TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING, MP
INTERVIEW WITH JOHN LAWS, 2UE, 4 JUNE 1992
E OE PROOF COPY
JL: I think it might have been weary.
PM: Well we had a week of Parliament and then I had a 7
o'clock breakfast for the Olympic Committee on
Friday, and a lunch time speech to the Tourism Task
Force and a speech at 3 o'clock for the TWU, and
then at 6 o'clock at Parliament House.
JL: You are a stop out aren't you?
PM: Well I can't stay away from it.
JL: I didn't know you were a big party goer like that.
PM: That was just a fund raiser, but by the time Friday
night was over I was just about pooped, and then I
had all this policy stuff which I talked about on
the weekend and which we done this week.
JL: Listen, you realise that the object of this
interview has got nothing to do with the important
running and operation of Australia, it's simply to
let these half-wit journalists know that you and I
are still talking to each other.
PM: We are certainly doing that. Yes, the last time I
had a bit of tucker with you was after that
Balmain/ Canterbury game.
JL: Yes, didn't I do you a favour that night? I
introduced you to Tim Storrier.
PM: You did too and he gave me his tie.
JL: He gave you more than that. He told you how to run
the country.
PM: I know, Yes that's right. I used his tie, but it
camne up so bright green, when I saw the TV play-back
k
2
I thought well that's got to be the last time I use
it.
JL: It's been an amazing few days in Canberra, you must
have made a conscience decision to gain the
initiative?
PM: I had all these things on the go. It's just that we
had all these problems in the Senate a few weeks
ago, but the policy things we had like the
reconstruction of the airlines, that was the merging
of Qantas and -Australian and its sale, the
establishment of a commission to award routes to
another carrier -in this case it will be, amongst
others, Ansett -to build a proper airline system.
And then pay television was something we had on
under debate. During that week you talked about, we
had Parliament sitting and then that busy Friday, I
had all this stuff in the night you see. So we were
already to do it. So I said on Oakes' program on
the weekend this is what we're going to do, and then
this week we've done it.
JL: Yes, obviously you didn't consider it a risk. I
know you like to take the odd one, but you didn't
consider it a big risk to announce it on television
before you talked to Cabinet or Caucus?
PM: It's because we had such extensive ministerial
discussions about these things. None of us can take
it on ourselves and just say we are going this way
or that way. We'd worked all these options up. And
even so, like anybody else if you want to say
something early you've always got to take the risk
of someone not agreeing. But the fact is, the
Cabinet agreed to this and the Caucus. But the
Caucus didn't agree easily and on television we came
to a very good solution in the end one which will
be great for Australian consumers of entertainment,
that's movies, sport, news, and good for the
technology as well.
JL: The airline thing is pretty important and when you
say you've had it on the boil for a while, it hasn't
been there all that long, and I was talking to some
people early this morning, the reaction I get
incidentally from people in the airline industry
that it's absolutely fantastic. But they were
saying to me this morning six months ago Qantas
couldn't even buy one share in Australian that's
how tied up they were. So how were you able to turn
it around so quickly?
PM: We came to the conclusion that selling Australian on
a stand alone basis and selling 49 per cent of
Qantas meant that the Commonwealth of Australia, the
public purse basically was treated pretty poorly
there, we just couldn't get the good prices for
them. But put together the synergies so called, the
operating efficiency gains of the, two companies
running together were quite profound. So Qantas
will now pay the budget $ 400 million for Australian
Airlines and we will float Qantas to the people, and
it will be owned just as we did the Commonwealth
Bank. Remember I did the Commonwealth Bank float?
JL: Yes.
PM: And the shares there?
JL: Yes.
PM: That was one of the most successful floats in our
history. The largest float in Australian history
and the most successful.
JL: How will the average Australian benefit from this
Qantas deal?
PM: For a start Qantas becomes a real airline with a
domestic base and an international base rather than
just a ring fence around Australia so it drops
people at Mascot or Melbourne and it can't fly
domestic routes. That's all finished. Australian
will now be a domestic route flyer and it will than
have that connection to Qantas. And what will
probably happen in the sale process, one of the
world airlines like British Airways or maybe
Singapore, will also buy a piece of the equity so
we'll get an international ' set of linkages out of
it. So you'll be able to go from Wagga to Sydney,
from Sydney to where ever and then link up with BA
or Singapore or whoever bids for Qantas. So Qantas
is going to end up now a major regional carrier and
a world player.
JL: How did you manage to convince those funny fellows
in the Left, and you've got a few funny fellows in
the Left, that this was a right and proper thing to
do and the way a Labor Party should behave?
PM: We are a very plural show John, we're a very plural
outfit. I think they think that we were going to
basically receive very low prices for them, no one
is going to pay you much for 49 per cent of the
company. Australian, you remember, had two bad
years of profit. It had the pilot strike the year
before last and then last year it had the heavy
Compass discounts which cut its profits into loss.
So anyone who could see the blue sky, the upside in
Australian, could see a higher price some years out.
But right now you wouldn't get a high price for it.
But putting the two together the value to Qantas was
quite profound. The other thing is, Ansett which
has been a domestic carrier will now be able to
apply to this new air routes Tribunal, and it will
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have international routes awarded to it. So we'll
end up with two carriers, two international carriers
not just one. So there will be competition in
international as well as domestic and as well as
that trans Tasman. You will be able to hop on at a
domestic terminal in Sydney and hop off at a
domestic terminal in New Zealand.
JL: Yes all these are very positive things that have all
happened very quickly and I mean it has been an
extraordinary few days. It's been more than a break
through it's been a crash through and you've
convinced people that I would have thought would
have taken a lot of convincing to do things that you
believe are going to be better for Australia. But
it all comes out of a pretty bad period doesn't it?
PM: We got caught up with this problem in the Senate and
Senator Richardson. Look, Richo did nothing
improper. He was unguarded with somebody who was
prepared to prey upon his best instincts, put it
that way. But you see this sort of kangaroo court
routine they do in the Senate these days means it
just gets dragged out, so Richardson said better for
the Government I go. So we put that behind us. But
understand this John, all of this was going on while
all of that was on. It'Is not as if the Government
had stopped, the thing is the Government was going
Or&. The main point is this, there's been more change
since I did the ' One Nation' statement the
rebuilding of the railway system, it's now going on;
the total rnvto-nof the airlines; now our
discussions with the States to rebuild and make a
new technical and further education system for our.
kids. K
JL: Yes, I want to talk to you about that because I
think that's a great idea and obviously it is
required. When you think that there are 50,000 kids
who had the qualifications to get into university
and couldn't because there wasn't room, I mean
that ' s disgraceful.
PM: You see there's more changes in that package than
there was in 15 years of Liberal governments. I
used to sit here for years and nothing like this
would happen. Just on airlines, remember this the
former Liberal goverrnent signed the two airline
agreement, the cosy high fare, high priced two
airline agreement after the writs had been issued
three weeks before the 1983 election and it was
binding on us for 8 years.
JL: Yes, but tell me this why would they have done
that? What was in it for them?
PM: Just a home town decision, just playing to their
mates. One of their mates in those days was Ansett
Airlines.
JL: I see, so really it was jobs for the boys on a grand
scale.
PM: Yes, these guys never broke through the micro
changes. They never did the right things for the
airlined, never did the right things in
telecommunications, never did the right things in
fiscal policy, never tried to internationalise
Australia, sat there like slugs for years. We come
along and in the last 8 years we've totally changed
Australia and we internationalised the place. Now
with low inflation, the lowest inflation rate in
years, and the lowest interest rates.
JL: Just back to the Graham Richardson thing, because
you know my thoughts on that subject. it must be
unbelievably aggravating to have to allow something
like that to happen because of the niggling in the
Senate which really was based on very little, and
proved very little except that I believe as you
believe that he's done nothing untoward. You can't
afford to waste fellows like that can you? Whether
you like him or dislike him, or whether or vote
Labor or whether you vote Liberal, you can't afford
to do without fellows like that.
PM: No, because you see the public system is not
producing enough people of decision making quality,
people who will break the system through. Now in
the Labor Party I think it is true we've been
finding the people, but it's certainly not true in
the Coalition. And the whole political system know
this because the people in it cop so much and wear
so much, so that a lot of the talented people won't
go into public life. The ones that are there having
a go just cop it in the neck all the time.
JL: Ok, well what happens to a bloke like Graham
Richardson? He can't be lost from public life.
PM: No he'll stay as a Sentor. If we win the next
election he'll probably bob up again.
JL: As a Minister?
PM: As a Minister yes.
JL: Would you put him back where he was? He was good.
PM: We'll have to see then where all the positions are,
but he liked the job and he was good at it. He had
the work well in hand at the time he left. Bob
Collins has now taken it up and doing a good job
with it. He was his assistant Minister anyway, and
had aviation for a number of years, and was
representing Kim Beazley in the Senate when Kim had
telecommunications. Bob was across both areas and
was able to take the job quickly.
JL: The job is really too big, both areas?
PM: It is a bit too big, it was part of the ministerial
changes of about three/ four years ago. But it's
become a huge micro-economic reform department and
actually it works well as a micro-reform department.
I've now come to the view that actually if we did
separate them we'd end up with two more conservative
departments than we have in, I think, a department
which is prepared to reform things.
JL: Ok, but when Senator Richardson returns as a
Minister, if you're re-elected, it wouldn't be
unlikely that he'd go back where he was?
PM: It wouldn't be unlikely no. It wouldn't be
impossible. I don't know what he'd like to do. He
might like to do something else. But again, let's
wait and see what happens, he may not exercise that
option.
JL: Yes, you might make him Minister for Sport.
PM: Well.
JL: It's about time we had one.
PM: He might decide being a private member is much nicer
than being a minister. I wouldn't be surprised if
he camne to that conclusion.
JL: I don't know, there are a few advantages.
PM: I had six months on the grass and I enjoyed every
minute of it.
JL: Yes, but a bit tough on the house keeping isn't it?
PM: It's a bit weighty on the house keeping.
JL: When are we really going to get a Minister for Sport
who understands sport? When we had John Brown there
it was fantastic and sport was up high and talked
about and enthused about, that's not happening now.
PM: I don't know. The people going to the Olympics -will
go of f with a $ 10 million budget. Ten years ago
when they went to the Olympics Malcolm Fraser gave
them $ 800,000. So $ 800,000 to S10 million. We're
spending $ 68 million a year on sport this year, in
1983 that was about $ 6 million. So from a
government's point of view we are still pouring a
lot into sport.
JL: Yes, but it's a piddling amount when you think of
the amount you take out in tobacco levies which you
now won't let sponsor sport, and they were doing a
wonderful job sponsoring sport.
PM: Yes, but they were also doing a wonderful job
teaching young kids to smoke, have a drag on a fag,
and that wasn't doing anyone any good either.
JL: No, but you see the evidence in that area is totally
incorrect
PM: You are a beaver on this one.
JL: I mean, you know, it's the opportunists who get in
the ear of people like Roslyn Joan and tell her that
it's naughty to smoke c~ aetss she hangs her
hat on that one, only tell her half of the figures.
The fact Is that those brands that were involved in
sport do sell a lot of cigarettes, but cigarette
increase in older people is greater and they're
buying those brands not young kids, that's all
nonsense.
PM: Well that's not what the data says.
JL: Yes it is. You only see half the data, she only
shows you half the data.
PM: You should sign a nomination form. We could make
you Minister for Sport, in the game.
JL: OK, I thought you might put me in charge of the
Broadcasting Tribunal.
PM: Well Roslyn is flying down to Rio, you know it's
like that old Fred Astaire film ' Flying Down to
Rio'. I don't know whether she'll be tripping the
light fantastic there or not.
JL: Well I don't know. I think a lot of people wouldn't
mind seeing her jump on the wing of an aeroplane.
Remember in ' Flying Down to Rio' when they all stood
on the wing of the aeroplane?
PM: That's right, yes.
JL: Fantastic. Back to more important things, she does
take $ 3 billion out of the revenue excise for
tobacco, so what goes back into sport, really by
comparison, is not a great amount.
PM: Can I just say though, excise revenues the
Commonwealth has got to make up it's revenue whether
it's by income tax, company tax, excises, petrol,
crude oil, whatever. It doesn't mean where it comes
is where it goes back, it never did. That's called
hypothocation, we've never had that. And John until
the Labor Party came along the sports budgets were
no work. I mean everyone in professional sports
knows that.
JL: I agree with that, but we had a good fellow set that
up, John Brown, he sadly got lost to public life as
well. And you see that's the point that people
don't understand. It's the same with you. Like you
or dislike like, vote f or you or not vote for you
the f act is that you'Ire there and all the Australian
people should do their best to get behind you
because you are the Government.
PM: Well at least we try and make things happen, we
don't sit down here on our hands. Australians, I'm
not sure they understand that in the last decade
there has been more change than the previous
years, in terms of the way Australia will function
in the long run. We have set Australia up now as a
low inflation society. Two days ago the Current
Account deficit came out, it's 2 and 3/ 4 per cent of
GDP, it's down to the debt stabilisation point from
6. We are winning now dramatically the current
account battle, we've won the inflation battle.
These were the two scourges on Australia. Sure,
we've had the pain of the recession to go with it,
part of it. But it wasn't just the recession that
pulled inflation down because after the last
recession inflation was 10.5 per cent in early 1983.
After this recession it's 1.5, mainly because of the
Accord and the tax cuts of 1988/ 89 and the wage
outcomes.
JL: Yes, but what about the huge problem of unemployment
particularly with youth?
PM: That's exactly right and I addressed myself to that
subject a day or so ago, and that's why technical
and further education is important. Let me just
give you a little picture about education and kids
and participation. In 1983 John, 3 kids in
completed secondary school. Now how in the hell can
we hope to be a technologically advanced country,
how could you say that you cared for your kids if 3
in 10 only completed secondary school? That's now
nearly 8 in 10 as a * result of this Governments
policies. Forty per cent of those kids then get
into university places.
JL: Yes and can I say this to you, there will be many
who will say, and quite correctly, that a lot of
kids are now staying on longer at school because
they are absolutely aware of the fact that if they
were to leave they wouldn't get a job anyway.
PM: That may be true, that may in part be true, but the
thing is they'll come out with qualifications and
find jobs which are not what John Howard calls dead
end jobs, jobs with low skills.
JL: But how can they do that if 50,000 of them can't get
an education when they are entitled to it by their
qualifications?
PM: Look, let me just say this about tertiary educatin_
about the universitiep. Since 1985 the Government
has added 50 per cent of places to universities.
We've added 120,000 places or the equivalent of 12
universities. Twelve universities with a campus
size of 10,000. That's just a phenomenal rate of
growth in tertiary places. For a country like
ourselves
JL: But it's obviously not enough. I mean you were
there for eight years before?
PM: No, this is from 1985. We were there for two years
before. These other characters who have proceeded
us, 3 kids in 10 completed secondary school. You
can't go to university if you can't even get through
school.
JL: No, but even if these kids are completing secondary
school they still can't get into university.
PM: I'm just saying we added 50 per cent of places. We
put 120,000 extra places into universities and the
proportion of Australian kids going to universities
is now about the average or better than the average
of the OECD. We are at the stage now where our
proportion of the school leaving population going to
university is about right. The problem is TAFE.
The problem is we've got 60 per cent of kids
cascading out of high school, and if the don't go
into technical and further education they go into
sort of milk bars or shopping mall plazas or railway
stations or something.
JL: I suppose somebody has got to do it.
PM: I'm not saying the jobs, I'm saying they just hang
about. The fact is we have an immature technical
and further vocational educational system, that is
people who want to do basic courses to find jobs.
And we're not catering for it, and that's why in the
' One Nation' statement and now Kim Beazley is now
negotiating with the States to develop a mature
technical and further education system. So we end
up like countries like Germany where most kids go
into TAFE and the people who run the big German
companies BMW, Mercedes, Seimens, come out of their
vocational education system, they are not coming out
of universities. The people who actually run those
shows come out of the vocational education area.
JL: Ok, well that's what's got to be rectified here
obviously, but the cry is, and why not, I mean you
rushed through the airline policy and the TV, why
not the initiative on youth unemployment, why not
the TAFE problem being rushed?
PM: Because we've got the dear old States haven't we,
six of them. You know what they're like dragging
them along, you get pulling teeth.
JL: Yes, but you're the boss.
PM: No they're sovereign you see. Under the
Constitution the Commonwealth was not given express
powers over education. The powers reside with the
States. We can only do it through our Financial
Assistance Grant power, it's all carrot and sticksthis
sort of stuff, it's all carrots. So we don't
have a clear power.
JL: But can't you set up, I mean there is talk of you
setting up a form of TAFE to rival the States
anyway?
PM: What we're basically saying to the States is look,
you handle compulsory education, primary and
secondary, we'll handle post compulsory, we'll
handle TAFE and universities. And I made the offer
two days ago that we'll1 not only take over the
funding of TAFE we'll actually take over its
administration. In other words, we'll take from the
States if they wish, the whole burden of technical
and further education and do for TAFE what we did
for university build a solid, mature, high quality
system.
JL: Well when are you likely to get a reply from the
States?
PM: Kim's seeing them within the next day or two again.
But you see, some of them dig in and say look, it's
TAFE one day, what's next? In other words there's
more aggregation of central power they say, we're
against this. And you say well hang on, we're only
a nation of 17 million, there's only one of us so
what's wrong with that? What's wrong with building
a national system of TAFE? And they so oh well,
it's just a further incursion to States rights, and
we say well hang on, that ' s only a line drawn on the
boundary by a bureaucrat in a colonial office in
Britain, let's not get too hung up about it. But
they are hung up about it, so we've now gone one
further than we did in ' One Nation'. In ' One
Nation' we said we'd take over the funding of TAFE
and share the administration. What I said to days
ago is we'll take over the funding of TAFE and the
administration, we'll take the whole burden. Some
States might find that attractive.
JL: But does that mean they all have to find it
attractive?
PM: No, if Victoria gave us a system which I think they
would,, if NSW gave us a system and one or two of the
other states, then we'll just continue to fund them
as we do now, that is joint fund them. But the
growth, if they want to keep it, they'll have to
handle the growth. Not all of it, we'll handle some
of it ourselves, but they'll also handle growth.
JL: This fellow-Arch Bishop Peter Hollingworth, who
didn' t get on too well wf-tK! -F-idiCiEssior
PM: He is a good fellow.
JL: He is a good fellow and he came up with some good
ideas, he reminded us that 30 per cent of the 18 to
year olds who are unemployed often for more than
12 months are out there and they should have
something done with them. He also talked about the
15,000 other young people that you and I have just
discussed, but he also talked about a form of
national service, non-military national service,
voluntary nationaI~ i36 6eet kee-f these'
people up to date with the work ethics so that they
don't sit around doing nothing, so that they are in
fact gainfully employed and making this place a bit
better. Is it not a bad idea?
PM: I spoke at the conference Peter spoke at, his plane
was late so I didn't see him there but he came into
see me yesterday with some other members of the
organisers of that conference and he's given me the
paper he presented with this proposal. I haven't
look at it yet John, but I will.
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 of f to much smaller
numbers and it has picked up as prosperity picked
up, and where 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 to 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 f ew 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 consider 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'It 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 expensive 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 $ A16O a month and offer a
flat company tax rate of 16 per cent. Now the SA160
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 of fshore,
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 I don'It 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 f or 15 years. Well if
we try and run this country on a basis of no tax for
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 some 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
of f 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 States, what have you. They
don't have 15 per cent tax rates. Or zero tax rates
as business incentives because they are developed
places and you can't run 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. But 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 was 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'Ire 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 ef ficient 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 to 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
are 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 of 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 unemployment. 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 you 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 simplistic point of view but most of mine are, why
can't we put some type of moratorium on nonessential
imports?
PM: Well because 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 not 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 something 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 Peteraville 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 said 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 Portugal 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. I 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 United 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'It 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 term.
JL: So what do we do? Stop canning tomatoes and do
something else?
PM: No. Do it ef ficiently. 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 ef ficient 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 laughed 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 17.5t 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 overtime
JL: Some, some not all
PM: So when they go on holidays there is a compensation.
JL: Yes
PM: This is a feature of many, many economies.
JL: But the man 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 in Australia now by OECD standards are low.
I mean its 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 of f on their
annual leave they don't take a big drop in pay.
JL: What about 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 31
inflation rate instead of a 10% inflation 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 mean 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 will 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.
9
24
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 ef ficient 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
unions are 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 co-operation 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
recession 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'ye 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'It 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 fittest 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 in that
market, to house them and making a j udgement 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.
3L: 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