PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING MP
INTERVIEW WITH PETER COUCHMAN, RADIO 3L0 MELBOURNE
OCTOBER 1995
E& OE PROOF COPY
PC: Good morning, Prime Minister. Good to have you joining us.
PM: Thank you.
PC: We have been discussing the erosion of support for the Labor
Government from the so-called ' true believer's' and people have been
advancing reasons for it. Why do you think the true believers are
deserting you?
SPM: I don't think they are. Just take the not the opinion polls, but the
real polls in 1990 Labor's primary vote was 39 per cent of the
national vote. In 1993 it was 45 per cent. So we picked up 6 per cent
of the national vote in primary votes between 1990 and 1993 and, I
think, if you take an electorate like my own, I think I got 72 per cent of
the primary vote and previously I have never had over about 65 or 66
per cent. So, in 1993 we had probably the biggest Labor vote in a
decade. I just don't think that this thing is really happening and to the
extent that it is, the mosaic is changing. We have picked up a lot of
people in the middle ground that we never had 10 years ago.
PC: All right, so you are losing some but you are gaining some you think?
PM: We have to be because we have won five elections.
PC: Let me just put to you some of the things that people have told me
this morning while we have been discussing it. They feel betrayed
because as Jennie George pointed out in an interview she did the
other day, the people in the lower pay scales have borne the full
brunt of economic restructuring that has gone on. They just haven't
seen any return for it yet, or they feel that they haven't seen any
return for it.
PM: What has happened, we've now had fairly strong real wage growth
for many years and in the 1980s where we had wage restraint in the
middle 1 980s to recover our competitiveness, we gave compensation
by way of tax cuts. This was a huge tax cut program that went on
from 1984/ 85 right through until 1993 and by cutting government
spending as we did, when I became Treasurer back in 1983 we had
government spending at 30.5 per cent of GDP and by 1990 it was
down to 23.5 per cent. So, it was down about six to seven
percentage points. That is about today, $ 30,000 million a year,
billion a year and because of that we are able to give those huge tax
cuts. Those tax cuts and the transfer payments, such as the Family
Allowance Supplement which we pay to low income families, all of
that has pulled them right up from where they were. For instance, a
decade ago the bottom tax rate was 30 per cent, it is now 20 per cent.
The tax free threshold was $ 4500 it is now $ 5460 from memory.
PC: The trouble is, they don't feel any better off and there are two factors
here, I think, they feel as if they have been thrown a few morsels and
then the better-offs the haves as opposed to the have notes have
been getting huge salary increases.
PM: Yes, but there was a lot of that in the 1980s, Peter, for a few people
up the top end, but I think a lot of that has disappeared, too. Look,
these are the real numbers household disposable income, and
household disposable income per capita. Now, per capita measures
wages, salaries, supplements and pension payments, and household
disposable income per capita per person has risen by 21 per cent in
real terms since 1983. Household disposal income per household
has risen by 40 per cent. They are the best measures.
You won't find anything like that in the United State. You won't find it
in most parts of western Europe. It is very strong real growth. Partly
the reason for that is, of course, th6 huge employment. We have had
two million job growth since the early 1980s. We have had about 26
or 27 per cent employment growth, which is about 2 to 3 times the
OECD average. And because more people in households are in
work, household income has risen.
PC: Yes, but you see people are earning less than $ 30,000 a year. Look
at a story like the one that was published in the Australian yesterday,
some of the senior executives in one of the Government's own
corporation, the Australian Industry Development Corporation, have
got the most huge salary increases, I mean millions of dollars a year
going to seven or eight executives in that corporation. They just see
the Government speaking with fork tongues on something like this.
PM: This is a body which we have thought of privatising and selling.
Essentially an investment bank like the AIDC is really only a
collection or a collation of its top staff. I mean, it is basically as I said,
you know, computers and office dividers and bits and pieces, but the
business is really the people in it. Now, to keep those people, you
keep them against the competition in the market place. But, again,
that is decided by the AIDC board. But the things I have been
interested in, Peter, and the things Jenny George is interested in, is
for instance the Family Allowance Supplement. You take someone
on $ 18,000 who has got two or three kids 18 base rate. That would
have taken them to roughly about $ 25,000 a year. Now there is no
way that someone on that income could negotiate in a workplace a
sort of 6-7 thousand a year wage increase. Now I have got John
Howard running around in fact he is following me around Melbourne
at the moment, I was just over at 3AW, me and my shadow I said to
him, if I give you my itinerary will it help. But anyway, I don't know
whether he will burst in on us in a minute.
PC: He hasn't rung us up though..
PM: He might come in with his smiling countenance in a moment.
Anyway, the point is what he is about, is basically cutting this out.
You see, he is out there talking about battlers. I mean, the cynicism
of it is he's opposed every wage increase bar one since 1978, and
when we introduced FAS, the Family Allowance Supplement, now
called Additional Family Payment, they were opposed to it. They
have been opposed to all of these benefits which we have paid to low
income families. Now when he talks but doesn't show us the list of
his policies which include cuts in government spending to get rid of
they say " waste and duplication". But it really isn't waste and
duplication, it's cuts in payments to families. It's cuts in payments to
schools. The same sort of things that Jeff Kennett has done here in
Victoria, but on a grander scale nationally. What we have done in
Australia there is a disparity in incomes, Peter, it has happened
world wide.
PC: So you acknowledge this.
PM: Absolutely.
PC: The gaps between the haves and the have-nots has widened.
PM: This is now an international country and the wage spectrum reflects
that which exists in a lot of other countries. The chief executive
officers, etc. But what we have done, unlike the United States, unlike
Britain, unlike the Thatcher's Britain which John Howard would seek
to emulate, or Ronald Reagan's America, we have brought the bottom
two deciles at least of income deciles, two groups, up immeasurably
so that yes the gap has widened but nothing like the way it would
have widened. So if you inject into that heaps of employment growth
so that a couple more people in the household are at work or the wife
has a job and formerly wouldn't have, because there is massive
participation now by women in the workforce, all of that I think means
that we wiill keep the Australian family. together by keeping the place
more financially, economically cohesive. That is with employment
and a goad social wage. That means, the likes of the Family
Allowance Supplements. That means the safety net for wage
increases which Mr Howard wants to do in. It means Medicare. It
means all of those things that really buttress a family. Now, you will
still have people say as they have said to you, Peter, well okay we
still feel as though some of it has passed us by, and I can emphathise
with that, but nothing like it would have. I mean, I don't know whether
you noticed the US labour secretary, Robert Reich, the US Minister
for Labour, about 3 months ago said well in America we have had
heaps of employment growth but we have had real wages falling for
16 consecutive years. In the United States, 70 per cent of the
incremental wealth of the last decade has gone to 3 per cent of the
population and the people at the bottom, they are really at the bottom'.
This is not true in Australia. The values of this government and the
values of holding this society together, I mean, Working Nation
looking after the long term unemployment, One Nation getting the
place started again, and those big social questions, occupational
superannuation for the workforce these are all about making
Australia different and better.
PC: Oh yeah, I think you are right. I think anyone who goes to the United
States comes back saying you are infinitely better off here if you are
disadvantaged than you are there. But your problem, politically, is
that John Howard is reminding people of just why they are finding it
tough in Australia. He pointed out last night, for instance, that the
cost of servicing an average mortgage in Australia has jumped from
$ 651 in 1983 to $ 974 in 1995 and that is in real terms. Now that is a
hell of a lot of money out of people's pockets if they are earning less
than $ 30,000 a year.
PM: Again, I would have to look at those numbers to know whether they
are right. But partly that will be explained, some of it will be explained
that house prices have risen. I mean, many people will say to you
oh I feel better about things because I bought a house for $ 120,000
and it is now worth $ 300,000. Well the new buyer who ii coming in to
buy the $ 300,000 house is going to have a higher level of
repayments than that person who bought it 10 years earlier. So that
is the sort of meaningless comparison, but if you look at the interest
rates we have got now, Peter. And here is John Howard crying
crocodile tears about the repayments but he has opposed every wage
increase. You see he says this " oh isn't it shocking that you are
paying this on your mortgage", in other words, your household
income has been diminished but " by the way I do oppose your wage
increases" you know, you have got to say are you-. for real, really. I
mean, are you out there crying crocodile tears about peoples'
disposable income but you have opposed formally every wage
increase bar one in 20 years. Now, before I opened up the banking
system in the 80s, when you went to get a mortgage you would get
maybe $ 30,000 at 13 1/ 2 per cent then the next $ 20,000 would be at
the overdraft rate which would then be 15 or 15 1/ 2, and then the next
$ 20,000 would be at 18 per cent. They used to call them cocktails
because the banks couldn't lend on a consolidated mortgage. So
your average interest rate, God knows what it was then, it was around
or 16 per cent. What is it now 10 and it is all in one lump. So
you can actually go in and say well look, I want a mortgage for the
house and it is in one consolidated mortgage and it is around 10 per
cent and at the same time you can actually say and we want to
actually start by putting, you know, a new fridge in and a garage on
the side and the bank will let you have actually a bit more on the
mortgage at the mortgage rate to do those things. Back in the 80s, in
Howard's Australia, you could get $ 30,000 from a bank, so you had
all these fringe institutions growing up, permanent building societies
remember the growth of the permanent building societies they were
all there because the banks couldn't lend and people had these very
high interest rates. So, if it does comfort people to think that their
house is worth more, they must know that when someone buys it they
are going to have a bigger repayment than they had 10 years earlier
or 20 years earlier. But the question is how much of their income
goes on it. And this is the housing affordability index and housing
affordability is very good now because wages have risen and interest
rates have come down.
PC: Just while we are talking about housing and so on. One of the things
that would have helped you and, I'm sure, heartened you enormously
would have been a cut in interest rates between now and the next
election whenever that happens to be. Now, the latest retail figures
we've got this week seem to indicate that that is not very likely at all.
Were they good news but a disappointment to you politically.
PM: Well, by the same token, the balance of payments for the month was
very good. Two months ago we had everyone going potty about the
thing running at 3 billion for the month and last month it fell to 1 1/ 2
billion, the previous month, 2.2. So, there is a sharp fall. You might
remember, Peter, at the beginning of the year Ralph Willis came out
and said the current account deficit would be 27 billion for the year.
Well there is now going to be, I think, a sharp revision downwards of
that number, which means the economy is behaving in a controlled
way. So we might have seen a strong retail figure for the month but
that doesn't mean to say that the economy is tearing away. I don't
think it is. When the next quarter comes around it will be 17
consecutive quarters of growth, we are in our fifth year of growth now.
We have had 16 consecutive quarters, four years, as of last quarter.
In the next quarter, the one we are in now, when the numbers are
published, it will be the longest growth phase in Australia since the
second world war. The longest continuous growth phase since the
second world war, but not just the longest continuous growth phase,
the longest continuous growth phase with low inflation. We had
some higher growth in the 70s but it was with 10 per cent inflation.
Now we have got strong growth with two to three per cent inflation.
PC: Which must make it puzzling to you that you are not getting support
from not just the true believers, it's the middle class greens, you know
the tree huggers, they are saying to you now we are the enemy and
we are going to bring this government down. A survey of business
leaders the other day I noticed overwhelmingly wanted John Howard
as Prime Minister.
PM: That is not true, though. Look, the public know the polls are a sort of
partial snap shot of opinion and they also know it is a way of sort of
spurring the government on, you know, needling the government. It
is a bit like a by-election, you can sort of have a needle at the
government through the polls. But it is only when we get down to
near the vote that people really start to focus sharply on where their
interest lie. This is just as true in the 1993 election. I was having the
same conversations, to some extent, that I am having with you today,
different issues perhaps, but the same theme, but then of course the
growth was only starting to it would have been around about a year,
it was not as obvious as now. I think that Australians know that this is
a good place to live. We have a chance of creating here, if not the
fairest, one of the fairest societies in the world. This makes your life
much more pleasant and that means a good social wage, decent
wage increases, a safety net, a good medical system, access and
equity in education, long term savings in superannuation and
retirement incomes. All of these things are what it is about low
inflation which really means low interest rates. Before they walk
away from that model and go back to a Liberal Party unprepared for
office. I mean, here is Andrew Robb, the Federal Director of the
Liberal Party, last week going on television saying we have 98 per
cent of our policies finished well why are they keeping them a
secret. Why are they so slick in not showing the public what their
policies are. The answer is they don't think the public will like them.
PC: Well the answer is they want to keep the pressure on you and they
want to make you the focus of public discussion and the public
campaign.
PM: No, they think the public won't like them, they think they will slip them
out to the public in the last week of the election campaign and they
will slip under the wire without really being pinned down. Remember
when Jeff Kennett said about three or four years ago no one will
lose a dollar of income when we come to office and of course that
was completely untrue. Howard will say the same things. He will
start talking about softening his wages policies, don't believe him. He
is going to be cutting into wages as he has always wanted to. Now, I
think, when the public take all of that into account they say what has
this government given us, four continuous years of growth and now
the longest growth phase since the war, low inflation, equity in the
wage system, enterprise bargaining but a safety net, a decent social
security system, income support for families, retirement incomes and
not just that, a view about Australia's identity, about its culture,
threading together the biggest free trade agreement in the world with
APEC which we are part of they say will we walk away from this and
take pot luck with the Liberal Party. I don't think they will do it.
PC: How seriously do you take these threats from the greens. I mean,
they do represent a large slab of the middle class vote don't they.
And if what we are hearing is true, they're pretty disillusioned with
you at the moment especially over forest policy.
PM: I don't think so. I mean, what happened, we have had a few
intemperate remarks by some people in the Wilderness Society
because what we are seeking to do now is the grand-daddy of forest
policy around the world. What this Government, this Labor
Government is seeking to do is to do as no other western government
anywhere has done. We are seeking to put away in representative
reserve systems for forests 15 per cent of the cover which existed
before European settlement in 1788. No other country is trying to
benchmark 15 per cent, they are mostly working on 7 or 8 per cent.
So we have got a most ambitious policy and we now have a draft in
the marketplace for three weeks which is a Commonwealth/ State set
of documents looking at Deferred Forest Areas. So what we are
hoping to get to is what we called Regional Forest Agreements. Let
me not confuse people with the terms, Peter. What a Regional
Forest Agreement is is this, we say look if you want to take logs, that
is native forest logs or regrowth from particular areas, you can only
do so if there is a Regional Forest Agreement. And what a regional
forest agreement will be about is having representative, solid strong
representative species of trees in representative reserve systems.
Once that is in place, they can go taking these things and they can
export their woodchips but only where these deferred forest areas
have been agreed. But before we -get to a regional forest agreement
which takes two to three years to pu6t into place because you have got
to firstly measure and survey the areas, you have got to know what
the species are, you have got to be clear that it truly is a
representative system. We are putting away now what we call
Deferred Forest Areas or OFAs. In these three weeks what we are
agreeing to is what goes away for the next two to three years so we
can have the Regional Forest Agreements later. And what will
happen in this process, you will have the greens pushing for more
and the foresters pushing for less, but what the Commonwealth..
PC: And the Government sandwiched in the middle.
PM: No, the Government will come through the middle with a system
which does justice to our native forests but at the same time tries to
preserve a forest products industry, perhaps not in the form it is in
now, but preserve a forest products industry that can actually work off
either regrowth, planations or parts of the native forest. But it won't
be parts of the native forest which tear away at the integrity of that
reserve system. So if we were not doing something like this, if we just
went on for years just approving woodchip exports like we had last
years debate, and not tried to put this together. You see, what I said
at Christmas last year is if these States don't come to the party, if
Tasmania doesn't sign up and the other States don't sign up here, we
will be cutting woodchip exports by 20 per cent a year to nothing, so
in five years there will be none. So they all said, God we better get
into the game. So they have signed up, Tasmania has signed up
which is the State we needed to be in it, along with Victoria and NSW
and we are now in this sophisticated process that no government like
this is doing anywhere in the world. And I just hope there was a
very good piece in the Australian on the weekend where one
journalist said look I hope the greens understand how important this
process is and what quality it is and how good this is going to be for
Australia and that they are part of it and not removed from it.
PC: Prime Minister, we have got to break for our news now, but thank you
for stopping by this morning and I'm sure we will see you again
between now and the next election, whenever it happens to be.
PM: If you give me a good invitation, Peter, I'm sure I'll turn up.
ends