TRANSCRIPT OF THE PRIME MINISTER, THE HON PJ KEATING MP,
QUESTIONS AND ANSWERS, NATIONAL PRESS CLUB,
SEPTEMBER 1992
E OE PROOF COPY
Q: Don Woolford Prime Minister. According to figures released on Friday by
the Japanese Embassy, Australian direct investment in Japan amounts to
only 0.8 per cent of Australia's total overseas investment. I'd like to ask if
you arc happy about thcse figures and if you believe that to any extent at all
they are attributable to constraints thc Japanese put on our investment and if
so, will you be taking that up in Tokyo next week?
PM: Don, it's not on the theme of ' Fighthack' and I'd prefer the question was, but
I'm happy to answer it. The issue is that Australia runs a huge trade surplus,
with Japan and thank God it does because onc wouldn't know where our
balance of paymecnts would be without it, and as well as that they've been a
source of savings in capital to fund our currcnt account deficit and to take
large slabs of equity in Australia. And if Australiani businesses want market
acccss in Japan they've got to do the hard grinding work in a culture which
is somewhat diffcrcnt to Australia to create that market access.
But Australians don't want their leadcrs needlessly putting off our major
trading partner. I notice Dr Hewson saying yesterday, I'll stick up for
Australia. It's not sticking up for Australia, punching in the nose the country
with which we enjoy the largest trade surplus, that's not being good to
Australia, that's not bcing loyal to Australian interests, it's being absurd, it's
being immature. And I think Australians understand that we've developed
an important basis of trade with Japan and that they want that -trad ' e
relationship treated properly. That's not to say you don't argue for market
access. Tlhis Govermecnt has beeni arguing for it and getting it for a long
time in minerals, in agricultural products, in meat, but Dr H-ewson has
been saying we've been letting the Japanese into Australia for investment
indeed we have. Who else is going to provide the capital? But would he
now say that we've done the Japanese a favour taking hotels off our hands at
$ 600 million which today are worth $ 400 million? Docs he regard that as
the sort of favour thcy should thank us for? These are all the comments of
someone who has basically wanted to be noticed, to get himself out of a
terrible problem with the National Party, that is, he has a zero tariff on sugar
and he'll wipe out the north Queensland sugar industry. And in the middle
of pressure on that, he decided to divert the attention by attacking the
Japanese. You notice the Japanese Embassy has stood its ground now over
the weekend and for a couple of days, and they're entitled not to have their
position misrepresented. It's doing Australia no favour behaving
immaturely, stamping your foot when you've got a very mature relationship,
and I hope to develop that relationship further when I go to Japan. I'm not
going for any particular purpose, for any particular initiative, but simply to
advance our understanding as trading economies and societies further.
0: Maxine McKew, ABC Radio current affairs. On a similar theme, in the
same way that President Bush is drawing international condemnation for
decisions such as extending the Export Enhancement Program and the sale
of F15 Fighters to Taiwan, at home thc same decisions are drawing
domestic applause. Do you not think then that perhaps similarly ! Dr Hewson
might be touching a domestic nerve with his comments about acccss to
Japan?
PM: You mean in the United States or in Japan?
MM: No, here.
PM: In Australia?
MM Yes.
PM: I don't think so, I think Australians are quite wise about these things, they
know that Australia has had to trade its way in the world, they know it's
been difficult for us, they know wc've now made a very large transition.
This year for thc first year in our history we exported more manufactures
than we did agricultural exports or mineral exports. They know that this
Government has made this transition. That is, we've taken Australia from
the Stone Age, without making a pun, to the age that is a Hlew. sonfloward
stone age where we basically went backwards in manufactured exports to
a stage where we're now seeing manufactured exports being greater than
rural and mining exports. They know that's all hard tack, they've watched
those balance of payment figures now at least for six or seven years, at least
since the terms of trade crisis of 1986, and I don't think they take lightly to
silly people doing silly things, and Dr Hewson going on as he did,
needlesly attacking the one market where we enjoy a huge trade surplus, is
no good for him, no good for us, no good for Australia and I don't think it
rings any chords anywhere.
Q: Dennis Grant, Prime Minister, from the Seven Network, pay television if I
might.
PM: You guys have given the GST a sleigh ride for now nearly a year, there ' s
becn no real critical analysis of it by the press gallery and even when the
Government gets up to critically attack it, we're on to pay television.
DG: Thanks Prime Minister, pay television, pay television then.
PM: It takes some dexterity to shift subjects, I know that.
DG: What is your view of a mandated role for the ABC in pay television, what of
your previous position that the ABC should bc in the queue likc everyone
else?
PM: This question is not encouraging me to put Channel Seven in the queue, I
can tell you that. These arc matters for discussion, the Govermecnt came up
with a good model for pay television. In the big sweep of events, in the big
sweep of subjects this is not again like a GST, a first order subject, certainly
a subordinate order subject. But that said, we'rc hetter to get it right than
wrong. And I don't want to see Australia's pay television system shanghaied
to an inferior technology: that is I don't want to sce the satellite being the
sole delivery system of pay television. Not when we'rc seeing your sponsor,
Telecom, extending its fibre optic network across the country in a mile
stone investment decision in the ' 80s, which gives you the capacity to speak
back as well as to be spokcn to, that's for interactive services, I don't want to
see us simply relying on the satellite alone. As far as the ABC is concerned,
I think the ABC has a real question to ask itself whether, if it's sidelined a%
a pay TV operator, it doesn't see its frcc to air charter diminish. I think that
is a very great possibility and the ABC needs to think about that, and the
ABC Board needs to think about that.
Q: Stephen Spencer, Macquarie News, Prime Minister with, thankfully, a
question about ' Fighiback'. -Many of your back benchers would like to see
you announce a 12-18 month tariff pause to further underline the
differences between you and the Opposition you've been making known in
re~ nt months. Is that somcthing you're likely to adopt before the ncxt
election or are you determined to stick to your previously announced tariff
policy?
PM: We've been the only government that has reduced tariffs in Australia.
Tariffs actually went up when Dr Hewson was advising Mr Howard. Under
the Fraser governmient tariffs rose, protection rose. The only governments
that have reduced tariff protection in Australia have been Labor
Governments; the Whitlam government in 1973-74 reduced tariffs by
per cent, they then rose under the Frascr government, under the advice of Dr
Hewson when he was advising them. This Government has studiously and
carefully put into place a discussion with Australian business and unions on
a phased reduction in tariffs. The big program ' 88-' 92 was completed on
July I this year where everything above 15 per cent went to 15, that's every
tariff above 15, that's the ones in the 50 and 60 per cents, went to 15 and
everything between 15 and 10 wcnt to 10. We're now phasing the 15 and
to 5 by 1996 and 2000. And for the plant areas we've got 15 per cent for
cars and 25 per cent for certain areas of textile, clothing and footwear. We
think we've got it about right, and, being serious ahout it, we're not about to
be buffeted by again the theoretical prescriptions of Dr Hewson, who did
not seek to join the consensus with thc Government and adopt the
Government's tariff policies, its phasedowns and endpoints, and say this
Government has done what we would never have done, it's done something
good for Australia, it's taken on a sensible thing that will actually stick, we
will maintain thc consensus, adopt the Government's phase downs and end
points. No, no he has a cheap onc up, we'll all go to zero. And we're
supposed to say, my God isn't that tough, isn't that strong where in truth it's
just silly and it is disruptive and that's why the motor vehicle industry and
other industries arc now so put out about it. And well they might be, the
whole city of Adelaide is put at risk by Dr Hewson's policy, a large part of
the state of Victoria is put at risk by Dr Hcwson's policies. So we've made
careful judgements about it in the 1980s and again in 1991 when we
announced the ' 92, ' 96, 2000 phasedowns. So they are all there and we think
wc'vc got the judgements pretty right.
Q: Keiren McLconard, Network Radio, Prime Minister, you spent a lot of your
speech bucketing ' Fightback' though you do admit it will be alive at least
until the next election. The Coalition admits that they haven't yct sold
' Fightback' that it is still causing concern and trepidation in the community.
Given that they're not the underdog going into the election and you are, isn't
it quite possible that Australians want to take anything except a Keating
Government for three years and is it also possible that you won't be looking
to try selling anything positive to the community until the economy picks
up, that's your only strategy on positives?
PM: Kieren it's only that colour co-ordination of yours and that wonderful hairdo
that encourages me into giving you a very nice reply because you always
put the most charming questions, and that is that I can't see the Australian
public being at all attracted to a policy which says we will take $ 27 billion
off you and we'll give $ 26 billion back, but it will be largely going to
removing other taxes and replacing them. And the result of that is to add 6-
7 percentage points to inflation and for all of that they then go and pay for
private health insurance, they have their tariffs cut to zcro and thcy have
industrial confrontation. That's basically what ' Fightback' is it's a crude
tax switch which taxes expenditure rather than income and which basically
cuts tariffs to zero which makes people pay for their private health insurance
and is generally socially upsetting. Now, contrast that with the
Government's change over the ' 80s to a more competitive country, contrast
that with our evolutionary though radical changes to the labour market, with
low inflation, with exports rocketing along, with a strong trade surplus and
growing, contrast all that with low inflation in the ' 90s and say give all that
up, see the social net destroyed, see Medicare destroyed, see people tipped
off unemployment benefits after nine months as Dr T-rcwson proposes, see
the social security program knocked about, see all these things occur, but.
we're so enamoured of Fightback with its consumption tax that we take that.
I don't think thcy will Keiren, and that's the point. And that's why I think
that upon mature reflection that won't happen. Now, I saw your Mother and
Father over the weekend in Bathurst and they told mc that you would ask
me a nice question and I wanted to thank you for it.
Q: Lyndal Curtis, radio 2UE ' and 3AW Mr Keating, from thc consumption tax
onto Labor's taxes, was the report in today's Australian correct that you and
John Dawkins pulled out details of your tax increases from thc Budget? If
so was it a bad move considering the scare campaign the Opposition has
been running against it?
PM: No, the story is not correct. At any rate it is a bit academic because
tomorrow the Treasurer will be making a statcment and introducing
legislation on this very topic. The fact is not only was thc story not
withdrawn, but they werc left. explicitly in the Budget papers. That is, the
measures that the Government might consider were actually announced in
the Budget papers,. but the notion that details had been considered by the
revenue committee and adopted to be then withdrawn was wrong, and I
don't know whether Laura is here, but shc was told it was wrong but she still
wrote it. One little chinik of it is right, but the general thread of the story is
not right. That is, the Government did announce that it was looking at these
things, the revenue committee never considered the prescribed payments
system or the WST, never. It did consider the FB3T but no decision was
taken as to its introduction leaving, that if it were desirable, to the Prime
Minister, myself, and the Treasurer. So wc then put in the appropriate text
saying we would consider some of these measures and if we thought it
necessary at a later stage adopt them or otherwise and wc have stayed true
to form. But you compare that with Dr H-ewson, the sleight of hand, here he
is the other day saying we'll consider in office what is the nature of the
charges for motor vehicles. In other words, he has a $ 4.5 billion set of
charges for roads which he is politely saying he will consider in office. And
he has also said on the record in Septcmber that charges ought to bc levied
on thc basis of mass of distance. So it is either going to come as a
registration fcc or as a tachymeter charge on trucks and on cars, and it is
huge. The fact of the matter is that hc has to he as accountable as we have,
but as always we are always thc accountable ones. As I have made the point
to you before it was Novcmber last since any of you insisted him doing a
press conference in Canberra, and as a result he is quite happy to deal with
the fire engine chasers and the rest where he knows there is going to be no
follow up questions. And on this qucstion there had ought to be follow up
questions, that is who and how, how will the $ 4.5 billion be levied and who
will pay for it?
0: Bruce Juddery, freelance, Prime Minister. You deplore Dr Hcwson's
penchant for experimentation of proposals. As I recall, as Treasurer and
now as Prime Minister, you committed yourself to an accord with the
Unions which effectively has emasculated the Government's capacity for
intelligently using fiscal policy to manage the economy, you have got
yourself locked into a situation, up until a year ago or so, where all you had
going for you was control of interest rates and wc seem to be in a pretty
pickle as a result of all that. When did you develop this abhorrence for
experimentation, Prime Minister?
PM: Bruce, occasionally you ask one that goes right over the shoulder, this one is
one of those. The fact is the Government has had total flexibility in policy.
Let me explain to you you write for a business magazine, this will be of
interest to your editor these arc the points; the first is that fiscal policy was
so tight in the 1980s we produced $ 20 odd billion worth of surpluses. That
gave us the freedom to produce deficit-, is we needed to, which thc United
States does not have, in US Budget deficit% now sitting at about 6 per cent
of GDP and the Chairman of the Federal Reserve Board, Mr Greenspan,
told an audience in Wyoming three weeks ago fiscal policy in America can
not be used to stimulate the economy, it has run its race.
In this country it can be used, it is heing used now. Why? Because of what
we did in the 1980s. Total flexibility on fiscal policy.
On monetary policy we have had 13 reductions in interest rates since 1990,
total flexibility there.
And on wages, flexibility there, we are talking again about another wages
system where three quarters of the people adjusted are not going to be in the
centralised system, and yet we are seeing enterprise deals been done with
very low costs and low inflation portents about them.
So on wages, fiscal and monetary policy we have flexibility and we are
using it. What would Dr Hewson have? He wants no conversation with the
unions, no Accord, no flexibility on wages.
On monetary policy he would only stick intcrcst rates up because the
consumption tax would add to inflation and therefore the inflation effect
would obviously climb into interest rates.
And on fiscal policy he would be left with the same starting points we arc
left with. That is wc are contemplating changes to deal with the starting
point deficit in ' 94-' 95 and ' 95-' 96 so the samc problem would apply to him
werc he to be the Government. That is, because revenue declined by $ S
billion between June and August this year, that $ 5 billion dccl ines at the
starting point out therc at ' 94-' 95 and ' 95-' 96. If it is a problem for us it is a
similar problem for Dr H-cwson. What's hc going to do about it? Tomorrow
we are going to announce measures which will improve that in ' 95-96.
What is he going to announce? Or does hc get let off again, does he get let
off again, the no explainer? This reply you get from him and Mr Rcith ' it
is in Fightback read it' as if those of you are deficient and you have not
been able to read the thing. The truth is it is not in Fightback, and this guy
is not accountable and the starting point problems of ' 94-' 95, t95-'. 96 would
be just as much his as ours wcre he to bc the Government but he wouldn't
have the flexibility on monetary policy and on wages policy that we have
because he has no truck with an Accord and no agreement with the unions.
So the confrontation is simply him saying we will kick you off awards,
your holiday pay, your rates of pay and conditions will all go, you will fall
out of the system, you have got to make a contract with your employer. So
the employee gets a phone call from the managers office come in you
have got to make a contract with us and the person says, I am not making a
contract with you, I have got an award. You make a contract or you are out.
Now that is going to produce a lot of confrontation. That's exactly what
some of the senior executives of this country have been saying the last three
week-, we don't want this confrontation.
We are now moving to a harmonious change in our industrial relations
systemn, a productive change to enterprise bargaining, we don't want
confrontation now and that's why Dr Hcwson's policies arc so out of kelta
with what is happening in Australia and thc mood of this country and its
needs.
Q: Glenn Milne from the Australian, Prime Minister. Two points; onc, the first
a clarification. Your previous answer on tariff policy, was that a yes or a
no? Are you ruling out any change to either the timetabling of tariff
reductions under your Government or the pause
PM: Glenn, we have made that clear in the past where we stand. We didn't think
about these things quickly or in an opportunist way, they were put together
carefully and we announced them carefully, and when a lot of people were
not awarc of all these issues the Government was doing a lot of careful,
consultative work with industry in putting those endpoints together. I was
one of them, John Button, myself, others making sure that the 15 per ccnt
end point for cars could be lived with. We belicve they can.
Q: And the second question, you raise doubts in the presentation of Fightback
in your speech about the economic value ot' incomc tax cuts. Why then did
you offer your own income tax cuts as part of the One Nation statement?
PM: No I didn't. What I am saying is all of this is supposedly to provide income
tax cuts, this whole nasty bag of tricks in Fightback, thc joy is supposed to
be a 30 per cent rate at $ 20, 700. All I am making clear is that the
Government will be doing a 30 per cent ratc at $ 20,700 with no
consiumption tax.
That is, we will be able to put into place, becausc of the fiscal policy we
have put there, tax cuts without a consumption tax and, in macroeconomic
9
terms, an inflationary, disruptive change to the economy. That was always a
possibility, and why is it a possibility? Because of the strength of Labor's
fiscal policy in the ' 80s, because of the underlying strength of the outlays.
That is, because the outlays were reined in in the ' 80s we have the fiscal
flexibility to do these things. But what then is the point of having a very
costly and complicated tax switch which is going to hurt many Australians,
a socially disruptive change to provide the tax cuts which the Government
itself will provide with no consumption tax.
Thank you very much.
ends