PRIME MINVISTER
TRANSCRIPT OF THE PRIME MINISTER THE lION PJ. KEATING, MP
JOINT PRESS CONFERENCE WITH THE HON DR C LAWRENCE, MLA,
PREMIER OF WESTERN AUSTRALIA, " INTO ASIA" TRA. DE AND
INVESTMENT CONFERENCE, PERTH, 17 NOVEMBER 1992
E OE PROOF COPY
PM: I think it is a timely and very important thing for Western Australia to bc doing.
I had the privilege of meeting the Deputy Premier earlier this year when I was
invited to open the Western Australian representative office and that continuity of
interest in South-East Asia, Indonesia in particular, is I think a tremendously good
thing for Western Australia to be doing and Setting this focus on -Australia's trade
relations with the Asia-Pacific in a conference that is widely attended and I am
very pleased to be part of it.
The other reason that the Premier and I are talking to you is to both remind young
people of thc offer which was constructed by the Commonwealth and the State at
the Youth Summit in the middle of the year to take up employment opportunities
for young people and now Treasurer John Dawkins announced the other day a set
of arrangements whereby we can group labour market programs for larger
employers and some employers have indicated they'll take up 1000 or 2000
-younger people as a group, so we've put the labour market programs together and
virtually packaged them as group programs even though there is a menu of
programs within each package. So there is the prospect for up to 100,000 young
pecople of six months training through an accredited TAFE course and then a
labour market program via a wage subsidy at the end of the six months so that
those young people can enhance their prospects of securing employment.
These things are funded, they are on offer, we've now made their adoption and
adaptation easier through the changes announced by John Dawkins last week and
there is at least the prospect of more than 10,000 yourg West Australians being
able to avail themselves of these opportunities. We thought this was a good
opportunity to just restate that and to say that we've made now the adoption of this
menu of labour market programs far more practical for larger employers who are
likely to take 300, 500, 1000, 2000 rather than doing each one individually as a
single stream which is slow and more cumbersome and is not going to have the
desired effect of taking thosc young people 15 to 19 up and giving them a job
where they have either dropped out of school or gone into the labour market and
found they couldn't get a job. I'll leave my remarks at that, I'm not certain whether
the Premier might want to say something to you.
CL Thanks Paul. First of all welcome to Western Australia and we are delighted that
you did take part in out ' Into Asia" Convention. because as you said it is very
important for us, particularly given our proximity to the region to be the driving
force, the leading edge in the Australian economy. Many of our companies are
now moving very successfully in south-east Asia, particularly Indonesia and I'll be
meeting today with the Governor of East Java as part of cementing the relationship
we have there. This is all about trade, investment, employment so it's timely we are
talking about the medium to long term improvements that wc expect in our
economy as we are talking about an offer to young people and I'm delighted that we
are jointly urging employers and the youth in Western Australia to take advantage
of the opportunities in labour market programs in training and in employment
opportunities. As the Prime Minister has said in the past some of these programs
we rather difficult for employers to get access to, they didn't necessarily suit the
variety of nccds that they had in a simple and we've certainly been urging through
our projects for youth that that link between the employer needs and the young
people in need of training and employment in the community be strengthened and
made simpler. So this is very much the spirit of this announcement and the 12,000
or so young people in Western Australia looking for employment I'm sure, will be
pleasd as they are informed, better able to take part in this program as the
economy improves and those longer term prospects which we believe are very
substantially in Australia are realised.
PM: Thank you Carmen, we might just now invite questions.
J: Prime Minister, getting back to the main issue which is the future, it appears that
President Soeharto may be visiting Australia next year. Are you confident that
such a visit could be conducted without any embarrassment or security problems..
PM: Some people do have strong feelings about it, they have legitimate feclings about it,
but that does not nullify the basis of friendship and the neighbourly association
which Australia and Indonesia share with one another and I would be very
disappointed to thinkc that the Indonesian President what's implied by your
question I think that the Indonesian President may be persuaded from visiting
Australia because of the prospect of somebody expressing themselves against him.
I said today and I will repeat for you that one of the most stratcgically important
things that happened to Australia in the post-War years was the clection of
President Soeharto's new order government. It's brought to this region exceptional
stability, peace, the government has held together the vast Indonesian archipelago
and from that very benign climate we've been able to get on with our lives in
Australia and develop ourselves without having a strategic problem overhanging
us. I said this in April and I thought it was time that that was said arnd we
recognised the truth of our strategic relations and associations with Indonesia not
with standing thc fact that we've had disagreements about Timor. So I should very
much like to see President Soeharto visit Australia and I can onl-y say that the work
the Premier is doing with the Governor of East Java who is himself a significant
person in the leadership of Indonesia, if anything smooths the way for a
Presidential visit at some point in the future.
J: Prime Minister, some of the latest polls I understand show a lack of support for the
OST, is this something that didn't surprise your shift..
PM: No, I just say how discerning people are, that's the point I'd make about that
because this is a shift of course, in the strategic discussion in Indonesia, but the
GST is nothing more than a crude tax switch crude by virtue of the fact that the
people paying the tax will not get the benefits of it. That is, they will bc grossly
under compensated and it's therefore inequitable and unfair as well as being
inflationary and given the fact that we've now got the second lowest tax-to-GDP
in the OECD group of nations and have got a relatively small public sector, it
seems to me we just don't need a new base in consumption, in expenditure, in the
tax system, that our direct side income tax system is working very, very nicely it
is very light, we've got good tax administration, we brought the marginal rates of
tax down, the overall tax-to-GDP is low. Why do we need another tax base and
why do we need it when it's going to blow our inflation rate to pieces, but
particularly put a very big burden on families, all Australians, and change the way
in which this country really functions. It would lead to a change in the way in
which the Australian society works, it's a very large impost, it's over half the
collection of the income tax, we collect $ 50 billion from the income tax, a GST
raises $ 27 billion it's over half the income tax, not 15 per cent of the income tax,
it's half the income tax and that's why it is so pernicious.
J: ( inaudible)
PM: Because in those days, we didn't have a crude switch in mind and then the direct side tax
system was haemnorrhaging to pieces. We had criminal evasion schemes of the late
the bottom-of-the-harbour schemes. We had no capital gains taxation, no taxation of
fringe benefits, high effective marginal rates of tax which have been avoided. The
taxation policy advice then was-look, this is almost incapable of repair. it's been left go
so long by the Liberals, it's incapable of repair let's try and tax it where the people spend
it. Now, when we couldn't guarantee the appropriate wage discounts to deal with the
inflationary effect of a GST in the middle 80s, we abandoned it. We were not going to be
in macro--economic vandalism to just push ahead with a proposal we knew would wreck
the national inflation rate, so we abandoned it. But having abandoned it, I then spent the
next 5 years developing a proper direct tax system taxing capital gains, taxing fringe
benefits, tightening up all the loopholes. So, now we don't need a GST.
J: ( inaudible)
PM: Well, I think the proof of the pudding is in the eating. We've given people the benefit of
higher tax collections by lower rates of tax. The top rate of 60% cent is now 47%. The
corporate rate was 49% it's now 39%. The bottom rate of tax when I became Treasurer
was 30%, it's now 20%. So, you've got to say: why? What's happened to John Hcwson is
he's come along a decde too late with this idea.
The principle is still the same: taking from the poor and give to rich, as you say?
PM: Well, that's not what we were proposing. We had over-compensat ions for all the
categories of social security recipients and also for low to middle income taxpayers. in
other words, we were putting the proceeds back by way of huge cuts in income tax. John
Hewson's putting the proceeds to remove payroll tax and cut the price of petrol. In other
words, it's a different group of beneficiaries from the people paying it.
1: ( inaudible)
PM: Well, just a second. In the middle 80s, thc people paying it were also the beneficiaries.
This is not true now. Under the Howson proposal, the people paying it
J: buy petrol though when it comes to cars?
PM: Well, that's the point: why worry about reducing the price of petrol when petrol -by world
standards is already cheap?
J: passed it in the Senate
PM: Because if a political Party in this country campaigns on the nced for such a basic switch
of the taxation system and the community supports that, open-eyed, understanding what
the issues are, on what basis would any political grouping in the Senate refuse the passage
of it?
J The ruckus over your signing of a couple of $ 5 notes yesterday? Are we going to hear
more of this?
PM: Well, the silly season has got away to an early start.
J: You don't think it might ? 7
PM: I don't know. Look, everyone in the political system signs bank notes, they have for a long
time. In fact, I appointed the two people who signed the notes.
3: ( inaudible)
PM: I doubt it very much, Certainly, I had no intention whatsoever to deface a note, can I say,
the person who asked rr but to enhance it by signing it as Prime Minister.
1: So you're saying that's not defacing the note, Prime Minister?
PM: No, I don't think It is. No, certainly not.
1: Do you expect to be prosecuted?
PM: I shouldn't think not, no.
Do you think its value is now worth more than $ 5.00?
PM: Well, ask the owner.
1: So, are you saying it's okay for thc Prime Minister to sign?
PM: Oh, come on. You've got more to talk about than signing hank notes, haven't you?
J: Prime Minister, how effective is Austrade in the push for developing markets in Asia,
bearing in mind that they're not even rcp~ resecnted at this Conference?
PM: Well, I don't think onc can conclude, as important as this Conference is, that whether
Austrade is a participant or a sponsor, invalidates its work. Austrade, I[ think, has been a
very profound administrative and structural change to Australia's trade initiatives. From
the old Trade Commissioner service of the ' 70s to something which is now really going
out there trying to identify opportunities, and put companies together, and really do very
good things. I have only heard praise for Austrade abroad. The last time which was my
recent visit to Japan where we've opened four Consulates this year. One was in Nagoya,
where Austrade was involved. I'd just say that Australia's presence abroad is cnhanced by
Austrade's initiatives.
J: Premier Lawrence, with the election ruled out for this year, do you have preference on who
would go first Federally or State ncxt year?
CL: Well, I think both of us agree that the timing of the election State or Federally are a matter
for each sphere of Government, and for the Party, and we'll make-the decision on it. I
certainly will at the time that it's appropriate for Western Australia, which as I've said,
for those of you who are not usually members of this audience, is sometime in the first
quarter of 1993.
J: Would you be guiding the preference of the Prime Minister?
CL: No.
J: ( inaudible)
CL: Not in the sense of us going first, or the Federal Government going first. It's always been
clear that it's a matter for each sphere of Government to decide.
J: Prime Minister, John Ralph has suggested there maybe another drop in interest rates in
relation to poor demand? Can you shed any more light on that?
PM: No. I was in Queensland yesterday, I didn't hear what John had to say about that at all, but
the stance of monetary policy hasn't changed. What has been governing our monetary
policy of late is the underlying ThflatLnjrate,_ but that has come down. Although, what's
called the underlying rate itself, is a little higher than the statistical rate, and I think that's
what a lot of people in the market look at. So, unless that dramatically changed, I don't see
a change in the stance of monetary policy.
Premier, will you be inviting the Prime Minister to he a part of the State elcction
campaign?
CL: Well, the Prime Minister is here in Western Australia now at our invitation because we
think it is very important that particularly in areas such as trade and investment and a
thrust into Asia that he gives his endorsement, something he already has to such an
important initiative. As far as I'm concerned the Federal Government has very important
matters to put before the people of Western Australia. They'll obviously do so at a time
that suits them, but certainly there is no suggestion that we wouldn't want to hear the
Federal Government's proposals on taxation, for instance as opposed to the GST on
industrial relations as opposed to the very firm endorscment that Mr Hewson has given last
night of the Kennett regime in Victoria. We think it's important that Western Australians
understand that, and we're certainly keen for the Prime Minister and other Ministers to get
that message across to Western Australians contemplating voting in the Fedcral election
and the State election.
J: So, is that a yes or a no?
CL I think it's a very clear yes, isn't it?
J: Mr Kennctt's actions, and the endorsement federally
PM: Mr Kennett? Lo~ ok, rye got no doubt that Dr Hewson has let's, put it this way -that NU
Kennett is doing what Mr Howard said he was doing, and that was giving us an early run
on the Coalition's policy. And for a couple of weeks, the Federal Liberals Dr Hewson
and Mr Howard were dissembling, shuffling, moving backwards, moving away from Mr
Kennett. But now they've decided that's impossible, they may as well embrace it. Well,
they were always embracing it, and I think what we do see in Victoria is what you'll see in
Australia under a Coalition that is, that the whole notion of cooperative wage
bargaining, of searching for productivity by more clever, the more clever management of
businesses and their operation, will be swept away in legislation changes, where wages
and conditions of employment are basically knocked over by legislation. That is, the
award system is taken away, there is no legal protection for employees, only the protection
of the common law, which to all intents and purposes, most ordinary people can't avail
themselves of, they can't hire Q. Cs. T7here is no point in sitting in a lift for 2 years waiting
to have your case heard when the proper industrial tribunal of this ' Country the unique
industrial tribunal of this country have been abandoned. So, at least, as the Premier said,
whenever elections are held in this country at least we now know with the Liberals what
they stand for. That means higher taxes and lower wages. Higher taxes through a
consumption tax and lower wages through reductions of rates of pay and conditions of
employment. We're seeing yesterday Dr Hewson simply confirming that point.
J: Last week we recorded an increase in unemployment to 11.6%. Do you think that strange
to believe your claim that the recession is over?
PM: Well, there was also quite strong emnployment growth for the month 26,000, the
economy is growing. So no economy that is growing is in recession, but we're still living
with the effects of rccession, and part of thc cffect is, of course, higher productivity which
means more output for fewer people. We're living through a surge in productivity, that is,
companies have stripped down to be more efficient. But in being more efficient they're
getting the same output or more output but with fewer people. So it means that this stage
in the cycle when we would be expecting the growth coming through to be reflected in the
employment growth -it's not being fully reflected in the employment growth because
we're living through a particularly high bout of productivity. But as the growth continues,
obviously the employment will be taken up, but it's going to he taken up later rather than
earlier.
J: But when it comes to voters, they don't understand that. They only know they haven't got
a job?
PM: No, no. That's true, I understand that. But let's at least make the messatge clear. The
economy is clearly in a recovery phase and the positive employment growth the 26,000
who got jobs last month know that, even though we are not keeping up with workforce
growth. Thiat is, workforce growth is ahead of employment growth and therefore
unemployment has risen. We have very high participation rates, very high, and that's
because peoplc have reasonably after the 80s experience come to expect that after the
huge job growth of the 80s you could go looking for a job and find one.
I: those problems outstripping your solutions?
PM: No, well. Well, I wouldn't be too pessimistic about Australia's prospects. We're now
growing faster than any other comparable OECD economy, we've got fiscal policy, in an
expansionary phase, we've got low interest rates. Our colleagues in the Opposition want
to cut $ 7 billion out of the deficit that's nearly 2% of GDP which will just push us
straight back into a recession. And they want to put a 15% tax on everything we consume.
As other commentators have made clear this week, most notably Ross Gittins yesterday in
The Sydney Morning Herald, this could be nothing but contractionary, nothing but
contractionary. So there's a very clear offer on the part of a very clear differentiation on
the part of the Parties. We're saying, let's expand fiscal policy and have low interest rates
to promote a recovery. Dr Hcwson is saying let's contract fiscal policy and see interest
rates rise as the labour market, as industrial relations changes. I'm saying the Federal
Liberal solution is no solution to a recovery, the only prospect of a recovery in this country
is with the Labor Party, with the Government.
J: Can the export incentives your Goverrnment provides further the export growth that we
need?
PM: Well, we've just had a very large depreciation of the exchange rate. The Premier and I
were just talking about it earlier. We're now down 20-odd percent against the Yen, I think
we're about 20% against the Deutschemark. On the trade weight, if my memory serves me
correctly about 12% or 13%. This is a large depreciation which will be very promot-Nig of
Australian product.
1: ( inaudible)
PM: Well, I gave you the figures inside today. We're now exporting 23% of all we produce,
nearly a quarter of everything that's produced in this country is now exported. in 1983 that
wais 14%.
J: But we do need to keep that sort of growth going?
PM: We have to keep it growing and that's why I congratulate the Premier on this initiative.
You see there's no better way of keeping it going than to keep opening up the market
opportunities in the fastest growing part of the world and that's the Asia-Pacific. So if
we can maximise those opportunities given the fact that we've already made the big jump
to exports in thc 80s just imagine where we'd be now if we were exporting 9% of GDP
less than we are? In other words if we were exporting what it was under Howard and
Hewson in 1982/ 83 we'd be finished, absolutely done for, unable to pay for our imports,
comatose. As it is now, we're now exporting nearly a quarter of everything that we
produce, and it's rising. The fastest growing component of it is manufactured goods and
services.
3: pretty encouraging results in the polls here in the West. How big and turn things
around though?
PM: Well it's not explicable. It's not eaisy to explain how the same transmission of national
issues is in some way not succeeding in Western Australia. I think it's to do with the
predominance of State issues in the West Australian mecdia in the main. But again it's one
of these things which time alone will cure.
J: Well, would you have a personal preference
PM: Oh well, you can't. When you ask silly leading questions, you get silly answers. I won't
give you one because I can't be bothered.
J: Do you concede though that you've got a pretty tough job ahead of you?
PM: Yes, but in national terms we've got three out of foujLpo s putting us in front. No, three or
four out of four putting us in front of the Coalition, and that's because I mean you've got
to believe this: if you cut $ 7 billion out of the Commonwealth Budget deficit, the
economy will go backwards. If you put a 15% GST on all food, clothing and services in
the economy, the economy will go backwards. And if industrial relations blows thc wages
system out of the water, inflation will rise and interest rates will rise with it and the
economy will go backwards again. So, while the Liberals may lament their circumstances,
their policy prescriptions will drive the economy back into recession. Now they rcjcct our
policy prescription, but ours was endorsed by the OECD last week. The OECD secretariat
was urging OECD member States to adopt an expansionary fiscal policy. They were
urging that: to adopt an expansionary fiscal policy. Japan's just done it, we've done it, but
the Federal Liberal Party says: oh no, no, what we've got to do is go back to Thatcherite
policies and pre-Reagan and the rest. Go back to contractionary policies. Well I just say
to Wr,. qcrn Australians, it's poison. If it happens, the economy will stay rececsscd, it will
go back into recession.
1: Given that WA was in the last Federal poll, would you be doing anything special over
here?
PM:-Well, I'll be coming here routinely as I have been and taking the opportunities. No better
or nicer one today than to be talking about WA's prospects. The great macroeconomic
changes of the W~ s, the floating of the exchange rate, the competitiveness of the dollar, the
low inflation, the lower interest rates, the lower unit labour costs are just bountiful for a
State like WA which is selling into the world markcts with agriculture, principally
agriculture, minerals and international services like tourism. In other words the whole
macroeconomic policy is set up for the primary exporting States, so WA is going to pick
up always that benefit of national policy.
J: But do you think the voters here though are going to see a clear distinction between State
and Federal issues?
PM: I think the Premier is entitled to campaign on the policies which better relate to WA, in
terms of those which are contained in the purview of the States, in the administration of
the State, in relation to the community. And obviously there arc a different set of issucs
than the Commonwealth issues.
J: State health must bc a bit of a worry that they are lacking if you're so concerned about
the Federal health budget?
PM: Look, I don't think it's a worry. I think all State Ministers are naturally concerned about
their area of responsibility. But our aim is to make Medicare more than a health insurance
System, to make it a whole total health system. That is, to enhance public patient access
for public hospitals.
J: ( inaudible)
pm: Well, you did share a platform with the Commonwealth Minister for Health a few weeks
earlier, and rm quite sure that in the arrangements that will be settled between the
Commonwealth and the State of WA that WA will be advantaged. That advantage will
flow most particularly to aii enhanced posicion for public patients in public hospitals and
particularly for the aged who are worried about elective surgery and the need for it like
hip replacements and the rest, without needing to carry the crippling burden of private
insurance.
J: Aren't you worried that WA will see you You tilk about the Coalition's economic
poison when actually you've got a mouthful of your own?
PM: Well, we've had
CL: I want to know who writes his questions.
PM: I know, he's a real charmer isn't hc? The thing is, obviously it's going to be a long way
from here to the Canberra Press Gallery for you many stations alonS the way. Let me
just make a couple of basic points for you. There were 6 million people in the workforce
when I became Treasurcr, there's today nearly 8 million. So there's 2 million Australians,
or just on 1.6 million Australians who have a job because of the policies of this
Government. New Zealand, which we're often compared with particularly by our Federal
colleagues, have fewer people in work today than they had in 1983. In other words the
workforce in New Zealand is smaller today than it was in 1983. Now, if one looks at it
beyond employment, to look at thc thing that's hardest to provide to any country and that
is a future, a solid future, this is what the Commonwealth and State Labor Governments
together have done through the
1: You're not worried about
PM: Well, it's absurd, absurd. We're now in a position whcre the Premier can hold a conference
in WA about trade with the Asia/ Pacific, Could you imagine that being held here in 1982?
Would anyone have turned up? Would anyone have believed that the great growth
prospects of Australian in the Asia/ Pacific area would have been as they are now? With
nearly 25% of all we produce going to exports? Where the great primary exporting States
have been preferred by national policy with tariff cuts, with a floating exchange rate, with
a proper set of market mechanisms? They are the things that West Australians need to
consider. If they need to consider their prospects in the 1990s and say: which Party has
given them an opportunity to share in the Asia/ Pacific, to guarantee long employment and
higher incomes it's only the Labor Party.
J: Much of Australia 1 million unemployed?
PM: Well, you're obviously in a contest with him. I'in not sure which one of you should win it.
Well, the fact of the matter is to ask the 2 million who've got a job since 1983. Sure, I
would very much like to see a higher level of employment. Remember this: the Federal
Liberal Party left me as Treasurer in 1983 with 700,000 people out of work, 700,000. At
Its lowest by the late 80s and early 90s, it got down to just ovcr 500,000. So we, in a
structural sense, we've always had right through the last decide 500,000 people or more
out of work. It's a matter of profound regret to me that another 400,000 to 500,000 have
been added to that. It's a matter of pride to me that another 2 million or so have been
added to the workforce. So, it's a case of we've always been dedicated to employment
growth and we need to get back to it. But I remember press conferences here and
elsewhere in the late 1980s and when I said: we've had 120,000 job growth this month,
160,000 last month, 119,000 the month before -and you said: yeah, yeaih, yeah Treasurer,
but what about the current account deficit and inflation? Well, no-one's now saying yeah,
yeah, yeah about unemployment, and it's good you might. But you should have been
consistently Interested in unemployment right through the 80s which most of you, of
course, were not but the Government was. That's why there's that extra growth in the
labour market. We remained interested in the whole matrix of policy: employment
growth, the current account deficit, inflation all that's predicated on growing Australia as
a mature economy. We're now doing Ithat via the sort of things the Premier is involved
with today and yesterday: that is, really engaging with the Asia/ Pacific as we've never
engaged before, where we have only paid lip service to our engagement with the area. We
are now truly part of the area and taking part in the fastest growing region of the world.
That's what's going to underpin higher incomes and higher employment. It's not going to
be the notion of taxing your food and your clothing and believing that a change to payroll
tax and petrol tax is going to re-macc Australia you would have to believe in fairies in
the bottom of the garden to believe in that. ThIs is the only way of doing it the right way.
ENDS