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PRIME MINISTER'S PRESS CONFERENCE FOLLOWING LOAN COUNCIL MEETING
MELBOURNE 6 NOVEMBER, 1978
PRIME MINISTER: I believe today in Melbourne we had an historic
meeting of the Loan Council. The history of Commonwealth and State
cooperation for the development of Australia is a long one, going
back many years to the original provision of road funds, moving
through the development of the Snowy Mountain Hydro-Electric Scheme3
by special agreement between New South Wales, Victoria and the
Comm-onwealth after that, special agreement for a number of water
resource projects, and railway standardisations. Now, we do
enter, I think, a new phase in the developmental relationship between
the Commonwealth and the States. It ought to be understood that
today represents a culmination of virtually two years work
the philosophy was originally
brought forward by Sir Charles Court, and that led to subs tantial
discussions betw0een the Commonwealth and State officials. -That
led to a decision, in principle, -at the last June Loan Council/
Premiers' Conference meeting. And since then, Commonwealth and
State officials have been going over the projects in detail to
get the package ready to put to a formal meeting of the Loan Councilan
d that has just occurred. The Commonwealth has felt able,
un * der the present circumstances, to agree to the proposals put
foward by the States, It should be noted that the proposals
generally fall into categories that are going to strengthen the
basic infra-structure of Australia, strengthen Australia's industrial
base, strengthen Australia's export potential, and generally add
to the growth and development of the Commonwealth. I believe the
proposals put together form a very signifcant development programme,
which is going to help, not only the individual states, but
will help Australia as a whole. The fact that this programme is
in place is one of the reasons why I loo1v forward to the decade
of the 1980' s with very great confidence. I believe that view
is shared by the Premiers. I believe also that the Premiers,
as a whole, feel that not only their own projects, but the projects
put forward by their colleagues are going to add very significantly
to Australia's development. So, we do enter a new phase in
cooperation bptween the States and the Commonwealth and its
one in which the States and Commonwealth have played
a constructive role, looking only to what is of advantage to this
nation. There are one or two things which ought to be said in
addition. The total programme obviously appears to be a relatively
large one, but the annual borrowing requirement is a responsible
one in the light of Australia's circumstances. For example, the
borrowing this year of about $ 158m is not unrealistic at all
the whole programme is based in realism, and based in getting
Australia moving.
QUESTION: Prime Minister, just. a few minutes ago, one of the
Premiers sa~ id that all of a sudd3en Simon the Gree starts behaving
like Santa Claus, there has got to be a catch. Is there?
PRIME MINISTER: I don't think there is a catch, but one of the
bases on which these particular proposals have been put to us,
of course, is that subject to Loan Council approval of the terms
and conditions, the States are responsible for the repayment of
the loans, they are responsible for the terms and conditions, and
none of its appears on our Budget. The fact that this Loan Council
meeting was going to take place was well known to us when our
last Budget was prepared, well known to us really from the moment
the in principle decision was made at the June meeting of the
Loan Council. Again, you have got to look at the phasing of these
particular projects. I think they are going to assist State
undertakings very greatly, and quite plainly the Premiers are not
deterred by the fact that they are responsible for the repayments,
they are responsible for any interest charges arising out of the
borrowing. QUESTION: Prime Minister, can I read from this situation that the
Government is recognising the need for stimulation albeit through
the Premiers to boost employment?
PRIME MINISTER: No, I think that is the wrong way of looking at
it. We believe that the main stimulation is going to come
from the Australian economy by getting inflation down further,
by getting interest rates down and continuing a sustainable and
steady downward movement in interest rates. We don't believe
that significant additions to Government expenditure, especially
off our own Budget for example, is the sort of thing that the Australiaeconomy
requires. It is worth noting that these particular
borrowings overseas, based over a period of eight or nine years
are related for the large part to business undertakings or
major developmental projects which are dependent upon other
private enterprise decisions, for example, the Redcliffe project
in South Australia is now dependent on a company decision, a
corporation decision, and the Dampier Pipeline decision, wh~ ile we
have given the clearance to that is dependent upon the North-West
Shelf project getting underway. We hope the decision of the
Loan Council today will assist the private enterprise in both
circumstances in making final and firm and positive decisions.
In this instance, the Governmental decision was necessary before
the private enterprise decision to take place.
QUESTION: Won't these decisions help employment? there is
PRIME MINISTER: Of course it will help employment, but/ all of the
difference in the world between projects of this kind, financed in
this way, designed to add to the productive base of Australia, the
export capacity of Australia, and the sort of financial stimulus
that people so often look for through Budgets and through an
increase in deficit finances.
QUESTION: Prime Minister, your not worried about an upward
pressure on interest rates as a result of this decision?
PRIME MINISTER: No, because by and large these funds, this year,
anyway will be raised overseas,-and that wouldn't lead to an
upwards pressure on interest rates within Australia.
QUESTION: money supply?
PRIME MINISTER: The increase in the money supply would tend
in the opposite direction.
QUESTION: Mr Fraser, it would appear that your aim in giving
greater-overseas investment in Australia hasn't succeeded, and
therefore you have to allow the States to borrow the money overseas
for these projects. Is that true?
? RTM4E MINISTER: No, that is not true. There has been a very
substantial increase in private overseas investment in Australia
over the last six or nine months, and the Treasurer will be able
to give more details. But one of the things which needs to be
understood is that this is part of a long-term strategy, this
began two years ago, there has been nothing sudden about any of
this. We made the decisions to examine the matter 18 months, or
two years ago, that led to exhaustive discussions between Commonwealth
and State officials, that led to the " in principle" decision last
June. So right through it has been part of a long-term
strategy, and no part of the decision making process in relation to
these matters has been determined by passing matters of the moment.
QUESTION: Why the World Trade Centre Mr Fraser?
PRIME MINISTER: Premiers believed, and accepted, the Victorian
view that this would assist greatly in developing and strengthening
Australia's exports.
QUESTION: I would like to ask the Treasurer something if I could.
Looking at it from a purely economic point of view and looking at
considering the fight against inflation, is this a good or a
bad move?
TREASURER: It is a good move. I think what is forgotten is that
we are talking about a borrowing requirement of $ l, 700million over
a total period of eight years, and it is something which hasn't
just arrived, hasn't been plucked out of the air. It, does relate
to essential industrial infra-structure, it does relate to
adding to the nation's assets, and when you look at it in terms of
the total-addition to borrowing of $ 1,700m over a period of
eight years, I think it is seen as a very responsible perspective.
QUESTION: Mr Fraser, is the World Trade Centre for Melbourne
at the expense of Sydney's development?
PRIME MINISTER: It is not at the expense of anybody's development.
I think there was a general view amongst Premiers that one World
Trade Centre for Australia is probably what the nation needed. Arnd if
there isan acceptance for the development of a Trade Centre,
in this city, then that would be it so far as that sort of
development is concerned.
QUESTION: Does that mean that Melbourne is the capital trade centre
of Australia?
PRIME MINISTER: That might be disputed by the Premiers of some
States I am sure it will be asserted by the Premier of Victoria.
QUESTION: Mr Fraser has there been any limited placed upon the
amount of money that the States can borrow, for example, in two
years time can they come back and between them borrow anothe Ir
$ 17 67m?
PRIME MINISTER: We have indicated our quite strongly-held view
that there shouldn't be futther approvals given within a 3 year.
period*-aind that is a view that the Commonwealth would want to
maintain. Against -that, one or two of the States had indicated
that if you get a prolect which was, or which needed a decision from
Government, so that private enterprise could make its own long-term
decision, maybe going years ahead, then they might want that
considered by the Loan Council and we didn't reclude that
kind of examination. In the Dampier project, for example, where
we have made the decision now, the borrowing requirement is in
1982-1983 a very, very long lead time. If there were other
projects in that category they could be considered, but in our
view there shouldn't be further approvals for borrowing within a
3 year period.
QUESTION: Will there still be a meeting of the Loan Council in June
next year?
PRIM4E MINISTER: There will obviously be a meeting of the Loan Council.
in June there is each year, and there is the normal borrowing
activities which have to be approved. I have got no doubt also
that at its meeting the Loan Council would be wanting a report
on these particular projects and on their further development.
There is one other aspect which the Commonwealth stated, and
wanted it to be a requirement which was very willingly accepted by
all the Premier -to the maximum extent practicable the funds
raised on these particular projects would be spent in Australia for
the advantage of Australian industry in trade and commerce. If
* contracts can be let in other words to Australian firms
they ought to be. That was a requirement which the States very
readily adhered to.
QUESTION: Mr Howard is there any limite to the amount which
State and Federal government can borrow in any one year before it
affects money supply and before it affects our domestic economic
situation? TREASURER: There are obviously dimensions, there are obviously some
limits, it is never possible to quantify down to the last
You have to look at proposals in the context of the economic
conditions at the time when they are made, -That is what we
did in respect of the proposals we looked at themn in terms
of present economic circumstances, the type of phased additions to
borrowings that would be involvbd over the next eight years, and
came to the view that they could be very responsibly accommodated
within the Government's overall monetary and fiscal policy.
QUESTION: Is this a maximum figure?
TREASURER: It is a responsible figure in present circumstances.
QUESTION: Is the decision, Prime Minister, on the World Trade
Centre and the fact that this meeting is being held in Melbourne
simply coincidental with Mr Hamer's electoral pattern?
PRIME MINISTER: If the truth was really known,
when the Treasurer and I discussed the timing for a particular
meeting, we also looked at our other commitments Originally, we
had proposed the meeting on the 1 November but anyway in relation
to other commitments it was going to be convenient to have the
ieeting in Melbourne, so when it was shifted to the 6th we still
had it in Melbourne. By that time the Premier had offered to
make this rooms and offices available for the meeting.
QUESTION: Is there any question that the general approval given
today was given contrary to very strong Treasury advice?
PRIME MINISTER: Good heavens no.
QUESTION: Prime Minister, when will the economic stimulus from these
projects start to ease the unemployment problems?
PRIME MINISTER: You can't look at any one aspect of policy in
relation to employment and its impact on policy you have got to
look at the total workings of policy. Let me take what has happened
with General Motors over the last few months they have put on
about l1400people, they have advised me that between now and next
April another 500-600 people will be put on. They have introduced
a new model, the motor industry is in a more buoyant position
than it has been for a long while Ford Australia will be introducing
their new model next year which should further help the motor
industry. This sort of thing has become possible because costs
are coming under control, there is stability in the cost base, we
are getting inflation down below that of a number of other countries
and I have been advised that significant sections of the motor industry
believe that the Australian industry is now competitive with
major elements of the motor industry overseas and is now rebuilding
export organisations. This is the sort of thing that is going to
help employment and one of the quite exciting things in Australia
at the moment are the number of industries that are looking to
exports. Some of them are smaller, some of them are larger, but
we have colour television sets into Hong Kong, fishing boats
made and designed in Western Australia being sold to half a dozen
countries, womens' underwear being made in Australia and sold to
Japan, furniture being made in Brisbane being sold to the major
furniture exporting nation of the world Sweden. These are
things that Australian firms are now doing. They can do it because
of a cost base under control, inflation down below that of our
major trading partners, and it is this kind of enthusiasm, this
kind of performance on the part f Australian industry which is
obviously going to flow through and affect the employment situation.
We all know, unfortunately, that unemployment is one of the last
economic indicators to start to improve but the policies we have set
together with the general improvement in the position of the rural
industries right across Australia, and coupled also with the
kind of initiative we have seen today from the Premiers Council are
going to take this nation forward into the 1980' s in a new era of
development and progress . which I believe all Australians can share
in and be proud of -and it is bound to have an impact on employment
and activity.
QUESTION: Can you how many more people will be employed arising
out of these projects?
PRI14E MINISTER: No, I don't think you can do that. I don't think
that kind of sum really makes it is very, very difficult to
do, as I think you will understand, but more activity of the kind
we have indicated, the fact that the sums are going to be spent
to the maximum extent practicable on-Australian industry, within
Australiayitlh Australian contractors, is bound to have an impact
on employmen.
QUESTION: Is the Commonwealth satisfied that all the projects which
have received approval today are economically viable, or is it
purely a matter of State responsibility, that they pick up any
losses which may be made for instance, exchange losses, borrowings
overseas?
PRIM4E MINISTER: The States recognise their State responsibilities.
On these particular matters where the Commonwealth c3uld have sonie
expertise in terms of the location of borrowing, they ask
the Commonwealth for advice, advising the available to them, and
of course it would. But right from the very outset the States
have put it to us that they wanted an access to fuinding that wasn't
dependent up-on a Commonwealth Budget, for which they Would be
responsible in terms of repayment, and interest rates, and any of
the other associated factors going along with raising of the funds.
So the States are recognising their own responsibility in this
particular way, and I think that is one of the very praise-worthy
aspects of the programme.
QUESTION: the Commonwealth hasn't examined on a project by
project basis whether they are viable, or not, it hasn't made a
judgement? PRIME MINISTER: They have been examined between Commonwealth and
State offici-als, but the main carriage of the project has to be
with the States.
ENDS