting. We'll be
meeting the unions tonight. But what is important is, I
believe, that they retain their commitment to the accord
which in terms of aggregate wage outcomes, talks about a
7% national aggregate, national aggregate wage outcome.
And I believe they will retain their commitment to that.
That in terms of levels of activity and the future
prospects for this economy is what matters.
MURPHY: You gave your Ministry and your Cabinet a pep
talk at the beginning of the week, you've asked them to
get out there and sell the message, to explain how
policies are working. Some people see Mr Dawkins' speech
yesterday and some media appearances he made as being a
response to that. Others say that it could be that
there's a contemplation in Cabinet coming up of a change
of economic policies.
PM: No, there's no contemplation of any fundamental
change in economic policy. Part of the debate that's
been going on about what John Dawkins has said is as
though there is a total dichotomy between a form of
freeing up the economy by deregulation and lowering
tariffs on the one hand and on the other, some forms of
interventionist economic policy. The fact is that over a
period now of nearly 8 years in Government we have
massively reduced protection more than has ever been done
before, a 30% reduction from 13% to 10% on average
manufacturing tariffs. In that way what we've done is to
expose Australian industry more to the wins of
competition which is what is necessary if it is itself
going to be able to be competitive on world markets. But
at the same time as we've done that we have also been
interventionist for instance, when we came to office
after 7 years of conservative government the steel
industry of Australia was going to be closed down. We
said not on your Nelly. We bought in the steel industry
plan. That was interventionist and we've not only saved
the steel industry but we now have the steel industry as
being a massive contributor to our export income. We
also intervened in regard to shipbuilding and heavy
engineering because we believed that there was a place
for that within the framework of our overall commitment
to gradual reductions in protection. So our record is
one not of ideological blinkeredness in which any
particular action which we regarded as necessary couldn't
be put on the table because of some, you know, almost
sort of religious position. As Paul Keating said
yesterday we have been pragmatic about the way we go.
Now we will continue, I've already flagged it, that when
the existing plans for tariff reform, when they come to
their end in ' 92, then we will be committed to further
reform in that direction then.
MURPHY: OK. Today you've announced a timetable for
reform of te: lecommunications and aviation. Now how will
these changes benefit Australians during these admittedly
and you've admitted it very tough times?
PM: Well let's look at telecommunications. For
consumers the benefits will be that they will get it's
estimated up to a 40% reduction in STD prices on major
trunks routes. They'll get more rapid access to new
technologies, they get a choice of telephone company,
they'll get better service quality, they'll get quicker
response time for telephone repair. All in all, quicker
access to the most modern technologies and a reduction in
prices that they pay. But from the point of view of the
economy generally, as you get a more efficient
telecommunications industry that permeates in its
benefits righit through to every part of the total
industrial structure.
MURPHY: And no timed calls for telephones in the home?
PM: We've made it quite clear that there will still be a
requirement to provide untimed local calls.
MURPHY: Yes, but they could be that's in the home but
they could be timed elsewhere?
PM: Well as far as consumers are concerned in regard to
the home situation, it will continue as it is.
MURPHY: Prime Minister, you must be worried about the
progress, or lack of it, in the Uruguay Round of GATT
talks and th~ e attitude of Germany of France in particular
in the EC to' agriculture reform. Are you prepared to
intervene personally, perhaps with others, to end the log
jam? PM: Well bEfore Neal Blewett, my Minister for Trade
Negotiations, left last weekend to go to Geneva for these
discussions I asked him to get some feeling as to whether
there could be any suggestion of involvement by heads of
government and I made it quite clear to Neal that if
that were to be the case then obviously I'd be involved
that would riot be and my I emphasise any lack of
confidence in Dr Blewett, I think he's done a magnificent
job as did his predecessors, Michael Duffy and John
Dawkins. Bul: there may be a feeling that given the
urgency of this matter, because under the schedule now
the final negotiations were to take place in the week
commencing the 3rd of December, and if there's some
feeling that the presence of heads of government may be
necessary or desirable then of course I would be involved
in that.
MURPHY: Have any other heads of government been in touch
with you?
PM: Margaret Thatcher has written to me urging me to
communicate to other heads of government by writing.
That's the most specific recent communication I've had.
MURPHY: So Mrs Thatcher would
PM: Let me make it quite clear when I say that. She was
urging me to write to certain of the heads of European
governments -to urge that they adopt a more constructive
approach in -the area of agricultural trade. She wasn't
saying write to them urging them to come personally to a
meeting but urging me to write to them to take, as I say,
a more constructive attitude.
MURPHY: So she's as concerned about the lack of
progress, the obduracy if you like, as the Cairns Group
led by us?
PM: Yes, and as I said in the Parliament yesterday I've
had my differences with Margaret Thatcher but it would
indeed be churlish of me if I didn't acknowledge the very
considerable commitment she has shown and, may I say, the
courage also in putting it right up to the Germans and
the French and others of the recalcitrant Europeans that
it is necessary to have meaningful and substantial reform
of agriculture in the GATT Round. She has been first
rate in the job she has done in that regard.
MURPHY: Prime Minister, you know all these leaders.
From your wide experience did you think there's any hope
at all of getting the EC to move?
PM: The thing that bloody well exasperates me, Paul, is
this; when I sit down and talk with them they say ' Bob,
we know in economic terms you're right', but then they
then the but., they go on ' but the farmers vote's
important to us'. I mean they're quite straight forward
about it. They accept the economic lunacy of a common
agricultural. policy which adds literally billions of
dollars per annum to their cost and price structure and
which is not: an efficient way of looking after the
poorest of agricultural producers. They acknowledge all
that but thEy say the votes are important. That upsets
me terribly.
MURPHY: So they're not going to move, are they?
PM: Well I'm not the signs are not propitious, let me
say that. But I think there's going to an enormous
amount of pressure accumulating upon the Europeans in
these days imediately ahead because you see it's not
just a question of agriculture but a number of the
members of the Cairns Group have said if the Europeans
are going to sabotage agreement in regard to agriculture
then they are saying they'll pull out of the whole lot
and there'll be agreements on nothing in areas which are
of importance to the Europeans. So it's not just a
question of agriculture being isolated, the whole Uruguay
Round is really at issue now and it really would be
devastating for the world if this failed and we relapsed
into a much greater increase of protectionism around the
world. No-one wins from that.
MURPHY: No, a trade war between the EC, America and
Japan with the Cairns Group and us principally caught in
the middle?
PM: That's right, it would be devastating for Australia
in particular.
MURPHY: Do you think that will happen, Prime Minister?
PM: Well I hope not and all I can say is that there's no
country, and this is recognised, not just the Prime
Minister of Australia saying it's recognised that no
country has over the period of the last few years and at
this moment, has done or is doing more to avert that
outcome than is Australia.
MURPHY: Prime Minister, thanks very much indeed for
speaking to PM.
PM: Thank you very much, Paul.
ends