Jj ISLI
TRANSCRIPT OF PRIME MINISTER'S PRESS CONFERENCE 22 APRIL 1985
E 0 E PROOF ONLY
PM: The Cabinet today endorsed the decision of the Expenditure
Review Committee to the effect that a major statement will
be made in the Parliament in May indicating a cut of at least
$ 1 billion in 1985-86 Commonwealth Government outlays. I
can put this in the simplest possible terms. This community
can not simply go on running up debts and living beyond its
means. This is a position which we realised as soon. as we
came to Government and saw the excessively large deficits
that we inherited from the previous Government. From day
one we moved to cut government expenditures in a way which
would enable the deficit to be brought down.. We intend to
continue to do this and the expenditure cuts that we are
making are deliberate. They mean that policies that'are
under'way now will either in some areas-: be eliminated or
curtailed so that this community will now and into thefuture
have a better opportunity aski say of living according
to its means and ensuring that the significant economic
recovery that has been initiated under the policies of my
Government will be continued. I don't go into details of
these expenditure cuts now except to say that we hay been.
guided in our considerations by the criteria of effici--cy
and equity. But it is certain now that with the recovery
that has been initiated under our policies which see he
private sector recovering and providing' 75% of the increase
of the new jobs that are taking place now, that it is important
that the Government by its actions does not crowd the
capital market, does not impose by unnecessarily high deficits
additional pressures on interest rates. It is this sort of
policy, these sorts of policies, which mean that the futura
welfare of all Australian citizens will be advanced. And * we
are committed to that policy.
JOURNALIST: How have we been living beyond our means?
PM: It is fairly simple. You can't have a situation whera
year after year you are running deficits in billions of
terms. VWhen we came in, we looked at thL inheritancc c. a
$ 9. G billion deficit. No,, what that rmeans is that
keep on doing that, you are going to be putting unbe. rable
strains on the capital markets, the private. sector i, not
going to be able to obtain funds for its expansion at
PriMME
PM. , cant: . reasonable costs, costs that they will regard
as Gconomically viable. And that is why we have in our
first budget, we were not prepared to accept that figure
of 9.6, we brought it down to a cohsiderably lower figure,
8.4, and going for a much lower figure now. And in this
way we will combine the degree of stimulus that is required
from the public sector but at the-same time allow the private
sector to go about its business of expansion and job provision.
JOURNALIST: Prime Minister, how much blame must the trade union
movement.. PM: I am pointing up here at Michelle.
JOURNALIST: Mr Hawke, when you talk about a cut of at least
$ 1 billion in outlays, a cut from what, presumably the forward
estimates. PM: The answer to that is simple. It represents a cut of
a $ 1 billion in the 85-86 year from what would have been the
case if we had in 85-86 continued the policies operating in
84-85.
JOURNALIST: And will you release those forward estimates?
PM: Well, forward estimates are not there in a releasable
form because what is happening is that we undertook the
expenditure review exercise early in this year. You know
that we accelerated the budget program and de liberately
did it on this occasion and so in that proce'ss you had
actual decisions being taken that would have' affected those
estimates. of course the other thing which has affected the
forward estimates is the whole volatility of the currency.
And so the simplest way and the accurate way of putting what
we are about is that,. put it this, ' a ; a that in respect of
forward that would have existed before we * Undertook the
expenditure review process, these decisions that we are
taking represent a cut of at least a billion dollars.
JOURNALIST: how do you know..
PM: We have got the figures. We know what the on-going
costs would have been. What I am saying to you is that at
the same time as those would have been prepared and perhaps
as a government engaged in the outlay cutting exercise and
the easiest and the accurate way of putting it is to say that
if there had been no decision by the Government to cut down.
on programs then in 1985-86 the community would have been
facing outlays of a billion dollars more than we have taken
now. In other words, by these decisions we have either
eliminated or cut back on policies currently operating.
And we have done that to the tune of at least a billion
dollars. JOURNALIST: an aggregate expenditure figure at the
Ministers' meeting last Friday, Mr Hawke, can you tell us
what that was?
PM: No I am not going through what happened in the full
Ministry.
JOURNALIST: I think what you are arguing here is that the
Government would be reducing tne deficit, not just through
extra revenue, but also through a very tough attitude towards
spending proposals. I wonder if, in this context, you could
perhaps go a bit further and perhaps tell us what sort of
spending increase in real terms, we are looking towards in
the next financial year given that the Expenditure Review
Committee has now concluded most of its work.
PM: Well there is still more work to be done. We will be
trying to keep that increase in real terms to the lowest
possible figure and clearly the slicing off of a billion
dollars, will be at least a billion dollars, will be
significant of achieving that objective.
JOURNALIST: I just wonder in general terms if you
can put a figure on it.
PM: I don't want to put a figure on it at this stage but
we are, but let me say this, we are determined to give
effect to the trilogy and within the trilogy that reduction
in significant money terms of the deficit in 1985-86 from
the deficit level of this year and we are therefore, as you
will appreciated, not in a position where we are going to
be able to achieve that objective by just going down the
revenue route. And, by definition, if you say, if you
make the commitment that you are going to retain, restrain
your movements in revenues so that there is no increase
in tax as a proportion of GNP, then you are constrained
by going down that route. You have got to if you are going
to achieve the trilogy result, exercise very considerable
restraint on the expenditure result. And this is what this
exerc ise is about. But I don'It want to * give you the exact
figure now. All I want to emphasise as* I do in the statement
that the triology will be achieved.
JOURNALIST: You were trying to get, the deficit-for next
year down to, I think, around about 6 billion>*' C an we say
that you are aiming for something. considerably. less than
than. ARe you looking at 5 billion now, or what?
PM: I don't know what you are looking, * all I can say is that
we have never said unequivocally a particular figure. But we
have said that we want to get,.. not want to but will get the
deficit down in money terms in 85-86 significantly beneath
what it is this year. Now we will be doing that and we will
be without question be achieving that this year and creating
the basis for the achievement of the trilogy through the three
years of the government as I have promised we would do.
JOURNALIST: Can you give us any estimate of the extra
revenue which will accrue to the Government next financial
year devaluation?
PM: No, Paul, we can't. All that we say, and that is the point
of that part of the statement is to say that the best evida. nce
that we have got now is tliat in not terms there will be maore
revenue than additional costs. And I am making the undertaking
that that will not be used to finance new programs. It will
be used either further to reduce the deficit or to reduce
taxes or charges. I simply don't know, I haven't been
given a specific estimate of what that net outcome is
PM, cont: likely to be.
JOURNALIST: Prime Minister, given that the federal deficit
is roughly half the overall national deficit, will you as
part of this belt-tightening process be looking to the states
and local governments to make cuts of a similar magnitude.
PM: Well, the statement makes it clear that what we are doing
here is quite independent of the federal/ state relationship.
We will obviously be expecting a stringency on the part of the
states because, you will appreciated that on the last occasion,
we adopted both in regard to the grants to the states and the
we handle that and also in regard to states' borrowings. An
approach which recognised that what happened in the area of
the states' budgets and borrowing program was relevant to the
total macroeconomic situation. We will be expecting from the
states their cooperation to achieve what is necessary for the
economic welfare of Australia as a whole. You can'It have a
strigency on the part of the Commonwealth and profligacy on the
part of the states.
JOURNALIST: What is the Government's attitude to discounting
the inflation effects of the latest CPI, it is suggestL-ed it
might be .4 of 1 per cent, over the next few quarters?
PM: Well I have made it clear in the Parliament and elsewhere
the approach that the Government will take in regard to
devaluation. We are not going to allow the results, the
advantages of the devaluation to be dissipated. And the
Government will take the appropriate action which is necessary.
I have made itclear on a number of occasions that it-is too
early now in April to be talking about something that arises
in the first place, minimally in September, more substantially
of course 12 months away from now. don'~ t handle economic
policy in that way.
JOURNALIST: Is it fair to say that you will'no~ i be looking
at deficit for 85-86 than you had intended before
you had decided to make your expenditure cuts in May?
PM: Well, the thing that is constant Mike is that we want
to make the cut as substantial as we can. What is complicated
the picture now is the devaluation effects. We just don't
know at this stage what sort of allowances we are going
to have to make for that. Although I have indicated
that on balance the effect of that should be to. provide
more flexibility for the Government. The question will be
as we say in the statement whether you do that on the aspect
of even further reducing the deficit or perhaps in other ways
which will be beneficial to maintaining the strength of economic
recovery.. But I don't think anything that has happened which
would be make us be looking at a lesser reduction in the
deficit, if I can put it that way.
JOURNALIST: But don't you leave yourself open to a charge of
window dressing if you're not prepared to make any sort of
commitment on the figures for the next financial year?
PM: We certainly don't leave ourselves open to window dressing.
There's just absolutely no basis for that. We're making the
substantial decisions now and we are going to make sure that
we get the full year effect of these decisions. We're going to
be doing everything we can to put ourselves in a position and
make the most substantial cut in the deficit we possibly can.
There's no question of window dressing. We're making the decisions
There'll be legislation involved. We're doing everything we
possibly can to put ourselves in the strongest position to make
the most substantial cut in the deficit.
JOURNALIST: When it comes to your of the devaluation are
in fact retained, obviously you have got to do that to wages
policy, budgetary policy or monetary policy. When it ccmn2s
to the latter, you wouldn't shirk would you from a general increase
in the level of interest rates if that in fact was need to achieve
that policy objective.
PM: Well, I think the record of this Government has shown that
we will not shirk from any decisions that need to be taken to
produce positive economic results. We've done that fairly
consistently and we've done a broad range of things which our
predecessors were never prepared to do to produce the
appropriate ec'onomic results. So I rely on the-. record there
to say -that in the circumstances with which this Government
is faced, we'll make those decisions which are necessary to
sustain economic recovery. And I make no exclusions or
exceptions-in regard to that.
JOURNALIST: In the Budget will we see follow, up expenditure
cuts ~ of the same order?
PM: the same order. But I make it clear that this is not
an exclusive list of what will be done by the Government.
JOURNALIST: Prime Minister, you could well find that the effect
of the devaluation on budget revenues could result in you taking
certain actions breaching the trilogy commitment in relation
to taxation. If you find that you have that spill-over in
relation to that trilogy commitment will all of the spill-over
be given back in the form of say tax cuts, or would you consider
the option of marginally breaching that trilogy commitment in order
to further reduce the deficit?
PM: We will not be breaching the trilogy and I make in response
to that question the answer that I've given before. It just does
not make sense at this point to say precisely what action you'll
take for some point a long way down the line. What does r'-11ke
sense now, and this is why we've made the decision that W3havtoday
endorsing the ERC decision, . is that it does make senSe now
to give notice of the fact that you are goin4 to be moving
substantially and early to make those decisions which are
going to be for the economic benefit of the country. That's
why we've made this announcement now, but it doesn't make
sense to go to a detailed answer now as to the sort of
alternative choices you may make later on down the track to
give effect to the broad commitments that you've made now.
What the community and the business community of Australia
needs to know is that we intend to keep to the trilogy
commitment. And I repeat, we're going to adhere to that
commitment.
JtOhUeR NrAeL-IaSdTm: i ssiPorni meo f Mitnhie stfeoru, r cunoiulodn s It os eetkh e yAoLuPr. comments on
PM: Well you certainly can, but I don't want to go back and
forth from Canberra to Coburg, if I can put it that way. So
we could we deal with Canberra
JOURNALIST: The statements that you make in May, as well as
details of the spending cuts program by program, will presumably
give us the full year cost before the cut was made. And at the
same time will you be free then to give us fresh, up-to-date,
forward estimates for the Government's whole spending progr. n
PM: Well I don't want to today give a commitment in regard
to the surrounding documentation to the May statement. But that
will be a matter for decision in the Cabinet and it will be
specifically considered by the Cabinet when the Treasurer
returns at the end of this week. And I'll be ina p6sition to
answer that question within the next week or so. I can't
give you a final answer now.
JOURNALIST: But you see what I'm ' driving at. When we get
the May statement we want some context to put a-billion dollars
into.
PM: And I can assure you from what I've said that you 1ihlalv e
no difficulty at all in determining the reality of th.' cuts.
That's what you want to know, and I'm simply saying i vcu' zen
4 a fly on the wall in the ERC Committee and seen the s.: eat and
blood that had gone on, you'd have no doubt about the reality
of the billion dollars, my friend.
JOURNALIST: Mr Hawke, is this statement dependent on the dollar
staying at the low value that the currency's at and whiat effect
would there be if the dollar recovered.
PM: The statement that we will be issuing is not related to
the level of the dollar.
JOURNALIST: Prime Minister, I was wondering if you could elabo$-
on your comments in. Parliament this afternoon about tL:
summit. Can you give us any more inforanation on when icV* o
be held, how many people might be coming
PM: We'll get to the tax summit. I just want to be vy usualogical
self and go from subject to subject. Have we finishc.
the billion dollars? Now it's Coburg I think next is it?
JOURNALIST: your comments on the re-admission of the unions
and the violence that occurred, and why didn't you make an
appearance. PM: Well the comment about the admission of the four unions
obviously I'm extremely pleased about it because I'm the one
who has been advocating this for a very long time. And I'm glad
to see that the proper principles have now been applied. And that
is that unions who apply to be affiliated are allowed to be
affiliated. And you cannot have discrimination in this
area and it's right and proper that these four unions should
be affiliated, and I welcome the fact that at last they have
been. As to the violence of course, I unequivocally condemn
it and deplore it. And I believe those who are manifestly
responsible for it will be properly judged, not only within
the Party but within the community. And if I am attacked as
I have apparently been by certain elements in the VictL-orian
Party the President, Mr Hartley well, so be it. It's not
the first time they have and I don't imagine I will stiffer in
any way if I'm-the object of their attacks..
JOURNALIST: Who or what sort of people do you think were
responsible for the violence.
PM: Well you had all your media there and there is an
acceptance that it was-one section of the one grouping and
the more extreme element of the Socialist Left Well, they
don't have to have othor. s accusing them. They accept that it
was them. Now, I say no more than that I deplore and absolutely
condemn'that sort of reaction. It will not be accepted within
the Party, and certainly is not acceptable to the community and
properly not acceptable.
JOURNALIST: Prime Minister what is your assessment of the
long-term effects of the entry of the unions into the Branch.
Do you think there'll be substantial changes in the next couple
of.. PM: Oh, I think through time, not just in Victoria, I think that
through time the Party will come more the reflect the constituency
out there that votes for it. I believe that with the relatively
small membership of I think of about 56,000 members throughout
Australia in the Party, that that's a very, very small proportion
of that very substantial number of people who vote for the Party.
I think it hasn't been totally reflective of our constituency
who vote for us-and I think this will be part of a gradual
enlargement of the party through time now which will see the
Party more reflecting the constituency that vote for them.
JOURNALIST: Is that the end of the split.
PM: Well, it means that those unions who were in and then
were out, are no,.. w back in. Now i'm obviously embarrassed about
stating the obvious. I think it's the end of that split. If
others who have been in the Party dislike it-that much that they
feel they have to go, well..
JOURNALIST: There's obviously still a lot of bitterness, isn't
there.
PM: That was a reasonable conclusion, I think, to draw from
the events of the weekend.
JOURNALIST: Mr Hawke, will it be better for the Party if they
did go.
PM: Well, I mean really they have to make up their mind. The
Party has made its decision. And if they feel that the Party
has been made something that they don't like and can't accept,
I can assure them that the Party is not going to change its
decision about who's come in. So the Party is going to be of
the kind and character which it is now as a result of that
decision. So if they don't like that, and they think they
can't live with it, well it will have be their decision.
Because the Party is not going to change.
JOURNALIST: Prime Minister, will you go to the Conference
in Victoria in June.
PM: I think I'll be going, yes.
JOURNALIST: Do you think there's room for some sort of
disciplinary action against the extreme sections of the Party
who were involved in the violence.
PM: Well I haven't addressed my mind to that. If something
is put forward, if someone proposes it, it will have to be
examined. But I've not addressed my mind to it and no-one has
suggested anything to me at this stage.
JOURNALIST: Any further details about the tax summit.
PM: No, no more than I really announced in the Par'liement.
I would think that within about a week the decisions shiould hnave
been made about the invitations. I. just haven't spokE to that
part of our bureaucracy which is addressing itself to that ciustion.
But I think it's something like a week or so that that should
be finalised. And I really can't add anything to wha. a sai. c.
in the Parliament.
JOURNALIST: You are inviting the Opposition, Mr Hawke. Do you
expect them to come and how important would their attendance bc
PM: Well, as I say, it's very hard to tell about these people.
I mean people thought I was being a little bit humourcus when
I talked about this division-ridden Opposition. But t'-ey are.
They're very deeply divided on this and everything else and I
don't know there'll be some who will want to come, others who
won't want to come. And I don't know how they'll pick their
team if they do decide to come, because they've got so nany
different views themselves about what should happen.
I seriously would like the Opposition to be thare, bec.-
I believe that they must havc something useful arid con. I..: c
to say. I hope they will not say to the Australian pcoe
going to be negative, we won't go to the Summit, we'll let crc-.
else'go, and then we'll set off and see how we can score : Doints.
I hope they don't do that because that's not helpful to the
community and, of course, in the long term it wouldn't be
helpful to them. Because I think the community would make a
very adverse judgement about them if they attempted that sort
of approach.
JOURNALIST: How far will the Government be able to go towards
implementing some of the changes from the Summit in the
August Budget.
PM: Oh, I've said before that I would think it would be very
difficult to pick up in the August Budget anything of any
significance from the Summit. For significant changes you
will require changes in legislation and you wouldn't be
able to pick those things up in the Budget. But that's nothing
new, I've said that over a fairly long period now.
JOURNAL IST: Was the principle aim of your statement today to
calm down the money market and re-affirm your economic
credentials. PM: Well I don't think our economic credentials need re-affirminc.
I'll come to the first part of your question because, as much
of the media has been kind enough to point out, the basic
economic statistics that keep coming out are pointing to the
continuing strength of the economy which results from the
impact of the policies of this Government. So ' all the
evidence is there about the basic strength of: the economy and
the credentials of this government in the area of economic
management. I think there are these things to be said about
the timing. The first is to say that we obviously want to
make it clear that we are going to adhere to the econcmic
strategy and the fiscal strategy that P : ul * Keating and I
have consistently outlined and which has been adopted by
the Cabinet and accepted by the Caucus. I and: Mr Keating
outUned that strategy at the end of last year. We have
adhered to it steadfastly and it has been accepted by the
Cabinet and by the Caucus. Now we want to make sure that we
get the full year benefits of the hard decisions that we're
taking and to do that you need to have legislation. And therefore,
you need to make the statement and get the legislation going
in this session so that you will have those full year benefits.
And of course I do believe that the market will also, and I
acknowledge that, the market will appreciate the clear
determination of a Government to pursue these responsible
economic policies which will be evidenced by this statement.
ENDS.