PRESS OFFICE TRANSCRIPT 4 JULY 1978
INTERVIEW WITH ANDREWV CLARK
QUESTION: The first question I want to ask you is that a
Feature of the Governments foreign policy especially
( inaulible) for this Common Fund concept and the access
of Thi--rd World countries to developed markets and I just want
to -kn'ow how you see that policy meshing in with what you
might call domestic economic policy. If it does mesh in
with that?
PRIME MINISTER: It does mesh in with it. Our policies
in relation to the Common Fund are based in a belief that
the developing world needs to given a fair and reasonable
opportunity to trade. Official aid will have had to increase
many times to make up for the fall in world trade fall in
the terms of trade of the commodities that are important
to the developing world over the last few years and many of
these countries are dependent upon one or two commodities
for their overseas income, for their development projects
and its ' gets very difficult for them. The Australian economy
used to be dependent upon wool, meat and wheat, it's now
much more diversified but if something serious happened to
one of those major industries, the whole Australian economy
felt it. We, for a l. ong while, have been a supporter of
commodity stabilisation arrangements within Australia. We
participated in international stabilisation arrangements;
international wheat agreements, international sugar agreements,
the Commonwealth Sugar Agreement. We in fact, through the
Wool Corporation, run a stabilisation programme for the wool
industry which is in a sense an example of what an international
commodity arrangementi-can be and I think should be. It's
been an economic operation, a properly viable commercial
operation and it's been responsibly financed and we also
undertake and support, as you know, promotion and research
activities which in a sense is an example of what other
measures could be in terms of the Common Fund; research and
promotion related to the product. While the multilateral
trade negotiations are pre-eminently designed to help the
major industrial countries and while there is a major
argument going on about the role of agriculture in those
negotiations, commodities related to the Third World,
developing world, are not really part of the MTN, they are
part of the UNCTAD, UNCTAD negotiating conference and Common
Fund. So, if there is to be an advance across the broadest
possible spectrum of world trade you've got to*-obviously
include industrial tariff matters, agriculture and Common
Fund for commodities through the UNCTAD forum. Now, this is
very much of concern to Australia because we are a very
significant trading nation with a large proportion of our
gross domestic product dependent upon trade and we are also
very much aware that our trade has been growing most rapidly
with many developing countries that are emerging in the process
of industrialisation, the Koreas of this world, the ASEAN
countries where two-way trade has grown very greatly. / 2
-2
PRIME MINISTER: ( continued)
So, we've got a broad based interest in all of these
matters but of very particular national interest because
an expansion of markets and growth of world trade is going
to mean a great deal for Australia.
QUESTION: Do you think its fair, just looking at the
two ar-an half years since you've been in government, to
say that in the first year and in the budget you announced
these changes which were aimed at an investment led
recovery and then the tax changes and the alteration in
the tax scale announced in the ' 77 budget and introduced
in February led to a view of a consumer led recovery and
now that the latest changes on foreign investment guidelines
mean there should be a foreign investment -led recovery.
Is that fair?
PRIME MINISTER: I'm very glad you asked that question because
it just shows how false labels can be. Obviously a number of
different factors can assist in economic recovery, but no
one factor can establish, provide, achieve, recovery of itself
and I think it was,, broadly speaking, a press nickname
consumer-led recovery, investment-led recovery or overseas
investment -led recovery. For economic recovery you've got to
get all the basic underlying factors in your economy right:
getting tax levels right, getting the appropriate climate
for investment right, having inflation down, having
industrial relatio * ns climate and a great many other factors
are ' all relevan-t to recovery, they all make their corntribution
and the Government has never believed that one factor and
one factor alone is . going to achieve recovery, youlve got
to work at a whole range of factors-look through all your
arms of economic policy get them all as righnt as you can,
and that's what will achieve recovery but I did see one
editorial the other day which was saying we are -now moving
towards a different kind of recovery which you have just
mentioned in your question. It's just onefactor of many
and the economy would be better described if labels were
aVoided. QUESTION: Is it fair to say that the Government is placing
more emp asis on investment from abroad in helping to stimulate
more local demand and towards a stronger economy?
PRIME MINISTER: I think I'd put it this way: for a long while
-1 have beli11evethe world trading WL3ic~ J. ae going to
r * emain difficult and that view was certainly reinforced on my
recent visit. You had a situation in which the British are
leaning back on the reigns of their economy, interest rates
have risen several points in a matter of two or three months.
There will be a rising unemployment in Britain. I was told
that there w., ill be over 100,000 more unemployed in France by
Christmas. We are approaching the 200 Yen dollar and there is
more and :: ore concern being expressed from the President downward
about inflation in the United States. They are going to almost 3
3-
PRIME MINISTER: ( continued)
certainly have to lean back in places in relation to
their economy. So the immediate~ prospects for a greater
rate of growth in world trade, for a greater expansion
of world markets,. are not great. There are still too many
basic faults in many economies which have to be put right.
Now acgainst that background, and against the background on
which Australia depends very much on world trade,.-what can
we best do to assist the Australian cause in a trading climate
which is. going to remain difficult. We have got some obvious
advant-ages; we are a great resource producer, we have resources
which overseas countries, many developed countries and
developing countries, need. How can we therefore make Australia
more' attractive than other potential suppliers? If we can
make Australia more attractive then other potential suppliers
we'll attract a larger share of whatever investment there is
in these particular areas, and if we do that, it's one of the
factors, not the factor, but one of the factors which will
help Australia and Australian recovery and in that sense,
it is the share of world trade and the structure of world
trade that becomes very important to Australia, all against
the background in which not particularly optimistic about
any significant increase in world trade which would help
everyone. QUESTION:-Do you agree that since the election, and this is
obviusly referring to the trade question ( inaudible)
do you agree that since the election, the Government has
definitely become, in its public statements, much more flexible
on the protection issue. As I say, I'm referring that to
the trade question and that not high protection in Australia I
know it doesn't-apply to all commodities or all manufactured
goods but to certain goods that high protection is now looked
on as a short-term, anti-unemployment policy and that lowering
protection is now an official long-term aim of this-Government.
PRIME MINISTER: You could have read that into the White Paper
on manufacturing without any inconsistency at all.% 9 that
doesn't have to be a new view. In theory, barriers to trade
are not good but we Live in a very imperfect world and Australia
lives in a world where there are very considerable difficulties,
with non-tariff barriers against up to 40% of our exports and
non-tariff barriers related to 7% or 8% of our imports. It's
not generally realized that in the sensitive areas of
employment, Australia has made a greater contribution to trade
than any other developed countrymmV'% you look at the
textiles,, apparel and footware area, for example, we import
much more per head, sometimes six or eight times more per
head than other developed countries North America, Europe,
or Japan. I've used this figure before but if the ASEAN
countries had the same per capita access to the North American
and the European markets as they have to Australia, they would
be sellirlg an extra $ 1,000 million worth of goods a year.
Their extoorts to ' Australia have been increasing at about 40% a
4
4-
PRIME MINISTER: ( continued)
year for several years. Now, even though it starts
from a low base, that rate of progression starts to build
up to a very substantial amount and so I reject the view
that Australia's markets have been unduly closed in the
total trading enviornment in which we are living, our
markets are much, much more open than many countries, more
open than any of the European markets, taking trade as a
whole-A-' gain, we've got to take note of the fact that
we're a market of. 14 million people, we're not like the
Swede-n, for example, that lives next door to a very large
tradin.; -bloc. We've got considerable transport difficulties
in get7ing products overseas. So there are cost disadvantages
for a lar-; e part of Australian manufacturing industry that's
going to be with us and that needs to be taken into account and
they need to be given a fair and proper opportunity to compete
and our determination to provide the necessary protection
for Australian manufacturing industry is in no-way diurinished, but
wedoreogiz tata general lowering of barriers for trade
will strengthen the Australian economy and at the same time strengthen
Australian manufacturing industry. I don't think there is any
inconsistency in having a present position that says in the
trading clinnate in which we are living we've got to provide
this protection but if we have a trading climate which opens
up many markets to Australia which are now closed to Australia,
t. hat will so strengthen the Australian economy overall, that
we ourselves can assist in the process of lowering trade
barriers. What you have to do to protect your own industries
depends very much on the trading world in which you have to
live and a-country Australia's size can't be a pacesetter.
But we can. throw open our markets and destroy all our
industries but that doesn't mean to say we are going to get
any better access overseas.
QUESTION: Would it be fair then to say that perhaps the
Governmenit's more flexible on protection policy because it
is now in a situation to negotiate what economists call a
trade-off device?
PRIME MINISTER: I think maybe the totality of the Government's
approach is better understood and better perceived.
QUESTION: Overseas or locally?
PRIME MINISTER: I don't think there's been any basic change
in attitude at all.
QUESTION: As everyone has been saying, if all ove'r the world
it's a pretty tough international climate at the moment, looking
at the worst possible scenario for Australia, in other words,
that you dont negotiate any greater access for us at the EEC
or any other maj . or concessions which would help us, what is
basically the Government's fullback position over the next
three yea-rs? How will Australia survive?
PRIME MINISTER: We'll go for our life in markets in whatever
countries we can find them. Take the developing countries of
Asia and the Western Pacific, the Koreas, Taiwan, Phillippines,
in all of_ these areas two-way trade has been growing very
PRIME MINISTER: ( continued)
markedly and I've got no doubt it will go on doing so.
There's been a very great emphasis on the development of
trade in developing countries, in new markets in the
Middle East.
( b rea]%-)
There are some trade figures here to go from 1972-3 to
1976-: to give examples of an increase in trade. The total
trade increased from 164 million to 688 million or 320%.
But the t-rade with Iran has increased 480%, Egypt 250%,
Iraq 3,10.1, Kuwait 200, Saudi Arabia 290, United Arab
Q9UESTION\:_ United Arab Emirates, is it?
PRIME MINISTER: Yes,, 2' 00%, S. Korea 260%. Well, Southeast
Aa, Korea, the Middle East, these are new areas of trade
for Australia and we haven't been they are not as much in
the news as our,, if you like, trade offensive against the
European Community, but its again in the European Community
we run up against two problems; non-tariff barriers that
prevent us trading which doesn't happen in these areas, doesn't
happen in Southeast Asia, and secondly, $ 4,000 million worth
of export subsidies competing directly with Australia's
exports in third markets and both of those areas are of
enormous importance to us. We can't get into the counter
subsidy gamne with 260 million people, technologically the
wealthiest and most advanced industrial group the world has
ever seen. We have to try and get, through argument, through
persuasion, sensible trading rules that stop Europe wrecking
other people's third markets and it's just as important as
getting entree into Europe for some of our commodities.
QUESTION: Just moving on to! this tax area. In the long-term,
doyou agree with the A9b Report that the weight of tax,
and this in the context of this Government inquiry into BAT,
that the weight of tax should be shifted towards taxation of
goods and services and away from the taxation of income?
PRIME MINISTER: We've made some move * s in that direction by
trying to lighten the burden of income tax and the reforms
in that area are very substantial. I would like to put your
question in a sense in historical perspective. Indirect
taxes originally have the name for being regressive and
unfortunate taxes because they would be on the basic
necessities of life for people on a sustenance wage and it
was out of that historical background that the philosophical
objection to indirect taxes arose but Australia is not a
sustenance economy and by world standards average incomes in
this country are high and therefore a different set of
arguments come to the fore. Indirect taxes have been low,
still are low, and income taxes have been very high, and by
some country's standards are still high. I think there is
a very strong argument in that many people want a greater
command ov-er how they spend their incomes and if income taxes
are lower and indirect taxes are higher, they have that choice.
If income taxes overall are higher they don't have that choice. / 6
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PRIME MINISTER: ( continued)
It's easy, to give you an example, if somebody wants
to buy a V-8 motor car that with present emission rules
might ' give 10 miles to the gallon around cities, that's
his choice, and if he's paying more tax for the privilege
throug-, h higher prices petrol and whatever, that's still
his chnoice. He can get just as-comfortable transport,
much nore efficient transport, in buying an economy vehicle
and ozne that will get him there just as quickly and maybe
a goo* d: L deal safer. That's his choice whether he wants to
spend :~ sincome on using a lot of petrol and a great big
heavy V-S motor car or whether he wants to buy a different
sort of1 -; rehicle. That's his choice. I think it's right
to give individuals as great a command as possible over
their own income as we can. I believe we are living in
quite a different environment from one which prevailed in
earlier days when the name of regressive taxes as related
to indirect tax. That's not the sort of world we live in.
QUESTION: Referring to this recent decision on the
resources tax. Why didn't the Government decide to impose
the tax on. Bass Strait Oil when a large part of the profits,
as you know, I'm not talking about the question of whether
the profits should be taxed, but when a large section of
those profits are the direct result of a change in
Government policy.
PRIME MINISTER: The companies know quite well that the
extra return to the people of Australia can come -through a
levy just as easily as through a resources tax and in fact
that's what's happening just at this moment. So the choice
there is not whether the community is going to get a proper
return for Government induced decisions in relation to that,
it's a question of how they weregoing to get that return.
So far as other resources are concerned, so far as uranium
is concerned, you know quite well that we've made a decision
that there will be 75% Australian ownership so you've got
the question of royalties, you've got the question of royalties
to Aboriginals in the Northern Territory, you've got company
tax, you've got income tax on individuals and we believe out
of all that the community can get an adequate return, especially
in relation to uranium because it is 75% Australian ownership.
One of the major arguments against the resource tax is that
if you did have it and you related it to Bass Strait Oil
only, and to uranium which is what we have said, nobody outside
in the investment world would have known or understood that
the tax was related to those two things only, they all'wbuld have
believed its going to be extended to all resource development
and that would have been an inhibition on development but when
you take the basis of royalties that states can put on for
things that happen in state areas the foreign investment
guidelines, the question of company tax and individual tax,
the community can get and does get and adequate and proper
return. QUESTION: Looking at the mix of-your federalism and your
tax indexation policies, this is goin bakto hywr
proposed in ' 75 or initially proposed in ' 75, they can be 7
7-
QUESTION: ( continued)
both together regarded as instruments for a radical
alteration in the scope and Structure of government and
also as the key elements in your economic policy can be
regarde-d as both those things. Which is the most important
to YOU;
PRIME1 MINISTER: I think you've got to take the policy as
a whol-e and I wouldn't want to break up different-elements
of it say one is more is important than others because
they are operating in different fields. Let me take a
non-finani-ial matter for a moment. You know the arguments
that had gone on over-seas and submerged lands for a decade,
even more, and its bedevilled relationships between the
Commonwealth and the States, it's even inhibited development
because who's responsible offshore? And do the laws stand up?
Do decisions stand up? More than a year ago we set about,
in a major enterprise to resolve all these matters offshore
mining for minerals and petroleum, fisheries, criminal
jurisdiction, navigation, all the areas affecting offshore
relationships. Now we've broadly determined the pattern
of what's going to happen, through joint authorities and
through a Series of agreements with the states. Very
considerable progress has been made, the pattern of what
we are doing in cooperation with the states has been set.
I think they are very happy with it and over the course of
the next 12 months, I hope there will be final agreement
on the remaining matters but more work yet remains to be
done by officials. The remaining areas are in a specific
subject matter areas. So this has been a major cooperative
enterprisenow which has gone very well. We haven't stuck
on the full letter of the power available to the Commonwealth
under the High Court decision. We've said we've got a
practical problem between governments which we want to
resolve as practical people, and jointly we will want to
pass laws with you which bring that about. Now we are
achieving that and I think that's a very major advance.
You never could have got to that position with a
Commonwealth Government that was insisting on saying this
is is the letter of the law, this is what we are going
to do. It's even in relation to treaties which is fully
a Commonwealth power, the consultative processes, the
willingness to put in federal clauses in the treaty, the
willingness to have the states have their own observers
present during the treaty-making process. All of these
things are an example of cooperative federalism which is
I think a very important development and I believe the
Premiers would regard it as a very important development.
So there are non-financial aspects of our approach which are
often overlooked. They don't get headlines because we are
not in conl: lict. In the financial area, we want the states
to have -c're responsibility for the things which they
themselves have to do. They've got to take that responsibility
for themSelves and if states are constantly to say that we
can't do his because the Commonwealth won't give us enough
money, t-r-en the authority and the erosion of state's powers
will be a continuous and inevitable process and that's not / 8
8-
PRIME MINISTER: ( continued)
something that I want to see, I don't believe it's
something that the majority of Australians want to see.
So policies which provide the possibility of the states
having a greater financial responsibility for their own
affairs is more consistent with the maintenance of state's
rights than any other possible policy. I think some
Premiers understand this very well and some others understand
it bu:_ don't want it because they don't want to lose their
excuse the Commonwealth as a scapegoat. I can't see why a
Commonwealth should be a scapegoat for all the economic
policies o-f states. One of the first things you need to
look to in terms of the financial management of any
governn7en: is what's that government doing with its own
bureaucracy, what's it doing with its-own employment levels
and on the -figures of our statistician andI don't believe
those figures lie, in the twelve months to-March, state and
local government employment went up four percent. That
doesn't to me indicate great financial stringency. If you
look at the growth in the day labour forces of the states,
construction projects and all sorts of things, the growth
has been very great indeed. They can get the work done
more economically, more effectively, by putting many projects
out to tender and getting some competition into the business.
Our day labour forces have shrunk very considerably over the
last two and a half years and I'm not saying we've got to the
end of that process. So, the financial aspects of the
policy are obviously very important and the states spend,
state and ' Local government together, spend such a high
proportion of total government, comprise such a high
proportion of total government expenditure that what they
do is obviously important for the totality of economic
policy and it can become very difficult if you've got
states running in one direction with the Commonwealth
responsible for financial management, believing the direction
should be different. I hope that one of the results from
the financial pressures that have been put upon the states
at the moment, through the last Premier's Conference, will be
for the first time to get to act with much greater strength
its responsibility in wage policies.
QUESTION: Just on the question of how the Federal Government
spends money and how the states spend money, the Report of
the Centre for Financial Relations, the Matthews Centre at
the says that the states have shown themselves to be
much more sensitive than the Commonwealth to the needs to
maintain capital spending and other expenditures with
employment-creating effects, -although the Commonwealth has
the primary responsibility for economic management the
states have felt obliged to move into the vacuum created by
the Commonwealth despite the dearth of capital funds.
PRIME MINISTER: I don't think they've felt obliged, we've
urged them to do so because of the generosity of the payments
under income tax-~ sharing which have gone up very greatly and
this year Have gone up by 10% which is three or four percent
in real terms. Increases in other years were just as
generous. But quite deliberately, of you look at semi-government
programmnzes, last year, the year before, and even this year, / 19
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PRIME MINISTER: ( continued)
the increases in funds for semi-government authorities
have been considerable. So, while the capital projects for
the states themselves, which do become a charge on the
Federal Budget, have been held very tight, and especially
this year, we have said, look, you've got plenty of leeway
from' " he general revenue grants, to divert some of that
money to capital expenditure and you've been more than
gener--usly treated in relation to semi-government
expndture and we've done that quite deliberately because we
know : i iortance-of capital works in relation to activity
in the economy. One of the difficulties in our scene, is
the way cur own budget structure, so much of it is already
pre-e2D-te in payments to the states, a lot of which goes
to capital works so you know that's not just a state it
doesn't aDear in our book really as capital works but its
capital works by the time they spend it a lot. Then so much
of it goes to health and welfare, which is not capital works
or overwhelmingly isn't and we have enormous payments in that
arena which the states obviously don't have and against the
need for f0inancial restraint, to have a deficit that's
responsible, to be able to finance that deficit in a
non-inflationary way. The room for manouvre in a Commonwealth
budget is obviously limited. That's another way of saying we
would like to be in at position to spend more funds on
capital works, but you can't go down that path if it means
that overall your economic policies are going to be
under mined. The overall structure of the budget and the
budgetary aggregates is more important even than our desire to
spend more funds in capital works.
QUESTION: You raised that question about wages, I want to
go back to that in a minute, but just going back to taxes.
What is your opinion of the vote on Proposition 13 in
California, where they pegged back property taxes very
substantially? Following on from that, do you think we should
have more and more cuts in taxes?
PRIME MINISTER: We've got to try and make sure that our taxes
are based in a way that they don't destroy incentive, they
don't cause undue hardship and the examination that John
Howard announced some time ago is designed to put us in a
position of being able to make judgements about the overall
equity in tax and made it plain its not designed to be taxing
more in total. We have, as you know, made very significant
reductions in taxation in some areas relating to companies,
relating to individuals. It is sometimes forgotten that
tax indexation provides a continuous cut year after year
after year. It's designed to make government's honest,
it puts a rod on a government's back. That was done very
deliberately as an act of policy because we have seen the
damage done when easy funds come to governments and so
easily spent and too easily spent. The commitment for
indexation is undiminished, let there be no mistake about
that, it's half tax indexation for this year because of
the size of the total income tax reform and to ease in
the financial obligations as far as the Commonwealth is
concerne-A. There was half indexation for this year but
this year alone. So there is continuing tax reform built
PRIME MINISTER: ( continued)
into what we've already done. There are clearly areas
where the Government would like to be able to give further
tax relief that would be well, I don't believe anyone
expects them, we are in that kind of situation this year.
I wo-uld like to make a word about California because I
had a= niqht there on the way through just before the vote
and cne -night in California and speaking to a few natives
of the State, it's perfectly obvious that that proposition
was gD-. n to go through because many people there's been
a land boom in California and property values for many
people haegone up enormously and the property taxes have
theref': ore-gone up to such an extent that people are being
forced o-u: of homes that they might have been in for a lifetime.
But incomes haven't gone up enough to cover the increase
in property taxes and against that background there no doubt
that that particular referendum was going to be carried.
I think there are about 13, no 17 states, where there is the
possibility for this citizen initiative in referendums, and
I have no doubt that a number of other states would be
moving along the same path.
QUESTION: Do you agree that that was a right, correct
course to : take?
PRIME MINISTER: I think governments have got to maintain
control, we have a capacity for referendum. I'm not sure that
citizen initiated referendums is really a good way of
running a government, of running a country or a state. Ter
There is a message in what happened in California for
governments that seek to impose too high a tax in one area
or another, and a very clear message but I don't believe
in this country we've got to the position where property
taxes have risen to an extent they have in California and
the very extreme circumstances which have developed as a
result, putting enormous hardship on thousands of people,
also against the background in which they had a surplus in
their budget of $ 3 million for $ 4 million, or it might have
been $ 3 billion or $ 4 billion it would have been $ 3 billion
or $ 4 billion.
QUESTION: Just on.. this tax area. Just taking the changes
in the tax scale and the cuts that were announced in the
' 77 budget, the recent changes to Medibank and the abolition
of the resources tax. It's fair to say that the Government's
redistributing money to the higher, to the people higher
up in the scale and I mean, is this being done to stimulate
because the Government believes this will stimulate
investment and economic recovery for simple philosophical
reasons or because this is the base area of the Government's
promoting support?
( break in tape) ./ 1
11
PRIME MINISTER: ( continued)
I reject the view that we've been redistributing income
away from lower income people to higher income people.
You've got to look at other things.
9gUESTION: The basic points are the family allowance
PRIME': MINISTER: I'd reject the view that we've been
rediS-_ ributing income away from -lower income people
to h-rincome people. You've got to look at other
things; ' in~ addition. Family allowances was a deliberate
measure designed to distribute away from middle and
higher-income people to lower income people because the
earli--: 7 7: a x rebate or before that the tax concession was
greatesz advantage to people on high incomes, . high marginal
rates or tax and now of course, there is a very great
benefit a-a number of low income families*, about 300,000
of them, who probably would have got no benefit at all
because their incomes were not high enough to get advantage
of the other arrangements. I don't believe the resources
taxes are properly part of this equation because for Bass
Strait Oil it's not a question of resources tax or no tax,
its a question of the levy which is in existence now or
a resources tax, and we made the decision quite plainly that
it's the le vy. So far as uranium is concerned, you've got
to have in : iind that there is 75% Australian ownership, you've
got a royalty situation, then you've got company tax and
you've got income tax and I believe it is the community,
through those mechanisms will get a fair and proper return
from whatever the income is.
( break in tape)
If you look at the tax reforms that we did introduce,
the percentage of tax payable by those with an income up
to $ 16,000 was a fraction under 62%. After the tax changes
it was a fraction over 62% and the range $ 16,000 to $ 32,000,
before the changes it was 25%, after the changes, a mere
fraction below 25%. For those over 32,000, they were paying
before the budget changes, a little under 13%. They are now
paying 12 it went from 12.7 to 12 1/ 2 percent. So there
has been no basic * change in the proportions of income tax
collected from the different income groups in those scales
and you've also got to have a mind of course that the tax
threshold has significantly changed, that there are well over
200 ,000 families who as a result of the change, again in the
low income area, were paying no . tax at all, so to that
extent, again, the * reforms were helping low income people.
* QUESTION: -Dealing with each of these separately, I don't
want to make this too long a question, but dealing with each of thes
separately, how much has your attitude towards economic policy
been influenced by first the visit here of Mr. Wolff the
American t-rade negotiator, secondly, your recent trip to Japan,
and thirdly, your recent trip to West Germany. Also I'm
talking about your talks with Wolff Mr. Fukuda, and
Mr. Schmidt. / 12
12
PRIME MINISTER: I don't think that the discussions with
Mr. Wolff would have influenced economic policy to much
' extent. The main purpose of those discussions was to make
our attitude to trade understood and to get the point
across that Australia is not the closed market which he had
implied it was in the press conference he had given in
Singapore before he even got here. And that was why I had
cdscussions with Mr. Wolff and also to emphasise the importance
of agriculture in the multilateral trade negotiations. Since
then, well Mr. Anthony had assurances and the Government
had,-I've ha-d personal assurances from Mr. Strauss and a.
matter thatz has not yet become public, a personal assurance
in a lett-r : ron-the President, that agriculture must be a
part of tha nualtilateral trade negotiations. Now that is the
first tilme -, nIich the President has given Australia that
specific assurance. Would you like to get that letter. Well,
that's the first time, I haven't used that before and it's.
a very recent letter. My visit to Japan, the motivation for
that was exactly the same as the visit to Europe; concern with
what's happening in international trade field, concern with
what's happening in international economies. I've found an
identity of view with Japan over a wide range of issues as a
result. They are in the process of shifting their position on
the Common Fund. I think, not insignificantly as a result of
discussions that I had at that time but then experts on the
Common Fund were in Japan were with me and I had very extensive
discussions wi:: h Japanese officials after my discussions with
the Prime Minister and they've had Government discussions about
the Common Furnd since I don't think the main basis or thrust
of Australia's policies were altered as a result of that but
I do believe-, I know, that the communication that we have with
Japan is much closer as a result. Our officials, their officials,
when they are together in international forums get together
and exchange views. The discussions I had in Paris with
(~ c~ c\ e.) were relaxed and frank and open, as were the
discussions down here. We got away from the large forum of about
people from either side sitting on it. But. all sorts of
issues have been remarkably useful. We are informed of what
happens in the major discussions in which Japan is playing a role.
I think the visit to Japan has put the relationship between two
countries on a new basis because for the first time Australia was
going to Japan to talk about major international issues of concern
to both countries and not going to have a discussion or an
argument, if you like, about bilateral matters and I might indeed
have been the first head of government to go to Japan to do just
thatbecause generally whether it's Europe, or America, or Australia
in earlier times, it was to talk about bilateral problems. and
I believe that Japan has appreciated that and they've responded
to it very warmly and I believe very constructively. I've made
no secret from the fact that I believe that Japan's policies
are more right than wrong and Germany's policies are more right
than wrong in the international context. There is no future in it
if the stronger economies damage their economies in an effort to
help weaker economies that ought to be doing things for themselves.
The American balance of payments problem can't be solved by
Japan. It can7-be sol ed with an energy policy and anti-inflationary
policies and United States knows that. Now this is not to say
that there are not obligations on creditor countries such as
Japan and Germany, of course there are and again I believe that
Japan is wanting to show itself as . a good international citizen. / 13
13
PRIME MINISTER: ( continued)
They are making not gestures, positive moves in terms
of more official aid and they're making moves to try and
reduce their overseas balances and those moves are sometimes
frustrated because other countries don't do what they ought
to do. If inflation in other countries goes on increasing
at a rate which is much higher than Japan's or much higher
than Ger~ any's, the efforts of Japan, for example, to reduce
its balarce of payments surplus is made much more difficult.
Again, the sorts of policies that Germany has pursued are ones
that Aust.-ral-ia would basically support. I won't name the
country, but in one country, indirectly an allegedly responsible
minister Dut it to me that there would be no problems if
Germany reflated to an annual rate of 11 percent. All that would
do is to make Germany's economy as weak as the others.
( Side Two of tape)
to be good trading partners and to contribute to stability
in the international trading scene. They cannot solve the
problems of weaker economies. They can't do for those countries
the things that they've got to do for themselves.
QUESTION: I've-been told that in the case of Germany, apart
from agreeing . with their economic policies, you're very
impressed in a more direct, personal sense, with them and
perhaps this may go back in history to the economic policies
that were pursued by Dr. Erhardt, when he was their Economics
Minister, which seem to be fairly similar to our own and I want
to ask, that this be true,, but the situation then of course was
a very different international situation and do you think that
it's realistic or even desirable to expect that the Australian
work force could behave in the same way as the German work force.
PRIME MINISTER: Industry is structured differently, unions
are structured differently.
QUESTION: Well, just the people are different.
PRIME MINISTER: And people are different, of course they are.
But one of the Things which was disturbing in the current push
for wage increases outside the Arbitration Commission at the
moment, is that some Union leaders would seem to have learnt
absolutely nothing from the history of recent times. There is
not the slightest doubt, in the view of this government, that
the very rapid rate of wage increase has been a material factor
contributing to unemployment and the higherwages are the
more unemployment there will be. The success we will have in
moving people back into employment will depend very materially
on the degree of wage restraint there is in the trade union
movement. Nobody can say that the totality of the budgetary
policies, the tax policies and the wage policies of this
Government are acting unreasonably or unfairly to wage earners
in Australia. You've, again got to look at it in the context of
tax cuts, in the context of family allowances, and all the other
things we are doing. The Arbitration Commission decisions have
very significantly compensated trade unionists for increases
in the Consumer Price Index, but in so doing there is not the
./ 14
14
PRI ME MINISTER: ( continued)
slightest doubt in the view of the Government that
the Arbitration Commission is contributing to a continuing
high level of unemployment in Australia. Now I said at the
time of the last election that from February unemployment
would fall and it would go on falling. Ithas fallen, it
has gone on falling but whether that process can continue
depends On a number of-factors. It depends upon world trade,
the grow:-. of world trade, Australia's share of that. It will
depend upoJn our capacity to get inflation down further. It
will depenc very materially on getting' greater stability
into wage taxation and on the general level of industrial
disputes.
~ QUESTION: I wannt you to be more specific about that. Can
you tell me ifE you want the system of wage I know the
Commonwealth responsibility as far as wage indexation is
very indirect at most,-but do you want the system...
of wage fixation changed, do you want the across the board
nature of wage rises which exist in Australia changed, do
you want the market to play much more of a role in the fixation
of wages?
PRIME MINISTER: I believe there have been advantages to
Australia througih the centralised Arbitration Commission system.
Because of the-position we are in there have been difficulties
with the comp) ression of margins for skilled labour and that's
something which will have to be tackled at some stage but when
you have...
QUESTION: Sorr-. Y for interrupting, but how would that be tackled,
for example?
PRIME MINISTER:-When it is tackled, I think it ought to be
tackled through the Arbitration Commission. They've had
margins decisions before, but I'm not saying that we've got
to that stage yet because the wage/ profit relativities are
still out of kilter and the sort of across the board judgements
that have been made in recent times are probably the only ones
that we could have had, although we would have liked judgements
at a lower level, and that would have helped very greatly. But
the nature of the Arbitration Commission' s decisions have led
to a compression of margins and that obviously has long-term
consequences which at an appropriate time would have to be
tackled, and I would say that further progress has to be made
in getting inflation down and further progress has to be made
in the general objective of wage restraint. I had said something
earlier about the states. The states have gone on employing
more people, they haven't helped us, many of them, in the
Arbitration Commission. Ibelieve all governments know that
too great a rate of increase in wages will lead to more
unemployment, but some for political grounds don't want to say so.
I believe thae: people who, whether it's a trade union leader
or anyone else who wittingly or unwittingly deceives his own
constituents, trade unionists, workers in factories throughout
Australia, is doing a great disservice to that constituency
in putting th-e sort of views that are so often put about wages
15
PRIME MINISTER: ( continued)
and full indexation, or even more than full indexation.
I don't believe the average worker believes it. The average
worker I am certain knows that if wages go up too much there
will be more unemployment. He is often not given an opportunity
to express his view in a responsible way and I think the
average trade unionist is way ahead of some of his leaders, way
ahead of some political leaders, in these particular matters.
I. will cgve you, in relation to Carter's letter which was dated
the 13th of June this year, in which he says: I will not consider
these negotiations a success unless they lead us towards
significantz liberalisation of world trade in agricultural
products. QUESTION: 3ut does he specifically refer to the question of
agriculture being put in, I mean that hasn't even been established
yet, has it?
PRIME MINISTER: In that relationship, yes. That sentence is in
the context of a general paragraph about the MTN. " I will not
consider these negotiations" that's the MTN. Now Strauss had
said that before.
QUESTION: Bu: this is the first time it's come from the
President? PRIME MINISTER: It's the first time, that I'm aware, that it's
come from the President and it's come quite directly in a
personal letter to myself. / 16
16
QUESTION: I know that one of the concerns of people who
oe o the concerns of the Government is that if and
when there is an economic recovery, wages do not go up
with that recovery like they always have and its not always
like they would tend to do. In other words, if that there is
more demand that workers can flex their muscles.
PRIME MIN', ISTER: Well, what I would hope, as recovery gathers
pace, -:-nszead of wages going up unreasonably you have more
people :-Ding into the work force. Again, Australians are
going to have to understand that as there is a level of
greater a.-tivity in this country the wage share of that can
go in two directions: it can go into higher wages in those
who are er: i-loyed, or to perhaps a lesser level of wages for
a much larger number of people.
QUESTION: Just to change subject entirely you've been in
office narly as long as Mr. Whitlam. What do you think
was his major contribution to Australia?
PRIME MINITSTER: I think I'm too close to Mr. Whitlam to
Zak a juc.; ement about that and I haven't really well,
putting it in that way, you're asking for a positive
contributton.
QUESTION: I'm not necessarily I'm asking for a
PRIME MINISTER: The major damage was a destruction of a
healthy economy.
QUESTION: Could I ask now if there was a positive
contribution? PRIME MINISTER: If you can say that a situation of complete
adutter turmoil in which Australians reassessed their values
and reassessed their sense of direction is a positive
contribution. QUESTION: That's all you are prepared
PRIME MINISTER: Well then he achieved that. I think I'm
too close to Mr. Whitlam There are obviously other
things, and looking back over the record which would
have to have merit and I don't want to be ungenerous about
somebody who is departing the political scene. You might
find this an odd remark what I am just going to say
my mind has always focussed on the future. What's past is
past, what's past is done with and it can't be altered and
it's what we can do to effectively influence the future which
is important to all Australians wherever they may be. The
times when you give a proper judgement on the Whitlam years,
I'd have 7-o consciously think back with overall the
initiatives that are taken and give you a considered reply
but when : hnings are past they move out of my mind very quickly.
/ 17
17
PRIME MINISTER: ( continued).
There is so much in the present and so much
affecting the future that I devote all my energies to that.
QUESTION: As you know, you are constantly criticised
as ce~ ng too centralised, too dominating, in the process
of gz'-ernnmeft, that is you personally, and you've publicly
rejec-e_. that charge quite often, once again. So I don't
want to go over old ground, as you say, but I want you to
be more specific in rejecting that charge.
PRIMIE-M! TNSTER: Well I don't make statements about policy
before zhe Government's made a view. So therefore you don't
find me expressing views that are contrary to the views of
the Government and the occasions when I might get'defeated
in Cabinet therefore aren't on the public record but the
Cabinet is a cabinet of people who've got forthright minds
and they express them forthrightly and I don't respect a
minister who isn't prepared to argue for what he believes
and the ministers know that very. well indeed." Somebody
would have to be inside the Cabinet room and know the nature
of the discussions and the nature of the arguments that go
on to really understand the way the system works. But that's
what its got to be, but there is a collective responsibility.
It's my responsibility to make sure that I don't, and a very
significanz one, to make sure that in a sense that-I don't
havb an identity outside the identity of the Government because
then you start to have two views Fraser's view and the
" Government's view ahd that would be damaging to any Government
and I don't intend to let it happen. But I think you've only
got to look at the nature of the people in the Cabinet and
in the Ministry as a whole. It's aMinistry of very great
talent, it's a very young Ministry, maybe the youngest in
Australia's history and there are very few over ' 50' s in
the total team. I don't think I can be more specific than
that. It's a collective operation. Maybe ther6 are one or
two things that can be said. There was one occasion, I've
forgotten the subject matter, but a Minister announced something
and the headline was " Fraser does this.." or " Fraser does
that..". There is a habit in the media of personalizing
decisions, it's a Government decision, it's gone through
Cabinet and oh no, it's Fraser's decision. I'm not going
to'name the subject matter because the Cabinet made it,
the decision, while I was away. I still regard myself just
as much responsible and bound by that decision as any other
member of Cabinet. Life goes on and when I'm out of the
country and unlike Mr. Whitlam I told the Cabinet to go on
getting work done. I don't want things to be set aside when
I'm out of the way there will be too big a list for me. to deal
with when I come back. And that applied in particular over
this last : rip and Doug Anthony had specific instructions to
/ 18
18
PRIME MINISTER: ( continued)
go on with the job of getting business through
Cabinet and he did. But there was one decision announced
and later on the commentators said " pers6nal decision of
Fraser.' s". Well on that particular matter it was a decision
taken by Government when I wasn't even in the country.
Now this kind of reporting gives an impression that Fraser
makes a decision, Fraser makes a decision, but the decisions
are Government.
QUESTION: The other claim that's been made in public in
criticism of you is that certain sections of business can
get dezisions made by Government from the top without
going through the conventional public service channels and
there's twi examples of that last year; one was the reference
to the TAA, on Sir John Lysaght s on steel and iron, and the
other one was the reference to the TAA Sir J. C. Williamson's
or it must have been IAC, not J. C. Williamson's while the
inquiry into the arts was going on.
PRIME MINISTER: I happened to be-responsible for the arts
at that time and quite plainly if I was responsible for the
arts and there was a problem in relation to J. C. Williamson's,
as there had been, should we do something about it or should
we not, as the Minister responsible for the arts I would have
thought I should have taken some action to get advice in
relation to it so the Government could make a decision and
that's what happened. In relation to other matters; if people
see me, I will say to the Minister, what's happening, what's
the Department doing about this? And you generally find that
they are well advanced in the process anyway. Now, I hope
it's not leading to a position that the Prime Minister's got
to stay in his office and not see anyone, not speak to anyone
and not to be able to feel or hear outside what people outside
this city, outside the Public Service are saying because I
think that would be extraordinarly damaging. It would be
very insular and obviously people put views to me and I am
going to make'sure that I remain in a position in which they
will go on putting views to me whether it's going into a
pub and seeing what the blokes in the bar are saying there or
whether it's an industrial or financial concern that's got
some problems. I think I need to be capable of hearing what's
said. QUESTION: Since the election campaign when you made that
comment about the Royal Commission on Human Relations, I think
I'm right, I may not be right but I think I'm right in saying
that you've made. virtually no comments about what is loosely
termed the social area of politics, no public comments that
' is, or no important public comments. Is there any reason
for that personally? And secondly, I want to ask you a
specific social question, that is, what is your attitude towards
the legislation legalising homosexual acts between consenting
adults in Drivate?
PRIME MINISTER: There is legislation that's gone through the
Parliament... / 19
19
QUESTION: The Federal Parliament? As you know it's
a national happens nationally and I think there's only
legislation to the South Australian Parliament.
PRIME MINISTER: Well, it's a matter for the States and
State Parliaments.
QUESTION: What is your attitude though, you must have
an ai:: iu e?
PRIME ITNISTER: I've on a number ofoccasions made statements
to the e:: ect that people ought to be allowed to lead their
own li estyles so long as they don't impinge upon the rights
and position of other people or affect the lives of other
people in a way that is unfortunate or undesirable. I don't
alter that general'comment at all.
QUESTION: Can you answer that specific question about
homosexuality? PRIME MINISTER: Well, I think it's covered by what I've
said. I don't see this is an area in which the Commonwealth
needs to buy into what happens in the States. See, I have
written to the Premiers on the Royal Commission on Human
Relationships and asking them their views in relation to it
and I don't think there have been responses yet, because so
much of that, or the results of that; will depend upon State
( inaudible) action and state legislation and before the
Commonwealth wants to state a view we want the reactions of
the states, we want the reactions of the community. Now this
is a classic example of what I believe it's damaging, if I,
Fraser, state views about things and the Government at a
subsequent stage comes to a view. I don't believe I should,
and in relation to that Royal Commission we need to assess
the total position, the total reaction, then the Government
will make a deal about whatever it ought to do in the areas
( inaudible).
QUESTION: This is a social area it's one where traditionally
Parliaments have had, as you know, vote on conscience so therefore
it's not a Party matter, or isn't necessarily a matter of
Government policy.
PRIME MINISTER: The Commonwealth Parliament has dealt with
/ the that matter so far as/ Commonwealth arena is concerned. The
rest is up to the States.
QUESTION: Can I interpret your previous statement as
saying that you don't necessarily approve of the act, but you
would approve of the legislation that would not make it
a criminal offence. That's what I'm really asking you.
PRIME MINISTER: No, I don't believe it should be a criminal
offence... with certain obvious safeguards.
QUESTION: Assuming there is some strong economic recovery
in Australia, which means without in any way becoming
profligate, the Government doesn't have to be as-careful or
as worried about day to day expenses as it does at the moment.
20
' QUESTION: ( continued) What are the areas which haven't
been nominated at all yet, where you would like to see a
major initiative in Australia, which would obviously
cost money, I'm not saying how much it would cost but
a major initiative?
PRIME MINISTER: I think one of the things that would
assist Australia in many ways is to be able to do more
to i-prove the basic infrastructure of this country. That
not only helps citizens in their daily lives but would
help business to be more efficient.
QUESTION: Can you be more specific?
PRIME MINISTER: Ports, harbours, communications, the
infrastructure financing guidelines in the proposals that
are now being examined, Commonwealth/ State officials coming
out of the Loan Council decision are ( inaudible) in this
kind of direction and these are things which help industry,
make Australia more efficient country, run on a better basis,
make us better able to compete. This is the kind of area
where greater expenditure, when that's possible, will I believe
do the greatestgood for Australia. 000---