Interview with Radio Station 3XY 6 November 1978
Prime Minister:
Today's meeting of the Loan Council will be an historic
meeting. Over a long period of years co-operative devices
have developed between the Cormonealth and the States
to promote Australia's national development. The original
programmes in support of State road construction, the
agreements with NSV and Victoria for the Snowy Mountains
development, the general support of State Loan Preorammes
were all landmarks in the general co-operative approach.
Today's meeting will be of major and historic significance
because it lill -ut into nractical effect t! ie ' in principal'
decision made at the June Loan Council meeting, which
indicated that States would be able to borrow overseas for
major infrastructure projects imnortant for development,
important to sup-oort the economic expansion of States.
There is a common thread running through a number of htie
projects--they add to oower for development, fey add to
export potential, they increase the strength of basic
infrastructure in Australia, they are related to economic
progress.
Ufithout pre-empting the decisions of Loan Council, I am
sure that substantial decisions will be made, in partnership
between the States and the Commonwealth, which will enable
a new Dhase of Australian develo-, nent to begin. The nolicy
is not related to the short-terTa problems. The original
approach and suggestion came from Sir Charles Court about
two years ago, and has been discussed at successive Loan
Council meetings, and there have been very intensive officerd
meetings between the Commonwealth and the States going into
-2-
the particular projects in detail, going into the philosophy
and approach in detail and after that two years of discussions
vie have come to the decision-making day.
Question:
It sounds pretty optimistic from what you are saying.
Prime Minister:
I am optimistic. But what I do want to do is put it in the
long-term setting, the long-term development policy. Without
pre-empting any narticular decision, and without implying that
all nrojects will get anproval or full apnroval because I
can't imply that, that's a Loan Council decision but it is
important that it be in the long-term setting, it is important
tha-t it be understood that what is decided today was certainly
in Ministers' minds when our owvn Budget was framed.
Question: So this isn't any extension on the Budget strategy?
Prime Minister:
No. It doesn't represent any alteration on Budget strategy
at all, because these projects had been under examination
for months before the Budget. ' 7e knew the extent of them, we
knew the extent of oossible borrowings this year even if
all of them wvere anproved and that was all in mind, and it
was certainly in Ministers' minds at that time that there
would be a positive result.
Question:
Do you accept the view, Mr Fraser, that the allowing of
States to borrow overseas like this can unset the economic
strategy of the Federal Government?
-3-
Prime Minister:
No, I don't, because it depends upon the extent of the
borrowing in any one year. It de'oends upon the nature
of the borrowing, it is subject to Loan Council approval,
and the voting procedure is a simple majority of which the
Commonwealth must be a part which means je have got to
be in agreement and that, therefore, is a very simple
reason. We have got responsibility for overall monetary
oolicy, overall economic control, so it can't upset
Budget strategy.