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Date: 9 February 1992 Time: 0900
Source: National Nine Network Program: Sunday
JIM WALEY: Tim Ie is fast running out for Labor to dig
Australia out of recession. New Prime Minister, Paul Keating,
has very few shots left in the locker. His first will be the
economic statement to be delivered on February 26th. Mr
Keating is nowr sifting through the wish lists of business and
union leaders lists that include large increases i~ n
government spending, investment incentives for industry, arid
superannuation reform. In the Prime Minister's latest catchcry
he will be trying to do the hat-trick of creating jobs
while keeping inflation down and lowering the foreign. debt.
Mr Keating is with us this morning. To talk with him Sunday's
political editor, Laurie Oakes. Laurie-
LAURIE OAKES: Thanks, Jim. Mr Keating, welcome to the
program. PAUL KEATING: Thank you, Laurie.
LAURIE OAKES: On our last program last year our guest was
also the Prime Minister a different Prime Minister. Has the
change at the top made any difference for ordinary
Australians? PAUL KEATING: Well, I mean this is a Labor Government; there
will be a continuum in the policy but there'll obviously be a
change in direction of some substance and there'll be a change
in style. So, yes, there will be a difference but there will,
from front to back, be a continuum in the general direction.
LAURIE OAKES: Well, if that's the case what's in it for
ordinary Australians? They've seen you squabbling for the job
but now you're there what's in it for them?
PAUL KEATING: When I say ' the continuum' the change is one
of internationalising Australia; making Australia an
externally oriented country and making that change, completing
that change, arid in this case bringing Australia out of a
recession and into a recovery. It is that, and the speed of
that change and the quality of it, which I'm addressing myself
to now and which will be different than what obtained in 1991.
LAURIE OAKES: So you are better equipped to do that, in your
view? PAUL KEATING,: Well, I think in the Party's view. That was
what basically the election was about.
LAURIE OAKES: The former Prime Minister is obviously planning
to jump ship fairly soon. Can Labor win a by-election in
Wills? PAUL KEATING: I'd like to think we could, but that's a matter
for Bob. It's always been. It's a matter for anyone who's
served this long in high public office is entitled to do as
they please, I think, and if it's Bob's view that he's better
out of the place, that's fine. If it is his view that he'd
like to stay there, he can certainly stay with, I am sure, the
support of everyone in the Caucus and certainly mine.
LAURIE OAKES: The Party is very pessimistic, though, -about
Wills. If you lost that it would obviously be damaging and
presumably it would be seen as a rejection of your economic
statement, wouldn't it?
PAUL KEATING: Well, I should look, let's not jump hurdles
before we come to them but let's also not kid ourselves we're
in a recession. We've been doing badly in the polls. If we
lost Wills last month, this month or next month, in a sense it
would be simply part of what the Labor Party would have to
face whenever it sticks its head up electorally ahead of
getting a recovery going; ahead of putting its changes into
place and having its changes work. So I'd like to think we
could win Wills if it was if it is a vacant position. If it
isn't, well there's no it's only speculation. If it is,
then I'd like to think we could win it. But, by the same
token, were we to were we not to it would be part of the
price we paid for the recession and our general tardiness in
coming out of it.
LAURIE OAKES: If unemployment is still in double digits at
the time of the next general election, can you win that?
PAUL KEATING: Well it depends where the direction is, I
think, Laurie. If the direction is unemployment is
stabilised and coming back, the answer is yes. If
unemployment is still rising, much more difficult. It's a bit
like interest rates in the 1990 election. The convention
wisdom was, with interest rates, if you've got high interest
rates you can't win a poll. Now I used to contest that often,
and we did win the 1990 election and I would contest the view
that a win is not possible with high unemployment but I think
the direction of the economy becomes then terribly important.
LAURIE OAKES: So if unemployment is still at 10 or 11 per
cent you can win if the public sees that it's coming down?
PAUL KEATING: If they think the direction if it's
stabilised and heading down and the direction's changed. That
is, the place is coming out and we've preserved all the big
benefits, low inflation, that we've got the exports still
running strongly and Australia will have a secure place in the
LAURIE OAKES: It seems that
PAUL KEATING: The worst thing would be to have a recession
and then find yourself in the 1990s in a terrible long term
economic hole. That we can avoid and I think if the nation
know we've avoided that that we're not going to go the way
of Argentina or some of these other countries that just can't
pay for their imports, that just can't deal with their
inflation rate, that just can't deal with their structure. If
we do all those: things and we can because we're going to
come out of this recession in much better shape than 1982-
83---
LAURIE OAKES: But it's unlikely, isn't it, that unemployment
will be below 10 per cent when you go to the polls or much
below that?
PAUL KEATING: Well, let's wait and see.
LAURIE OAKES: You've got no projections on that?
PAUL KEATING: Not at this stage, no.
LAURIE OAKES: The last time you were on this program was back
in June on the clay before your first unsuccessful challenge---
PAUL KEATING,: M~ m.
LAURIE OAKES: And in that interview you promised a touch of
excitement. What's happened? It's been more hesitancy and
uncertainty than excitement, hasn't it?
PAUL KEATING: 1' don't think so, Laurie. I think that Let
me repeat what one Cabinet Minister said to me last week. it
was said to me that the Cabinet meetings are again exciting
are again exciting and I did say at the time that I thought
we lacked a bit of esprit de corps and a touch of excitement,
and I think that's coming back. I mean, I've seen this sort
of You've ju[ st mentioned this line about me being nervous.
I mean you can't win with the journos. For years I was too
arrogant. For years I was insufferably arrogant and for six
weeks I've had me head down working out what we should do with
the place, and how to do it, and now I'm too demure. I mean
now, Laurie, my job is to produce a statement which gives hope
to the Australian people but I'm not going to be doing sort of
bird calls on tele while I'm at it. I'm not going to be in
there cooing around the television sets while I'm doing it. I
mean, it's a serious job of work and it has to be done. One
has to find one's way through it. I'm trying to do in six
weeks what would normally take us six months but the
enthusiasm within the Cabinet, the good will, the focusing on
the job is more than I could have expected.
LAURIE OAKES: Do you think that excitement will spread to the
public when the stateament emerges?
PAUL KEATING: Well Laurie, look, this Government taught
Australia about economic change. I mean in the decade up to
1983 there was no economic change in Australia. . It's this
Government which produced the economic change. It taught the
press gallery about change; it encouraged the public into
change; and now what's good for the system is the public's
pushing the political system for change. Now, I want to keep
that change going but now we're in the harder parts of the
changes. We're past the big macro changes. We're into all
these areas of the micro-economy wharves, ports, airlines,
telecommunications where you're dealing with States; you're
dealing with p) rivate companies. It's not just things which
are in the Commonwealth exclusive realm. You're dealing with
others so you can't do it as quickly. But I'm trying to do
now things which induce a recovery, but at the same time
provides a long term plan for Australia, that's actually a
long term plan which means we've got to comprehend a lot of
these issues, and to do it in six weeks is hard work that's
going to be difficult to do and we're trying to beat the clock
in a sense. Australia needs it; it needs it now and that's
what I'm about and I mean this is the sort of inter regnum
over Christmas and in the parliamentary period and things
always go down a bit and the journos are always looking for a
story a week and the answer is they can't have one.
LAURIE OAKES: Before we go into detail on domestic issues,
you said on that Sunday program back in June that Australia
had to have a better idea about the region we live in. You
said we didn't pay enough attention to New Zealand and, more
importantly, to Indonesia, and certainly not to Japan. Well
now you're the Prime Minister what are you going to do about
that situation?
PAUL KEATING: Well I hope a bit quite a bit. And I've
already had the benefit of two very long discussions with
President Bush about the Pacific. I've already put to him our
view that we need a better political and institutional set of
arrangements in the Pacific and the United States should be in
them; that Japan should be playing a key role in trade
liberalisation in the region and itself. And I'm also
interesting myself in issues which affect us, such as New
Zealand.
LAURIE OAKES: Are you going to visit Indonesia and Japan, for
example? PAUL KEATING: I may well do, Laurie. I think if I for
any visits I'll be having they'll be to the Asia-Pacific area
before anywhere else. But my job at the moment is to focus on
domestic issues and to get the domestic issues right.
LAURIE OAKES: You're not going to make the ritual trek to
Washington and the capitals of Europe? Wouldn't that be the
normal thing for a new Prime Minister to do?
PAUL KEATING: Well, maybe, but I don't think In fact I've
had the benefit of an American president coming here which
is unusual for us and obviously saves me the time of going
there in a useful exchange of information and views. So I
won't be doing the northern hemisphere thing but I'd like to
be doing the Asia-Pacific thing but I'll be doing the
Australian thing first.
LAURIE OAKES: Prime Minister, we'll take a break there and
get on to the detail of the economy in a moment.
PAUL KEATING: Good, Laurie.
( Short commercial break)
LAURIE OAKES: Mr Keating, ACTU President, Martin Ferguson,
says that when you deliver your statement on Wednesday
fortnight you will be on the mat. Is that how you see it?
PAUL KEATING: I don't think so, but I think if he means that
there's an expectation that the Government will deliver a
statement for a recovery and a longer run program of change
for Australia, a plan for Australia, to that extent he's
right. That is, not that we're on the mat but much will be
required of us.
LAURIE OAKES: But if it doesn't get a good reception you're
just about dead politically, aren't you?
PAUL KEATING: Well I think it will, that's the point, because
we are doing things to accelerate the recovery but at the same
time doing it the way which does provide a long term for this
place; a plan for the long term. So we're not going just to
have a big fiscal bang that goes up in a puff of expensive
smoke but things we'll be doing will have a long run benefit
and form integrated parts of a long term plan.
LAURIE OAKES: How wide, how broad is it going to be? Is it a
mini-budget in the sense that you'll be looking at pensions as
well as things to create jobs?
PAUL KEATING: It'll have a productive focus, Laurie. I mean
the great need of Australia is to continue to lift its
domestic capacity so it'll have a productive focus.
LAURIE OAKES: Does that include things like pension
increases, though? Or will that have to wait until August?
PAUL KEATING: Not necessarily, no, and---
LAURIE OAKES: That won't have to wait?
PAUL KEATING: No it doesn't not necessarily include them
and they are things which more particularly are confined to
budgets but the Cabinet hasn't completed its consideration of
all these issues but I just say it will have a productive
focus about it.
LAURIE OAKES: Just while we're on that. What's your view of
welfare? Do you think there's room in a recessed economy for
pension increases at the moment? Can they look forward to the
Budget with some optimism?
PAUL KEATING: This Government increased they extended
increased outlays through the ' 80s which was quite strong but
we had spending failing as a proportion of the total economy
because the economy was growing so fast in the ' 80s. That's
not to say we didn't spend and we spent Every spare dollar
went in either tax cuts or transfer payments. So we lifted
all of those social security benefits and payments and
targeted the system. So we've now got a very closely targeted
system, but as generously applied as fiscal policy in this
country could permit, and I think that still remains our
policy. We'd always like to be improving the system where we
can but budgetary policy matters.
LAURIE OAKES: Well ' what about tax cuts? Could they be within
the scope of the statement? Or are they also budgetary
matters? PAUL KEATING: There's a lot been said about them but what
motivated the tax cuts in the past? The answer was
inflation getting inflation down, reducing nominal wages
growth in lieu of tax cut for inflation control, for
inflation. We" ve now broken the back of Australian inflation..
We've got a statistical rate of 1 and an underlying rate of
about So we're down there with the best of them. So I
think that the focus and the target now has to be inflation
and everything else has to fit into that. I mean that's got
to be maintained and we won't, for our part, be doing any
inflation-wrecking, like Dr Hewson with his 15% tax on
everything everyone spends goods and services. Having
broken a 20-year problem we won't be letting that genie out of
the bottle again. That is, we'll be trying to keep it there
and wages our wages policy will be tailored to our policy
on inflation. Tax cuts will simply fit into that context.
Now, whether or not we provide tax cuts, whether or not they
can be useful, what positions we take before the Commission,
will be governed by one thing inflation.
LAURIE OAKES: And when do you decide this? Negotiations are
this week, aren't they, with the ACTU on that---
PAUL KEATING: We're going to meet them in a week or so's
time. LAURIE OAKES: So, is a wage-tax trade-off one of the options
still? PAUL KEATING: It's an option but the primary option is
maintenance of low inflation levels. There's got to be a sort
of a change in attitudes here. In the ' 80s we were always
about aggregate wages growth, aggregate wages growth,
aggregate wages growth targets. Now we're about maintaining
pinning that inflation number.
LAURIE OAKES: There's been a lot of confusion about your
wages policy, partly because of misreporting, I know, but I
guess the key question is, ' Will the Government support an
application for a general wage rise this year?'.
PAUL KEATING: Well, we'll see.
LAURIE OAKES: Bob Hawke committed the Government to do that,
didn't he?
PAUL KEATING: But I'm committing the Government to low
inflation rates.
LAURIE OAKES: So a Hawke commitment is not necessarily a
Keating commitment?
PAUL KEATING: It's subordinate to the commitment to low
inflation subordinate to the commitment to low inflation.
LAURIE OAKES: What about the speculation about a likely shake
up in the aviation industry? That's caused more excitement
than anything else, I think, in the run up to this statement.
Are we going to see an open skies policy?
PAUL KEATING: We're looking at options in aviation, Laurie,
again, can I say, the first government in a quarter of a
century to do so. But one thing we are determined about and
that is Australians had a taste of deregulation with Compass.
They had a taste of the low fares and they liked it because
they had mobility which was formerly denied to them. Compass
failed essentially because it was badly managed but one of the
issues in that is ease of access of entry into competition..
So one of the things we are looking at is the provision of
common user terminals by the Commonwealth so that entrants are
not carrying that burden and don't have to squeeze themselves
into the Ansett or Australian terminals to start. In other
words, they're in a competitive environment which is their
own. Now, there's a line between where the Government's role
in this starts and finishes and where the private sector role
starts and fini. shes and we'd like to try and get that line
right but at the same time we want to give Australians the
benefit of the opportunity of competitive fares---
LAURIE OAKES: And these would be new terminals?
PAUL KEATING: New terminals. But not letting the two major
airlines drift back into old habits of higher prices. In
other words, with the competitor out of the way seeing the
fare structure drift back up. We'd like to see room for
competitors but obviously the Government can't be providing
competition. We can't have two, three, four airlines owned by
the Government. That's not going to be on any more than
trying to fix Compass's financial problems were on. But we
can do things which make for ease of entry and ease of
competition and competition will be important to us.
LAURIE OAKES: Does that mean you don't want Qantas running
domestic services?
PAUL KEATING: Well that's another issue and that is on the
big canvass of policy and that's something which, you know, we
may or may not get around to.
LAURIE OAKES: And will all this affect the privatisation of
Australian and the partial privatisation of Qantas?
PAUL KEATING: The whole environment matters because we've got
these things up for sale. Obviously a bidder is going to say,
' Look, what's on here? What's going to happen after the end
of this year? What's the environment going to That's
for Qantas and Australian and obviously that's on our mind,
too. LAURIE OAKES: In the run up to the leadership challenge you
promised Senator Rosemary Crowley that the Medicare co-payment
would be dumped if you became Prime Minister. Now that's a
Keating commitment., Are you going to stick to it?
PAUL KEATING: My private views about this have been well
known. Over the years, as Treasurer, I never supported copayments
and I wouldn't have supported one in the Cabinet
discussion but there is one and what I've said is we'll debate
this properly in the Cabinet, and we will.
LAURIE OAKES: But if you go into Cabinet and say, ' I want
that dumped; it will be dumped' is that what you are going
to do?
PAUL KEATING: I don't think I should be saying to the Cabinet
you must do this or must do that, but---
LAURIE OAKES: You made a commitment.
PAUL KEATING: But my position is that I don't believe the copayment
was the right way to go.
LAURIE OAKES: And you accept it if Cabinet takes a different
view they make a liar of the new Prime Minister?
PAUL KEATING: Well, let's wait and see, Laurie. Let's wait
and see. I mean, the Cabinet's sensible. They look at all
these things. They've had some chance now to weigh up the way
in which this is working and also to get a greater level of
public reading. So let's wait and see.
LAURIE OAKES: Do you agree with some of those committed
royalists, who've changed their mind recently, that this royal
visit's going to cost too much money and it's a ridiculous
extravagance in a recession?
PAUL KEATING: Well, no I don't. The Queen is our Head of
State. She visits here I suppose regularly, but in a sense
irregularly, and I don't think those costs matter. Can I just
say, from my part, this visit was arranged well before I
became Prime Minister, anyway, but any request by the Queen
for a visit would ordinarily be approved of by the Government.
LAURIE OAKES: But it's $ 1.6 million that you could spend on
helping the unemployed creating jobs in your economic
statement. PAUL KEATING: But $ 1.6 million is not going to change the
world and I don't really think that's an issue. I don't think
it's an issue, Laurie.
LAURIE OAKES: What's the ball park for you, looking at
business representatives where some have told you the country
can afford $ 2 billion to kick start the economy. Will you
accept that figure?
PAUL KEATING: We'll make our own judgment about it. We've
been doing that in the 16 or 17 statements we've introduced
since 1983. We've made our mind up about what we thought was
appropriate and what we thought the Budget could stand and
we'll come to the right figure. The public debate's
interesting and it's always interesting and it's relevant.
LAURIE OAKES: Do you accept there's some concern about the $ 2
billion figure on the money markets?
PAUL KEATING: Oh;, there could be but I mean money markets are
a bit smarter than I think the media gives them credit for.
They've been around. We turn over $ 40 billion a day in the
dollar. They're not bunnies. They've been around for
nearly a decade.
LAURIE OAKES: We're just about out of time but I suppose the:
overall question people want to know from Paul Keating is have
you abandoned you level playing field philosophy? We've got a
new interventionist Paul Keating who's put all that stuff
behind him.
PAUL KEATING: I just know it's a bit of the program about
level playing field and clothing, textile and footwear. I
mean there was nothing level about asking Australians to pay
300% duty on shirts and 320% on shoes and the rest. The fact
is let's get this clear there is no concept of a level
playing field outside of Australia. Outside of Australia you
just cross the low water mark it's catch as catch can
everywhere. They all cheat. They all muck about. They all
play favourites. But inside you're only cheating yourself if
you run policies which have scarce national savings going to
the wrong places. Now, what we've tried to do is make sure
that our scarce savings go to the most productive places and
the most productive places are not necessarily putting
buttonholes on shirts or collars, which are highly labour
intensive, where we're never going to be competitive, compared
to a very productive place which can actually add to our
national wealth employment in the current account.
LAURIE OAKES: Well what about the 30-xxx ( tape failure)
jobs in textile, footwear and clothing industries?
PAUL KEATING: This change was on from 1988. We had a vast
rate of employment growth through the ' 80s. A lot of those
people were taken up and hopefully they will be taken up
again. At the moment we are in a recession but, again, now is
not the time to change structural policy. So if you are
asking me, which is really what you are saying, ' Is there any
revisionism on the vision splendid?' which is to
internationalise Australia emphatically, no, but---
LAURIE OAKES: Mr Keating, we're out of time.
PAUL KEATING: But let me say this, Laurie, that that's not to
say that we are going to be taking an absolutely hard and fast
attitude to every single issue that comes along; that where a
bit of latitude is important and useful that's what we'll be
about. LAURIE OAKES: Thank you.
PAUL KEATING: Thank you, Laurie.
LAURIE OAKES: Back to you, Jim.
JIM WALEY: The Prime Minister there, with Laurie Oakes.
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