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PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING MP
INTERVIEW WITH HINCH, CANBERRA
27 FEBRUARY 1992
E OE PROOF COPY
H: And tonight it's good evening live, as you can see
behind me, from the marble foyer at Parliament House.
We are here for a special broadcast tonight, to follow
up the release last night of Prime Minister Keating's
Economic Package, ' One Nation'. A package that he
says, is the best hope to kick-start a sick economy out
of a recession he once said, we had to have. A program
he says will generate 800,000 jobs in the next 4 years.
If, and the polls show it's a big the Australian
voters elect a Keating Government at the next election.
Tonight my special guest in the exclusive interview
after a torrid and controversial day in this House, if
we can ignore the bells, Prime Minister Paul Keating.
That's coming up next. I'm Derryn Hinch.
H: In this House this afternoon I heard you in full
flight, I thought you might not have a voice by the
time you got here tonight.
PM: Oh no, just a cup of tea gets me going again.
H: I should say, welcome to day one of the election
campaign, shouldn't I?
PM: Not really, I think that the Government took the view
that the economy was not recovering quickly enough. We
had to do something to try and induce, to put a
stimulus in it, to get a recovery going and to do some
sensible productive things while we are at it. Now,
there is no doubt it will have some impact on the state
of the parties, but an election is so far off that,
it's far enough away not to be able to say what
influence it can have.
H: Well, after all these budgets, all the Mini-Budgets,
the Summit, the J curves, whatever, why should the
Australian people believe Paul Keating this time?
PM: Well look, the recession has marred what was a fairly
unblemished record for growth and employment for the
Government. From 1983 to 1990 we had very fast rates
of growth and very fast rates of employment. But the
recessicon has knocked that off. It means that we are
now not growing fast enough to take up school leavers
and other entrants to the workforce, but what we wish
to do is: to go back to doing what we were doing in the
that's growing Australia, pulling that employment
out of the economy and finding jobs for people.
H: Now, yout have said recently, that you regret using the
expression, ' a recession that we had to have', and it
has come to haunt you hasn't it?
PM: Well, it: was a slow-down we had to have. You see, we
were spending twice the capacity the economy could
produce, so it was slow-down we had to have. When you
knock 0.1 out of GDP, it is a recession. And the day
that happened I said it was a recession we had to have.
Now as the recession got deeper it seemed like an
H: Cool, Callous
PM: an uncaring thing to say. But it was really
shorthand for the slow-down.
H: When youL talk about the recession we had to have,
initially you did not mean it, but did you think it?
PM: It was aL slow-down we had to have. You see, we had,
it's as simple as this, we had spending running at 9
per cent: growth and we had product, the economy,
running at 4. So 5 per cent was coming as imports, so
we had t~ o take the 5 out. Now, if you can do it
precisel~ y and take the 5 and none of the 4, you are
set. But what happened we cut into production and
that's cut into employment, that's where the recession
comes.
H: But your Government, you, the then Prime Minister
Mr Hawke, kept saying there wasn't a recession, there
would not be a recession. You went into an election
saying there would not be a recession, and there was
and you personally, whether it was right or wrong, you
personally are blamed for it.
PM: I know that, I think every Treasurer is. But there is
a similar recession in the United States, Britain,
France, Canada and they are all deeper than Australia.
And I think the thing we did not figure upon was the
big coll. apse in asset values world-wide. When the
world-wide financial market system decided that low
longer funds, asset values of properties, of stocks, as
that dropped out of the system, we were bound to have,
as it turned out, a recession. Now we thought here we
could avoid that, we could fine tune it down so it
didn't quite happen, but it did happen.
H: But you are the experts and Joe Blows like me, we all
seem to know, and our bank managers certainly knew, and
small businessmen seem to know and the guys whose home
loans jumped when you lifted the ceiling, jumped to 18
per cent, they seem to all know long before you did,
that thiLs recession was hurting like hell all over
Australia.
PM: We knew it was hurting. We knew the slow-down would
hurt, but it was whether it would cut into production
and employment was the issue. And whether we could cut
the excess spending out, but without cutting GDP,
without cutting the economy. But the collapse in asset
values, the fact that we actually pulled inflation.
See, in the last two years Derryn, we have taken
Australian inflation down from 7 per cent to 1 1/ 2. As
that's come out, it's had quite traumatic effects
inside the economy, that is the reliance upon property
prices continue to rise, and all other asset prices.
With that gone so was the confidence that you could buy
an asset; and sit there do nothing and the rise in value
went with it. So the banking industry decided not to
keep funding these things and that's where basically,
the dept~ h of the recession has come from.
H: But also, apart from the non-funding, the interest
rates went through the roof, and for a while there you
did not mind that.
PM: No, that: knocked the spending out. But remember this I
knocked interest rates down, in January ' 90, over two
years ago. It shouldn't have given us a recession of
this depth. It's a combination of interest rates and
the coll. apse of asset values, and the fall in
inflation, of expectation.
H: Does it scare you, we'll come and talk about jobs after
a break, but does it scare you that you have this image
as the grim reaper, because of the recession, because
of the collapse of the small business especially,
because of people out of work, how can you go on to win
an election when you have that reputation?
PM: Well, I will just make this point, that in the years
that I wras Treasurer and including to this day, we
producedt in Australia 1 1/ 2 million jobs. We actually
produced 1.8 million and we lost 300,000 in the
recession.
H: How many of them were in the Public Service?
PM: Virtually none. They were all private sector jobs,
million. In the previous 7 years, under John Howard
and John Hewson, that period, including their
recessio'n, they created 350,000. That is, 1/ 5 of the
jobs that the policies associated with me created. But
what I say is, don't look at our 1 year or 18 months,
look at the whole 8 years.
H: Unless you want the people out of work?
PM: Well OK. People are entitled to take the bat to you if
they are out of work. I accept that. But again, what
I want to do is get into a recovery and get cracking
again.
H: Mr Prime Minister, we'll take a break and come back and
talk about jobs from Parliament House.
H: And back with the Prime Minister. Mr Prime Minister,
800,00 jobs in 4 years. Got good headlines this
morning, very ambitious and sounds great. But most of
the 800 surely will be 3 years down the track when you
may not be Prime Minister?
PM: No, no, we would have about the first 150-200,000 in
the first year.
H: And therefore, 600-700,00 when you might not be Prime
Minister?
PM: Well, that's a possibility, but they will still be
there, whatever the outcome of the election, they will
still be there Derryn. I mean, the fact is, that these
are not phenomenal. Employment and the production of
the economy are very closely related. If the economy
grows, employment grows. If we get the economic
growth, the' employment comes through.
H: What scares me about these figures is, you've ( lot in
1996, 800,000 jobs, you say, that means 4 years from
now, unemployment will still be over 7 per cent.
That's your projection?
PM: With a very high level of participation. Very high
level of people looking for work.
H: And of -those people, anybody who have been out of work,
long term unemployed, unemployed for more than 12
months, there could be between 300-400,000 of those in
that number?
PM: There could be good quarter of a million in that
number. That's a lot.
H: What worries me is that you and I, believe it or not,
are exactly the same age virtually. We are 48, we've
both got jobs at the moment. But what of the guys of
our age who look in the shaving mirror in the morning
and know they will never work again. What do you say
to them?
PM: Well, I think that they will, because you see, the
velocity... Let's take the late ' 80s, when we had
unemployment down to 6 per cent, because the change is
about 4 per cent, it is not 10, it's about 4 because we
never ever got the below 6. But it's like a pool.
People come into one end and go out the other. It is
the time they spend in the pool of unemployment that
matters. The velocity of movement through the pool,
and if we can speed economic growth up, the movement
through the pool, there still may be 9 or 10 per cent
unemployment in the pool, but the time through it and
out the other side is quicker. So that's what matters..
If you can get the growth up, you can get the
employment. And we should get growth of the order...
Look, if we can't grow at 4 per cent a year Derryn,
which is what I have got in these forecasts, we ought
to give the game up, the whole lot of it.
H: People are saying that you can't grow at 4 per cent.
So what happens if you don't?
PM: Well, we have always grown at 4 per cent through the
anti we can grow again. If we can't run the
Australian economy... You need 3 per cent a year to
simply -take the new interest of the workforce uip, not
to touch unemployment, just to take the new ones. You
need 3 per cent growth. If we can't do 4, we should
pack it in me, the bureaucracy, the Parliament, the
lot of us.
H: Would you?
PM: Well, I mean the place can do 4. It should be able to
do 5s. All of the countries around us can do 6, 7 and
8 per cent a year growth. The reason we can't do
better " than 4 is that we've had this lousy equipment
stock from the ' 60s and ' 70s. We can't run faster than
4 without spilling into imports. So what we are about
now, is trying to run it at 4 and gather the capital
stock back.
H: Coming back to the credibility thing where back in the
you said, ' hang on, we are setting our sails'.
PM: But we dlid, we had more growth than they have ever
seen. The trouble is it wasn't sustainable.
H: Then you would have had about as much chance as setting
your saiLls as Australia in the next Americas Cup?
PM: But no, we did 4.2 on average. The previous 7 years
was 1.8 on average. The last 7 or 8 years was 4.2 on
average. It ran twice as fast. The problem is,. it was
a spendiLng spree at the end. I mean, we had every
punter, sort of buying property and shares and stocks
and taking over companies. We never had the savings to
go around and the Government said look, we can't go on
borrowing from the rest of the world, we have got to
pull it all back to something we can live within.
That's what it was about. Now, when we go out of this,
what are we going to go out with? Low inflation, 1 1/ 2
to 3 per ce ' nt. We are going to go back with a good
profit position in companies, we are going to back with
a good level of investment, with now a new tax regime
which is also going to help investment and with it will
come good employment.
H: Let's move on to GST because I was in the House this
afternoon and obviously, that is going to be the major
issue you will stick to John Hewson over in the months
ahead leading up to the election.
PM: It is such a dull idea.
H: Well, if it is such a dull idea, do you recall, back in
1985 in the economic summit, that was your preferred
option, 12 1/ 2 per cent wasn't it?
PM: Yes.
H: You fought like tooth and nail for it.
PM: I did.
H: You got rolled and looked shocked when you got rolled,
by the deals that where made. Do you know what you
said about GST after that? At the press conference?
Have a look at this for a few seconds.
" It's a bit like Ben Hur. We've crossed a line
with one wheel off".
H: What's your campaign now?
PM: Well, I will tell you what it is. The direct tax
system the income tax system, was then like a bag.
You've seen these bags of water which you see in the
bush, it: was like a bag of water with holes in it. The
holes were the tax avoidance that dripped all the water
out of t~ he bag. So when governments get desperate and
they can't fix their tax system, they say, look don't
worry, we will get it when they spend it. So you pull
a plastiLc bag under the bag, that's the GST. When the
GST was refused to me, I fixed the holes in the bag. 1'
made the Australian income tax system totally secure.
It didn't need..
H: So you now say the GST will now work?
PM: It doesn't need another thing receptacle underneath it
to collect it from
H: I watched you in the House today, and you are saying,
taxing the clothes on kids backs, taxing their food on
their table, and I recall in radio days criticiLsing you
for using that exact same language.
PM: But we h-ad massive compensations in that package. This
is not true of this thing. And can I also say, in
Italy for instance, Governments there couldn't run the
tax system, it was just haemorrhaging away. So I said,
' don't worry, let's not try and fix it, we will collect
it when they spend it'. But in Australia we did fix
it. In the
H: Sorry Mr Prime Minister, it is live and we have got to
put the plastic bag on the water, bush bag, we will
take a break, we will be back.
H: And back in Canberra live with the Prime Minister.
PM: What I was saying before we went to our break Derryn,
fringe benefits tax, capital gains, removing credit
cards, free lunches, all those things plug the tax
system. We ' made the direct tax system totally secure.
So now, to build a consumption tax is simply to shift
income around. It is not to repair the tax system.
That's why now we don't need it. And it always had an
inflation risk and the reason I was refused in the
middle ' 80s is we could not guarantee wage reduction,
that is, wage changes to get the inflation rate down
and John Hewson can't get those wage agreements either.
H: Alright, speaking of John Hewson, you don't personally
like him do you?
PM: Well, they're opponents, it is a professional matter.
H: But you can, have professional matter, but you don't
personally like him?
PM: Well, I don't think he stands for much. He is sort of
a boy from the wrong side of the tracks who has sort of:
gone to the other party to look after the wealthy
people : Ln this country. He has given up on his own
people and I don't admire that, you see. I think if
God has given you enough brains to do anything you
should at least represent people that need help.
H: Well, people around here today, some people on both
sides, t~ ell me that you and Hewson are virtually
obsessed with each other?
PM: Oh, no, no, no. Well, he might be with me, I'm not
with hima.
H: Because watching you today, and some of the brawls
earlier this week, it's like two school teachers
brawling, while the school is burning down.
PM: Oh, no, no, no. I mean, last night I produced a
statement of substance that changed the way Australia
is. Look, all those great big things, rebuilding the
railway lines, the ports, the roads, a new airline
system for Australia. This is real reform.
H: Yes, but the road recovery one worries me a bit,
because we had this huge bicentennial roads campaign
all over the country, it didn't stop the recession
hitting us?
PM: But the point I am making is, what we are about here,
always been about here is reforming the place and
making it better. Now the Parliament and theatre of
the Parliament is part of all that. It is part of all
that. People should not mistake the substance for the
shadow. The substance will always be the changes. Bul:
that's not to say that in the theatre of ideas, which
is the Parliament, you won't have a joust about: ideas
and about arguments.
H: So a lot of it is just show-business.
PM: No, no, it's about how you debate things out. It's how
the psychological balance of politics changes. That's
what the House
H: Alright., today's effort, are you going to get a caning
probably from a lot of people, especially royal. ists
tomorrow, about your outburst today about the Brits,
about people getting knighthoods, you really went full
flight on that didn't you?
PM: Well, I hate this sort attitude you still get from John
Hewson and Howard and others, that we should be still
sort of tied up with Britain and that we don't have own
cultural identity and some way we are not as entitled
to be as proud of where we stand independently in the
world wiLthout this sort of connection. I mean this
sort of foggysm held Australia back for generations.
H: I eavesdropped on a couple of politicians in the lift
today, -just after you had said that in full flight, and
they saiLd, ' it is his Irish Catholic background'.
PM: No, no, no. I can't stand that sort of pomp and
nonsense and this idea. Both of them went on so
anxiously on the radio after I addressed the Queen in
here.
H: The respect line got to you didn't it?
PM: No, no, I thought it was said so much about them, that
we should be sort of forelock tuggers, that I couldn't
say to the Queen of Australia, that Australia had made
its way independently in Britain and Europe. What a
shocking thing for me to say. These people are from
the tribe, the team, that gave us all of the Rip Van
Wrinkle years of the ' 50s and most of the ' 60s, and
they are sort of still back at it.
H: Are you a republican?
PM: I think Australia will probably end up a republic at
some point, but certainly not while I am Prime Minister
of Australia.
H: That could be next year?
PM: I don't think it will. I think that as time goes on..
H: No, I mean about you not being Prime Minister?
PM: That's right, that's what I am saying. So this is a
matter which has been, this debate has come on and of f
and it will probably head that way.
H: Would you like to see Australia a republic by the end
of 2001?
PM: I think that's a matter that should run its course in
the public discussion, in public debate.
H: How did you feel when the Fleet Street papers all said,
' Hands off Cobber' and ' Hands orf Cobber' and
PM: Well, you used to run a tabloid, you know what it is
like. But I mean, I must say, the Sydney tabloids were
a cut above those London ones.
H: So is the New York Times compared to...
PM: The New York Times is better, I know.
H: I defended you actually on my program, when you put
your arm around the Queen. It seemed to be just a
guiding gesture.
PM: Well, that's right. Because you see, we were zigzagging
across a corridor, and there were people I knew
that she knew, like Dame Patty Menzies, John Gorton,
Gough Whitlam, I was moving here around to see people
she knew and other people and she is engaged in
conversation and there are people trying to crowd on
her, so you are trying to both be guiding and
protectiLve of her. And I thought it was a very nice
morning for her. She seemed to enjoy herself
immensely. And of course, she is right across all the
issues. She is very well briefed and
H: You were helped a bit by the fact that the Duchess of
Kent was saying similar things in Queensland at the
time.
PM: The Queen is a very gracious, conversationalist and
very we. 11 informed, very well informed.
H: We will take a break.
H: And back live with the Prime Minister. Mr Prime
Minister, Richard Nixon, I'm not comparing you to him,
but Richard Nixon fought and scraped and clawed and
plotted to get himself to the White House, and when he
finally got there, it didn't quite sink in for a little
while that he had made it. Did you have a feeling like
that in the first few weeks of being Prime Minister,
after the way you got the job?
PM: Not really, but just trying to find where all the bits
and pieces were. Where the weights were within the
country, within the Government, how we could sort of
put the two together. It took a while for me to find
my way -around the job.
H: But personally it did take you a while to find your way
and say, I've made it, after all these years, I've made
it.
PM: No, not really. I have been that close to it for so
long. ' rhe scales have long fallen from my eyes about
it. So I didn't really have that, it was about saying,
where is everything, what can we do here now. It was
all that sort of thing.
H: After being in the job for a month, or six weeks of it
when it happened, were you surprised by the manner of
Mr Hawke's departure and the way he did it on
television?
PM: Not really no. I thought there was an even chance Bob
would quit and
H: That way?
PM: Well, it didn't matter. He announced it, then went on
television, that didn't worry me.
H: If you got beaten in the next election, and you
resigned, would you take $ 10,000 from a TV show to
announce it',
PM: Probably not but that is not to reflect on him.
H: Did it offend you?
PM: No, no, I just probably would do it privately.
H: Do you -talk?
PM: Occasionally, we spoke the other day a bit. Yes.
H: Is it friendly?
PM: Oh yes, yes, it is still friendly. Sure.
H: I presume you talked when his wife was ill, something
like that?
PM: We are niot all over each other. But it is friendly, it
is cordial.
H: When YOU made the run, I would broadcast from there
last year, you missed by the numbers. You knew you
were not going to get the numbers that time, didn't
you?
PM: Yes, I dlid.
H: So therefore, it wasn't the one shot you fired, it was
your first shot?
PM: I mean, I did by the end. I wasn't sure a bit earlier.
I thought I'might have, but as they faded away I knew I
wasn't going to win.
H: By the t~ ime you walked into the room, you knew you
wouldn't: win?
PM: Yes, that's true.
H: So it wasn't the one shot you said?
PM: Oh yes it was. In the end, Bob did actually resign his
position and I had not decided to challenge him, so it
might well have been just the one shot, as it turns
out.
H: But you would have stuck around
PM: Not for long. I will tell you this quite honestly, had
Bob taken questions at the beginning of this week, I
would not have stayed to have given the Labor Party or
him any difficulty.
H: Is that right?
PM: Absolute-ly.
H: If he would have stayed on, in this building for
Question Time, you would have quit?
PM: That was the end of me. That's it.
H: Why?
PM: Because I don't think it would have fair to himt or the
Party and probably
H: Would you have taken such a kick-in?
PM: No, no, just to have me around, it wouldn't have been
fair to him. And I think it is probably the same
reason in part he's decided to go, which I understand.
H: So one of you had to go.
PM: I think so. It got to the stage after 8 years, and it
got to the point where either one of us was going to
leave the place. Whoever had it, should have kept it
by that stage, that is February.
H: You said that you would have walked away?
PM: Absolutely, I would have packed my bags and said, ' give
my regards to Broadway', or something like that.
H: That's a good note to go out on. Thanks for your time.
PM: Thank you.
ENDS
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