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CHANNEL 10 MEET THE PRESS 11.00 20-11-94
Subject: INTV PAUL KEATING, Prime Minister
INTERVIEWER Barrie Cassidy:
Hello and thanks for joining us on this special edition of
Meet the Press coming to you from the cabinet suite
inside Parliament House in Canberra where our guest is,
of course, the Prime Minister, Paul Keating.
Good morning and thanks for joining us.
Paul Keating:
Barrie Cassidy:
Paul Keating: Good Barrie.
We'll talk about the APEC agreement very shortly but
first, on wages: should Australians be bracing
themselves for a period of industrial disputation in the
leading up to Christmas?
I don't think so except, you must know and I think most
Australians know, we've changed from the centralised
wage fixing system. We've now got the sort of system
that I think most people in public life have believed we
should have had for a long time. That is a broadly
decentralised system which is industry for industry, plant
Agency Report. For private research and niot to be di~ ssemninated. Every effort made to ensure accracy
for the benefit ofour clients but no legal or other responsibility is taken for erros or omissions. I
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy: for plant. And because people are making agreements
which go for a year or a couple of years or three years,
it's likely that there will be some disputes but that's the
nature of the system.
And does that mean that disputes will be enterprise to
enterprise, that we shouldn't expect to see a blanket
strike a national strike by the Transport Workers
Union, for example?
I don't think so. But, again, if they are bargaining for
what they see as a sort of industry-wide adjustment of
some kind, some segments of that industry could be
subject to disputation.
They are certainly talking tough aren't they? Steve
Hutchins, the President of the TWU, said, for example,
that he'll roll right over the top of you if you get in his
way when he's going for these wage claims.
But he's running for election, Barrie, you see. They've
also got an election on so you get this sort of talk in
union journals when the campaigns are on. You get it in
national election campaigns, indeed.
Well what about the merits of the claim? They are going
for 15 per cent 71/ z per cent a year. How much of that
do you think could be made up of both productivity and
profiteering?
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: There is an assumption, I think, in a lot of the
commentary about these claims that what is claimed will
be given. But, remember, this is not the centralised
system where largely what was claimed came from it. A
claim is one thing but an agreement is another. So, in
my view, 7/ 2 per cent a year is too high and
It's an ambit claim.
And I think employers will think that too.
So what percentage? Is there a percentage that you can
point to that accounts for productivity? Because some of
this is retrospective of productivity, of course, in its-
No, I can't disaggregate the claim and I'm not going to
do the employers' work or their bidding for them. In
this system the employers have got to, for the first time
in decades, actually stand up and be counted. They've
actually got to defend their own profits and seek to draw
a productivity from the arrangements. In other words,
this is a grown-up system. It's not a system where the
government and the ACTU under the Accord through
the centralised system fixes wages. The employers
wanted us out of that system. We are now out of that
system and the employers now have to manage the
system and deal with claims and try and deal with them
in a way that protects their profits and keeps the
inflation rate low.
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: But then you, as a government, you have to take the rap
if the claim is too generous if what they get in the end
is too generous, and that feeds into inflation, and then in
turn puts pressure on interest rates.
The government doesn't take the rap because this is a
system where it's all up to the participants. But, by the
same token, we will keep our eye on the total outcomes
and the portents for inflation and competitiveness and it
is in that respect, and for that reason, that Ralph Willis
made the remarks I think yesterday saying the
government will look at fiscal and monetary policy in
the context of wage settlements which we think are
unreasonable. All right. While they're trying to sort this out and you
are looking on from the sidelines, how much sympathy
have you for the Transport Workers Union, for
example, because they are among some of the lowest
paid workers in Australia?
Exactly. And there's going to be some pressure inside
that union for adjustments. And I think the other thing
that's worth bearing in mind: it's also true it's been
some time since they've had an adjustment. So there is
an element of catch-up here. But, again, it's a very
competitive industry and a productive one and it's for
the employers to draw the productivity from it.
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: And for political reasons you don't want to see those
wages kept down anyway because it just feeds this
perception that the opposition is putting out that in
Australia the poor are getting poorer.
That's just patently untrue and this comes from the
humbugs in the opposition who oppose every wage
increase since 1983. All the years that I've been here as
Prime Minister and as Treasurer, Barrie, in every
national wage case, in every wage round, they opposed
the lot.
We have to take a break. We will be right back with
Meet the Press. Stay with us.
( Commercial break)
We are back with Prime Minister, Paul Keating, here at
Parliament House in Canberra. It does appear quite
obviously interest rates will go over 10 per cent very
shortly. Are these rates going to go up through next year
and then the following year? When can we see an end to
it? It depends what you call 10. We're
The housing industry.
The yardstick of the Government's what we call ' cash
rate' you know, the Reserve Bank's cash rate? I think
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: the commentary to make here, Barrie, is that it would be
most unlikely that in any recovery of strength you could
keep the interest rates that you had while you were in
recession and we've now adjusted the cash rate by 11/ 4
percentage points, to about 6'/ 2 per cent. But, again, it's
amongst the lowest cash rates in the last 20 years.
Yes, sure, but can you say to the people of Australia
that there will be end of this; that it won't go on all
through next year; that we're looking at an
There'll be no repeat of the eighties here. For a start
That's in terms of the top limit of interest rates. But in
terms of this constant rise that we expect every three
months? Well, again, we'll see what happens in activity. We'll
see what happens with the economy and activity. I mean
we're already starting to see a slowing in housing
lending, for instance, since the last rate rise. That's been
reported fairly comprehensively by financial institutions.
So, again, I think we'll look at activity and we'll look at
wages. We'll look at the inflation outcomes. Remember
this: that it was just a week or so ago that the inflation
outcome for the last quarter came through and for the
year it was 1.9 per cent. So we're still sort of keeping
There's very strong productivity in here about 3 per
cent productivity at the moment. So that's keeping the
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy: inflation rate low and that lower inflation rate is the
driver of interest rates and competitiveness.
What is the optimum growth rate above which you
cannot go without having to ratchet up interest rates
again to bring it down?
It depends how much capacity we can see installed and
how efficiently we use it. I mean you can see some of
the East Asian economies growing at six and seven per
cent a year without inflation sort of jumping
We go over 4 per cent and there's a problem, isn't
there? That was because under 30 years of the Liberals our
capital stock fell to pieces. I mean, I used to say to the
Liberal Party in the last few years, ' You should hang
your head in shame', in the late eighties; that as soon as
the economy gets a burst on If it gets over about four
to 4 1/ per cent it spills into imports. The reason for that
is because we had such a poor over 20 or 30 years
development of the capital stock. Now, that's changing.
It's changing under Labor. It changed in the eighties
with a big addition of investment, and it will change in
the nineties.
Now I'll come back at you and talk, of course, about the
budget deficit. I think this coming budget in May next
year is going to be one of the most analysed in the
country's history, certainly in advance of it. Are you
warming to the view now that you need to do more on
the budget deficit, you need to get it down at a sharper
rate?
Paul Keating:
Barrie Cassidy: I think people should understand what's already been
done to get it down in the future. That is, the decisions
which It's as if we'd been through a little time warp
here that people haven't noticed. You might remember
John Dawkins' budget of last year and the difficulties we
had getting that through the Senate the tax changes
through the Senate. Well those policy changes are worth
about $ 9 billion to the budget over the next two years.
That's around two per cent of GDP. A lot of that hasn't
happened yet. A lot of that is still coming through.
Now, a lot of people who focus on the deficit put that
straight in their pocket and say, ' All right, what's next?'
What I say is ' Well, just remember what's coming.' It's
not a matter of what's here. It's what's already been
provided for because what was legislated were triggered
That is tax changes which were triggered to come into
effect on petrol, on wholesale sales tax, and other things
over the next couple of years.
Well, even allowing for that and the growth dividend, of
course, there will still need to be tax increases and
spending cuts, won't there? You won't be able to avoid
either one of those?
Paul Keating:
Barrie Cassidy:
Barrie Cassidy:
Paul Keating: As I often say in commentary about the budget, we'll do
our usual housekeeping job on the outlays. Remember
this, Barrie, that the outlays in Australia are as low as I
think you could possibly have them in an OECD country
and deliver the sort of services we have. Apart from the
spending on the jobs compact, the 1992 One Nation
spending has now all largely been unwound. So this is
not as if there's been a spending spree here. The outlays
are still largely as they were at their low point in the
eighties largely at their low point in the eighties. This
has been essentially a revenue problem. About $ 3 billion
has gone to the business community in lower company
tax and accelerated depreciation and in tariff cuts. And
of course with the slower growth over the last few years
we've had a smaller tax base. But that will improve.
All right. We have to take another break. We'll be right
back to talk about the historic APEC meeting in
Indonesia. ( Commercial break)
We are back with the Prime Minister, Paul Keating.
You've said this APEC meeting last week was the most
important thing that's happened to you as Prime
Minister. Why should people at home share your
enthusiasm? Simply because in the past, Barrie, we've never been
part of a free trade area. Australia has simply been a
Barrie Cassidy:
Paul Keating:
Barrie Cassidy: sole trader. But as the world is getting a tougher place
to live in, with the US signing preferential agreements
with Canada and Mexico, under NAFTA; as Europe has
its borders closed behind the European union, life's
pretty tough out there. So getting Australia to become
part of a free trade area is obviously a change that
Australia has never enjoyed before.
But are the benefits at home going to be fairly mixed?
It's not going to be particularly good news for those
who are working in highly protected industries, is it?
I think it's going to be tremendous news for the whole
country because what happens with a trade round is you
get not just your own decision to reduce protection that
is a unilateral decision you get a multilateral decision.
So everyone is coming down at the same time. So you
are comparing then apples with apples. The problem
we've always had is when we've reduced protection
other people haven't. If you look through the tariff and
non-tariff barriers of East Asia, they're very high. So if
we get them to come down we are going to open up
enormous opportunities for Australians.
How does that work when you are all coming down
from different bases? Do you keep an eye on what the
others are doing and act accordingly, or do you like to
try and lead the region?
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: That will be the basis of the negotiation which we will
begin establishing processes for in Osaka in 1995.
But you've signed onto a very big agreement here. You
must have given some thought to how it works from
now on.
Absolutely. Because we're already Most of this is
behind us. We will have an average level of trade
weighted tariffs of 2.3 per cent by the year 2000. So for
us the bulk of the work is behind us. It's the other
countries. I mean we've opened Australia up. We've
made it competitive. We've reduced tariffs. We've got a
productivity culture and we've had a big throw to
exports. What we had to do in public policy was get
something in place to get the tariffs down around the
Asia Pacific, and that's what APEC does.
But, as you say, the heaviest responsibility is now with
the other countries, not with Australia. You obviously
have faith in the resolve of the present leaders but
leaders come and go. Is there not a possibility that this
will get a bit of a head of steam up and it just might run
out of steam in two or three years?
I don't think so because I think certainly East Asian
leaders know that the countries with the lower tariffs
grow faster and they do because the countries with the
lower tariffs get more investment. Now, with South
Africa coming back into the world economy; China for
the first time really in the world economy; South
America, Russia, the Russian Far East, India there's
going to be an enormous competition for capital and
countries that keeps their tariffs up are not going to get
capital. It's as simple as that. And that's why, for
instance, in Malaysia last week we saw a reduction in
tariff protection. In Indonesia three months ago, a
unilateral reduction in tariff protection. So what we're
doing here is saying, ' Listen, if we club in together and
bring them down together, the political cost and the
difficulties of economic restructuring will be much
easier.'
Barrie Cassidy:
Paul Keating:
Barrie Cassidy: You spent a lot of time with Bill Clinton this week.
What do you think of him?
I think he is what one would always hope an American
president is, and that is a person into good works and
deeds. I think Bill Clinton is a very conscientious
person. He's not simply about sitting back watching the
world go by. He's trying to address the policy issues
that a lot of people either never had the courage to
address or found great difficulty in addressing.
And it's tougher for him in many ways, isn't it, because
getting up the GATT round and APEC in the United
States is a tougher shot for him than it is for you here in
Australia.
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: He has the difficulty of the Congress to deal with, but
he's got NAFTA through. He's now got the GATT
ratifications going through but he comes to the GATT
ratifications with this APEC agreement in his pocket. In
other words, what Bill Clinton can say, and* I think say
with voracity, is that he's the one who has opened up
the opportunity in Asia for the United States. That's got
to be a bull point, I think, in getting the GATT round
through the Congress.
Why do you think he is so unpopular at home, then? It's
not a personality problem. The country seems to think
that he's failing them in terms of leadership.
I think that probably he was a bit like I mean there's a
moot point here. The Democrats blame him for their
difficulties but I think probably he's entitled to blame
them. I think it was like marrying into an unpopular
family. He picked up all the dross of the Democratic
Party and he's had it sort of round his neck over these
last 18 months. I think this is going to give him a
chance for a very clean break.
We'll see the real new Democrat, do you think, in the
next two years?
I think he is a new Democrat but he tends to look like
an old one because of the demands which the
Democratic Party make of him. You see, when he came
Barrie Cassidy:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: to Washington I don't think the Democratic Party said,
' Oh, here's the new Democratic President. Let's see
what we can do for him.' The view was: here's a new
Democratic president, can we knock him into shape?
Okay. Still a lot to talk about. We'll be back in a
moment. ( Commercial break)
Back with the Prime Minister, Paul Keating. Clearly,
you're not going to tell me when you are getting out of
politics but have you made up your own mind? Have
you got a ball park idea about when you plan to get out?
No. No I haven't.
Because you have said that you've got at least a
strategy, if not a time table.
I've always said that I think there is a time when you've
done your best and you should basically clear off. But
I'm still I think kicking goals, so
I suppose a week like you've just had would encourage
you to stay around even longer?
Well you do get that sort of feeling with a week like this
I think. I've been here 25 years last month but I came
early, Barrie, so I can sort of stay on, if you see what I
mean.
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: And you can't set up something like APEC and then
walk away from it because, as you say, there's so much
follow-up work to be done it could take years.
And it's so interesting as well. I mean it's so interesting
to get these countries together and put all the blocks
together; to see all the blocks coming together in a sort
of a change. I mean APEC didn't have to happen. There
was no logical reason why it had to happen. It happened
simply through cooperation and goodness basically
some people seeing something better, which I thought
was tremendously encouraging. I think it's the most
encouraging thing that's happened in the last probably
years.
So I presume from all of that you can go to the next
election and promise Australians that you will serve the
full term?
Indeed. So that's at least four years, and perhaps longer?
I think it's silly to be saying, I'm here for the next
decade, and all this sort of stuff. I've always taken the
parliaments parliament at a time. I started thinking about
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy: my life in here after I was here about three years. Well
I've been here 25 now and so I'll obviously think about
it and carry on.
What do you think you will do next, when you put all
this behind you?
Well I don't think anyone knows really, do they, when
they're in public life? I mean it's such a high wire act,
public life, you just wonder how you go off the wire.
You joined, as you said, at 25. You cut off your options
at a very early age in many respects. From someone
who has worked and lived overseas for three years, it's
one of life's great experiences have you ever felt that
you denied yourself some of that? The opportunity to
work overseas
That's the thing about Australian politics. You can't hop
out and hop back in. I mean, in the US if there's a
Democratic administration, the Republicans all clear off
to their private lives and they come back a few years
later. You can't do this in Australia. You sort of grind
on till you're finished. I'm a stayer, I hope, so I'll stay
on. But would you look forward one day to experiencing life
overseas and perhaps living over there for a while?
Paul Keating:
Barrie Cassidy:
Paul Keating:
Barrie Cassidy:
Paul Keating: Not necessarily. I would look forward to a life without
the attendant pressures and strain and stress of public
life. It's not the hours, ever, it's the responsibility. It's
the responsibility but, again, I've had it as a Minister
now for 12 years, as Prime Minister, and one gets a bit
case hardened to it I think.
I know, again from my experience working with a
former Prime Minister, that this invasion of privacy is a
constant problem. Is that something that you struggle to
cope with?
Oh everybody does I think, because the media today is
so intrusive and there's so much of it and everybody
wants a little piece, like you're trying to get a little piece
now, Barrie. I mean everyone wants a bit.
Can I ask you about your kids and whether you think
there are any positives for them in having a father as a
Prime Minister? Or, from their point of view, is it just a
damn nuisance?
I think it's uplifting for the kids, but is it advantageous
in the long run? Well, I wouldn't know. I mean it's very
hard to make a judgment about that, I think. There's no
doubt it certainly is an added pressure on them in their
young years they could do without. But, again, they do
see things and hear things and are part of things that
other kids aren't. So there's an advantage there'.
Providing it doesn't affect them adversely, that's
probably not a bad experience for them.
Barrie Cassidy:
Paul Keating:
Barrie Cassidy: Okay. We're almost out of time. With the next election
coming up next year perhaps into 1996 who do you
think you'll be facing John Howard, Alexander
Downer, Peter Costello?
It doesn't matter. It doesn't matter. The problem, as I've
always said, for the Liberal Party is it's not the jockey,
it's the horse. The problem is the Liberal Party has had
it. So I don't think it matters whether it's Alexander
Downer or it's John Howard or whoever it is. I mean I
think the Liberal Party constitutionally is in trouble. It's
basically not a national party. It's just a party of six
state runts and that's why you hear all this talk about
state's rights all the time state's rights in the Liberal
Party because all the Liberal Party thinks about is the
rights of the states because it is just a states' party.
Okay. We are out of time. Thank you for giving up part
of your weekend. We appreciate it very much. Next
week's program will be the last for the year. I hope you
can join us then. So it's goodbye from Meet the Press.
ENDS I
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