PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING MP
UNEDITED INTERVIEW WITH PRU GOWARD, ABC RADIO NATIONAL,
12 MAY 1995
E& OE PROOF COPY
PG: Prime Minister, Mr Howard's address in reply basically talks about
your broken promises the L-A-W law tax cuts, the rise in the
Medicare levy does that leave you " going into an election with a
credibility problem?
PM: No. Here he is, he has a Budget reply and he hasn't got a policy
he had 45 minutes 30 minutes, sorry to give the country his
policies, and he didn't have any. It was a sort of 1970s raucous,
empty policy-free speech, and I don't really think that hurling rhetoric
or abuse at a Prime Minister is any substitute for an opposition's
position or policy. Our people on our side of the Parliament were
very cheered up by Mr Howard's speech, because they thought it
was so bad. And when you think about the weight and content of the
Budget speech which Ralph Willis delivered on Tuesday night
and the empty, rhetorical Spe-eh-tha-John Howard replied to it with,
the difference between the Government and the Opposition was
plain and stark for all to see.
PG: All right, but what about the credibility problem that he argues is
yours?
PM: I don't think we have a credibility problem. In the election I said 2
things we would restart the growth in the economy, and that we
would get employment going. We saw the second largest fall ever
yesterday in employment 90,000 fall for last month. We have now
had 640,00 jobs since the election it's the largest fall in
unemployment in Australia's history the recording of the fall in
unemployment, the largest fall we have ever seen. They were the
principle commitments I made at the election not to leave the
unemployed behind, to put an arm out, to bring them up. We did it
with raw employment and we also did it with Working _ Ngtion, with the
long-term unemployed. On the tax cuts, I said in the One Nation
policy that there would be 2 tax cuts one we paid in full, brought itforward
and paid it in full at the end 1993, the second, we have paid
more than it was worth $ 3.5 billion, we are going to spend $ 4.2
billion paying the second into superannuation accounts. And I
believe that most Australians will think it is better in the
superannuation account than simply paid as cash. Now, that means
that with almost complete fidelity to the things we undertook in the
election, we have done. Unlike most Australian Governments, we
have actually got these achievements into place growth
employment, the tax cuts, looking after long-term unemployed and of
course the other great issues like Mabo and APEC and Hilmer.
PG: I mean, he says though, technically, it is a breaking of a tax promise.
What you're basically saying is that you have changed the content of
the tax promise, but still delivered?
PM: That's right. We have spent more than the promise was originally
costed at $ 3.5 billion we will actually now spend $ 4.2 billion, but
it's a bit rich coming from John Howard who, in the 1977 election, the
Liberal party as their central policy, a program of tax cuts, and they
had as their logo a fist with a handful of dollars. And we were all
enjoined to ring up a certain toll free number to find out what our tax
cuts were. Five months later as Treasurer, he took them away
completely. And you might remember that famous front page in the
Illawarra Mercury which said " Lies, Lies, Lies". John Howard is up
there tonight talking about transparency and decency and budgetary
policy, yet it was of him that John Stone wrote that the fiscal
deterioration in 1983 was the most rapid since the war, and that he
had told then-Treasurer Howard about the $ 9.6 billion budget deficit,
but he wouldn't reveal it in the last 2 weeks of the 1983 election. So,
to be up talking about transparency of budgets is unbelievable. And
then of course, the other thing he did, he stood up with the Tax Act
he said " this is how big it was in my day, and this is how big it is
now". Well, the answer to that is sure John, it's bigger because we
caught up with all the people avoiding tax, and that is what he
should have done.
PG: But do you think the electorate will go back 18 years I mean, there
are a lot of kids who are voters who weren't born 18 years ago. I
mean, the focus is really going to be on your promises not his?
PM: No. But, there are plenty of people in public life, and in community
life, who remember the cynical commitment of John Howard to those
tax cuts, and he took them away, and the ones that he offered in
1982-3 and couldn't pay for, which then blew out the Budget in 1983.
this is twice he's had a go at this, but look at how many tax cuts that I
delivered on behalf of the Government through the 1980s about
of them all of them paid under the Accord to the letter. And then
One Nation, the first lot paid to the letter. In this week's Budget, they
are to be paid for the betterment of everybody. In other words, they
add to savings, but it's the great historic opportunity to say to people
" 1you put 3% away yourself, and the Government will match it". This
will bring everyone in the country under the Government's
superannuation policies to 15%, and I gave the figures in the House
yesterday. And what they mean, and show, is that under this
scheme, someone on average weekly earnings which is $ 33,000
would, in today's dollars-, have-a parcel of money of just on half a
million, and that would guarantee them an annuity for the balance of
their life of $ 30,000 a year. So, in retirement, someone on $ 33,000
today would in the same dollars, in the dollars of the day have a
retirement income of $ 30,000. Now, is this not a more sensible,
better thing to do with the tax cuts, than simply just pay them off as
cash, and not take, if you like, the generosity of spirit, the
opportunity to build this great savings reform.
PG: Well, he listed a few broken promises, and we won't go through them
all now, but I mean his basic conclusion was how can you trust Paul
Keating to deliver the Government's promise on superannuation
when there have been these other broken promises and it is after
all, after an election?
PM: We reject absolutely the broken promises routine. You look at all of
the great bulk of the Government's commitments the generalised
child care cash rebate in and proposed the parenting allowance
in. The h-ome child care allowance legislated. It's very unfair for
people to make, for John Howard, to be making these points.
PG: What about the current account deficit, and he said " 9 years later
after banana republic, and it's still not fixed the electorate are
cynical"?
PM: The reason why it's not fixed, Pru, is because, there has been a big
savings hole in Australia. And that is, the nation has saved much
less than it did in the 50s and 60s. And the reason for that was,
inflation 10 or 12 years of high inflation established in everyone's
mind that the last thing they should do is put money away. Buy the
flat, buy a second house, buy a holiday house do anything but put
money away. Now, we are now back... . we have had 3 years of low
inflation, but 3 years doesn't change the sort of savings notions
inculcated in people. What the Government has done now, and it
did in the 1980s, is to make a very large change in fiscal policy we
have seen exports now go up by 50%, for 14% of GDP to 21 and
that's worth about $ 18 billion a year, God knows where we would be
without that and now, in Tuesday night's Budget, we are going to
see a 4 percentage point turnaround in the Budget balance, from a
deficit of 2.9% of GDP to 1.7% of GDP in the next few years. And
out of superannuation, we will see the Treasury estimates that the
super change will be worth 4% of the GDP by the year 2020. Well,
let's say we are talking about 2000 rather than 2020, and call it 2%
of GDP. The current account problem is only 2 percentage points of
GDP that's how big the problem is that's $ 10 billion a year. That's
largely the size of the problem. So, the Government's put in, if you
like, a 6 percentage point fix in Tuesday night's Budget, for a 2
percentage point problem. And when we said to John Howard " well,
what would you do, John?", he wouldn't give us any policies. He
would...
PG: He said you steal them?
PM: Did we steal occupational superannuation? Did we steal the policies
of putting 15% into super away from him? He has
always opposed it always opposed it. The general change in the
Budget balance he said he was going to vote against the revenue
increases. That change that we put in there on Tuesday night will
basically, I believe, handle the current account problems and that's
what the long-term bond market told us in the last couple of days
when they confirmed that 1 percentage point fall in the long bond
rate. Let me just say this the pressure off interest rates that this
Budget will bring, will keep growth going through the 90s, and this
gives a lie to Howard's principal claim that we have had 5 minutes of
sunshine, which is just a cynical lie a cynical bit of opportunism.
PG: But it hurts, doesn't it? You keep biting on it?
PM; All lies hurt. So if a lie is effective, it doesn't mean to say it's right.
We have had 3.5 years of growth, and the Treasury is now saying
we have got 3 years coming up. So, we have got 6 years there. you
know we used to have a thing called the bond selling program? This
year because of the Budget going into surplus the bond selling
program will be about $ 15 billion less $ 15,000 million. Because
there are going be fewer bonds around, the price of bonds will rise,
and therefore the interest rate on them drops. That's why the bond
market confirmed the 1 percentage point fall so the Government
has effectively reduced the pressure on interest rates in this Budget
effectively, and the bond market has said so. Not John Howard
the bond market. These are the important things. But John Howard
had a chance to say where he would change the Budget Peter
Costello, on his behalf, has said they would not increase tax at all.
So, if he believes that the public sector should be saving more, and
he thinks that we have got to do a big change, like 2% of the GDP to
deal with the current account, in his terms, it all must come from cuts
in Government spending. Now, 2% of GOP is $ 10 billion how could
he cut $ 10 billion for government spending. And if that's his policy,
he ought to say he must know where it has got to come from he
had that Finance Department list he was running around with he
knows it has got to come from payments to families, or pensions, or
payments to schools or to universities, or to TAFE, or defence, or
payments to the States. They're the only places -you can get
billion out of a Budget of just over $ 100 billion. And he was mum on
that subject last night he wouldn't say a word about it, and that's
why I think he has squibbed the opportunity.
PG: Well, he says that the next election is going to be based on who
people believe you or him. Are you going to take him up on that?
PM: The proof is in the pudding. When I came along, Australia was an
unconfident, inward looking, country ring-fenced by tariffs with an
uncompetitive managed exchange rate and rust-bucket industries.
That's what John Howard left me as Treasurer with double-digit
unemployment and double-digit inflation. What have we got today?
We have got inflation now at just a little over 2% 2.5% and we
have got unemployment just a little over It's a whole world of
difference. And you know, Australia today is 40% more competitive
than 1983 you can't believe that number, and that's the Treasury's
number. Not or 14%, 40% 40% more competitive. So, that
was the Australia that I was left, and look at what we have got today
a modern, international, competitive, low-inflation, economy. So, if
it's a case of believing me, or a guy that has had no policy guts he
got nothing done as Treasurer, who squibbed all the big fights and
financial de-regulation on the exchange rate, on tariffs, on social
policy, on savings, on superannuation, on productivity, on product
innovation, on education I mean, there shouldn't be a contest. And
so that's Government MP's last night were in very, very high
spirits at Howard's speech, and the Coalition MP's were very glum,
because they realised that feisty little sort of speech style that Mr
Howard employs on a Matter of Public Importance in the Parliament
or in Question Time, is not the material for a budget reply. But that's
as good as he could do, and it wasn't good enough.
PG: You did have terrific news yesterday on unemployment it has
dropped a lot, to 8.3% but if it's only going to be 8% by the end of
the year, I mean, is that enough? I mean, that's still a lot of people
out of work what else are you going to do?
PM: We have got 8% in the Budget, we may do better than 1 hope
we do. But again, I think the forecasts are erring on the cautious
side. We're at 8.3% now, 2 days after the Budget. Can we get to
8% in 12 months? There is some prospect that we will do better.
But employment could also.... . you can't keep jobs growing at 90,000
a month. That may slow down over the course of the year, and
participation rates change too. Our target is for 5% unemployment
by the year 2000. We would be the only western country within
cooee of it within cooee of it. And Working Nation is helping us
now get the long-term unemployed back to work there is 102,000
long-term unemployed people gone back to work in this last year. In
the same period in the 80s, it would have been 10,000, it's now
102,000. By being able to grate big chunks out of that pool of longterm
unemployed people and getting them back into the labour
market, it really means that the target of 5% can be achieved. And I
think the forecast in the Budget for growth over the next 3 years to
be sustained on a low-inflationary basis means that we can basically
get there. That is what we are going to do about unemployment, and
that's what the Coalition can't do.
PG: You like forward forecasts, and it is a hopeful picture, but not
tomorrow not in the run-up to the next election which is presumably
less than a year away I mean, isn't that the problem for you and the
electorate? That it's a promise that doesn't start, really, in some
ways until 1997?
PM: Except that the job growth is there now the GDP growth is there
now and it's been there, really, since 1993, so 1993, 1994 and
1995. In 1994 and 1995, the Australian economy grew faster than
any other western world economy that's a great achievement. And
in this public debate, we have got a sort of unreality debate. Here
we are with an environment I can't recall at any time in my
parliamentary life where we have had 5% economic growth and 2%
inflation. We have got, sure this time, a little slower we want it
slower, about 3.75% 4% economic growth. Treasury is forecasting
3.75%, and inflation slightly up on that 2-3% range, but a
tremendous environment for growth, and I think a lot of people are
going to have to say " well, do we turn our back on that do we turn
our back on these long-term things like savings, or Hilmer, or Apec,
or the big social changes like Mabo do we that to go basically back
to a party with 1950s values, and a leader with a 1950s view of the
world?".
PG: So you think you can win the next election with the present
current... . with the current economic circumstances?
PM: The Government has set up a low inflation, contestable, high
productivity, pro-growth economy. And I don't think any community
in this country has ever turned a Government out on those
conditions.
PG: So do you reckon this year? An election this year?
PM: No there will be an election I have always said that I think it is
better when we get as much value I mean, they're too hard to win
elections here they are short terms, they are 2.5 to 3 years mostly
they are too hard to win without giving time away. And I think the
public expect value for their money from....
PG: are you calculating that the longer you leave John Howard there,
the harder it will be for him?
PM: I think that the more people see of him, the more they think he is just
the same John Howard from the 1980s. The only thing is, he is not
the same John Howard from the 1980s the John Howard of the
1980s had a little more fizz to him, a little more bubble, sparkle. And
I think what last night's speech showed is that he can't cut the
mustard as he used to. He could never cut the policy mustard, but
now he can't cut the rhetoric either. So, I think that is going to
become apparent as time goes on. There was a very great chance
for John Howard last night on national television, within a year of
an election, well within a year of an election, of saying where he
stood. He took, rather, the opportunity to attack me.
PG: And just finally, I mean you do like forward projections big plans
what about yours? I mean, do you think you will be here to see the
1998/ 99 changes that you have promised?
PM: I joined Bill Kelty and his colleagues in the ACTU, working on
superannuation, in 1985/ 86 we put the 3% schem-e together then.
And then we were tickled pink with ourselves when we got it to
and then we got the superannuation guarantee levy in place, which
took it to 9% by the year 2002. And now we have been able to add
6% to that in Tuesday's Budget. You do like to think that great
things like this that take time to be around to see them happen,
and, as I say, to make them Tory-proof, so that some nasty little
right-winger won't get their ideological little fingernails under them
and try to remove them. It's not just a matter of reform in Australia
it's keeping it. And I think Bill Kelty and I will be long enough around
to repel boarders.
PG: Mr Keating, thank you for your time.
PM: Thank you indeed.
ends.