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PRIME MINISTER
TRANSCRIPT OF THE PRIME MINis-rER, TIHE HION P J KEATING MP
DOORSTOP, CANBERRA, 18 OCTOBER 1992
fi& OE PROOF COPY
PM; I just want to make a couple of comments about a few things Dr Hewson has said
and done over the weekend. HeI told us in the Alfred Dcakin lecture earlier in the
weck that policies of leaders should have a human touch and should be more
warmi-hearted. Well he was totally cold-hearted in his put down of the Australian
tourism industry on the weekend. That industry, which I think 14; now the largest
employer of Australians or certainly will become, particularly of young
Australians in the 1990s, and is really doing more that its share of any sector to
add to growth and to exports of services, that sector has asked that under a. OST it
be relieved. Not only did Dr Hewson say he wouldn't relieve them, but he has
actually upbraided them, he has hopped into them for daring suggest that they
should have relief. It is as if they have to apologise for even existing.
Now, Dr Ifewson's proposals provide no relief to these people. Payroll tax relief
will not go to any tourism operator who has a payroll of less than about half a
million dollars. So they'll wear the OST, it will actually put a hole right through
the industry, and there will be no relief for them, and to an industry which is really
making a huge contribution to Australia and is going to make a bigger contribution
in the future. Because you can't get a machine to make a bed, you can't gct a
machine to clean up someone's bathroom, you can't get a machine to serve a meal.
Thiis is a very-1abour-intensive industry, it's one of the service industries we are
going to rely upon in the ' 90s, and he is going to kick a hole right in it with the
goods and services tax. And Mr Jull, his tourism spokcsman, recognises and
understands that. But not only does he not recognise it but he has hopped into
them for daring suggest that they need relief.
J: The tourism industry will be helped by the industrial relations chaniges the
Opposition is putting forward when penalty rates are abolished.
PM: No. Under the Sheraton Hotels agreement already concluded, penalty rates have
all been rolled into a weekly rate. Thcrc's no thing, nothing In flexibility, that can't
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now be done under Section 37 agreements. What Dr Hewson and Mr Howard
want to do is to actually cut the wages of Australians. They want flexibility
downwards, they dont want flexibility up, they don't want flexibility sideways.
Anything they want to do by way of hours, working time, working week, are all
now iii all these hundreds of varied agreements which are being made and have
been made over thc last 6 months, and quite historic ones in the case of Sheraton
Hotels. So, don't believe any of Dr Hewson's rhetoric about tourism and industrial
relations, the truth of thc matter is they just want to cut people's pay. And as I
demonstrated during the week, in an American survey of pay rates Australians arc
way down the scale. We're already hugely competitive, what does he want to hop
into Australians' pay for?
J. The Opposition Leader says that Fightback will quadruple the number of tourists
coming here by thc end of the decade. Given that, why do you think he'd be
insane enough to want to damage an industry as important as tourism to Australia?
Surely what he says is based on fact.
PM: No, I think the potential of the tourism industry is huge. It was the one great new
industry created by the freedoms of the 1980s introduced by this Government.
And its going to grow very strongly in the ' 90s, and particularly in the region, and
also not just inbound tourism but domestic tourism. But a heavy tax on every
service provided by it accommodation, meals, all sorts of scrvices will knock it
down and slow its progress back. So the fact is, the industry is entitled to say were
actually doing well and we're not going to get virtually any substantial relief from
payroll tax or anything else, leave us alone. And he has got into them for being
selfish.
1: Does that indicate, Prime Minister, inbound tourists face some sort of value added
tax in most competitive destinations anyway?
PM: But it's also a fact that we're running a current account deficit, arnd one of the
things we have going for us is a trade in international services tourism, financial
services, education services, et cetera, and tourism has grown like Topsy in the
1980s and has the potential to keep on going. People have got to understand this:
the GST is half as big as Australia's income tax. At $ 27 billion theGST raise
more than half the income tax. It's not just a mere bagatelle, it's a massive impost
on the nation and on any industry, and this industry, which is competitive, and
does has a lot to offer. One thing it has to offer is the potential to employ labour.
When productivity is reducing the number of people employed in factories,
tourism is giving us a real potential to employ people to take up labour and to set
this industry back as this would do, I think enormously, is a terrible pity. But not
only that, for them to ask for relief and then be shunned in the way that hc shunned
them on the weekend and then chastised them as being selfish) means it's just
nothing but inflexibility and cold-hearted responses from him.
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J: He's just being consistent, isn't he? He's not going to give them anything he is not
givinp any othcr industry.
pM: The fact is, to be consistent, this industry is not consistently growing, it is
exponentially growing. If we want industries which are going to actually make a
bigger than average difference to the way in which we perform, you've got to give
them somc room.
J: If he zero rated inbound tourists you'd have say a tourist couple in a hotel room
paying a great deal less than an Australian couple in the next room. Isn't there
some inequity in that?
PM: I think there is, but the best thing he can do is relieve the whole industry. See, the
truth is a tax of this dimension will seize the Australian economy. A tax which is
equal to over half the income tax will seize the Australian economy. And his great
rationale for it is that it will relieve payroll tax. In fact it is four or five times a
larger tax on labour than payroll tax is. And in collecting equal -to-over-half the
income tax, it's too great a burden an inflationary and coernptive burden on the
Australian economy at this time. It's a luxury Australia can't afford.
J: Prime Minister, given there is an inequity on inbound tourists having a cheaper
deal in Australia, then isn't that a justification for what Dr Hewson is saying?
PM: Look, there's no justification for penalising, an industry which is now competitive
and growing like steam. None. It's a bad tax, the whole idea, and it's particularly
bad on high labour content industries like tourism.
J Jeff Kennett this morning said that he'd like to talk to you and you hadn't spoken to
you yet, and he said that the worst thing Labor had done federally was not to go far
enough with industrial relations reform, have you any response to that?
PM: We've changed the nature of Australia in the ' 80s. It's now an externally-oriented
competitive country. We're now clocking up bc-st practice awards with
international bench-mnarking with companies. Because of the huge changes in
industrial relations we've got an inflation rate of 11/ 2 per cent. So I don't think
there's any validity in Mr Kennett's claims at all. And as far as I'm concerned I'm
quite happy to see him. If he wants to discuss Victoria's troubles he'll be treated as
fairly and as decently and as openly as every othcr Premier is.
J Well does Mr Kennett have any other option than that he conceded hc was going
to do today, that is to raise taxes substantially?
PM: Well, that's a matter for him. But Victorians should take note that the Liberal
Party of Australia is a high tax party. Whether it's the State Liberal Party sticking
up taxes as Mr Kennett is, or Dr Hewson putting on a OST, they believe in higher
taxation. Whereas what Labor has done is produce one of the smallest public
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sectors in the world and onc of the lowest rates of tax to GDP of any OECD
country. in fact we're the second lowest in the whole of thc 27 countries of the
OECD.
J: What do you make of Mr Hewson's comments on Mr Can in New South Wales?
PM: To be honest I was flabbergasted by that remark, that in some way he tried to Score
off the fact that Bob Carr had no children. And what we see here creeping into the
debate he said you've got to be suspicious of a guy that doesn't like kids. Well I
can tell you this, Bob Canr has climbed all over my children from the time they
were babies, and I think he's bringing in the worst of American politics. It's onc
thing to have people criticising us in the way we fight the issues out in Parliament
House, but at least they're issues. But this sort of stuff, and I should imagine that
Dr Hcwson, who has had his own family affairs paraded in the public debate,
would have been grateful for the fact that not one person in the Labor Party, not
one, on the Labor side of politics made a comment about them. Not one, He said
that Mr Carr wasn't as full-blooded as John Fahey because he doesn't have
children. Well I don't think Ben Chifley had any trouble being a full-blooded
Australian, and he didn't have any children. I think Dr l-ewson should withdraw
this renmark, apologise for it and never repeat it.
I, Mr Keating, speaking of issues, do you think that after the release of the
Coalition's IR policy that IR will be the biggest political battleground up till the
next election?
PM: It will be two. It will be the GST arnd industrial relations. But remember this,
we've now got industrial disputes at their lowest since we've been keeping records;
we've got an inflation rate of under 2 per cent, which you can only havc a with a
labour and wages system which is working; we've got all sorts of inventive,
ingenious and productive enterprise agreements, flexibly being written between
unions and employers across the country; we've got now one of the better labour
market systems in the world and it's growing and improving every year. But to
give it the cold, hard treatment of saying that awards arc finished, that people lose
holiday pay, maternity leave, rates of pay and other things, and that they can sign
up under a contract but only contest it in a court with their own legal
representation will see Australians' wages cut dramatically from what are already,
by world standards, competitive and low levelled. So industrial relations is
obviously going to be an area of great difference between the Government and the
Coalition, but I suppose most things are a great difference now between thc
Government and the Coalition.
J: khe fact is workers in Ncw Zealand havcn'I bceii chopped off at the knees, have
they?
PM: But they are being chopped off now. The rates of pay for New Zealanders now are
now declining sharply, people are losing conditions and living standards are
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sitarting to decline. And we don't need to do it here. Weve got an inflation. rate of.
1 1/ 2 per cent, wc've got a profit share which is already reasonably good and will
go quite high the moment there's any, real volume going on the to the bottom line
of Australian corporate accounts. That is, when their overheads arc covered all
their extra volume is just simply cop, it goes straight to the bottomn line of profits.
So we're about to sce, as the economy really gets up a head of steam, the profit
share go to very high level, and why anyone would want to go ripping Australian
pay rates around and knocking ordinary people around in pay I've got no idea, and
at the samne time while they knock Medicare over and everything else.
J: Speaking of..
PM: OK, I think I'll just leave it at that. T'hanks. I know You're very enthusiastic,
Anmanda ( Buckley), it's that break it's done you the world of good!
ends TEL