PRIMEMINISTER___
TRANSCRIPT OF THE PRIME MINISTER, THE HON P. J. KEATING MP
INTERVIEW WITH JOHN LAWS, RADIO 2UE, 3 NOVEMBER 1994
E& OE PROOF COPY
JL: Prime Minister, good morning and welcome.
PM: Good morning, John.
JL: How are you?
PM: I'm good thank you. It's nice to be here.
JL Good to have you here. When you talked about the banana republic
on this program back in 1986, you remember it as well as I do.
PM: Yes.
JL: You were worried about the size of the current account deficit. Are you
worried about It now?
PM: Well, it is always something to keep our eye on, but the difference
between then and now Is that Australia is a much changed, much
reformed economy. The tariff barriers are down, we have broken the
back of government spending In the past and in that period we were
exporting about 14 per cent of all we produced and today we are
exporting 22 per cent of all we produce.
JL: OK but just back to the qupe-t ion. IS it 2 worry, are you worried about it
now as you were In 1986?
PM: No, I'm not because our capacity to service our current account debt
has improved dramatically. Let me make this point to you clearly,
John. In about 1985, about 21 per cent of our exports proceeds went
to servicing the debt. Today, that is just about 10.5 per cent, it's about
half that. And, the reason for that Is because we have now been
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exporting very strongly all through this period and that is the point I just
made a second ago. We are now exporting 22 per cent of our produce
instead of 14 per cent so our capacity to pay our way has improved.
That is not to say I am not concerned about the current account deficit
and we don't keep our eye on It, but it is basically a savings issue and
what we have to do in the medium term is to improve Australian
savings and the big boost to that will come from two places. That is,
the budget returning to surplus In the 1990s and occupational
superannuation which now has In Australia's super funds, under the
government scheme owned by Australian employees of $ 180 billion
$ 1 80,000 million.
JI: Graham Richardson writes in his book about that banana republic
comment. It is very interesting and I'm interested. to hear your reaction
to the way he puts It and I quote him by May Keating was really
worried about our growing balance of payments deficit. It was no use
trying to explain it away again as we had done by declaring that
Qantas had brought another plane. Keating needed to issue a shock
warning to Australia and to overseas investors. On the John Laws
show he told the radio audience that Australia was importing about
$ 12 billion more than we were exporting every year and that if the
government couldn't get manufacturing going again and keep sensible
wage and economic policies we were basically done for and would end
up being a third rate economy." Then the current account deficit for
the year went to $ 14.8 billion. But, now it could go to $ 22 billion, so
shouldn't you be even more concerned than you were in 1986?
PM. Well, we are forecasting it at about $ 18 billion, but the thing is that was
$ 14 billion then in the size of the economy as it was then, It is now
very much greater. I mean, Australian GDP, this is the total economy,
is now about $ 400 billion. Then it would have been something in the
order of $ 300 billion. So, as a proportion of GDP, and we were then in
the late 1980s John, we were looking at the current account, deficit
heading up to 6 per cent of GDP. Now, we are looking at rates of half
that. So, that is the key point. Can I just make this other point, when I
spoke to you at that stage, we had the worst terms of trade, the worst
commodity prices since the Depression and that Is what lead me to
make that remark. Our national Income had fallen so sharply from
wheat, wool, Iron ore, coking coal and all these other things, that now
commodity prices are much stronger and, of course, we have had this
enormous transformation in our industrial base. We are now exporting
elaborately transformed manufactures. In fact, the fastest growing
component of our exports is elaborately transformed goods.
JL: The thing that I don't understand, pardon me if I don't, but I doubt that
our listeners understand either, as a percentage of GDP, doesn't it
mean that it could still go to 6.1 per cent of national output?
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PM: No, I don't believe that because I just think that we are not going to
have the sort of crazy credit growth we had In the 19809. When we
came to the end of the 1 980s boom we had credit growth of nearly
per cent a year and that sort of spending by the banks just lit the whole
economy up like a Christmas tree and, of course, we started sucking
the imports all over the place. We are now growing at a pace we can
manage and, of course, the banks after being stung so badly in the
1980s are now so abstemious In rationing credit growth, that sort of
problem is not going to arise.
JL: OK, I looked at the figures because people are now going back to the
1986 comments because of Its revival in Graham Richardson's book
Back In 1986 inflation was higher, I think about 8 per cent.
PM: Yes, it is now 2 per cent.
JL: That's right. Now, does the lower inflation figure make any difference
to the way In which the current account deficit should be looked at?
PM: It makes a tremendous difference because for a start world Interest
rates are lower so, basically if you take our current account and take It
to pieces there are two elements of it. One is called the trade surplus
or deficit and the other is called the payment surplus or deficit. One is
called the merchandise trade deficit and the other is called the net
Income deficit. Let me just explain those. One is basically whether
you are importing or exporting more goods and services that is goods
and services well, that Is basically about balanced. At various
periods now we have a merchandise trade surplus. That was never
the case. I mean, where our debt came from, it came from the fact that
In the 1970s, we dropped our guard on our manufacturing base and
were so massively uncompetitive. So, we were running huge
merchandise trade deficits so the debt came from an incapacity to
trade goods. Where the debt comes today, where the current account
deficit comes today is from the net income deficit, from the interest
payments. Now, that low inflation rate that you just referred to and the
low inflation rates and lower Interest payments around the world
means that in the 1 990s the Interest payments on our debt are much
lower than the 1980s so therefore the likelihood of the current account
deficit blowing out because of high debt payments and high interest
rates on that debt Is, of course, noth ing to be compared with the
1980s.
JL: OK now we hear the doom boosters and there are plenty of them,
saying that we have to level out the amount of exports compared to the
amount of imports, that they have to be about even. You say they are,
but the cry that we are hearing from quarters is that is not the case,
that we are importing a good deal more than we are exporting. But,
even if that was absolutely balanced, that doesn't solve the problem
does it? r
PM: No. it doesn't solve the problem. In the end what we have had to do is
we have to export even more and that is why next month I am going to
the APEC meeting In Indonesia which is about lowering tariff
protection and trade barriers around the Asia-Pacific. Australia has
already made this great transformation, John. We have got tariffs
coming down to about 5 per cent by 1997. The whole culture of the
Australian manufacturing has changed to a competitive one.
Manufacturing production has doubled since the 1 980s, early 1 980s.
Manufacturing exports have trebled, we now export as much
manufactures as we do primary products.
JL: Well, I imagine even more this year with the drought.
PMV: Even more this year, and this is, of course, the first in our history and it
is that higher added value, these elaborately transformed products
which is basically coming from our education system and our research
and development and by more entrepreneurial management and a
willingness to actually ship product into the Asia-Pacific and the rest of
the world which was never true when the tariff wall was there. It is that
change which will give us the capacity to meet our trading imperatives,
but the basic fundamentals underlying the current account deficit mean
that we have got to lift our savings during the 1 990s and the two things
that I say that will do that is basically a shift of the budget back into
surplus and a very large change in savings coming from the
government's policies of award or occupational superannuation.
JL: OK, what about government spending, that should be cut surely?
PM. I Well, not so much spending. I mean, the deficit is being reduced and
let me just make a point, John. At the moment we have 9.5 per cent
unemployment. The last time we had 9.5 per cent unemployment was
in about 1984-85. Then the budget deficit was 4 per cent of our total
national production. At the moment it is 2.5 per cent. So, if you are
comparing apples with apples we are miles in front of where we were
in the 1980s because if the budget was in surplus today we would be
running the economy back into a recession. That's the point, we have
got the economy I noticed yesterday by the way, on 2UE Alan Jones
was saying he was talking to Mr Costello saying " the dramatically bad
circumstances we seem to be in at the moment". I mean, it is just
outrageous this sort of talk. Let me lust explain this to you, we have
got 4.5 per cent growth. We are growing as fast or faster than any
other western economy. We have got 2 per cent inflation which came
out last week. Now, the last time we had growth like that 4.5 per cent
growth and 2 per cent inflation would have been 30 years ago. As
well as that we have had 4 per cent employment growth when western
Europe has had around 1 per cent employment growth. As the
Treasurer said recently the last time we had a conjunction of
circumstances like this was 30 years ago. And yet, you have got
people talking about dramatically bad circumstances. Look, the
average person is not to know all these numbers and to make all these
comparisons and It is irresponsible in the extreme to be addressing a
broad audience saying we have got dramatically bad circumstances or
it is a " sickening confidence trick" and all this sort of stuff. The fact is
two and a half years ago the economy was still in recession. This
government has managed to get it back to growth, but not just back to
growth, back to massive levels of employment growth. I mean, the big
issue in the last election was unemployment. Unemployment has
come down from 11 per cent to 9.5 per cent and we have had a
massive increase in people looking for work and we have had 4 per
cent employment growth. The other thing is, in the mean time, John,
we have absolutely exported our heads off. So, Australia is at the top
of the OECD league table and lot me just say this to you, The
Economist magazine, a conservative economic publication one of
Britain's foremost economic publications it has a league table in there
every month of economic performance versus inflation and
employment. We are at the top of that table and we have been there
for 14 months.
JI: Now, just quickly back to unemployment. How many of those jobs, you
say that we have created or you have created all these jobs
PM: Well, the policies h ave created this.
JL: I mean most of it has been private enterprise that has created the jobs.
PM: Well, of course it is, but it didn't just happen. The ' One Nation' policy
of 1992 got the country moving again. When we put that money into
rail, road, the ring roads around the capital cities, the highways, the
trunk rail network, all that government spending at the time was there
when private spending had stopped during the recession. That is what
kicked the place along.
JL OK, well when you talk about the jobs and the job rate being increased
how many of those are government subsidised jobs because there are
many who are going to say ' well, the government created the jobs.'?
PM: Very few, very few, the great bulk of them, 90 per cent of them would
be in the private sector 90 odd per cent in the private sector. And, of
course, need I -say John, with 11 per cent unemployment and 4 per
cent employment growth, the unemployment rate, if everyone stood
still, would be 7 per cent. The reason it Is 9.5 per cent is because we
have got new entrants to the workforce and in the main, people
optimistically looking for work and In the main the people joining the
workforce are women. So, there is a tremenidous boost of what we call
the participation rate. That is once things start to improve those who
are not registering for work or looking for work go out looking for it
again and that is why you don't get a clean translation of the 4 per cent
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employment growth off the 11 per cent which would otherwise give you
7 per cent.
JL: Yes, 1s there any indication of how many of those in the private sector
P M. It would be 90 odd per cent.
JL: Yes, but how many of those in the private sector are still getting
government assistance?
PM: In terms of?
JL Subsidies.
PM: None of those other than those who are longer term unemployed who
get wage subsidies.
JI: But, there would be a percentage.
PM: Only those unemployed over 12 months or more.
JL: Yes, well, there are a few of those aren't there?
PM: That is one of the great successes, I think, we have had in the last
year. Of the 400,000 jobs, 90,000 went to the long-term
unemployment that is people unemployed 12-18 months. Now, if we
were comparing 400,000 in the 1980s about only 25,000 of them would
have gone to the long-term unemployed. So, the government's White
Paper changes and the labour market programs where we actively
support those who have been longer term unemployed, we are now
finding we are having, well, you could say, roughly a quarter of the
jobs that have been created now are going to the long-term
unemployed and that for this country is just terrific.
JL: OK all the news according to you and understandably is good news,
one would like to think that everything that you are saying is right.
Graham Richardson has caused us, of course, to raise our eyebrows
on that subject again, but if everything Is as you say, if everything in
God's great garden is as rosy as it sounds when you talk about it, why
then do we have other people decrying the situation in which Australia
finds itself at the moment.
PM: Well I noticed that you, yesterday apparently referred to the Australian
Financial Review story where one of the largest US American bond
dealers said Australia had gone bond-kers and amongst other things,
you said this, ' the glass is never half full in Australia, its either seen as
empty or overflowing", and Isn't that just dead right. In other words, we
can never say, look, here is a recovery, we are going to maintain it and
ILL: ~ j: 7
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extend it with low Inflation. We have got 4.5 per cent growth. We
have 4 per cent employment growth and low inflation. Now lets do the
right things to extend it and give all Australians a chance at it right
through the 1 990s. No, Its either a feast or its a famine. We are either
all ' rooned or its a bounty heading our way. And you can't seem to get
from the commentators here, that sort of latitude that says " look, we've
actually done it right this time".
JL: Present company excepted please.
PM: Well, present company excepted, absolutely. And I think that is part of
the point. I noticed in the same story, let me just give you a couple of
quotes.
JL: You see, that's the point I made yesterday and I read parts of that from
the Financial Review that's what it was wasn't it yesterday page 37
PM: Well there were a couple of can I just read you a couple of
JI: But let me just finish I read that, and said that these fellas are
into bonds and this is the way they are talking about our country,
Australia. And then you get people on the phone saying " oh yeah, but
so what. They are only buying bonds". I mean its intelligent people
talking about our country for God's sake.
PM:. Well its more than intelligent people, its the people who watch the
major western countries who handle billions dollars of bonds and
basically buy them on the back of the prosperity and their Judgements
about those countries. So its not just a judgement about Australia, by
Australians, Its a judgement about Australia by people who buy similar
securities, In Germany, In Britain, In the United States right through
Western Europe. Let me just read what two people had to say in that
interview. One said ( this is a New Yorker), " Aussie inflation is fine, its
going to pick up a bit, but its still quite low by OECD standards. The
budget deficit has got a little bit worse but I'm willing to believe that is a
timing issue. The currency is going to appreciate it in the next couple
of years". Another said " we think the inflation fears in Australian are
exaggerated and we don't think Australia has the political uncertainty
of many countries. The currency is strong, the commodity prices* are
strong, and I have to say that it does look a bit like the bonds are
mispriced". The key point is the underlying sentiments of the remarks.
Forget the focus on the bonds, I mean, here you have the really hard
assessors of Australia saying, look basically the Inflation rate is fine,
they are ticking along with quite high rates of growth, the place is
stable, commodity prices are high and the currency is strong. Now,
you wouldn't get that out of the doom sayers, And that's the point. I
. mean, its quite wrong for these people. I mean you can never quite
win with the Jones' and people like that. A year ago eighteen months
ago It was all doom and gloom. It was unemployment; we're all
B1 No -N 1
ruined; where are we going: we've had it; and within six and ri'n
months transition, we are all ruined again. This time its for growing too
fast. Because Interest rates have moved up slightly, and why are
interest rates up? They are up to sustain the recovery. So all
Australians can enjoy it for longer. That is, to keep inflation down, and
therefore keep our competitiveness up, to keep our exports going and
to get and maintain now this Investment phase in plant and equipment
which we haven't seen for three or four years. We are seeing it
coming back strongly, and with it of course, a long run recovery Into
the 1990s.
JL: OK Well you say that Inflation Is under control, we would like to
believe you. But we've got unions now, going for unbelievable wage
increases; increases have got nothing to do with productivity but based
on the fact that the interest rates to which you just referred are going
up. Now if they get those increases, and they flow through to other
sectors of the economy and normally that's the way it goes. We have
precisely the same situation that lead to the recession we had to have.
PM: Well, what you do what Governments do all the time is manage
things as they arise. We are now in a growth economy. In a growth
economy, you get price taking, you get people who want to put their
prices up. You can see various strength in the housing sector. It's
possible that things like bricks and tiles and kitchens and all these
sorts of things will have a little premium on them now where they didn't
two years ago, so the Government has got to watch that. Its got to
watch claims in the labour market, given the fact that most people in
the labour market did no better but probably worse over the last couple
of years, in some cases in the Inflation rate, so they're out there now
saying " well this is the time to get a wage increase"
JL: And of course they are using interest rates as the hook,
understandable.
PM: Well, some are. Basically they are just using the growth. And the
other thing Is, some of the states in the public sector are starting now
to offer wage increases they shouldn't be offering. For instance, the
NSW Government, John Fahey was under attack up at Darwin at the
Council of Australian Governments, not so much by me but by some of
the conservative State Premiers of the other States saying, " listen
John you better chop it out, offering 7 per cent to teachers and 5 per
cent to nurses" and on top of that, he's now got another 8 per cent
hanging about. So that sort of public sector lead coming out of NSW,
there is this notion you can buy your way back into office by offering
the public sector employees up to 15 per cent wage increases, is very
dangerous indeed. I can assure you that the Commonwealth Public
Sector, that is my Government employees -we will not be making
those sort of settlements.
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JL: Well, you have no control over -wbat hiaPPens in NSW. So if those
wage demands go ahead, how are you going to control inflation?
PM: Its not the wage demands, its the complicity of the Government in
meeting them.
JL Well assuming that happens in NSW, you have no control over it.
PM. You will always get wage demands, its a matter of whether you have
some bunny to actually say yes to them.
JL; Well if one of the bunnies does say yes, you have no control over that,
so how do you control it?
PM: Well, basically what we have done over the years is that we have had
an Accord with the Trade Unions. The reason we have got 2 per cent
inflation and remember this John, we have been growing now for about
12 quarters for three years, we have been back into positive growth for
three years and we have still got 2 per cent inflation. And the reason
for that is, basically we have had reasonably a good restraint on
wages and good productivity arrangements. The great change now
compared to the eighties, Is that we now have enterprise bargaining.
We've got a decentralised labour market and all wages are not fixed
by the Australian Industrial Relations Commission. There Is no such
thing as a National Wage Case today. So a lot of companies, what
they are doing is basically saying " look alright, we will give you an
increase, providing you give us some productivity".
JI: OK Well what about our mates at the TWU. 15 per cent they're
demanding and that has been sanctioned by the ACTU.
PM: Well, It depends on for a start, what's agreed by the companies.
Whether the companies want to cut their throats by agreeing to it and
secondly, over what period of time? If its over a couple of years or two
or three years, it becomes eminently affordable in national economic
terms. So John, you know the debate we have had in this country
about industrial relations. You've had the conservative side of politics
for years and the business community are saying " give us a
decentralised labour market. Give us labour market flexibility. Give us
enterprise bargaining." Well, now they have got it. And what they've
got to do is basically make It work. So when they pay a wage
increase, they have got to get something in return. That's more
productivity, that is, more product and lower costs.
JL: Its seems that they are having some difficulty making it work because
only 45 registered non-union enterprise agreements have been put in
place since the new industrial relations laws were introduced, but in
that same period of time, 2694 claims for unfair dismissal have been
lodged. : I i, 4 j
PM: Well, Its the full enterprise bargaining stream, not the non-union
enterprise flexibility area that's important. Its the full what we call
' certified agreement area' that matters and we've now got about 55 or
per cent of all federal award employees subject to enterprise
agreements. In other words, the system is working and a lot of good
businesses with good managers are doing good productivity deals.
They are getting higher profits for the company which they then share
between profits and wages. And the employees walk away with a
wage increase and the Inflation rate doesn't suffer. Now in any
recovery, there will always be a bit of what's called ' economic
adjustment'. That is, to cover off the bit of the joy and even modest
inflation. Well, the economy can afford some of that, providing there is
a bit of productivity around and what the Government is about and
what the ACTU and our Accord partners are basically about here, will
be trying to manage that wage outcome, through the next few years, so
that we can have what most countries don't have. That's growth with
employment. Now let me just repeat this John. Western Europe is
growing at about 1.5 per cent. We are growing at 4.5 per cent. They
are getting about 1 per cent employment growth. We are getting 4. In
other words, our society is going to be more fully employed and
therefore, much more fulfilled and I hope happier. Therefore, the
Government's job is to extend the recovery, but listening to all the
doom sayers saying " it's a disastrous state of affairs" because interest
rates have risen by 1.3/ 4 percentage points from a 30 year low, to still
be low is extravagant doomsaying.
JL: There is so much of it, people do tend to become brainwashed by it. I
mean, how do you stop it? You see, if you look at what the former
head of the Treasury, John Stone, has to say about your statement
that $ 9 billion taken from the Budget represents the fiscal responsibility
of the Government, and he says it's all... . this figure is arrived at by
sleight of hand that you have included as so-called savings $ 3.6
billion by deferring the second instalment of the tax cuts. Now, nobody
can understand what he is writing about except that he is talking the
place down again that all this Isn't really happening, that you.. . have
you indulged in some sleight of hand?
PM: No. And when John Stone was secretary of the Treasury,
Commonwealth spending was 30.5% of our total product 30.5% of
our GOP.
JL: When he was head
PM: When he was secretary of the Treasury.
JL: Yep.
TEL: 3. OV 14 : 17 No .014 P. 11/ 1
PMV: When " Paem Fraser left the Treasury to become Governor of the
Reserve Bank, the Government spending was 23.5% of GDP down 7
percentage points. Now, I'll tell you what that is 7% is just on
billion. Thirty thousand million each year less spending when Fraser
left the Treasury compared to Stone. So, the thing about all these
fellows is to look at what they did at the time. Stone believed in the
tariff wall, he believed in a managed exchange rate and when he left
after giving us all these high faluting ideas about his economic
capacity when he left the beauracracy, where did he go? Of all
places, to the National Party. To the Country Party which built the
tariff wall In the first place. These guys are classic under-achievers.
They failed In their public life, walk out and then want to be
commentators about people who realty achieved something. Putting
at no time during John Stone's Secretary-ship of the Treasury
was there ever 4.5% economic growth and 2% inflation. Never. He
could have only dreamed about It.
JL: Why do we need a racial hatred bill?
PM. Well, basically because we do see outbreaks of violence against
people... . persons and property for reasons of race. And at the moment
under the law, if someone throws a brick through your shop window,
they can be prosecuted only because they have broken your window
and not because It was racially Inspired.
JL: But violence of any sort. should be kept under control by any
governments anywhere...
PMV: Exactly.
A: Irrespective of the motive of the violence?
PMV: Here we are talking about incitement's to racial hatred and threats of
racial violence or damage . or such as damage to property etc.
Because basically having people running around saying " I'm going to
throw a brick through your window or bum your building down because
of your race" should be an offence. And that's what we're making it.
JL: out now it's being said by Michael Lavarch and others that ' Well, this
won't be enforced really there won't be any charges laid against.. If
this is true, why have it there?
PMV: Well I don't know that's true. But we have legislation of this nature in a
number of the States already. This is basically just the Federal
Government doing what is already around in some places, but having
a national law here.
JL But you can't legislate emotion.
TE. 3. Nov. 94 NO -1 F. 12,
12
PM: Of you can't legislate emotion, and the operation of . when I say
that you can't legislate emotion.. that is, If they're emotions that don't
lead to an infringement of someone else's liberties you can legislate If
it starts to infringe someone else's liberties. If they had this sort of
legislation in Western Europe in the 1 930s, of course, it would have
mattered a great deal indeed.
JL: Yeah, but you still wouldn't have changed attitudes legislation can
never change attitudes.
PM: It can't change attitudes, but there's no way that the nation or the
community or the Government should regard offences against persons
or properties for reasons of racial hatred as being something to be
condoned.
JL: It's got a lot going for It as far as the Government is concerned in as
much as it has obviously shored up the ethnic vote?
PM; Look, it's not for that reason. The Government, I can say, has had a
lot of support from ethnic communities over a period of time for years
we don't need a racial hatred bill to maintain that. It's there because
It's a proper adjunct to our laws in respect to people's liberties.
JL: Is it something that is in place in most Westemised countries?
PM. I'd say most countries would have something very similar.
JL: It's going to cause... put the cat among the pigeons in the Coalition,
because they will be at loggerheads with each other on the issue.
That too would be to the Government's advantage, wouldn't it?
PM: Well, I should hope it isn't because I should believe that most people
in the Coalition would support this sort of legislation.
JL: Yeah. Out of all strange people, one of the Western Australian Green
people seems to be opposed to it does that surprise you?
PM: Well, they were opposed at one point to the Native Title legislation
when they were claiming an interest in the welfare of Aboriginal
people, and now they're seeking to upset the Land Fund legislation.
So again It just makes this point Independents wandering around the
Senate with no rhyme or reason about their political existence no
depth of policy analysis, no track record, no yardsticks, no sheet
anchors have no particular consistency in their approach to particular
pieces of legislation.
JL: OK Something else that we have been hearing a great deal about,
and we have been hearing hysterical cries about how we have dudded
TEL: 3. ov9 14: 17 No. 614 F. 1.
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Now Zealand as far as the aviation policy is concerned what i3 the
real story?
PM: Well, we haven't dudded New Zealand at all.
JL: Didn't New Zealand dud us?
PM: What happened here was I said in the One Nation statement.... we
offered New Zealand... . John, you would be familiar with the Airline
SAS the Scandinavian Airline System?
JL: Yes.
PM: Now that's basically an airline which operates around the countries of
Scandinavia you don't see a Swedish airline, and you don't see a
Danish airline, but you see SAS. Do you understand?
JIL: Yes, I do.
PM: Now what we were saying is " let's have a single aviation market for
Australasia". And in One Nation, I offered the Government of New
Zealand a common Customs border that is, Australia's customs laws
would be the same as Now Zealand's, and therefore the carriage of
passengers between our two countries could then be domestic to
domestic terminal. In other words, you would travel from Auckland to
Sydney, or Christchurch to Melbourne, and you would go just as you
would go from Perth to Melbourne, or Brisbane to Sydney.
JL: Ok. So New Zealand would become part of our domestic air market,
and we could become part of theirs.
PM. Yes. Now, New Zealand refused that. They said they wanted to keep
particular Visa arrangements with Taiwan and Mexico and other
countries, and they refused that. So we then said " Aliright. OK Well
listen, let's talk about then... it would be better to have a single customs
union a single set of customs arrangements let's then talk about a
single market." Now, what a single market means is that we have a
single market for passengers, and we organise that market in terms of
a single market for the capital for the airlines. In other words, there's
no particular reason why one of the airlines should be a New Zealand
airline or an Australian airline. That idea we have not been able to
make progress on. Basically I think, the view from New Zealand is Yes
they want a single aviation market for passengers, but not a single
aviation market for airlines. In other words, they want to keep a
national flag carrier.
JI:. So that's why you have terminated the arrangement?
14
PM; At this point, Australia... . there were to be agreements about airline
ownership and rationalisation about airline structures. We have had
repeated conversations over the course of the last 18 months I have
had a number with the New Zealand Prime Minister, my colleague
Laurie Brereton has had a number with the New Zealand Transport
Minister, the Australian airline companies here Ansett and Qantas
have had a number with Air New Zealand, and because this
memorandum we had together had certain indicative dates In it, Air
New Zealand has already done very finely out of It. It's got now 14
jumbo flights a week out of Brisbane, which is a very large number of
passengers, which they can pick up Australian passengers and take
them to Japan...
JI: So that's taking away from Australian airlines?
PM: Yes, that's taking them, and they also then the contemplation was in
a single market, we would move them to domestic flying In Australia
between Brisbane and our capital cities our trunk routes and then
further beyond rights, that is further rights for say, Air New Zealand to
pick up people out of Sydney and Melbourne and carry them to other
countries. But that's only on in the event we have a single-market. In
other words, what has happened in Australia's terms is it's been all
give, give, give, and New Zealand has been all take. And as the sort
of trigger dates for these things were coming up, we were looking for
some kind of change on the part of New Zealand to recognise the
imperatives of one market, but it didn't come, and so therefore Mr
Brereton wrote to, Laurie Brereton wrote to his counterpart saying in
terms, seeing as you basically in spirit rejected the proposal, It's off.
JL: So this was done in the main to protect Australia as they had, in part,
reneged on the deal?
PM: Well, if we went, say flew to San Francisco and said to the United
States Government " We'll pick up American passengers in San
Francisco and go and fly them to London and Paris..."
JL: They would tell you tell you to go jump.
PM; Exactly. But we're giving Air New, Zealand the right to pick up
Australian passengers and take them to Japan. Now, they wanted that
right, plus more plus to be able to fly domestically, but to put nothing
back in return.
JL: So you said enough Is enough?
PM: Yes, that's wh'at we said enough Is enough.
JL: Okay. I know you're not much into polls, but you might be into this one
-the Bulletin poll that says 50% of Australians favour a republic, but
3 N>. C 4 No. Oi0s1
want to elect the Head of State. Would you proceed with the
republic plan if you can't get up your preferred option of Parliament
selecting the Head of State which I believe is the only way it should
be done, and could be done, because otherwise the Head of State
would appear to have more power than the Prime Minister, and
obviously that is what you have got in mind?
PM: At the moment people often say " you know, the Government and
Keating wants to appoint the Head of State even though there has
been some discussion about Parliament appointing such a person". At
the moment, of course, upon the expiry of the current Governor-
General's term....
JL: Yeah what's going to happen?
PM: Well, I would make a recommendation to the Queen and it would be
accepted the Government, and me as Prime Minister, would appoint
that Head of State without any reference to Parliament whatsoever. So
at the moment, the ball is right in my court, so It's obviously not for that
reason that I am saying Is what we need to do is to consider a republic
constructively. But more importantly than the modality of the
appointment John, is the notion that Australia will never really go its
way in the world while ever we're following the monarch of another
country. And I have said, one of the things that I wanted to see in this
year in 1994 was a genuine public debate about the virtues of a
republic versus a constitutional monarchy. Now I think we have well
and truly got that debate going, and that's a very good thing for the
country.
JL: Yeah. Still on the subject of poll. s It appears that the gap between the
Coalition and the Government is now narrowing some are saying that
Alexander Downer after his recent performance is going to bounce
back in the polls. Do you still have the future for Alexander Downer all
mapped out as you claimed you had In the past?
PM: Well I think I have, John. But again, these polls fluctuate, and the only
poll that ever matters is the poll on polling day. But again, the
Government has done all the things it said it would do at the last
election we said we would restore growth in the economy and it's
growing faster, or as fast, as any economy in the world. and western
economy In the OECD economy. We said we would restore
employment we have got 4% employment growth. The only country
that Is as high as us In the western world is Canada at about 4% itself
no other country Is up in that league. We said we would give effect to
the High Court decision on Native Title we have gone and done it.
We said we wouldn't leave the unemployed behind we set up the
White Paper to do that. We said we would support the arts we have
gone and done so. I mean, the Government has done all the things It
said it would do.
16
JL: Just back to the arts thing again you know that to the chagrin of
many? I mean you have got a lot of criticism for having done that In a
lot of quarters?
PMV: Yes. Well, I notice your friend and colleague on the morning program
having his one final . you know I was listening to him while I was
coming onto your program, and they're saying " Oh, there was
Turandot", he said, " None of Mr Keating's art money in that". Well the
fact is, unless there is support for the Australian opera, and for the
opera companies In this country from the public purse, and the ballet
and the other major companles, you can't have a Turandot. It doesn't
occur to these guys that an Investment In arts and culture In the public
infrastructure In Australia is one of the things that we should be doing,
and we happen to do It well look at the rave reviews we had for the
Australian Ballet In Washington. The Australian Ballet went to the
Australian Festival which was held at the John F Kennedy Centre in
Washington and it was a great success 40,000 people came on the
first day, half the American Senate was there, some of the Justices of
the High Court, a number of American Ministers were there, members
of the Cabinet were there, and Clive Barnes the noted New York dance
critic had such glowing references to the Australian Ballet. I mean, we
are getting international acclaim for the standards of our arts, and to
be whlngelng about that Is really to be blinkered and mean-spirited.
JL: Yeah. I can understand to a degree and it's difficult to say this
because 1 have to refer to a friend in the form of Reg Livermore who I
think Is a tremendously talented fella and I think he has done a great
deal but Reg Isn't actually on the breadline, and when those artists
who are struggling a iittle bit trying to get on, and I mean you have
seen many of them around you, and endeavoured to help many around
you, and they hear that a fella like Reg who is fairly well gainfully
occupied and has done pretty well and has got himself set up pretty
well that he gets a grant of some $ 60,00 odd dollars for a couple of
years in a row in order to write his biography that smarts a little. You
must be able to understand that?
P M-The Australian Artists Creative Fellowships are for artists of
accomplishment mid-career. These are for people who are in the
broad, In the main, uncommercial, and in commercial terms
unsuccessful, but in artistic terms of course, are very successful.
JL: But you couldn't say that Reg was uncommercial?
PMV: No, Reg is commercial, but again, he is going to take time off to make
a contribution back. I mean, just the same as John Olsen at the
presentatlon of the awards this year as a former awardee, presented
works back to the Commonwealth. Frank Moorehouse has
w V-.1 r
I LL: s. rO. Ui 17
produced a first-class nave?, yo have got... I mean, it has gone to
people like Garth Welch in dance and....
JL: Yeah, but surely these people could have made the contribution
without the taxpayers having to foot the bill?
P M. Well let me just tell you this John when the first group of Fellowship
awardees went through, and there were on that occasion 7 or 8 of
them now these are people at the absolute top of Australian artistic
ability, and of international standing. Their average income is $ 9000
for the year, the previous year the average Income of all of them is
$ 9000 and that was 1988, and now we have 45 people, I think, in the
group. I don't know exactly what the average figure would be, but I
wouldn't mind betting it's not much beyond $ 12-1.3,000. This is a very
sad fact that people need to understand about the arts that somebody
who is a sculptor or a dancer or a pianist or whoever It might be,
unless they fluke that commerciality, they can be absolutely world best
and be basically broke. Now, this Is an acknowledgment of saying to
people who do what they do best, but do it with the greatest possible
commitment to this country, who have never walked away from it and
gone though it all and given Australia up, but stay here and stay with
the low money It's a way of saying for 2 or 3 years, or 4 years if you
like you can block out these years and put something back right at
the peak of your career, and not have to worry about putting food on
the table.
JL: Yeah well all that Is fine, and I say that I don't want to go into it too
much because I am not mean-spirited, but you could never say that my
friend and he Is a terrific fella and a terrific talent you could never
say that Reg Livermore Is down in the low wage earning. I mean, he's
a pretty commercial character and very successful and very good at
what he does, and that does smart a bit with people you know. I really
do understand people saying " well come on, hang
PM: Okay, but I don't think it is possible to just take one out of...
JL: Well, it's not fair
PM: out of forty....
JL: Well he's the only one I can think
PM; One out of forty odd, or maybe a couple out of forty odd....
JL: Well, you know there Is another one that springs to mind as well...
PM: Well what contribution has Livermore made to Australian theatre? An
enormous contribution....
PM: . and he will put something back. And what we are paying him is
$ 60,000 for the two years that he is going to do it.
JL: But one could also ask what contribution have I made to Australian
radio?
PM; True.
JL: Nobody offered me 60 grand.
PM; No. But they have offered you much more than that, and that is the
point.
JL: No, I offered it myself.
PM: Welt it's like our friend on the morning program I don't want to seem
obsessed about him, but he seems obsessed about me. The tact is,
hearing his blaggarding Australian artists most of whom, in this
category without any Government assistance are getting $ 12-14,000
a year. That is, they're not getting what someone at the bottom end of
the wage market is getting, when he is picking up probably around a
million a year or better. Now, is there any justice in that? I mean,
reading out transcripts and vetting opinions and picking up multiples
and multiples of what people of international accomplishment are
actually getting. You see look, I don't mind people getting greedy, as
long as they are not mean-spirited about it.
JL: I think it's terrific.
PM: I mean good on Alan. He's got a good rating program even though
it's basical ly.. . most of the stuff is middle of the road fascism I don't
mind if he's doing his best and he's getting his money for it, but let's
not blaggard everybody else who is accomplished and who is basically
living on a pittance.
JL: Would you consider taking the House of Representatives to an
election without the Senate?
PM: I'm not interested in early elections, John.
JL: No, that wasn't the question.
PM: Well, to take the House to an election without the Senate means that
the House has got to go before next August, and that's just not my
intention.
JL: Have you....
IEL3. Nv. 91 9 1 17
PM: I want to see the Government enjoy this Parliament to do the things we
promised the Australian people we would do restore the growth and
employment, keep the inflation rate low and get on with the big ticket
Issues like the republic, APEC, Mabo, the White Paper all of these
major milestones in Australia's political history, get working on those
and at the end of it we'll say to the Australian people " This is what we
promised, and this is what we have done, and we want you to return us
again".
JL Okay Prime minister, thank you for your time. Good to talk to you, and
I hope we get to talk again very soon.
PM: Thank you very much John.
ends.