PRIME MINISTER,
TRANSCRIPT Or INTERVIEWfTALKBACK WITH GERRY GANNON, 6W F ABC
RADIO 30 JUNE 1992
E AND OE PROOF ONLY
GANNON: At your breakfast this morning you were talking
about economic growth of 4.5% A market analyst I have just
spoken with said a bit optimistic, he reckons may be 2/ 2.5%
PM: I think most of the private forecasters think
as we do. The economy in picking up and it's picking up in
the first instance in Western Australia and in Queensland in
the two large agricultural and mining states. Part of that is
because national economic policy has preferred now for most of
the last decade the things we do comparatively well, where we
have a comparative advantage and we have a comparative
advantage in minerals and we have it in food and the
structural change which has been on now for nearly a decade
has Buited very much western Australia and Queensland and as a
result they are recovering now I think more quickly than the
other states, but we expect across the year quite reasonable
rates of growth.
GANNON: But despite that forecast for growth you don't
see any great joy in the unemployment front?
PM: Employment is picking up in Western Australia,
the trends here an Tin Queensland are quite good and NSW
employment has picked up as well but it is patchy across the
country. See what's happened is businesses have become quite
lean now they are much more productive. That is they are
producing a similar sort of output with fewer people and that
is called productivity. Now as the economy grows they will
reach a point where they have to put more people on. That is
they won't be able to go down their productivity mine any
further looking for efficiencies and they will simply just
have to engage more people and it's that lag between growth
and employment which pulls up behind, it is the lag we are
living through now.
GANNONs So productivity is helping keep some us out of
work in fact?
P~ t That's exactly right.
GANNONs Let's go to some calls and a couple of
listeners who couldn't hang about ask you, what can federal
and state governments do to encourage the planting of
harvestable timber forests and what impact might this have on
unemployment? PM: I think we do have great opportunities in
Au * stralia with forest products and plantation hardwoods and
sof twoods are going to be I think part of our future and some
of the large companies are now into plantations and see this
as a way out of native f orests but I think it is going to be
one of the things we can do well. How much we need to do
beyond the sort or general incentive we have got there for
write of fs and depreciation and low interest rates and the
rest I don't know but, so far there has been no inhibition to
the planting of plantations.
GANNON; Mnother, question Prime Minister, you made some
comments I think it was at the weekend concerning the image of
Australians and the ocker image. A male listener wants to
know what about the image of some of our politicians who sort
of tend to sport an ocker image f rom time to time. Do you
think that might need addressing?
PM: I think the subtle things about Australia I
made the point the other day f or instance the United Nations
representative on the Committee on the Elimination of
Discrimination Against Women, I presented Ambassador Tallaway
with Australia's second report and she made the point that
policy in relation to women in this country is really second
to none around the world the changes through the 1980s.
That's not known around the world, a lot of our cultural,
scientific, technological achievements. For instance in aged
care policy we are now leading the world, that's not known. I
would like other things to be known about Australia other than
we put a-shrimo on the bar0! beqqe you know what I mean.
GA1NNONs But that has served us well.
PM: That served us very well, it served us very
well with an important audience, important market,
particularly in the USA and it does very well and
appropriately typifies the outdoor image of Australia but
there are other images as we know. This is a subtle country
and it's got a lot of texture about it and if that is exposed
to some of the big markets you will get the people who are
interested in those things coming here.
GANNONsGANNON: Let's take some calls.
TERRYt I am not going to complain about anything which
is probably a let up for you. I just want to assure you of my
support I think you are probably in my lifetime, I am 47, the
first really Australian Prime Minister we have had.
PM8 Thank you for saying so.
TERRY: And you are a leader, you are leading us, the
people might not want to go where you want to lead them at the
moment but I think in time they will look back and I think you
will be looked upon kindly.
PM3 Can I just respond and just say this to you,
thank you for the remarks but what I am trying to do in this,
that the old Australia the Australia of the 1970s which was in
the end a piece of industrial archaeology, old smokestack
industries that couldn't survive the competitiveness of the
area we live in or the rest of the world. We have opened it
up so that the areas of comparative advantage which for
instance western Australia enjoys can give Australians higher
levels of growth and wealth and at the same time as we are
doing that structural change which is still continuing despite
the fact that it has been overlaid in the last couple of years
by a recession, when we come out we will come out with a low
inflation recovery and a lot of productive economy into the
1990s which can employ lots of people and as we are doing that
I want us to declare for Australia, to say we are a unique
country and we want to advertise ourselves as unique and
present ourselves as unique. So if I can do some of those
things I will be very happy.
MARIE: I would like to ask Mr Keating why can't the
dependent spouse rebate be substantially increased?
PM: We have increased it a couple of times Marie
over the period of time but most particularly we have put
support into support for children by way of the family
allowance supplement where most of the growth has gone and
into the family allowance. The dependent spouse rebate is for
generally a taxpayer with one dependent and it's mostly for
taxpayers whose family are of f their hands who may have a wife
at home and the DSR is some tax compensation for that
dependency but the main dependency of life is children and
that is why we have always focussed that into them.
MARIE: I just feel that the $ 1,300 or round about that
mark isn't enough incentive for one parent to stay at home and
be a parent and there is too many families where both parents
are going of f to work and if there was more, if that rebate
was a lot greater like triple it or even greater there may be
more incentive for one of the parents to be at home.
PM: It's not meant as an incentive to stay at home,
it's a tax trade off against the tax free threshhold which if
you are in the workforce is $ 5,400, that is before you pay a
PM: ( cont'd) dollar of tax you have to earn $ 5,400 and the
tax payable on that in some way the dependent spouse rebate
goes to compensate for the benefit which is bestowed on a
taxpayer of being able to earn $ 5,400 free of tax. it's a
sort of an offset but it's not an incentive to stay at home.
ROB; I would like to ask if you intend to introduce
some sort of tax break on income earned from interest because
it's a great worry to retirees particularly since the interest
they are getting is pretty low anyway. There is a good
article in yesterday's West Australian on page 5 by the An~ I
Bank which doesn't mention retirees specifically but it says
there of course it would help to boost the national savings.
I wonder if you have any plans to do that within perhaps the
coming Budget?
PM: A lot of the problem about interest income was
a large part of it was inflationary. If you look a couple of
years back you had 6 or let's say you had a nominal, a
real rate of interest of 4 on top of an inflation rate of 7,
you had a nominal interest rate of 11, but on that 7, the 7
was taxable. in other words we were collecting tax on that
inflationary component as well as on the real rate of in
other words we were collecting tax on the 7 and the 4, well
that 7 is now 1.5 and so as that inflation rate has come down
the distortion of tax upon interest has greatly diminished and
so we are at a position now where the economic system is
working much better than it was in the taxation of interest
income when we had this inflation distortion there, so I know
the rate. are low but so too is the rate of inflation.
GANNON: Do you anticipate some trouble in this area for
instance with self funded retirees who a couple of years ago
when interest rates were like 13, 14, 15% putting their money
in and being able to live of f it, now many of them are finding
they can't live off it.
PM3 Those same high interest rates slowed the
economy down and they were only a -tempo6rary thing. It's the
long run thing that matters and a few years before that the
interest rates were lower again but again then the inflation
rate was around 10%. So if you are inflating around 10 and
your interest rate is around 11 or 12 you are not as well off
as you are inflating around 1.5 or 2 with interest rates of 4
or 5. You are actually better of f now than you were then.
GANNONs So it balances out you think?
PM: Well it's the point I made a moment ago Gerry
that is when we had interest rates of 11/ 12% we had 7 or 8% of
that being inflation and yet we were collecting tax on that 7
or Whereas now we are only collecting tax on the real
interest rate mostly which is 1.5% plus 3.5 or 4 real, so it's
actually better now because people, the prices they face
outside are only of the order of 1 to 2%.
GAN4NON: Someone who is about to saddle themself with a
now mortgage Prim. Minister, have you ever considered giving a
tax break on mortgages?
PM: Well the break we have given on mortgages is
low inflation and we have now got mortgage interest rates
running at around 10% and we have got an inflation rate which
is now still low and coming down and it may be, I am not sure
exactly how the banks housing books look but I think long term
lower interest rates for housing look a pretty strong thing
and that in the best thing. But if one starts tax preferring,
every country in the world that's had mortgage interest
deductability has rued the day it got it because their whole
national savings pattern gets skewed to putting money into
houses instead of into investment and production which gives
people jobs. So there has got to be that nice balance or
neutrality between commercial investment and housing, but once
you tax prefer housing there is not much point in sitting in a
house without a job.
GANNON: So 10% you reckon it's going to go lower?
PM: I don't know, when I was Treasurer I used to
know pretty well the balance of the banks housing books. I
don't off the top of my head now know that, but given the fact
that inflation is low, inflation and trend ways about a
interest rate in housing is quite high now even though it
is historically low. You understand it's low but in relation
to the inflation rate it's still relatively high.
LEWIS: On 19 September 1985 as Treasurer you
disallowed entertainment expenses as a tax deduction. What
about possibly a tax break for the hospitality industry
because if we are getting more clients we can entertain more
people and engage more staff, buy more stock and get the
wheels of hospitality turning.
PM: I don't think in hindsight that the removal of
the deduction for entertainment did the hospitality industry
any harm because what they did they grew then. What happened
restaurants that were charging high prices for lunch time
meals and the rest started charging proper prices and that
attracted a greater level of clientele I think. The other
thing is that what this government has done is open Australia
up to a service economy it never ever had bef ore. before we
removed exchange controls, floated the exchange rate, made the
place more competitive that produced for the first time a real
tourism industry in Australia.
LEWIS: But Prime Minister if more people are using
restaurants and hotels surely that is going to create more
staff and more jobs and more money for the government. The
restauranteurs and the hoteliers are not going to cop all the
lolly and over the years I have seen many many high powered
people and very few of them are putting the snouts in the
trough.
PM: The trouble is the Tax Commissioner can't be at
every table deciding whether a lunch is for business or for
pleasure and that is the problem and the other thing is there
is no reason why lunches should be tax preferred. In other
words restaurants should be tax preferred because if we then
decide that buildings should be tax preferred, mortgages
should be tax preferred, everything else tax preferred there
is no preference for anybody. one industry only gets a
preference at the expense of another but if every industry
gets the same preference there is no general preference, so
once you start, I mean the hospitality industries have had a
boom in Australia in the 80&, an absolute blow out and they
have done it with a neutral tax system but if we go back to
the days of preferring lunches and trying to basically give
those people who can spend time at lunch, particularly a
business lunch and make it deductible I think it is unfair the
rest of the people who are having sandwiches at work and
paying for it etc. It's one debate which I can say happily in
Australia virtually disappeared but when it disappeared it was
in the middle 80. and in the 5 or 6 years since the
hospitality industry have literally expanded as no one in
those industries would have ever believed they could have.
LORETTA: I would like to know why when you were
Treasurer you put gold tax on the gold industry because this
caused a lot of hurt and a lot of unemployment.
PM: It was not we put a tax on it we just removed
the exemption. You see every other mineral is taxed, iron ore
is taxed, nickel is taxed, lead, silver and zinc are taxed,
why not gold.
LORETTA: They put that money back into more research to
do more and make more employment here and a lot of people have
been hurt.
PM: As the point I have just made to the gentleman
before you asked me about -free-lunches and restaurants. Any
industry which is tax preferred will grow faster than ones
that are not but the question is why should they be tax
preferred, why should someone digging gold, mining gold be
preferred over someone mining nickel.
LORETTA: Because that money went back into making more
PM: A lot of went into foreign mining companies and
was shot back overseas and the point is in a country like this
the business corporate savings of Australia should go where
they naturally should go best not where they go by way of tax
preference. LORETTA: But you went to Indonesia and stood there and
really called your own play in front of the whole world.
PM3 Not what I said was that Australians, I was
asked a question about it and I said that Australians need a
representational image of themselves which is unambiguous that
is having a f lag of our own which doesn't have the f lag of
another country in the corner. Just understand this, I don't
have any problems about Britain or with the British
government. I have got the best of relationships with John
Major and the current British government and I have had over
the years with Nigel Lawson before him when ho was the
Chancellor in all the year. I was Treasurer. It's not a
problem at all about Britain# Britain has sensibly acted in
its own best interests. Britain has gone into Europe and
joined the Common Market as I-it sould. We have got to go into
Asia and join the market around here and you have got to go
there looking like yourself, not someone else.
GANNON: Why is all of this so important at this
particular time Prime Minister. People say to me every
morning here on talkback we have got over 10% unemloment a
sluggish economy yet Keating is going arudbgigthe
f lag, the Queen_ and now the oath of alleiance. why are all
these things so important right now~
PM: I am not bagging the Queen, because they are
important in an economic sense. My conservative opponents say
it's a distraction but frankly as you say Gerry, every day you
are talking about the economy, unemployment on radio, there is
no way other than addressing that issue. I don't ever try not
to address it directly but to say you have got to address
that, only that and that nothing else matters, I mean the fact
is that we have a great opportunity now to tie in with the
Asia Pacific. When I was in Indonesia Ian Taylor was up
there, the Deputy Premier opening a representative Western
Australia office in Surabyu and that is the kind of
relationships which we are going to see Western Australia grow
as it links into that part of the world and the rest of
Australia generally.
GANNON i Do our near neighbours in Asia really confuse
us with a British identity because I mean they live next
PM: No they think we are not certain whether we
want to deal with them. They are not sure whether our mind
set is basically in Europe or North America, is it just the
place we fly over, do we really want to deal with them, they
think we are ambivalent about that. But if we actually go and
say to them we are here we do want to deal with you, but we
deal with you as a independent country, we deal with you as a
country with its own traditions, it's own culture, it's not a
derivative of some other place. I mean the best reaction to
all of this stuff has come basically from the Asia Pacific,
from Singapore, Malaysia, Indonesia and that where they are
saying thank God Australia is starting to sort of call its own
tune and that will make an enormous economic difference, not
just social dif ference, "' ut economic dif ference, particularly
to places like Western Australia.
GANNONs Yesterday we discussed on talkback, because you
made some comments about it at the weekend, changing the oath
of allegiance for migrants so it's better to reflect their
commitment to Australia. What brought that on?
PM: Because I think it's time that it happened. We
have tried to do it twice by legislative amendment in the
past, in the 70s and 80s. That is when someone makes a
commuitment, they make a commitment to Australia and its
values, that is the commitment In fact they are making. When
someone goes to a naturalisation ceremony they are making a
commitment to Australia, they are saying I want to be an
Australian, I am committing myself to the values of this
Society. If that is what they think let's say it.
GANNON: There are some people who called us yesterday
who said that they didn't become citizens because of having to
take out the oath of allegiance to the Queen. Are you
conscious that there is a great number of people like that?
PM: You mean they became citizens
GANNON: They didn't become citizens because they were
not prepared to take an oath of allegiance to the Queen.
PM1 There must be a few like that I don't know. I
have a great regard for the job the Queen has done in the
heavy constitution of ceremonial tasks which have been her lot
now for so many years, 40 years. But in this respect in terms
of naturalisation and taking citizenship, the people who do
that do it to become citizens of Australia and pick up the
values of this country, this continent. All I am saying is
let's say so.
GANNON: There was a question too put to me yesterdaty
about MrsKeating. She is Dutch born, is she an Australian
citizen? PM: Yes she is, yea.
RON: I am a 59 year old unemployed person, been
unemployed for nearly 3 years now and Mr Keating's figures on
unemployed with the kids, 15-19 year olds doesn't he trust his
statisticians or does he have to mess about with the figures
because the February figures which I have gone over because I
have got plenty of time because I am unemployed, for females
15-19 40% of them were seeking full time work and with the
boys, 35.7%. The whole thing about this unemployment issue
there is too much money being spent on people like JoblJink all
it is is jobs for the boys, they are a hangover from when they
had JET which was a pretty good thing they had out for getting
women back in the workforce.
PM: Let me just come to the point. There is what
we call the age group, the age cohort 15-19 have 1.3 million
PM: ( cont'd) young people in it, that is the total population
15-191 122,000 of those are actually In the workforce looking
f or work that's about 9.8% r that's the number. Now that is
getting confused with the notion of those in training and
school and those out of training and school. In other words
there in about 7 in 10 in training and school and 3 in 10 not
in training in school but only 1 in 10 are looking for work.
GANNONi But a great number of those
PM: Even that is too many, that is the point I am
making, there is no point people arguing whether it's 1 in
or 2 in 10 or 3 in 10. The fact is even 10%, 122,000 is still
too many and that is why we are trying to find now a
breakthrough on entry level training wages for young people so
that companies are not bearing the cost of the training but
the Commonwealth will pick up the creation of a training place
in TAPE and that the employers should be picking up simply
that wage component. Now that is a matter which is going to
be and has been disagreed by the workforce and the trade
unions over a long period of time. It's one of the things we
hope we can sensibly discuss and get a breakthrough on it at
this meeting I am holding next month.
CANNON: A great number of those young people who are in
training are unskilled, are only there sheltering from the
harsh reality of unemployment.
PM: 1 don't think that is right. There may be some
but look in 1959 when the economy was booming when there were
a lot of jobs around we still had 7 in 10 staying on in the
secondary schools. That was 3 in 10 in 1983, the Liberal
Party of Australia were quite happy to see only 3 kids in
get a secondary education and 7 in 10 go untrained in the
workforce. That is now 8 in 10 are completing secondary
school and we have added 50% of university places to the
system. That is since 1985 we have added about 120,000 places
to university that is the equivalent of a dozen full
universities and about 35 or 40% of the kids leaving secondary
school now go into universities. A weakness in the system is
now technical and further education and that is why I have
been discussing that with the Premier and with the States to
try and pick up TAPE and make it a better system so as that
now 8 in 10 kids come out of secondary school they either go
into universities or into a much more developed TAPE system.
So they come out with a trained position and they are not
looking for jobs as unskilled people.
JACKs Other than your prowess in parliamentary
slanging matches and your fluency in economic jargon, your
recent investment in a pig farm, have you any qualifications
or experience to justify your Labor Caucus appointment as
Prime Minister? If so what are they?
PM What they are vas and I was one of the feow
people in Australian public life prepared to blow the whistle
on the industrial archaeology which the Liberal Party left us
with. old smokestack industries that were going out
backwards, an uncompetitive exchange rate, not enough jobs
ever to pick up the kind of growth that we are likely to have
in employment and basically trying to turn the place into a
modern industrial state. That's basically what I did as
Treasurer and one of the reasons I think the party elected me
as Prime Minister. Can I just say about the piggery, I have
always practiced, I like to practice what I preach, I have
always said don't go investing in buildings, don't get into
speculation, don't punt on inflation, we don't want the
country buying office bocks, they should be doing productive
j~ sensible things. Now to walk as I did out of the Treasury in
June and the first thing to go and do is buy an office
building in a depressed market and do exactly the thing I have
told everyone else not to do was not something I was going to
do. So I thought what can I do which is productive which will
employ people which will to our comparative strengths,
which will add value, which will do the very thing that I have
been preaching, that is building on comparative strength in
food or in agriculture using high technology, value adding and
exporting. So I decided in the 6 months that I was out to
turn my hand at the things I have been asking other people to
do. GANNON& Why pigs though, why not charollais cattle?
PMI Because I happened to know a f ew people in the
industry and I thought Australia is well placed in the Asia
Pacif ic to do something good about this industry, about the
production of protein and the weakness we always have is in
technology and marketing and I thought I would do that. John
Hewson who said a few words about this or the Liberal Party,
he invested a couple of million dollars in Bellevue Hill. Now
I would rather put an investment in a productive business than
in a piece of real estate playing the old rich game of a bit
of inflation looking after your wealth. That is not the game
I have been playing, it's not the game I have been asking.
Australians to play.
GANNON: So the future looks good for pigs in Australia
does it?
PH$ it looks good for agriculture, adding value and
exports and if you look at the growth of the Asia Pacif ic
market in protein I think the opportunities are profound.
GANNON: Do you know much about the day to day operation
of running a pig establishment?
PM:. No mine is really just a passive investment.
GANNON iGANyNoOuN : tDaok e any active interest at all though?