PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THIE HON. P. J. KEATING, M. P.
EDGELL-I3IRDS EYE PLANT, IJLVERSTONE, TASMANIA
MONDAY 23 AUGUST, 1993
3: Mr Keating, an issue that's been dominating the local headlines today is that
Savage River and their criticism over the fuel excise: They've got major
concerns... inaudible..., will lead to the premature closing down of the mine.
PM: Yes, well they all say things like that. I mean, the fact is, last week interest rates
at the Reserve Bank and Bill rates in this country went below 5% 4.75%,
Any of these companies, if they've got any debt, or in the event that their
general business environment with customers in this low inflation, low interest
environment is vastly improved. The Budget has just cut the company tax rate
to 33% from 391/. We've just given them further accelerated depreciation on
any equipment they may be using. So, it's a case of looking at all of it, Not
one bit of it.
J: How far are you prepared to tough out the Budget, Mr Keating?
PM: There are a couple of important things, I think, to say about the Budget. The
first thing is the Budget hands more back in tax cuts than it takes in the
increase in indirect taxation. When these measures are up and running the
Bludget hands back $ 3.8 billion a year in tax cuts and it raises $ 3 billion in
indirect taxes, Even this year with the increases in petrol etcetera, the revenue
of the Commonwealth in the total economy, revenue toG5DP is actually falling.
It's going to go down from 23.6% last year to 23.5% this year. And that's why
the OECD) will tell you in two weeks time that Australia is the lowest taxed
country in the western world.
Aud-the other key point is -about the Budget it gets the deficit down to
I% around 1% of GDP' in 1996-97. Now, what you're seeing at the
moment is the stock market booming, you're seeing a pick up in prices and
earnings and that reflected in the stock market, we're starting to see it coming
through in investmntt. And we want to now we've got a recovery really
moving we want to make surc that by 1996-97 we're not out there with a big
public borrowing requirement, that the public sector's out of the road so private
investment can go on in a low inflation sustainable recovery. That's the big
picture, that's the thing that really matters.
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So, that's why the Budget is targeted at that 1% of GDP deficit, in the middle
nineties. That is why the Budget revenue to GDP is still going down because
we're handing back more in those personal cuts than we're getting in indirect
revenue, and that's why we think the Budget's got the right construction for
Australia.
I But most people don't think that why. I mean how are you going to get it
through the Senate and particularly those you mentioned the petrol and
optomctry inaudible.
PM: Well they are part of a package which gives substantial tax cuts fr-om
November. So, people just can't say, ' oh well look at that, look at the petrol'.
If that was a stand alone measure and there were no tax cuts you could say well
ok, there's some very understandable criticism there.
J: Are you going to do a deal with the Democrats to get
PM: Look, the Budget's strength is that Australia is one of the first countries into an
obvious redovery, it's a low inflationary recovery unlike all the others, and we
want to make sure this one goes right through the nineties. So when we start
to see private investment pick up we want the Budget deficit down. Now, to
do other than things like that is basically to, you know, sell the public interest
down the tube. To do other than things like that is to not do the serious things
of Government.
J: Are you going to have to cut a deal though?
PM: Well I've just said to you the structure of the Budget is a good one. We've sent
the Senate a package and we are saying in that package there are tax cuts and
there are indirect tax increases but it's a package.
1: What about the legality of getting it through the Senate?
PM; Well, I notice that these debates come up about the legality or otherwise.
There is no problem about the legality of the Bill. Don't have any doubt about
that. But the legality is one point. If the Senate were to amend this Bill, or
seek to amend it, whether it can amend it or not let's say it can because I
think-it can we won't accept the amendments unless they suit us. Because
the Government has put it up as a package. It has got tax cuts, and it has got
indirect tax increases and it has got other features. So, it's not a matter of the
whys or wherefores, will they, won't [ hey, maybe, can they amend the Bill. The
key question is will the Government, in the House of Representatives, accept
the Bill when it comes back?
J: Some of your backbench though might be willing to accept some amendments,
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PM: Well, I've brought in nine budgets and eight May statements. And two
economic statements since I became Prime Minister. That brings me to around
eighteen or nineteen. On every one of those there was always some
backbencher wanting to amend something.
J: But this time we've got the Morgan-Gallup poll showing you've slipped well
and truly behind the Opposition. Is that a concern?
PM: Well, you know these things go up and down all the time. I mean, it's early
days in a long Parliament, you know.
J: You've got Mr Beazley saying you're willing to put that at risk to go to that
extent, to go to an election.
PM; Well, no, he didn't say that. He didn't say that at all. But the fact is don't
polls are very special things. They're like codes before they've been deciphered
and they can mostly only be deciphered by politicians. So don't try and read
them too hard.
J: Are you going to talk to the Greens or the Democrats?
PM: You've asked me that three times...
J: Just to localise, there has been scathing attacks on your budget from our state
government.
PM: Surprise, surprise.
I flow do you see that affecting the recovery here?
PM: Well, see this plant here. It is here because of' a commonwealth Labor
government. It has got nothing to do with Ray Groom. The remaking of
Australian industry is happening because of low inflation, a competitive
exchange rate, low corporate tax rates and basically a cooperative environment
in the workplace. Labor, Labor, Labor, Labor. Nothing to do with the
Coalition down here. This plant is here because of the Labor Government and
a decent international Australian business, Pacific Dunlop.
Now, the best thing the state government can do is go on and manage their
own affairs. Manage the things that they have responsibility for and let us run
the national economy.
J: Mr Willis yesterday said that hc wouldn't rule out fuzrther spending cuts. That's
a bit of a contradiction..
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PM: No, no. We're into this sort of.. We've now got a press gallery with a
corporate memory going back about two May statements and one Budget.
When they could go back seven or eight Budgets they'd know what that meant.
What I'm saying what I said last week was that we will not cut outlays below
where they'll be in about 1994-95. Which is about 24% of GDP. When you
wash the unemployment benefits out of it, when you look at the structure of
the outlays, to cut one or two percent of GDP in other words to cut the
spending of the Commonwealth back as a structural prop for Budgets is not
acceptable. That is not to say we won't do what we do in every other Budget, is do a
housekeeping job on the Budget housekeeping job on outlays. Cutting
$ 200, $ 300 or $ 400 million. But that's not $ 7 billion or $ 8 billion. But that's
what we're being enjoined to do by some of the sort of fiscal junkies who write
columns in the newspapers. Hop into the outlays. See, they said to us, ' what
you need to do is to cut the Budget deficit back to 1% of GDP. We said, ' OK,
well go and do that'. When we did it they said, ' Aha, we don't like the way you
did it. Wed prefer it to be all spending cuts and not revenue.' To which we
say, ' to cut the outlays back any more than that is irresponsible.' It would be
unfair and it is unreasonable.
J: You said the state government should look after its own affairs but the
government is concerned there's a $ 20 million gap in the estimates presented at
the Premier's Conference and the actual special grants delivered in the Budget.
PM: Well, that's about being in government. It is a hard caper. And if you want to
be a Premier, you have to face up to the hard tack of being a Premier. And not
asking this fellow to write a cheque for you.
ENDS.