is.
PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING MP
INTERVIEW WITH PAUL LYNEHAM, 7: 30 REPORT, JANUARY 29 1992
E& OE PROOF COPY
LYNEHAM:
program. PM: Prime Minister Paul Keating welcome to the
Thank you Paul.
LYNEHAM: Are you getting used to the title?
PM: It takes a while I think, it takes a while.
LYNEHAM: Is it enjoyable still?
PM: Vezy I think.
LYNEHAM: Why?
LYNEHAM: Well for a start it's the greatest honour I think
any Australian could be paid, to be Prime Minister of the
country and the power of the job means that all of those
options one looks for in public life are available to you.
LYNEHAM: How does it compare to being Treasurer?
PM: I -think the workload's are about comparable but
its a different sort of work. It is more of an overview of
all the responsibilities of the Government and also an
overview of society.
LYNEHAM: Of course your critics would say you'd love to be
the boss wouldn't you?
PM: My critics say I'd love to be the boss?
LYNEHAM: Yes
PM: I mean I have spent 22 years as an apprenticeship
which is reasonably a long time.
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LYNEHAM: DoCes it make you more interested in a wage tax
trade-off?
PM: Well a wage tax trade-off is the principal reason
why Australian inflation is where it is. The 1989 tax cuts
which were $ 6 billion, I might add, just on $ 30 a week and I
might add without a consumption tax, those tax cuts stopped
Australia from coming out of this recession with inflation
at 8-9%.
LYNEHAM: Well are you interested in another one?
PM: Well they have been very effective but again
there's got to be, time has to be precocious for them.
First of all everyone has to want to do it, including the
trade unions.
LYNEHAM: Have you been on the phone to your mate Bill
Kelty? PM: No, and the other thing is the capacity has got to
be there, the result has got to be there. I mean they were
always done, I hope with a lot of aplomb, all the bits
fitted together at the right moment and the result was we
have now got the lowest inflation in the western world
thanks largely to the Accord with the trade unions.
LYNEHAM: Well thanks largely to the fact that the economy
is in intensive care.
PM: No that's not true. The recession has certainly
deflated prices, but we came out of 1982-3 with a
inflation rate, we are coming out of this recession with an
inflation rate at 1.5% with an underlying rate of about 3%.
The difference is wages policy, the difference is the
Accord, the thing the Liberals don't want and the thing
which has put Australia up the front in the inflation race
world wide.
LYNEHAM: Presumably 1.5% inflation does give you a lot more
room to move now as you contemplate how to prime the
economic pump a bit.
PM: Well obviously with the recession the way it is
the economy can stand some stimulation before we see demand
take off and reach a position where it is beyond where we
would like it to be. So if you are asking me is there scope
to stimulate the economy the answer is yes.
LYNEHAM: If you wanted an immediate boost to business
activities some would say why not let the dollar fall gently
to around 70 cents. Why have the reserve in there propping
it back up from 74 to 75 all the time?
PM: WeL1 I'm not here to give you commentary on the
exchange rate.
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LYNEHAM: Do you think getting it in a caucus spill gives it
the legitimacy that you get by going to the people and
actually getting their endorsement though?
PM: I think there's only three Prime Ministers who
have ever become Prime Minister at an election. Bob Hawke
did, Malcolm Fraser didn't, Cough did, Bill McMahon didn't,
John Gorton didn't..
LYNEHAM: Are you really fair dinkum now unless you have
gone to the polls?
PM: Harold Holt didn't, I mean as far as I know all
Australian Prime Ministers bar three became Prime Minister
other than a general election. This is true of Curtin, true
of Chifley.
LYNEHAM: Inflation at 1.5% does this mean we should all
expect lower wages outcomes than the 4.5 5% that's in the
current Budget?
PM: Well, the fact is we have had a better performance
on inflation than was generally believed and while I'm not
sure what the wage outcome for this year will be, obviously
there will be a real increase in wages, that is, with
inflation lower for any given nominal wage, that is, for any
given wage outcome there will be part of that wage outcome
will be a real increase in wages.
LYNEHAM: But should the outcome be so far ahead of the
annual inflation rate?
PM: Well success breeds success, it's the old story,
that is if you can do better you end up with the benefit, if
inflation is low the benefit is higher real wages. If at
the time whenr forecasting that and putting wages together we
believe we'd have inflation down to 1.5% obviously the
nominal wage outcome, or the nominal wage target would have
been lower.
LYNEHAM: But you don't feel inclined to try and ratchet
them down now?
PM: Well it's too late to do that now. The year is
halfway over.
LYNEHAM: It would make a wage tax trade-off a lot less
costly.-though-. wouldn't it?
PM: We" Ll there's no guarantee they will come out at
four and a -half, I mean it just depends on what, I mean
there is a recession out there, wage costs have been held,
the labour market deteriorated for the getting of wages,
even the enterprise bargaining slows up, so we are not
certain what the wage number will be yet. It could be lower
than that.
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LYNEHAM: Buat wouldn'It you get a lot of economic bang for
very little bother?
PM: Well the thing is the foreign exchange markets are
quite deep and I think now over the years quite smart, that
is, what they have there is a lot more depth and
understanding than there was in 1984 or 1985 and the
fundamental! 3 will always remain important, I think, for that
market and iLt's a mechanism to keep Australian commerce, thle
Australian economy competitive and what you are talking
about is that the recent depreciation of the exchange rate
has made us more competitive and that's obviously true.
LYNEHAM: But then the Reserve has gone back in and pumped
the dollar back up again.
PM: Well no I mean if a market wants to set a rate,
central banks, I don't believe can resist that rate, this
bank hasn't, and the result is that the place is more
competitive but again part of that has been the interest
rate changes in the period but it also has an attendant
inflation risk and that's got to be borne in mind as well.
LYNEHAM: Butt yesterday's NAB survey for example, suggested
that Australian companies who are operating now at about 76%
capacity wa-s a fair bit of slack in there before you have to
start to worry too much about inflation isn't there?
PM: Well exactly. You are making my point for me.
You asked me before is there a risk' on inflation and on
demand if we stimulate the economy and the answer is minimal
risk given the state of the economy, the state of capacity,
the very point you make.
LYNEHAM: So the dollar could come down, boost our exports
without too much immediate danger of inflation as long as it
is done gently and
PM: Let's leave the dollar out of that. Let's
just say..
LYNEHAM: Well the farmers don' t want to
PM: There is room f or a stimulus. I noticed today
that Dr Hewson, by the way, said there was no room for a
stimulus and. he came up the gobbledegook, yes well if you
want to do structural things which can improve investment
you -have gal: to make savings -somewhere else, but if it is
Budget neutral, in other words if you save what you spend it
has not stimulus to the economy. Now he was trying to brand
that as irrE-sponsible, of course it isn't irresponsible he
is the only one that shares that view, Westpac, Bankers
Trust, Citibank, a whole stack of institutions have made the
point that the economy can stand a stimulus and the
Government's now considering that.
LYNEHAM: But isn't there a balancing act that you have got
to make here. On one hand you have got warnings that there
is a distinct possibility that a dash for growth ahead of
the next election could precipitate a further currency
decline, I mean you have got to do something but do it very
delicately with aplomb as you say
PM: Well we have always done that. I mean I think,
look this Government has husbanded over the years a fiscal
policy which has been the envy of most countries and John
Dawkins and Ralph Willis and I and others have sat in that
room for seven or eight years cutting outlays to get the
size of the public sector down. We have earned ourselves
the room and the judgement to decide how we ought to treat
fiscal policy in a recession and we don't need to be told by
some jock from Citibank or somewhere else that they'll be
watching us if we do that. I mean, frankly, the Government
will be makiLng the judgements around here, we're the best
place to make them. Not only that, we have earned the right
to make them.
LYNEHAN: Yes, but you didn't do too well with the recession
bringing the economy in for a landing at 90 degrees.
PM: Well you might make the same point about the
United States which is in a recession where I'm told that
pessimism about confidence is at lower levels in Australia
about the same as Britain and New Zealand. I mean there was
a stock market crash in 1987, monetary authorities world
wide for a crash larger than 1929 avoided the depression
like 1933 but the result was a recession, but a recession we
will emerge from to a recovery and the main emphasis now has
to be on a recovery.
LYNEHAM: Well you spoke recently of taking economic risks
on inflation and on the current account.
PM: No what I said was in the 180s I always tried to
run Australia faster so that Australians had more jobs than
they would in a place where we were running it more slowly
and with the attendant inflation and current account was
being lower. I said the trick is not to be running the
place slowly with high unemployment and lost opportunities,
the trick : Ls to be running it with faster rates of
employment growth and at the same time lower inflation and
lower current account. In other words doing the hat trick,
and that's basically what the 80s structural change is
about, restructuring in the context of growth. Now in other
countries, such as New Zealand, they restructured in the
context of very. low growth or no growth or contraction.
There result is there is a much higher level of social.
misery. LYNEHAM: But: you have also got the political imperative,
you have got no time at all to spare have you? You have got
to perform the equivalent of the economic loaves and fishes
by the time of the next election?
PM: What I would like to see is a recovery coming
through as eEarly and as strongly as possible.
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LYNEHAM: How daring can you be though?
PM: Strong in the sense that it is sustainable in
terms of inf lation and demand and the current account.
Which it can be. I mean we have come a long way, remember
this we have got a cyclical problem with the recession, a
problem with the cycle. But in terms of the structure the
long-run structure, is low-inflation, structural Budget
surpluses, a competitive exchange rate mechanism, all of the
other changes, the wage and profit shares, the changes in
enterprise bargaining, all those competitive, efficiency
things are still there in the structure, for the ' 90s for
Australia, and they are put there by this Government.
LYNEHAM: A lot of it has not rung the bell yet. I mean
waterfront reform. When are importers and exporters going
to see the waterfront companies actually lowering their
charges? PM: That will happen because we have now reduced a
cost for themn substantially.
LYNEHAM: But not for the users.
PM: Let's understand this Paul, the Liberal Party left
us an industrial museum, they left us an industrial museum,
a country of industrial archaeology, from the Rip van Winkle
years of Menzies, we're the ones that had to
internationalise the place and we are the ones who are going
to finish the job. There is a limit to how much macro
economic policy, that's Budget policy, and interest rates
can change thie country and the tax system. We are now into
the micro economy. There are things like ports and wharves,
you know, airlines, telecommunications. They're the things
which are the constraints we are now pushing it through.
Now in contrast what are the Liberals talking about? They
are having a. debate whether we tax income or expenditure.
Well big deal. Big deal! Whether we tax income or
expenditure, not how you get a container between Sydney and
Melbourne, not how you get it across the water..
LYNEHAM: For all we've heard from your Government, if I ant
an importer or an exporter I am still not paying less on the
waterfront? PM: Wel. l you may well be but I mean, that will come
through. Wea have made the -changes. . Whether stevedore
companies have yet passed them on is a moot point, I'm not
sure. LYNEHAM: It's a bit academic unless its...
PM: There is a 40 per cent improvement in the wharves
and we are FLot f inished yet. But I'm just trying to say
this. We're the only ones that have ever tackled the
rutted-in, deep problems. The waterfront issue did not:
arise since we were in office. It's been there for
-7
years. How come the Liberals had 7 years of fice and did
nothing abolut it? How come when Dr Hewson was advising
Treasurer Howard, he said, listen Treasurer, what about that
waterfront and micro reform, what about those airlines,
Treasurer, what about the two airline agreement? What about
Telecommunications reform, what about the structural budget
deficit, wha~ t about the 10 per cent inflation.
LYNEHAM: What about we talk about
PM: These are all the things which we had to tackle.
LYNEHAM: What about we talk about the Morgan Poll. I mean
I know you said you would prefer to operate from behind.
PM: No, I. said I have always enjoyed coming from
behind. LYNEHAM: Well you certainly are aren't you. 28 per cent is
just about terminal isn't it? How can you get from 28 per
cent? PM: Look, I have never been out there chasing
popularity. I have always thought it was important to earn
one's regard, one's respect, and as Prime Minister I will do
my best to earn it.
LYNEHAM: But since the last poll, 7 out of 10 of those who
undecided then have gone against you. That's hardly a trend
you can afford to see kick along is it? 7 out of 10 of them
have given you the thumbs down and gone in for your
disapproval slot.
PM: And which poll is this?
LYNEHAM: Morgan Gallop.
PM: Since the last poll.
LYNEHAM: Yes, since the one before.
PM: Well I-don't know how you read that statistic into
it. LYNEHAM: You~ r approval went up 3, your disapproval went
down 7 and ycour undecided's went down
PM: Well. it. is a . very large. undecided group, and I
hope they decide in my favour.
LYNEHAM: Well 7 out of 10 of them gave you thumbs down.
PM: And I will be doing my best to earn their respect
and regard. And' I will not be picking up shabby policy, I
will not be making decision I am ashamed of, I will not be
selling the place out for a bit of cheap cheers. Now the
point is, I was part of the structural change from
Australia, to take it from that industrial museum to a
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country which is part of the modern world and will continue
it, and I'm not going to go into bribes, you know tax
options, and other tomn foolery a la the Liberal Party, i~ n
the process of trying to garner some regard.
LYNEHAM: Are we seeing a new Keating style emerging here as
Prime Minister? I mean you're certainly haven't called
anyone a perfumed gigolo, or a mangy maggot in recent
months. PM: Well I mean again, you use those points Paul, but
you've seen me in Question Time, basically in an educational
role for nearly a decade. Educating the Opposition to
policy and I hope the Press Gallery with forensic answers
which were wrapped in a bit of politics to paint the
picture, and it's always it'Is always the lolly in the
wrapper, its always suited the media to run the wrapper and
drop the lolly. Now the fact is I've used some of those
expressions once or twice in 20 years. Now if you want to
drag out Dr Hewson' s record already you will find something
there. You will find it from..
LYNEHAM: So you have been misunderstood?
PM: No you will even f ind it from John Howard, who I
know wants to keep policy as high or low up about all these
things. But the fact is, this is a clearing house of public
pressures. The House of Representatives. It's where we do
our national business. Now in some countries people decide
issues by shooting themselves across footpaths, or other
kinds of violence. We don't have any of that in our
political scene, fortunately. But we do have a vigorous
debate and I really don't think the media has a right to
score of f it all, report it all with all the colour and
verve and vivacity and technical accomplishment is often the
stock in trade of the Parliament and then pick up the odd
word to say, Oh now, isn't this dreadful. Well of course it
isn't dreadful and you know that in terms of, there is not a
Parliament in the world that takes a nswers without
questions. There'Is not a Government in the world required
without any notice for three quarters of an hour or an hour
a day to answer questions on each subject. That's the level
of general co~ mpetence which obtains here day in and day out,
and it is that which with lif ts the tone of the debate, but:
unfortunately it's not that which is always reported.
LYNEHAM: Well let's talk about one or two of f the cuf f
things . you -have.. said-since you. became Prime Minister. Your
suggestion that Bob Hawke's style was to let others lead for
him which was the antithesis of leadership. Why kick him
like that when he was already
PM: Oh look, I was not seeking to kick him. He made a
point to me, he made a point of trying to say to me that I
should change what he perceived to be my style. I was only
making the point that his style worked well for him, mystyle
is dif ferent and I hope mine works well for me. But
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LYNEHAM: that's not just a neutral comment?
PM: I just made that point about Menzies. Menzies put
Australia in the cooler for 30 years. Bob Hawke was the
Prime Minist~ er who took it out and I had the pleasure of
doing a lot of that work with him.
LYNEHAM: He wasn't too pleased by your remark?
PM: Well he might not have been. But his record will
survive that remark and many others.
LYNEHAM: Do you think he is going to retaliate? Do you
expect him to?
PM: I shouldn't think so because I don't think it was
a remark calculated to secure a retaliation or that warrants
one. LYNEHAM: Your other piece of outspokenness was accusing the
Coalition of an anti-Asian bias in wanting the immigration
intake cut. Do you really believe that John Hewson or
Phillip Ruddocc are racists?
PM: No.. I was saying I hope we don't have a repeat of
some of the 88 shenanigans and that I thought that some of
the remarks which have been made in by-elections ran that
risk. Now I didn't refer to any remarks, I didn't name
anybody, I just made that point and I was very pleased to
have Dr Hewson' s assurance that this debate, important as it:
is, will be conducted properly.
LYNEHAN: You don't regret stirring the possum?
PM: Wel. l I have just told you what my motives were.
LYNEHAM: The Statement you are planning will be March now
presumably will it?
PM: Well the timing is yet to be decided.
LYNEHAM: These things usually later than early aren't they?
PM: Well, there's a lot to be done, and there's not,
by any measure, a long time to do it.
LYNEHAM: What's-. the danger that. expectations are starting
to become unrcealistically high and that it could end up a
bit like an anti-climax?
PM: Well it's always a danger with any Government
announcement which is foreshadowed. But you know we've
been, I per~ sonally introduced 8 Budgets and 7 May
statements, -that was 15. About 15 years of Budgetary
presentation crammed into 8. So we have got an idea of
managing expectations and also what a package should
contain.
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LYNEHAM: And how risky can you afford to be in such a
package? PM: I don't think we need to be risky at all and won't
be. The f act is the Government can do two things here at
once. It can do things to induce a recovery, it can do
things which are of a stimulatory nature to the economy but
which add to a long-term productive capacity of the nation.
In other words, not costly Budget bangs which go up in smoke
but things which have a long-run benefit to the productive
base of the country. We have always got those things right.
And from the Government which produced the first structural
surpluses ever in the nation's history, the first huge
structural surpluses. From that Government you will see no
risky things but well thought through, sensible things which
will serve the nation well.
LYNEHAM: There's a danger isn't there that even if you can
get the economy going again reasonably well many voters will
give you very little thanks because many of them blame you
for causing -the recession in the first place.
PM: Well we also had 8 years of almost unprecedented
growth. We took the workforce from 6 million to currently
to this very day
LYNEHAM: With a million out of work.
PM: No, well we always had 600,000 out of work at any
stage. But -the fact is we created 1.8 million jobs, we lost
300,000 of them. Now that's a great pity, but we had 10 per
cent unemployment in a workforce of 6 million in ' 83. We
have got 10 per cent odd now in a workforce of 7.5 million.
The trick is now to get the economy growing again to take
those new entrants to the workforce. And the increment in
wealth, the wealth of this country which changed between ' 82
and ' 91, has been quite profound, I don't think we have
every seen anything like that in our post-war history. So
they have go-t to see us in the context of the 8 or 10 years
and not just in the context of the stock market crash fall
out, the boom of ' 88-89 which was induced by sharp lifts in
the terms of trade etc.
LYNEHAM: Amazing what not having a job and no opportunities
for your kids can do to the lapse of your memory how
Paul Keating used to be.
PM: . No no. Look the Government regrets the fact that;
there is a recession but if we were now growing as strongly
as we were in ' 88 we would be copping America's exportable
surplus, we would be copping Britain's exportable surplus,
we would have a current account which would make Australians
never forget any of this for the next 20 or 30 years. Now
what I'm hoping is that as we get out of this recession we
can get on wiLth it, recovery and not be burdened down for a
generation as we would be with an irresponsible policy which
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never made those changes. Now the fact is, the recession is
to be regretted, but let's get out of it.
LYNEHAM: Finally East Timor Prime Minister, isn't it simply
humbug for the Government to be expressing concern f or the
human rights for' the East Timorese, while ruling out one of
their most fundamental human rights, which is the
opportunity for some sort of senseless self-determination?
PM: Well, I think that matter would have been
appropriately taken up perhaps in the middle ' 70s and that
matter, I thiLnk, largely passed Australia by then.
LYNEHAM: Haire we dropped the ball then, and they are then
condemned to suffer now?
PM: We" Ll, I hope not condemned to suffer. That is
that we have deplored the events in Indonesia but at least
we have seen disciplinary action taken by the Indonesian
Government against the people in the military who were not
responsible but who presided over as commanding officers of
the groups of soldiers involved. And we've seen remarks by
President Suharto and the presentation report and the action
which he took upon that presentation which gives us heart to
believe that the final report will be a report of substance
and where clear action will be taken. So in other words we
will see some change of behaviour or light or future
behaviour as a result of this unfortunate occurence.
LYNEHAM: And should it worry our national conscience that
they are ther7e, our northern neighbours without any right to
determine their own future?
PM: Well I mean this is always a problem, I think
Indonesia came at this issue in the ' 70s from what ii;
believed was the post-colonial arrangements in this part of
the world. That's what I think spurred their action at that
time. Rights of self-determination are obviously something
which we have fought for. In fact we f ought for the right
of self -determination for Indonesians themselves in the
1940s. But a lot of water has flowed under the bridge since
that time, and I'm not sure it's a realistic expectation
that Indonesia will surrender control of Timor.
LYNEHAM: Even to the East Timorese?
PM: Even to the East Timorese.
ENDS