PRIME MINISTER
E OE PROOF COPY ONLY
TRANSCRIPT OF THE' PRIME MINISTER, THE HON P. J. KEATING MP
JOHN LAWS PROGRAM, 2UE, SYDNEY 21 JANUARY 1992
PM: Good moriLng John.
JL: You are running close to time.
PM: I'm right on time. Never been so early.
JL: Absolutely right on time. Is that part of the deal when
you are Prime minister you have to be on time?
PM: I generally try to run on time.
JL: Tell me other ' things about being Prime Minister that
come as a surprise to you.
PM: I Con't thiink any of it is a surprise but it is a
different job than the one I have done for a long time.
You know, it has got many other bits and pieces to it
policy issues which are new and varied. Above all else
I think taking responsibility for the direction of the
thing.
JL: Yeah. Well we saw the pre-recorded, heavily edited
dress rehearsal last night so let's get into the real
thing now. Can you really sit there in front of me this
morning and insist as you did last night and look
Australia in the eye, of which you are quite capable of
doing, and tell us you didn't do any deals with anybody
to get the top job.
PM: No. I didn't do any deals with anybody. It Was a
matter of choice for the Labor Party and it is like most
of these t: hings, I mean you make alliances, friendships
and thinga;. But they are not deals. Deals go to people
getting positions and policies and what have you.
JL: Are they fair dinkum friendships or are they friendships
of convenience?
PM: Oh well, think, you know, you do end up with a certain
core group of supporters in this game and you get a few
added on along the way and sometimes there is more of
them or loss of them, and it just depends on the
circumstances I think.
JL: But you diLdn't do any deals with the left?
PM: No.
JL: What about: the centre left?
PM: No. Nor ' the centre left. The centre left were
substantial supporters of mine.
JL: Not that it really matters mind you.
PM: No.
JL: One would expect to swing it around the way it was swung
around would require a bit of engineering, a bit of
manipulatiLon.
PM: I understand that, but no, nothing which you would call
a deal. rhey know what I generally think about things.
To that exitent they needed to be sure of what I thought
about things. But beyond that, no.
JL: Did you have to alter you attitude to certain things in
order to accommodate them.
PM: I don't think so. I think that the fact that I thought
the economy more recessed than maybe the official family
was telling the Government, the bureaucracy was telling
the Government, struck a cord with some people in the
Caucus and it was that in which they were interested.
And as time wore on they believed that that was true and
therefore a number of groups were interested in what
they thought I might do about it. But beyond those sort
of generalised things, that was about the main.
3L: Anyway, I imagine one of the prime requisites for the
job is to be reasonably flexible.
PM: At least keep your mind open. I think to have an open
mind about things is important. You can get a closed
mind in this game I think. That is, you know,
particularly when you have been the author of policies
and where you are not just putting them in but defending
them. You have got to know when to stop defending
things and when to move on.
JL: Tell me this. The general consensus at the moment seems
to be, and I only came back last Thursday, that you are
not yet looking comfortable in the role of Prime
Minister. Do you think that is a reasonable
observation, again it would be understandable.
PM: I don't know. I think some of the commentators want me
to come out sort of fighting every time they see me. I
think they think I'm on the floor of the House of
Representatives all the time at Question Time. Well
you're not, you're not, and therefore to be thoughtful
about what you say and to be not smothering people in
argument iLs, I think, appropriate for the moment. I'm
feeling my way. I'm listening. I'm trying to get a
grip on where I think the place is going and that is as
I think it should be at the minute.
JL; You say that you are feeling your way again, that is
understandable. is the whole thing a bit overwhelming?
FM: Not really, no it is not overwhelming, I don't think.
JL: It is just another job.
PM: It is another job, but it is a different job, and it's a
job where the ultimate responsibility is yours, with the
direction of the place. I think it is like, the great
burden of these jobs is never the hours or the time, it
is always the responsibility. The responsibility is
what weighs upon you. That is what I find the
difference, but as far as the job, I mean a lot of
people I'm sure that have had this job in the past have
wondered well what should we do. Well that is really
not my problem. I mean, I have got a reasonable idea of
what we should do. But what I think is important is to
tap other people's ideas of what we should do now.
JL: That is a~ n interesting observation People say what
should we do, that is really not your problem. I would
have thought it was absolutely and totally your problem.
PM: No what we do though is our problem, but I'm saying
knowing what to do, that is having an idea of what to
do, and what I'm doing with these round or meeting
which we have had with the business community anid the
trade unions and others last week and this week is to
tap into community opinion about how they see the
economy and society and what they believe the remedy
should : be.
JL: Ok, you've got in round terms, 12 months to get the
place mDving again. is it possible to do it in 12
months?
PM: I think so. I think that a is a possibility.
JL; Only a possibility?
PM: More than a possibility. Provided the Government takes
the right policy steps.
JL: well you are the Government, aren't you?
PM: That's right. And that is why it is very important to
see what people think. I mean, we tend to think that
most of the various interest groups, they come our way
at various times and what they have to say is pretty
much on record, or pretty much been said to us a month
ago or we nave some idea of it. but it is nice to hear
their contemporary view and hear it direct. And you
can pick things up which you haven't heard before, and
I think we have done quite a bit of that in the last
week.
JL: Ok, well you say providing the Government takes the
right steps. From that we could glean that in the past
the Government hasn't taken the right steps.
PM: well I think, all governments can only feel their way
through a situation and with this recession, I mean we
have felt our way, we rely upon the statistics as they
come in, you rely upon anecdotal evidence, you are
generally just trying to reel your way through.
JL: Ok, well the same people got it wrong before. What
kind of assurance that they won't get it wrong again?
PH: Well I think the only way now is up. And therefore
what the Government will do will be to take the economy
up, to take the place up. So one should hope that we
get the general direction right.
JL: When you say the only way is up, does that mean that
anybody could get it up now, it is so flat that it
wouldn't matter who was there it would go up?
PM: Oh no, I think it will require changes to bringing it
up faster than it might otherwise naturally do, and
leaving it to its own natural devices, I don't think it
is good enough right now. I think we have to do more
and assessing what to do is what we are about now.
JL; Yeah. What did you do wrong, or what did they do wrong
that needs to be changed?
PM: it is not they, it is me. I was the Treasurer for a
long time. I think that there are two things, I mean,
there was first of all the boom in 1988 had to be the
spending spree and the rise in activity in imports had
to be slowed down. We lifted interest rates to do it.
I think we have left interest rates on probably too
long, -they didn't come off quickly enough through 1990
and 1991. Remember this, I took interest rates off for
the first time in January 1990, exactly two years ago
this month, to avoid this recession.
JL: Ok, but you didn't succeed.
PM: but I don't think we took them off quickly enough. And
secondly there was what the Americans call the asset
price overhand.
JL: Let's keep away from that stuff.
PM: I know, but let's off, but let's say what it is. It is
a belief in inflation. A belief that if you bought a
couple of shops, or you bought a flat, or you bought
another house, that inflation would kick it along and
over a period of time without any effort on your part
you would be more wealthy. And that belief in
inflation was there while inflation was high. But now
inflation is low and we have seen asset prices fall it
is that fall in asset prices which has knocked a lot of
business confidence around and I think as properties
have been tipped to the market both here and in the
United States and in Britain and in Canada and
countries like us. we have all got recessions now at
the same time that it is that fall in asset prices
which I think has really knocked confidence about at
least to unemployment. When unemployment starts to
rise, people then start to worry about their spending,
so they cut their spending and so the thing generally
winds down. So it is a combination of the two things.
The interest rate rises and the speed of the decline in
them and this big belief in inflation and the collapse
or inflation or expectations which has seen asset
prices fall and
JL: Well all of that is very natural. I mean, if inflation
exists you can understand people who want to invest,
wanting to capitalise on the tact that inflation is
there. So the public can't really be blamed for that.
You say that you didn't take interest rates of f early
enough, are you going to take them of f now?
PM: Well we have, we just took them of f another 1 per cent.
JL: Are you going to do more?
PM: Not at the moment. we are at 7 1/ 2 per cent and I
can't remember how long it was ago that we had, if you
like, bill rates at 7 1/ 2 per cent. So they are down a
long way. They are down ii percentage points from
1990. They are a long way down. I mean, I suppose
what I'm trying to say, John, is this, that if it were
not for a long running belier in inflation and asset
values and the rest, the recession wouldn't be as deep
and if the banks who went into a basically a very big
lending spree in the late 1980s because of collapsing
asset prices they've pulled their head in. They won't
be lending as they were lending. And the combinations
of the two has produced a recess ion of greater depth
than any of us believed.
JL: There are 23,000 people in this country waiting for
refugee status which can take a long time. The other
day some more arrived in the West as you know, claiming
to be refugees and even called refugees by some, there
is no guiarantee that they are in fact that. Why should
we continue to allow these people to stay in our
country when our country is economically unstable, it
needs all the help it can get and we have unemployment
running at a dangerous level and we import more people
into the place that we can't employ. Now are you going
to do something about that?
PM: Well this is where our border was breached by a group
of people who arrived by boat unannounced.
JL: well so did the other 23,000.
PM: Well somie of them have come in all sorts of ways. But
we are now assessing those to see what their real
status is.
JL: And if -they are not refugees, are you going to send
them back?
PM: Well I will see what the report says. I don't want to
pre-judge it. We have got people now up there speaking
to them. But on the general point about migration
which I think is what you were directing your remarks
to, we ] iave seen the program change over the last half
a dozen years to rise rather sharply in the late
particularly when we saw a need to bring in skill sin
demand, one of the things which was in evidence between
1985 and 1990 was skills shortages in the economy, and
we had a large complementation of skills coming from
the migration program. In a slower economy, you don't
need that skills supplementation and what the
Government has been doing has been slowing the program
up, and. it has slowed rather considerably now from its
peak of say about 1988.
JL: Why don't you stop it until the place is right
economically?
PM: well I don't think that is the right thing to do. I
think that you can't just turn these programs on and
of f.
JL: Why?
PM: Well because there is a whole system of people being
assessed over a period of time, being interviewed
between the various categories of migration whether
they be business migrants, skills in demand, family
reunion. The operation of these various categories
which are different than each of the other and to just
simply wind the program off and try and wind it back
up, you won't be able to wind it back up. And it is
not very easy, and it is very harsh often to wind it
right back.
JL: Harsh on whom?
PM: well it is harsh on. I think, the people who have been
part of the process to date.
JL: Well maybe it is, but surely your first responsibility
and our collective first responsibility is to this
country, and you know that politics is all about
perception and if we are perceived to be in such a
condition that we have almost I million unemployed
people, it seems to some extraordinary that we continue
to import people from other parts of the world who,
too, ar-e likely to become unemployed.
PM: Well some will, no doubt. But it has been a long term
program, a long term program to complement the natural
growth of our population and governments in their
wisdom have increased it and decreased it as things
have changed, but they have never cut it out.
JL: Governments aren't always wise. Because the Government
did it in its wisdom, there might be a limit to its
wisdom as indicated by the situation in which this
country now, finds itself.
PM: But I think they have been wise, I mean it has kicked
our population along, the place is a more interesting
vibrant place because or the migration program.
JL; Yeah, but I fail to see what value there is in having a
whole lot of interesting unemployed people around the
place.
PM: Well it won't be all unemployed.
JL: But there are a lot of unemployed. There are a million
unemployed people in Australian seeking work and we
continue to bring people in from other parts of the
world. Now the perception is that that is stupid and
unfair to the people who, really are the responsibility
of the Government.
PM: But it is a medium term program, well it is a long term
program with a medium term perspective and I think that
the thing about it is, you have got to decide whether
you think this country can take a share of people from
abroad. Is advantaged by a more diverse and larger
population and if you believe that, a program should
exist, and perhaps it should change in its quality and
its quantity as time goes by, but most governments have
changed it at various times. We had huge numbers come
into Australian and then it dropped off to much smaller
numbers and it has picked up as prosperity picked up,
and whEtre there have been difficult times it has
dropped back. Can I say the more general point is by
and large I think it has been accepted by most
Australian. The migration program has been good to
Australia, has made it a more interesting place, made
it a more economically robust place. And it has been
very important at various times to complement skills,
the business migration program is now bringing quite a
lot of people from various parts of the world.
JL: Ah yes, we saw what a rort that was being turned into
by people coming here from Hong Kong and other places
buying real estate and going home, saying they were
unable to make their business investment and yet that
was part of the package.
PM: But thEre is a lot here though, John, there is a lot
here.
JL: Of course there are and when you say that it has been
accepted I agree with you I think that it has been
accepted. I'm not sure that it is accepted now,
because! it-has been accepted doesn't mean that it is
going t~ o continue to be accepted.
PM: Well there has always been a debate about the numbers
whenever the economy goes off the boil and that is fair
enough. And I think the Government has taken note of
that and that is why the program has been scaled back
in the last few years and we have got a review of the
program underway now. And then in April, or about
April, which is the normal cycle of these reviews, we
will cconsider the intake again for the coming year.
JL: What is your recommendation?
PM: Well I will wait and see what the review turns up.
JL: Well assessing it at this stage, you see, you say that
most people accept it. Most people that I talk to
don't accept it and I think that, with respect to you,
I speak: more of the population of Australia than you
do.
PM: You certainly speak to them, whether you speak with
them I'm not sure about that.
JL: Well they speak to me.
PM: Well that's true, that's true.
JL: They pick up the telephone and dial the number.
PM: That is right. I don't doubt that you have a
perception, and probably a correct one, that people
think the program should respond to difficult times,
and I think it should.
JL: Shouldn't you respond to the people?
PM: Yes, but I'm not going to pre-judge what is a
reasonably sophisticated process of review every year,
and then the Minister, in this case Gerry Hand, will
bring a recommendation to the Cabinet.
JL: But on the information you have know, what would your
recommendation be?
PM: Well I'm not going to make a recommendation. I won't
be recommending. It will be Gerry recommending to the
Government rather than me recommending to him. But the
program has been coming back and I would be surprised
if there was a discernible trend in any other
direction.
JL: But down?
PM: But down? But when I say that, I don't mean down the
way some of our colleagues in the Opposition mean down
because I think from them we will see a repeat of what
we saw in 1988 which was basically about how we
shouldn't have more Asians here, we shouldn't have
Asians in this country. I mean, if you scratch most of
these characters what you get is a little bit of that
sort of talk from them and that won't be motivating us.
JL: No. Well of course it is not specifically Asians, its
people that we have to employ, that is the problem, it
doesn't matter where they come from.
PM: I know, I understand that but from the Liberal Party's
point of view the sub-plot in the late 1980s was about
Asians.
JL: OK, prior to my going away in December, I read a story
about * a pie manufacturer who warned us that the great
Australian meat pie might soon ship to China, tasty
products, warned that high labour costs, high taxes
expensiLve food ingredients would force lots of
businesses off-shore. Now it didn't seem very
important at the time, but when you look into it, in
china's Xnandung Province they will give you the land
to build your factory. They will provide you with
labour at $ A160 a month and offer a flat company tax
rate of 16 per cent. Now the $ A160 a month is nonsense
in this country. But why don't we consider doing
things like they are doing in China. We have got
plenty of land why don't we give it to people in order
that they can create enterprises and businesses here.
And why, don't we offer them a special company tax to
come in. from other parts of the world instead of us
going off-shore, bring them here give them the land we
have got plenty of land?
PM: Well the thing is, they are a developing country and
they are re doing all the classic things which
developing countries have done. you know, Korea was
doing that some time ago, and now they are doing it.
I'm sure it happened in Taiwan.
JL: Do we ever give land away, I never heard it was giving
land away?
PM: No we don't, I don't think. I mean, certainly the
Commonwealth doesn't. But I mean, the States have
industrial parks and they let people have access to
them.
JL: When I say giving away, I don't mean give it away
forever. Give a lease arrangement to these people, but
at a proper rate to encourage business to come here,
why don't we do that?
PM: Well, because I think it is important to understand
what we are. This is a developed place. We run a
sophisticated society and public sector. services here
are in evidence wherever you look, whether it be
hospitals, roads, or railways, or what have you. And
we finance this public sector with the second lowest
rate of tax in the world bar a decimal point. We are a
decimal -Point higher than Japan. We are the second
lowest tax country in the 27 countries of the OECD.
now you can't provide this sort of public sector with
these sort of services and this standard of living with
the tax rate very much below that. So if you want to
give big tax breaks to developing companies, what you
have got to do is put tax hikes on ordinary people.
JL: Why can't it be done for a short period of time?
PM: Well it: all costs and once you do these things, that is
it. you set a new benchmark. I mean, you can't
compete with them because you see
JL: Why can't you?
PM: Well let me just give you an example. Now I was
talking to a company last week. They went to Malaysia
because it had a tax holiday for 7 years so they said
we set up a business in Malaysia unfortunately they
said the 7th year is up so now we are going to Sri
Lanka which promises a tax holiday for 15 years. That
is no tax for 15 years. Well if we try and run this
country on a basis of no tax for 15 years, you won't
keep this sort of society of ours together.
JL: No, but this is a more attractive place to be so surely
with somae sort of incentive.
PM: But we don't need to do the things which those people,
in other words, rely upon wage rates and labour
conditions that those companies rely upon in those
countries. We produce different things.
JL: But we need to do something.
PM: We are doing it. We literally exported our heads off
all through the 1980s.
JL: You can't say that because we are developed country
that we don't want to continue to develop.
PM: No, but -all the developed countries, we have got a
corporate tax rate of 39 per cent with full dividend
imputation. In other words, you don't pay tax on
dividends twice. Germany has got a corporate rate in
the ' 50s.. Most of the countries we compare ourselves
with have got corporate rates like us, Britain, the
United St~ ates, what have you. They don't have 15 per
cent tax rates. Or zero tax rates as business
incentivets because they are developed places and you
can't runk your developed society on zero tax rates.
JL: OK, well if we can't do that for people who want to
create businesses from other parts of the world, what
sort of incentive could we offer to the people who are
one by one going to the wall, and they are one by one
going to the wall, here in Australian. Surely at this
time, we should be offering them some kind of incentive
to keep their business instead of taking it to Sri
Lanka or Singapore.
PM: Well the best incentive offered to them is growth, is
to get back to rates of growth and that is what the
point of the Economic Statement will be about. to
restore growth to the economy, to get the economy out
of the recession.
JL: How do you do that?
PM: Into recovery. Well it won't be long before you will
see. EBut we are now assessing how best to do that, but
one of the things which we have obviously done in the
last two years is reduce interest rates, which
themselves will have their effect upon the economy and
we will be doing other things which we think are
sensible in the short term but are also supportive, if
you like, of the structure of the place over the long
term.
JL: Like what sort of thing?
PM: Well I don't want to go through..
JL: Well just give me an idea of what sort of thing?
PM: Well some of the public infrastructure, for a start,
which wets left to languish in the ' 80s as we cut the
public sector back, and which can take the place of
some of the private investment we're now not getting.
In some of those areas we're looking closely now.
JL: Does that mean increasing the public sector?
PM: Not particularly, but it means for the moment in areas
of public infrastructure where there are needs, and
where they are an important part of the efficiency of
the economy, then they are areas I think which we can
look. But the main thing is to provide growth to the
economy and that's the best thing we can give the
business sector, small, medium and large. And there's
not much point in saying well here's a low tax rate,
but sorry there's not much growth around, because if
you look at the small business community in particular,
both them survive on growth.
JL.-. By-growth, you-simply mean that somebody who has,
they're making matchboxes, you're going to make the
place so efficient that people are going to want to buy
more matchboxes?
PM: Well we're finding, firstly to lift activity and demand
so theres a demand for product in Australia and people
start hiring people again to produce product.
JL: How do you do that?
PM: Just by lifting activity. We did it after 1983-4,
JL: Well if' it was that simple why wasn't it done before?
PM: Well in. 1983-84, when we came to office after that
recession, we turned it around within about 12 months.
And I hope that in the same way we can do that now.
JL: We'll have to do it quickly because from what I hear,
and correct me if I'm wrong, but from what I hear from
business people we are not in a position to be able to
trade competitively with other countries, we are
disadvantaged here in Australia?
PM: I don't think that's true. Because what is happening
and has happened, we are now running a very large goods
and services surplus, we are running a huge merchandise
trade surplus. A lot of Australian companies I have
spoken t: o in the last two weeks have said, we've made a
shift, because the domestic market is down we've made a
more rapid shift to exports and we'll stay in exports.
Now we aire doing that because the place is largely
competitive, its competitive in wage rates, its
competitive by the exchange rate, its a generally
competitive product that I'm will to support.
JL: Well, why are we in recession?
PM: Well we are in a recession in the domestic economy,
while the international economy is also not doing well,
the truth is we can eat a bigger share of it and that's
one of the things which is at least holding employment
where it is and keeping the place growing where it is
is the fact that we have a thing which we never used to
have called net exports. In other words we are now
exporting a large part of our product, particularly in
manufactures.
JL: OK that's fine, and I understand it is very important
but its very hard to convince people who haven't got
any money and have got kids, and they haven't got any
clothes and they are flat out having a house, that
because somebody is selling something overseas its
going to be to their advantage, its not to their
advantage now. Surely the domestic economy, as you
refer to it, is at this stage in your career and in the
history o'f this country the most important thing?
PM: Absolutely.
JL: Well what do you do about that? It's all very well to
talk about the exports
PM: Well, exports are what give you production and there
would be a lot of people employed in factories out
there now, probably listening to us, who are doing so
for products which are going to be exported, and if
they were not going to be exported their jobs wouldn't
be there. So exports have filled a very large void in
this cycle and that's why these export growth numbers
and the merchandise trade surplus is very important to
us, they are complementary to domestic growth.
JL: Well its not working
PM But it doesn't invalidate your point and that is that
the domestic economy has to grow more, we can't have
the thing, if you like, in the negative, that is
contracting which is what its been. It's contracted by
about three per cent in the last year and a half or so.
And that:' s what's produced the angst and produced the
unemploynent. We have got to get that back to positive
rates of' growth.
JL: OK well how do you do that domestically?
PM: Well a combination of I think, a change in confidence
which comes from a willingness on part the of the
Government to let the economy grow. That people in the
business community know now that the Government wants
the economy to grow. Where in 1988 and 1989 and 1990
they thought the Government wanted the economy to slow
down which we did. We now want it to grow, and we have
now provided one of the instruments of that growth,
much lower interest rates, and we can provide a more
direct stimulus to the economy coming from the
Governments own policies, and that's what we are now
examining with the business community as to how best to
cast those so they complement, if you like, interest
rate reductions. To try to induce and engender a high
degree of business confidence to get people out there
spending again and to pick the place up.
JL: Prime Minister Paul Keating back to the subject of
Australia and its immediate future domestically, and I
think that you agree that that's what matters at the
moment. Certainly that's what matters to the people
listening to this radio program around Australia.
PM: Exactly. To get back to growth and to get the place
moving again, to get employment shifting and to do it
as quickly as possible. That's got to be our first
priority.
JL: OK you can understand the frustration of people and
confusion of people when you can go into a supermarket
and yout can buy imported canned tomatoes, I think from
Italy, cheaper than you can buy the Australian product.
So here! we have the dilemma of the people who are doing
to tough having the opportunity to buy the product
cheaply but we also have the converse situation of
those producing the product here in Australia not being
able to compete. Why do we import canned tomatoes?
PM: I think a number of reasons. I mean it makes me
furious as it does you I'm sure. It does make you
furious because its just absurd but I think we really
haven't developed as well as we might agriculture
businesses which extend beyond the agriculture into
canning and into promotion and into the efficient
production of canned products often particularly in the
horticulture/ agriculture sort of fruit and
vegetables.
JL: Is that because we are not smart?
PM: Well I don't know. I think it might be the fact that a.
lot of these were done through co-operatives in the
past and the co-operatives flourished well enough
before the trade in these things world wide, there's
now a greater trade in food products and that we
haven't seen the sort of efficiency and competitiveness
coming from the canning of these sort of foods and
their marketing.
JL: OK, well what do you do about that? I mean why
PM: Its a sort of breakdown of entrepreneurship. I mean
there should be in that particular industry more
entrepreneurship I think than there is and its a pity
that people say well its not a pity you saying it but
its a pity its being said, you know what can we do
about the fact that we have got sort of canned tomatoes
from the United States or Italy or Israel or somewhere
like that and you know, I think one of the things we
can do well in Australia is food and food processing.
JL: In order to let us do that, and I know that this is a
simplistiLc point of view but most of mine are, why
can't we put some type of moratorium on non-essential
imports?
PM: Well beca-use what happens then is that people put a
moratorium on our non-essential exports. The trading
world is a very nasty place and once you get into sort
of trade reprisals everybody gets into you. I mean we
are still shipping great stacks of meat to the United
States and Japan and if we were to say
JL: But why are we doing that, because Japan needs it,
that's why they're buying it.
PM: Yes but they can buy it from other places and
JL: And because America needs it
PM: But again it has got other options. I mean if we get
into the trade reprisal business so will they and
that's rnot a goer and the fact is we have got to do
better. It's not their fault that we are not doing
better, in some of these areas we have just got to do
better. Now its happening. You can see it, I was
talking to one chap last week in these rounds of
consultations who has brought together a whole lot of
food products and is now marketing them much more
efficiently in Australia. These were formerly brand
names which had sort of been left by the way-side,
business which were not running efficiently but making
largely food stuffs. Now that's changed for that
particular person and his business and for those
products. And that general change is what we need. In
other words you see an opportunity and go and exploit
it, not just to say well look we can actually import
compete, compete against these imports but actually
export them ourselves.
JL: But are you going to encourage people to do it because
the number of people that come to me directly and
indirectly to tell me that they have had a wonderful
idea that they've wanted to start a business doing
somethin~ g here in Australia, and have been unable to
get co-operation from the Government and they end up
doing it: elsewhere and successfully. Now what are you
going to do about that?
PM: Well I think it's happening I mean you know and again
another company I spoke to last week has just taken
over Petersville, this is Pacific-Dunlop has just taken
over Petersville which is a big food producer and that
includes Edgell and all those business Edgell, you
know, peas and beans and these things
JL: and tomatoes
PM: and hopefully now with a larger company, a greater
understanding of the value of the product it produces,
its capacity~ to sell into the largely growing South-
East Asian market, we will see now the marketing of
those products but we haven't seen enough of the export
opportunities being obvious to people, investing in
them, getting an existing business and making it more
efficient, marketing the things better in Australia, I
mean its often true of the large supermarket, they have
often sa: Ld to me you can't get people to quote the
supply a lot of the food lines that just don't quote
because they think they will get too tied up to Coles
or too tired up to Woolworths so they don't quote and
so what: happens they end up taking stuff from Italy or
from Po'rtugal or somewhere like that.
JL: Would the Government be in a position to subsidise
producers of those kinds of products that have unfair
competition if it is considered unfair from overseas?
PM: Well, we don't subsidise agricultural produce in
Australia.
JL: I know we don't, but why don't we?
PM: Well because when we do it becomes a cost on the rest
of us. In other words, you know, I mean we are getting
the very thing we are complaining about in the GATT. 1
mean the reason why our wheat producers are not being
able to sell now as profitably in the markets is
because of subsidies from the European Commission and
the Unit~ ed States. Now if we get in the same game the
thing is they can outplay us at that game, theres no
point in us getting in.
JL: Then we can't compete?
PM: We don't have a deep enough pocket to go into an export
subsidy war and wouldn't want to.
JL: OK well let's get back to..
PM: And that's why, can I just say in the GATT in the
Uruguay round, the General Agreement on Trade and
Tariffs where all this is being discussed at the
moment, we're saying keep the markets free from
pollution, keep them open, keep them free from this
export subsidies, give the honest producer a chance.
Now if we were to say well look, forget all that
rhetoric we didn't really mean that what we are going
to do now is start subsidising canned tomatoes and
canned this and something else then the whole game goes
bad and I think it will work against Australia over the
long terra.
JL: So what do we do? Stop canning tomatoes and do
something else?
PM: No. Do it efficiently. What we should do is someone
say look I've got a tomato here which is as good as any
other tomato, I can put in a can for this price
providing I have an efficient business
JL: Yes but then you have difficulty doing it because of
work practices and all sorts of added tariffs here
PM: Well the good management smooths all those things out.
I mean the huge shift in productivity which we are
seeing in businesses today is coming from the fact that
good Managers getting rid of work practices which are
bad. See, a good management which actually make any of
these businesses competitive.
JL: Despite the trade union movement?
PM: Not despite them, with their support. I mean by and
large the trade unions are knocking out restrictive
work I mean if there's one thing which has come
through four to three days of very intense meetings now
is the almost every hour declaration by managers of
major companies and small companies of the changes in
enterprise bargaining and workplace reform.
JL: Because the union movement is becoming more cooperative?
PM: Yes absolutely because they are saying lets not only
keep our jobs lets make the place better.
JL: What about the 17.5% holiday loading which is a laugh,
and laugrhed at all over the world?
PM: Well a lot of other places in the world have got it to,
its in the United States
JL: Not at 17.5% its not.
PM: Well its every higher I think in some places.
JL: But that doesn't make it right?
PM: Well you know why its there, because most people
earned, often earn in their normal working week more
than the standards weekly wage because they get a bit
of overt: Lme
JL: Some, sorme not all
PM: So when t~ hey go on holidays there is a compensation.
JL: Yes
PM: This is a. feature of many, many economies.
JL: But the mian who introduced it even says its stupid now.
A bit late now but he even says its stupid now.
PM: Who said that?
JL: Clyde Cameron.
PM: Clyde, well I didn't know he said that but look the
main thing is labour costs in total and labour costs in
total i~ n Australia now by OECD standards are low. I
mean it~ s another thing that has been said over and over
again in the last three or four days in the last week
by people running businesses, look this is now
basically a low labour cost country. John that is the
truth, this is a low labour cost country which includes
holiday leave loading.
JL: Well it is and that's why Japanese motor companies and
others want to set up large factories here because it
is becoming a low labour country.
PM: And that includes the holiday leave loading on these
things.
JL: Yes, it would be better still if we didn't have the
holiday leave loading though wouldn't it?
PM: Well I don't necessarily think that's right. I mean I
think, you know, if someone goes off on their annual
leave they don't take a big drop in pay.
JL: What abcout penalty rates on the week-end though? For
working Saturday's, whoever said that Saturday is
different from Friday or Thursday?
PM: Well, now this is an old hobby horse one of yours I
know, I know.
JL: Its a good one
PM: You're like a dog at a bone on these penalty rates.
Look, they are changing, they are changing over time,
they perhaps should change more slowly in some places I
agree particularly in the hospitality industry but I
think a bit of that is changing.
JL: Are you going to encourage the change?
PM: Well part of my job now is to make this a competitive
labour cost country and I did that across the board, it
was part of my job in the 1980s to get inflation down,
we have now got a 3% inflation rate instead of a
inflationL rate and that was in a large part
accommodated by shifts in wages so its not my job to
run bull-at-a-gate at one particular thing
JL: But nobody wants you to do that, but could we receive
some sort of guarantee that you will give your careful
consideration to penalty rates?
PM: Your a great one on guarantees you are.
JL: Yes its: very important its very important to me
and penalty rates stop people getting work.
PM: Well look, I can see that the structure of penalty
rates are not always conducive to employment and
productivity but changing them is not a simple matter
the Government particularly can change overnight.
JL: No but You've got friends.
PM: Yes well I hope I've got a few.
JL: Have a quite talk to Bill.
PM: Poor old Bill, you'd get him to do everything.
JL: Well I maean he is the man to do it because by having
those.
PM: Well you get him in, next time you get him in you put
it on him.
JL: OK I wil. l but in the meantime you might put in a word
for me because you're keeping young people out of work
and the same thing in the United States. If you want
to go to a restaurant in the evening or at lunch time
you drive up the to the restaurant, get out of your car
somebody parks it.
PM: Look the whole service sector in the United States is
far more
JL: Fantastic?
PM: Sophisticated than here.
JL: That's right.
PM: And we have got to learn to be like that.
JL: Ok and people are doing it Saturday nights, Sunday
nights and their lunch time and they're doing it for
what they get in tips. No you couldn't do that in
Australia because you would have to join the Transport
Workers Union before you could drive the bloody car.
Now that's stupid isn't it.
PM: Well I think that the proof of the pudding is in the
eating. They have a service sector which is a vast
employer, I mean we do to but theirs is greater and the
services are more varied and more sophisticated.
JL: But you see a bunch of young kids could set up valet
parking as they insist on calling it in America, and be
contributors to the economy but making money and
keeping them gainfully occupied instead of hanging
around sticking needles in their arms, but they can't
do it because of some stupid work practice or having to
belong to some union and pay union fees.
PM: Well that's not necessarily true. I mean a lot of
people are working in places which are not unionised.
It doesn't stop people working.
JL: How long do you think it would take before the TWU
wasn't down on people who set up valet parking outside
restaurants? About a day and a half?
PM: No, no I don't think its going to worry the TWU very
much. The truth is as long as it doesn't happen
because it hasn't occurred to people. I mean we Just
don't have these sort of services here. I mean in the
US
JL: It has occurred to me.
PM: I know because you travel and you experience it. But
you can see there was a time when there wasn't
propriety car parks, you know car parks operated as
businesses in Australia that happened in the United
States many, many decades ago, its been with us a
couple of decades only and I think, you know, we will
see a much greater sophistication in services, personal
care things.
JL: Ok but you can only do that with the co-operation of
the trade union movement?
PM: John don't underestimate the co-operation. I mean we
are seeing, this is not rhetoric, we're seeing now such
mammoth changes in productivity and work place reform
the likes of which most businesses could not have
contemplated a decade ago, could never have
contemplated and it is why Toyota is coming to
Australia. Toyota motor company, probably amongst the
most efficient in the world and which is going to set
up a $ 400M state of the art plant in this country.
It's not doing it because it thinks labour relations
are bad, they know that productivity is good, they know
that.. the-trade unionsare . co. operating and we are
making great strides.
JL: That's right, but I have watched the progress of that
from fairly close quarters and its been interesting to
note the reaction of the trade union movement who have
been more than co-operative. Now obviously they are
smart because Toyota obviously are going to employ a
lot of people in Australia, now that kind of cooperation
is the sort of thing that will help to get
the place back. But it means that the unionists, the
trade union movement has got to co-operate with the
Government doesn't it?
PM: It does and what I'm saying to you is that it has, and
that's why the inflation rate is 3% and that's why
interest rates are
JL: Ok but tell my why.
PM: If inflation was 10% interest rates would be 13/ 14.
JL: Its great to have 3% inflation. One of the reasons it
is three per cent is nobody is spending any money and
one of the reasons is nobody's got any money.
PM: The main reason is wage change in the 80s and the
second reason is, in part, the deflation coming from
the recession. But its only a part, a very large part,
the largest part was a decline in inflation coming from
wage changes.
JL: Yes, but: obviously inflation is going to be low if
nobody has got any money to spend.
PM: Well, that's not true. We came out of the 1982-83
recessio~ n flat on our backs with a 10% inflation rate.
JL: That's true. What about the engineering company that
can buy Australian made BHP steel cheaper in Singapore
than it can buy it in Australia? That's slightly
bigger than tomatoes.
PM: True and I think we need competition in steel like we
do in everything else and I think it is a great pity
that we have to import certain varieties of steels
because they are not available here.
JL Yes but this is Australian made BHP steel which can be
brought cheaper in Singapore $ 700 a ton in Singapore,
$ 1000 a -ton here. Now how can you allow that to
happen? Not-that its your direct responsibility.
PM: No its not my responsibility, but look obviously, I
don't know that the numbers are actually right I can
only.. take.. your. word-. for.. those..
JL: Well do.
PM: It may be! its been part of an export deal, a package
deal which BHP has done a sort of shop deal for steel
to some supplier in South-East Asia which they are now
supplying back. But I'd be surprised, well pretty
surprised. if you could buy BHP steel cheaper abroad
than you buy it here.
JL: Well you can, you can buy it in Singapore for $ 700 a
ton as opposed to $ 1000 a ton here.
PM: Well no doubt that someone in BHP will hear this
conversation and give us an answer.
JL: If the answer is yes that is a fact, what can you do
about it?
PM: Well I -think BHP would say it seeks to be competitive
inside -the Australian economy and supplying product.
The complaint against it is it doesn't supply enough
product, enough of various types of product that it
should, but there is no doubt the export markets are
very competitive and if you've got people saying, well
look you can have an Australian job at BHP we export
steel but we've got to export it cheaper than we have
been exporting it then BHP will probably taken the view
that we want to keep that employment and we want to
keep those exports. So its losing profitability and
margin exporting but better to have the product export
and have the jobs than not have it all and that's
probably the position right now.
JL: Yes except they are paying the price here in Australia
and obviously they are going to suffer long term
because people are simply bringing it back from
Singapore cheaper than they can get in Australia.
PM: Well look, I mean the international steel market is now
becoming over supplied, it is very competitive out
there and there is not there is probably price falls
and theres discounting in all markets.
JL: There's a dreadful expression that has come into our
language and that I hope you'll never use, when people
talk about a level playing field which seems to be all
the go, why are we doing that with a level playing
field when nobody else seems to be?
PM: I don't -think we are. I mean, I think anyone who
believes there's a level playing field off-shore
outside of Australia is basically deluding themselves,
I mean its catch as catch can out there and survival of
the. fittst..-and-the . smartest . and I think that if anyone
believes it is fair and reasonable and above board and
level they are having themselves on.
JL: Ok well we are about to run out of time and I know you
have got a lot to do with your day jut to rap it up,
the illegal immigrants, these boat people, apart from
costing us a fortune in searching, if we find out that
they are not what they claim to be will you send them
home?
PM: Well I -don't want to pre-judge that.
JL: Would that be your desire?
PM: I don't want to pre-judge that let's wait and see how
they interview, where they're from, what their claims
are and there's a very clear process there in dealing
with people who cross our borders and there is no
reason -why that process won't work just as well on this
occasion as on any other occasion.
JL: So it would be likely that if they are not what they
appear -to be that they won't stay in this country?
PM: Well again that is pre-judging them and I don't want to
do that because to do it in the position I hold,
prejudice is their position, and the processes are such
that they shouldn't be prejudiced.
JL: Ok the other point, when you assess immigration in
April it won't rise?
PM: Well I'm not saying that
JL: No I was asking.
PM: The trend has been down, the trend has been down but
that is not the dissimation of the program which some
people wish and it won't be and it won't be motivated
by crude political instincts like we have seen from the
Liberal Party in the late 1980s and which we are seeing
a bit of now. In other words we will be looking at the
long run future of the Australian population, its
growth, a contribution of the migration program and
looking at the labour market and the capacity to absorb
people : Ln that market, to house them and making a
judgement about the intake for the following year.
JL: OK but in the present circumstances being as they are,
would it be reasonable to say that it is unlikely that
it will rise?
PM: Well it hasn't for the last couple of years. It's
unlikely to rise this year.
JL: Ok something else that I think we should touch upon
briefly. Will you be doing something to restore
confidence for the job getters in Australia quickly?
PM: Well that this the whole point of what I'm doing now,
that is trying to make sure whatever the Government
does that is what we announce, when the statement is
announced, that we have assessed as fully as we can
with business and with other groups in the community
the likely measures to have the greatest and earliest
impact upon activity and employment.
JL: Will the dole rise?
PM: Well that's not an issue which we are examining right
now but the question I think is not a matter of the
dole rising its activity rising is what we need. We
need basically more people being employed and that can
only come from producing more product and that means
getting confidence going, getting people confident
again about the economy that they think there is a
future out their. We actually face a good 1990s in
many respects low inflation, lot of good structural
things there's no reason why this country can't get
back to decent rates of growth and more satisfying
levels of employment.
JL: Prime Minister thank you very much for your time and
let's hope we can talk again very soon.
PM: Thank you John.
ends