4bAU ALA'
PRIME MINISTER
TRANSCRIPT OF PRESS CONFERENCE 11 APRIL 1985
E. O. E. -PROOF ONLY
PM: Well Ladies and Gentlemen over to you.
JOURNALIST: Prime Minister what did you mean last night when you
said " we can't be talking about in 1985, giving some increases on
productivity grounds to productivity which occurred in the past".
PM: Well I was trying incapulate a very brief form the concern
that the Government will have in the conduct of wages policy
generally in regard to the producLivity case whenever the ACTU
decides to take it. That we will wanting to ensure that the
outcome of that case will be consistent with the economic
achievements that have characterised the first two years of
Government. That is, economic growth with low inflation. And you
know that I have had some experience in the Arbitration Commission
and to the way they go about thes things. And I think I was
reflecting in my shorthand statement that experience. It is the
case the way the Commission considers productivity is that they
look back, they look forward; they iook back to get some
assessments, some attemfpts to measure how productivity has been
moving in the economy as a basis for making some assumption about
how, its likely to be moviig in the period within which any
decision the'y take will operate and so I was indicating that the
Government when it appears in this case will be making its
submissions. conscious of the way the Commission does look at these
things. But knowing that importantly for the Commission, for the
Government and I would suggest for the ACTU will all be wanting to
ensure that the de-cision that is taken is consistent with it
economic capacity of the economy in the period in which it
operates.
JOURNALIST: Will you be saying at all Sir that there haven't been
improvements in productivity, appreciable improvements in
productivity over the last two years. Enough to take account of
it.
PM: I'm not saying that there haven't been, in fact the answer
that I have just given should indicate that I believe that when
the Commission does entertain the hearing of the ACTU's case that
all the parties wi. Ll be concerned with an analysis of how the
econom has been operating. And the best way of trying to get
some understandit. g the environment within which any decisi. on
that a Commission makes will operate is to try and get some
picture of the past and the relatively recent past. I believe
they will be doing that again, to do it would be consistent it
with the way the Commission has approached these things in the
past. I wanted to emphasise and I take this opportunity again of
emphasising that this Government has been at great pains to turn
the Australian economy around. Its been remarkably successful in
doing that. We've got record growth and employment increase with
very distinct lowering of the inflation rate, a halfing of the
inflation rate. what we'll be concerned about and I believe all
parties there including the Commission will be about, will be in
looking at the past, making decisions which will enable the future
pattern of movement in the Australian economy to maintain that
sort of momentum within those sorts of parameters.
JOU RNALIST: Today's unemployment figures aren't all that terrific
are they.
PM! Its going to be very interesting, you know I'm a reasonably
ke ! n media watcher, I will be watching very carefully to see if
there is total symmetry in coverage between the figures of March
and the figures for February. I mean in February we had an
increase of 44,000 in employment, it wpsn't much coverage of that,
so I presume an equal lack of interest in the fact that the
figures for this month are disappointing. Now I concede that what
you have got to say is that the movements month by month in this
series are somehwhat erratic. Y. ou have got take, therefore, I
think if you are going to gat a picture of how things are moving.
You have got to take the longer term, if you take the March
quarter, which is now available. The March quarter has provided
about half of the increase of some 90,000 new jobs that hav; e
occurr-ed so far in the financial year 84/ 85 and if you take the
longer period back to April 1983, 340,000 increase in jobs. So
we're confident that looking at the other statist-ics that are
available about economic activity that there will be a
continuation of employment growth through time. I am disappointed
that in this particular month it has gone down, obviously must be
one of disappointment, one would rather have seen an increase.
But I am totally confident that if you take the longer term trend
there will be a continuation of employment growth. I still
believe that the target which I set at the beginning of 1983/ 84 a
1/ 2 million new jobs in the first three years of office will be
achieved. We are ahead of that target.
JOURNALIST: Does it undermine your attempt last night to restore
confidence.. PM: No not unless you make the assumption that the market is
entirely irrational in that they say oh this month is down in a
series which has been notably erratic over the last nine months or
so and if they are going to be guided by that month, why after an
increase of 44,000 last month did the market not, if you are
talking abouL the dollar go through the roof. Now I don't think
that they are as irrational as that.
JOURNALIST: Mr Hawke going back to productivity, the ACTU is
talking about a 3% claim phased in. Do you believe thats
reasonable.
PM: I think that such a claim would be a perfectly reasoniably for
the ACTU to What you have got to remember, its not merely a
question of the principles that have been outlined by the
Commission. But lets go to that, the principles of the Commission
itself acknowledge that through a period of time would be
appropriate of the Commission to consider whether under their
auspices there is room for an improvement in real terms in
conditions of employment of the great bulk of the workforce for
which they are responsible. They recognise that and lets also
observe that employers have traditionally recognised that as well
in the opposite position only needs to be stated to be seen to be
qui Ite unreal. If you don't agree that through time there is room
forf reflecting a growth in the economy in real terms, then the
logic of that is that you have no improvement in real standards
ev~ r through time. Now that is an absurdity, no one would suggest
that. The critically important thing is as I gave in my earlier
answers is that you ensu're and this should be the responsibility
of Governments-, Arbitration Commissions, i believe also of the
trade union movement and of employers. But you have got to ensure
that the reflecticn of underlying economic realities through time
is implemented in a way which does not upset the objectives which
are important for everyone, including the trade union movement in
workers. That is increasing employment at low rates of inflation.
JOURNALIST: Sir, last night you said the Government would take
the impact of devaluation into account when you were deciding your
attitude to the productivity case, and today Mir Willis told us the
result of approximately 3% productivity trade off would be
improved super benefits phased in sequentially over 2 to 3 years.
How do you plan to fit the devaluaLion impact consideration in
wi * th the productivity super trade off? Where is there room for
it? 1
PM: Well the actual methods that the Government will adopt, the
positions that the Government will adopt either in indexation
cases or in productivity cases, as I have said on many occasions
and as Mr Willis has said, will be a matter for a* decision at the
time when those cases are being prosecuted. It would be an
exercise in economic managerial irresponsibility to say now
precisely what the best approach is for a position 6 months or 12
months down the track. What the Australian community can be sure
of is that this Government, having achieved better economic
results than there have been in recent memory, is not now going to
adopt positions which would dissipate those achievements or make
it less likely to be able to continue that sort of achievement.
So you can be assured that at the time when we have to put a
I IV z a p
4
position to the Commission that we will put them in . a way which
achieves those results. Now you talk about the possibi,, ity of-a
productivity improvement of that order being brought in over a
period of say 3 years, well obviously if the calculations were
such that the productivity increases in that time could
comfortably accommodate that then you would have one attitude. if
you had doubts because of particular economic circumstances at
that time about the capacity of the economy so readily to
accommodate, then the submissions and positions that you would be
putting would be somewhat different. But let me say this, we are
confident of the future course of the Australian economy and I
want to repeat here again what I said on the program yesterday
that there is a totally firm adherence by this Government to the
commitments it made to the Australian people as to the conduct of
economic management in this country. The trilogy will be adhered
to. There will be a reduction in the deficity. Now it follows
that if we are going to be adhering to the sound and firm economic
management, that we are going to be having an economy which is
performing strongly through 1985. And I believe through 1986.
And it is just precisely how we see the economy performing which
will fashion the exact nature of the submissions that we make.
And I go back to the general observation that I made it is an
accepted fact within the Commission guidelines, within the
attitude of Governments, and the attitudes of employers and trade
unions, that through time you don't simply have an adherence to
the same real L~ tandard. It doesn't happen in this country and it
doesn't happen anywhere else.
JOURNALIST: Mr Hawke do you accept that one of the consequences
of the devaluation and the Government's offsetting action will be
a higher level of interest rates than the Government would have
previously liked to see?
PM: It is the case that with the greater devaluation than has
been expected, yes there has been more of a movement of interest.
rates that you otherwise would have expected. There is the
relaticnship between what happens to the levels of exchange and
the level of interest rates. We nevertheless believe that given
the fundamental strengths of the Australian economy and I think,
the increasing perception of the strength of the adherence of Lhle
Government to the fiscal management which is embodied in the
triology, that we can expect through the period ofl this year that
there will be, I would expect, a lowering of the level of interest
rates. But also understand that we are right now in the tax
rundown period and you appreciate the impact that that:-of itself
has on the interest rates.
JOURNALIST: So do you think the present increase is in fact
temporary. I mean is this simply a function of the tax rundown
period or would you expect interest rates including mortgage rates
to stay higher for some time after that?
PM: No, I don't expect them to stay high for a long period into
the future. No-one I believe at this stage, Paul, is able to
Pr., -v
weigh each of the factors which is operating in re~ pect of both
the value of our currency and of interest rates. I kno% of no~
economist who would be prepared to weight those facto:-s. But to
the extent that the seasonal rundown, for tax reasons, is
operative, it would be logical to expect that once that factor is
out of the way, that therefore there would be an easing of
pressure. I expect that to be the case. I also expect it to be
the case that to the extent that there has been, that one of the
factors in the lowered level of the value of the dollar has been
some perception of, if you like, non-adherence to previously
stated economic policy approaches. To the extent that that
perception diminishes, as I believe it is now diminishing, and
that there is an acceptance of the commitment of the Government to
firm economic policy, and to the extent that that has been a
factor, I would also expect that therefore to mean an improvement
in regard to interest rates.
JOURNALIST: How did that develop?
PM: HOw did that perception develop? Well as I said yesterday,
and as I have said before, the market as distinct from some views
of it being a collection of very hard-nosed operatives, I think at
times operates in a somewhat irrational way. There may have been
some perception that because of one particular incident or
another, that the Government had departed from adherence and
strong adherence to its economic policy framework. If they
thought that then they were wrong. Now I can't help it if thcy
make a wrong assessment about what is happening to economic policy
making, but I would think that increasingly, as the days and weeks
go ahead, the-, will see the evidence of the Government's continued
commiitment to the trilogy and to a significant reduction in the
money level of the deficit in 1985-86. And to the extent that is
seen, and it is seen that the Government by its action will be
reducing pressures in the public sector borrowing requirement and
giving more room to the private sector then logically certain
consequences should flow in regard to interest rates.
JOURNALIST! Mfr Hawke, do you see the devaluation putting, if
continued, putting so much pressure on that the trilogy just won't
q hold? P. M: The trilogy will hold.
JOURNALISTr: Prime Minister what action does your Government plan
in support of the trade union movement and trade union principles
inQueensland?
PM: Well at this stage I-don't want to go into any detail. Let
me say simply this, that certain discussions are going on I will
be in a position to say more in the relatively near future.
4 JOURNALIST: Will Senator Macklin have your support for his
Private Members Bill?
11.-
PM: Well I hope that this doesn't come as a shock to Senator
MTacklin but I don't follow assiduously everything that he says or
proposes. Which particular pLoposa. is this?
JOURNALIST: The Bill relating the concept of one vote one value?
PM: Yes, well.
JOURNALIST: Do you believe in that concept?
PM: I think it is an excellent concept. I wish more people
b-elieved in it. We will be discussing, as a Government, our
attitude towards that. And that will become clear at the
appropriate time.
JOURNALIST: Do you think it is likely you might support it?
PM: Now, you have been around long enough to know that you can't
jump ahead like that and get me to answer what is likely to be a
Cabinet decision.
JOURNALIST: Mr Hawke, on your damaging incidents, presumably..
PIM: My damaging incidents?
JOURNALIST: The incidents which you feel that perhaps leave thc,
PM: That might have been seen.
JOURNALIST: You are presumably referring things like the MX
matter and tertiary fees decisions. How can you guarantee that
now that these sorts of incidents have started that they won't be
repeated in the future?
PM: Well I think that one operates first of all from the basis
that people who have been involved in certain circumstances in
reacting in particular ways look at the results of their actions
and the reactions and I am simply making the judgement, that I
think is~ particularly well founded, that we will not see any
circumstance arising which will be capable of a misperception
about the fact, which has always been the fact, that the
Government is firmly in control of economic policy and that the
basic framework, which I set down in the election campaign will be
adhered to. And I remind all the people who are viewing and who
are going to read your written words, that I think it is true to
say that there is no government in the western world which has
imposed upon itself such a stringent framework of economic policy
and we are entitled to be believed, on the basis of our
performance over two years, we are entitled to be believed that we
will adhere to it, because we will adhere to it, we have shown
that we are prepared to take the range of decisions in the
economic field which are necessary to produce beneficial economic
results. And it would be an exercise in stupidity for the
government, having achieved those resulits, which in-many respects
are the envy of. most of the res.. of the world, to suddenly depart
from that stringent approach. We don't ii~ tenJ to.
JOURNALIST: Mr Hawke do you now foresee the Reserve Bank playing
a larger role in monetary policy than one of bimply smoothing out
fluctuations.
PM: I don't think you seriously expect me to speculate on what
the role of the Reserve Bank will be in the future.
JOURNALIST: But you said last night that it had played..
PM: I answered a question yesterday in respect of what had
happened, what was my observation about what had happened. I say
you don't seriously expect me to talk about the future role of our
central banking institution. And I am not going to.
JOURNALIST: Prime Minister would the Government ever consider
going to the Arbitration Commission
PM: I'm sorry.
JOURNALIST: Would the Government consider going to the next
national wage case and arguing that full indexation increase
should be discounted to
PM: I have addressed that question several times in the past, I
suggest that you look at the transcript of the number of answers I
have given that, you will see what our position is on that.
JOURNALIST: Could you tell me what that was.
PM: No I suggest that you do your own reading, I mean I've
answered the questions specifically on a number of occasions and I
am not here to do your homework for you.
JOURNALIST: Have you had any discussions with any representatives
of the ACTU about your latest views on productivity.
I have spoken with Mr Crean.
JOURNALIST: Can you give us any indication of his response, we
are having trouble getting Mr Crean too.
PM: I'm here to do your telephone work for you.
JOURNALIST: On the question of Bang
PM: On the question of Bang.
JOURNALIST: Mr Bang.
PM: Oh, well. Lets say that we know that we are talking about
a.~
the Secretary-General of the Communist Party of China Hu Yaobang,
yes.
JOURNALIST: The same bloke who was reported in the press this
morning.. PM: Hey this is getting very chummy. This is an indication of
w-hat he is to expect at the Press Club on Tuesday is it.
JOURNALIST: Would you be seeking clarification of his reported
remarks that American Warships will be welcome in Chinese ports
and about the nuclear weaponary.
PM: Well I think the matter may come up in general discussion, I
mean. I haven't pencilled it down on my agenda, but I think it may
arise in our discussion.
JOURNALIST: What would your view be.
PM: I think my view in respect of what happens between China and
the United States if I seek to express a view about relations
between China and the United States is something that I would
convey to Hu Yaobang.
JOURNALIST: Hnw' detailed will be the May economic statement if it
goes ahead. Will it just be on expenditure cuts, or are you
planning to make other economic announcements?
PM: Whenever any statement is made right before the budget in the
expenditure, it would be in the expenditure area, in other words
it is not going to be a mini-budget covering the whole range of
issues that would normally be in budget. But I believe that it
would be appropriate to make some of our announcements in the
expenditure area early, and if for no other reason that of course
you then get the full yeair benefit of the effect of those cuts.
JOURNALIST: Is it appropriate to consider family allowances in
this expenditure review process or because of their tax
imp) lications would they be a question left for the summit?
PM: I couldn't answer that at this stage because we haven't
considered that issue. And I am not going to by some answer now
pre-empt consideration of the expenditure review commitee and the
Cabinet on that. But you are right in referring to the
implications in the tax area, but I'm simply not in a position to
give you an answer on that because we just haven't gone to it.
JOURNALIST: Just fudging on Prime Minister..
PM: Just fudging on, just sneeking one more.
JOURNALIST: Can you tell us your opinion of the program you
appeared on last nijht.
PM: I didn't seit.
JOURNALIST: How was the program.
PM: Oh the program generally rather than my support.
JOURNALIST: Your appearance was wonderful.
PM: Thank you, thank you you are entitled -to extra questions when
you ask questions on that basis.
PM: Let me say there is considerable room for improvement, I did
say to the interviewer who was equally excellent if I may be
gratuitous as you. I did say that if there were more segments
like that then the hope for the program would be enhanced.
JOURNALIST: Would there be hopes for more ABC money in the Budget
do you think.
PM: You're a trier son, your a trier.