TEL
TRANSCRIPT OF INTERVIEW WITH KEVIN HUME, ABC RADIO 2 7
JANUARY 1993
3 AND OE PROOF ONLY
HUME; Prime Minister, why bother to battle for Carmen, she
is dead and gone isn't she?
Flit I don't think so. Carmen is held In high esteem and
the polls tell us that. She has done a first class job in
tightening up the admuinistration here in Western Australia,
she is an honest# decent, hardworking person who is running a
fairly tight government and I think she has every reason to be
re-elected.
HUME: Every reason to be re-elected, a fairly cautious
endorsement. I mean the polls are showing 9/ 10% swing against
Labor. PM: Polls are not always right, they are not always
right and we will see What happens on polling day. She has
had a battle and she has known that but all the same she is in
there with a chance.
HUJMEt Your talked yesterday about generational change,
Richard Court in a sense represents generational change or
does he?
FM: I don't think so, much the samne age, he and Carmen.
No if Carmen were an elderly person I would say yes that's
fair comment, if she was the age of you know Joh Bjelke
Petersen or Charlie Court or somebody, fair enough, but she is
a young peruon as a Premier and I don't think the generational
change in turn anyway. If a generational change refers to a
youthful view of the world, a youthful view of the world and a
sort of upbeat progressive view of the world, she is a younger
person than Richard Court in.
HUME1 if you look back to the 19809 the heritage of the
past, the baggage of the past that Premier Lawrence has got to
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2.
HUM ( cont'd) discard, part of it includes Of course
economic rationalism. Does economic rationalism to you these
days represent the baggage of the past?
PM: I don't think it includes economic rationalism. I
think it includes state participation' in the private economy
and a lot of questioning about that but the issue is it was
she who set up the processes of enquiry into these policies
and therefore I think that any problems in the way in which
the state has functioned in those respects shouldn't be
sheeted home to her.
MUMS$ Let's look at the wider question of economic
rationlism and your own promise with the coming federal
election to bring just a touch of the Whitlams back into the
campaign, a touch of excitment certainly from the 1970s but
it's curious to look to the past to find that contemporary
touch of magic to inspire the electorate isn't it.
PM1 I think so. I think politics is about imagination
and you can't get nations to do great things, great deed.
without a sense of imagination by the public and it is the job
of political leaders to instill that sense of imagination in
them and I should have thought in the last year we have done
quite a bit of that.
IjUMEt Can you successfully remake yourself though from the
1980s, can you shed all of the baggage from the 1980s?
P21: I don't want to, I am not intending on remaking
myself at all, not one bit. I mean it depends, you are
confusing the terms I think rationalists with the ideology of
the right. The view that sort of John Hewbon subscribes to
the sort of Margaret Thatcher, Reagan view, I wan never for
that but I was always for rational policy not for irrational
policy and you can't com~ pare Australia today to 1983 or 1984.
Here we are now a much more interesting country, much more
diverse industries, much greater wide basis to our wealth.
This is the first year we have exported more manufactured
goods and rural goods than rural products. The great bulk of
those, the greatest growth in those has elaborately
transformed manufactures which we just were not doing a decade
ago. International services, medical services, education
services, health services, tourism, were just not traded
services ten years ago. These came because of a Labor
government turning Australia into a proper functioning market
economy. HUM There have been considerable costs as we have
seen with the continuing turmoil for example over the banks,
the role of the ~ eevBzkwhether regulation ought to be
reintroduced and tightened in the 1990., a dereg4latory
fervour as though you were not susceptible to it. But there
were certain TEL
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3.
PM: It's not a matter of being susceptible to it.
I introduced deregulation but you can't halt introduce it,
that's the old point about pregnancy, you can't be half
pregnant, you either are or you are not. If, when I was for
instance deregulating deposit maturity controls back in the
savings banks for instancel well trading bank. couldn't
accept deposits under 30 days. Why? Why? No reason. So what
do you say we won't go to accept deposits, any deposits at any
duration, we will only make It 15 days, we will only partly
deregulate. I mean what Ise the rationalisation
HUJMES I am confused here, you are saying that
Thatcher and Reagan for example were excessive in their
fervour as far as deregulation in concerned. You are saying
as far as you were concerned you couldn't be a half
deregulator? PM8 No, no because Thatcher and Reaganism is not
about deregulation, it was about basically no role for
government. it was about government withdrawing, it was about
ripping down the public sector, It was about not breaking the
social wage, the safety net, those people didn't care about
access and equity in education or access and equity for health
or access and equity in age care. These are the things that
marked out the Labor Government against the cold winds from
the northern hemisphere in the 80s. The things we had In
common was making economies function, function more naturally.
That I regard as simply rational.
HUME: One of the costs again of the boo in a sense
though was the increasing internatioflalisation of that
deregulated world economy we are seeing with the turmoil on
the foreign exchange market day by day for example. The
extent to which the Treasurer and the Government, the Keating
Government in a sense is a prisoner of those International
forces, Do you regret in any sense having to deregulate to a
degree to make Australia more competitive, more part of that
International economy?
PM8 No, we just had to happen, it just had to
happen. You look at western Australia, western Australia is
a mining and agricultural state. Just imagine how it would be
without a proper exchange rate mechanism, without a
competitive exchange rate, wh~ ere would those iron ore mines
be. HUME$ But it has made you a prisoner in a sense those
international gnomes in Zurich, hasn't it?
PM: No, no that's all static from the Left, you
have been mixing with too Many Lefties mate, that's just
voodoo stuff. You are a prisoner of your economic
performance. Floating exchange rates came because when some
people were inflating at lot and others at 2 they wouldn't
take your currency for theirs because yours wasn't worth Ea
much, so the fixed exchange rates went, so what was going to
TEL
4 PM ( cont'd) be put in its place? Obviously mobile floating
exchange rates and in the days of low inflation when everybody
warn inflating about the same low rates of inflation you could
keep fixed exchange rates. But you have seen how difficult
it's been with Britain. I had a lot of people in this country
Say to me in the 80s we shouldn't have our currency tied to
something, look at Britain it's joined the SRm and I used to
say yea, this is a mistake they won't stay there and of course
it's proven to be true. They tried to stick with the fiction
that a country which was lose productive and more high cost
could keep its currency on a par with one which was more
productive and lower coat and of course In the end people
won't swap your currency for theirs for the same price. So
floating exchange rates in fact covert they make the
difference. In other words they make the system equilibrate.
HUXhEt But they still create considerable political
and economical turmoil for a P'rime Minister heading into a
very tight federal election.
PM: There is no turmoil here. There Is turmoil in
Britain with a fixed exchange rate but there is none here.
The exchange rate has come down over a period of time, there
is an occasional flutter and it gets a headline in the
newspaper but by and large the system works and it works
because it's in a sense the shock absorber that takes the
change, be that change be the difference in the terms of
trade, that Is the falling prices for commodities etc or be It
be in Interest rates, whatever it Might be that exchange rate
takes the shock and takes the change. You intimate therefore
we are sort of prisoners of that, what you are if you are a
prisoner of anything you are a prisoner of your economic
performance, you can change all this by changing your economic
performance and countries that don't change their economic
performance, that don't be productive, that basically lay back
on the oars, fine, in the and someone marks them down.
HUME: Let's look at other prisoners of the past
internationally then. John major certainly, Bill Clinton
certainly. The Germans with the price of reunification still
to be paid and hoping to Make it to be paid through credit
cards rather than in a sense through raising taxes. The
Japanese also suffering because of their past enthusiasm for
asset inflation from the late 1960s, stock market fervour and
so on. All prisoners of the past, to that extent you and your
Government and this country is also a prisoner of the past and
the legacy of the past internationally.
PM: The past that I have had to deal with was the
sloth of the coalition parties who believe that we should be
just left with agriculture and minerals. I mean they took the
view when I became Treasurer in 1983 only three kids in ten
completed secondary school. They didn't think we needed to
educate the workforce, they didn't believe we needed to do
sophisticated things like sell health, medical, tourism
services. They didn't believe in high value added products,
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PHMi ( Cont' 14) they believed basically in farms and quarries.
it has lot us down, that's what produced our national debt,
it's that basic weakness that occurred over 25 years that
produced the rise in our national debt and the only way out of
it is to change the basic nature of the economy so you can pay
for yourself. That you can pay for your imports and you do it
in a way adding value rather than selling primitive
things, primitive things or primary things. Now that is the
job that I had to do that wasn to change all that, to change
all that culture to an outward looking productive culture and
it's changing. As I said this is the first year in our history
where we have exported more manufactures than rural products.
HUMEs Ten years on the point again is still that
Australia is a prisoner of the past, the legacy of Reagan and
Thatcher to a degree a prisoner also of international forces
whether they are the stock market, international foreign
exchange PM; I don't think we are prisoners of anything. I
think Australia is in a position to control it's own affairs.
If it wishes to promote its investment, if it wishes to
produce more product, I~ f it's productive sectors are more
supple and there is a larger level of production then of
course our current account deficit will be lower, our exchange
rate will be stronger. What I am trying to say long windedly
it's all up to us. But it you want to lay back and not make
the changes well you get beaten up, you will get beaten up by
markets. There is no one looking out after you any more
that's all changed and the changes of the 80s mean that we are
now a long way on the path of changing Australia towards that
kind of integrated with the Pacif ic particularly and
integrated productive international culture.
MUME: I can certainly understand your optimism, if I
can quote some Jerimiahs from Britain though, economic
forecasters and others. You say that 1990s because of the
past is going to be a decade of stagnation essentially, It's
going to be a repeat to a degree of the slump of the
America is bound by $ 460 billion of budget deficit, Clinton
can do vey little in the way that PDR did in the 1930.
something like the economy. The Germans as I have indicated
are unwilling to do anything-
PHI The Germans-
HUMEt finance themselves through credit card
fantasies. Not the most encouraging with which you have
to work as Treasurer or Prime Minister.
PM: That's true, the Germans are obsessed with
inflation and they are now through their policy of their
central bank largely hurting, seriously and badly the
economies of western Europe starting of course at Britain, nov
France, now others. The. French Franc is seriously overvalued
and it's hurting, desperately hurting the French economy. But
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6. PHI ( cont d) the people in the Bundesbank are keeping the
pressure on those economies to make certain that their
domestic change, that is the incorporation of East Germany
into West Germany is a low inflationary incorporation. in
other ' words-i~ yare prepared to punish the rest of Europe. I
don't approve of that but it's happening we have got to live
with it. Japan is in a recession because of the spread of
credit in the 80s, credit in the BOB went beserk, it went
beserk in Australia. That's part of when you were talking
earlier about the problems in Western Australia. It was part
of that credit binge, the availability of credit, the easy
availability of credit through international credit markets.
HIUO1k48, let's look at solutions then. Bill Clinton
again, the generational change we talked about at the
beginning of our discussion. He has hedged in there in very
little that he can do, he cannot in the sense be FDR as he
might want to be. Can he though reform the international
economic order which is still tilted against countries like
Australia? PM: I think he can, I have great hope and
expectation for Clinton. I am very heartened by his presence
by his attitudes and I think he is in a good position. People
need to remember this that America, like Australia, today
there is one in ten roughly out of work. in the Depression it
was three in ten, this is not to be compared this period.
American production fell by 33% between 1929 and 1933, the
month that Roosevelt was inaugurated three years back to the
stockmarket crash of 1929 American GDP, Aimrican product fell
by 33%. In the last two years American products has fallen by
3% 9 3% not 33, so I think that gives you the relative
weightings. We have got problems, yes, but they are solvable,
they are capable of solution and I think Clinton has the
energy and the youthfulness and the mandate to go and do it.
HUMEt But much depends on either revival of the north
south dialogue from the 706, redressing the balance between
the third and first world or some sort of fairly fundamental
readjustment of the terms of trade around the world. We are
in crisis.
PH: That's what the GAMis about, that's what the
General Agreement on Trades and Ta riffs is about.
HUME1 There has been certainly a significant shift In
terms of GATTr but the job has barely started. It was an
interim arrangement until Clinton gets in there one surely
must hope that Clinton will see the need for radical change
for the world economic order if it is to survive, if
prosperity is to continiue.
PMS We have certainly played more than our role, a
bigger role than our size in getting agriculture into the
GATT. I must say we, I mean this Government in getting
agriculture in to the GATT agenda and the GATT discussion in
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7. MH ( cont'd) 1986 and It's in there now and there in some
likelihood now that we will get a Solution on agriculture
which we will mean we will have an international regime for
trading goods, in services in intellectual property rights and
in agriculture. This will be a great backdrop for Clinton to
inherit the American presidency and a very enthusiastic and
bull point for Australia in finding itself in a fairer trading
world. They are the things you can do as well as all the
bilateral things that's between our country and another
country but It's the multilateral, it's the great world steps
like the GATT which make the difference. SQ I am quite
optimistic, get the GATT together get a decent backdrop in
trade, further liberalisation of trade in the Asia Pacific,
the development of APEC which this Government has started in
the Asia Pacific area, a pickup in American growth, a better
rationing of credit worldwide. I don't think there is cause
for pessimism about the 90s at all. notwithstanding the
excesses of the 80o and they were huge excesses. People talk
about the roaring 20a it was nothing like the roaring 808, the
credit growth of the 80s was profound and this has been part
of Australia's problem. The reason we had the boom in the late
which was then we had to slow down was because of the
excessive growth of bank credit.
HiUAMmEe rican historian Arthur Slessenger, he was
associated with the Kennedy regime in the early 60a in the
USA, pointed a couple of years ago before the trends were
evident perhaps of the 1990s like the 60. and like the 30s in
America and through the western world being a decade of reemergent
belief that government was good, that government
regulation as necessary. Things have changed though, part of
the generational changes you see in the USA is increasing
diversity and fragmentation, multiplicity of races and of
Interests and so on, it becomes more difficult in that sense
for government properly to govern and to manage that diversity
and that rapid pace of change.
PH: This has always been an issue in this century
the belief that the two competing beliefs, one that private
intiative and private reward Is a key to all prosperity, the
other the government involvement and government planning as
the key and you sort of go from Calvin Coolidge on the one
hand to Franklin Roosevelt on the other back to Eisenhower
then over to Lyndon Johnson's great society then back over to
Nixon, across to Carter and then Reagan and now of course Bill
Clinton who takes the view that there is a role for
government. So it's been a competition for that view what is
best. Now what I have said is this I believe in community
values, I believe the dominant national values of this
country, of Australia should be community values not
individual values. My opponent John Howson believes In
individual values, he thinks if you keep the wealthy woalthy
and they have got a buck well the rest will trail along
successfully behind. I don't believe that, I believe that we
ought to be addressing the country as a community so it is
important that people can get health protection and health
TEL: 28 . Jan .93 42 No 00 F'. U6/ Ui~
PM: ( cont'd) insurance at a decent rate and find themselves
covered for health regardless of income. I do believe that
kids from working class families ought to avail themselves of
secondary schooling and got into universities and into TAPE.
I don't think it ought to be a matter of how much you can
afford to pay as John Howson-does and I think that is the
difference. That In whether a nation commits itself to
community values or individual values and what has happened in
America is 160 million Americans have voted for community
value, f or the policies of Clinton and I have made the point
here and it's worth making to you Kevin. in this election
John Howson is going to ask the Australian electorate to vote
for individual values, to vote for Reagan Thatcher values
against the kind of values which 160 million Americans have
just voted. 80 that is why I think that it's not really about
deregulation or whether the gnomes have got us or what have
you, it's about this nice happy fit of an effective market
economy built around a decent social wage and social policy
and safety not and you can do thorn both and that's why social
democratic parties, Labor Parties have been more successful at
doing this than any in the world and I think we have a pretty
unique mix. We have got one of the best social security
safety nets in the world and it's worth fighting for and at
the same time we have got an economy in a modern transition.
HUMES But the X f actor beyond all of this again to
refer back to another theme of our conversation which you have
moved away from time to time is the ghosts of the past, the
ghosts of Calvin Coolidge If you like. An extent to which in
the public Australian mind Paul Keating Is seen as the ghost
who still walks of Calvin Coolidge and Ronald Reagan and
Thatcher of the 1980s still stick to your clothing.
VMS No# no.
HUMS You can remake yourself
PHI But where do you think Medicare comes from,
Where do you thinkc the family allowance supplement came from,
where do you think supplementary payments for low paid women
came from. Where do you think occupational superannuation
4.. came from? It came from me when I was Treasurer, when I
was Treasurer.
HUMS beyond the world's greatest Treasurer,
Treasurer who gave us the recession we had to have and so on.
VMS No, what gave Australia the recession was a
crazy leaning by Australian banks and the crazy borrowing by
Australian business. That's basically where the overheating
com'e from.
HUME iHMS: And who was responsible for
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PM: And the slowdown was induced becaUDe we
couldn't afford to go on blowing our national savings. Just
understand this point, that in terms of social1 poli cy while
the social policies of the Labor Government were the product
of a number of people, I was the Treasurer for most of the
period so if you go and ask say, an organisation like the
ACTU, where did they come to give ordinary working people
access to superannuation? They say the Treasurer, to me.
Where do they come for the family supplement, for the funding,
where do they come for continued changes in Medicare or
increase in Bole parent pension or the aged pension or the
hostel program or the home and community care? It came from
the Budgets of which I was Treasurer. So don't put me in the
Reagan and Thatcher category, that's Hewson, he believes in
all that stuff. He never gives the people an even break, make
them pay through the nose, rip Medicare apart, make them go
and pay $ 30 a week for their health insurance, put a 15% GST
on their back because they don't know what's good for them.
Make them pay full fees at university for their kids, that's
his view, it's not my view.
HlUME% So realistically looking to the next federal
election whenever it might be, what are the chances we are
going to see Paul Keating up on television with dark glasses
playing a saxophone like Bill Clinton, heralding in a new era?
pmt I am not a saxophone player and he is, he is a
good one as well and good for him but it's all about your view
of the world. I mean I had the opportunity to take a middle
sized OECD economy and change its orientation out to the rest
of the world, make it f airer and more decent and make it
productive and few people in life are given those sorts of
opportunitites and I had mine 9 years before, 10 years before
Bill Clinton had his opportunities. ' We are basically the same
age so I had got at this stage a 10 year jump on him.
ENDS