1 , AUSTRA! IIA
PRIME MINISTER
E. O. E. PROOF ONLY
TRANSCRIPT OF THE PRIME MINISTER ON AM 21 AUGUST 1985
BEUTLER: Mr Hawke, the first reaction to this Budget has been
favourable. How much can we rely on the underlying assumptions
of growth, employment, inflation and value of the dollar?
PM: Well I think we can rely on them entirely. Wc have put an
enormous amount of work into this Budget. As you know, we started
work on it much earlier than usual. We really began the processes
almost a month after the last Budget and I think through the
prolongation of those processes including the very substantial
achievements in the May Economic Statement this is a better
prepared, n. G. e thoroughly thought through Budget than there
has been in living memory.
BEUTLER: No rubbery figures?
PM: No rubbery figures. obviously, let me make this point
that it is understood the 4.9 billion deficit is in there on
the assumption that one must properly make that the Arbitration
Commission will continue its existing principles, that is the
full indexation, but we have made it clear that we will argue
for discounting and in that sense if we are successful, then
as the Treasurer pointed out in his Budget speech, the deficit
would come up to about 54 billion.
BFUTLER: Well that question of wage discounting, of course,
is critical and already Simon Crean from the ACTU has repeated
the union movement's total opposition to discounting. Why are
you persevering on this what appears to be a collision course
with the unions?
PM: Let me make it clear that I think Mr Crean has made a
broader statement than that., A'ind Mr Dolan, the current President
of the ACTtJ, who perhaps in the past has been somewhat more
unbending in his approach on this, I think has very responsibly
indicated that there may be, from their point of view) a capacity
to accept the approach as there should be. Well, ultimately
you'll have to listen to the full bench of the Conciliation and
Arbitration Commission because they will have to make the decision.
I believe that they should make a decision in line with our
submission.-Because I want to make it clear, as Mr Keating did
last night, that the Government remains fully committed to
the basic principles of the Accord, that is, through time the
maintenance of real living standards. But what we are saying is
2.
that the whole of Australia, including not only those who are in
the work force now bud.-those who want to enter into the work
force, have an enormous opportunity for the creation of very many
more jobs if we rete'in the competitive advantage provided for us
by the very significant devaluation that's taken place. And I
believe that in the discussions that we had both with the ACTU
and the employers that they will all see the wisdom of the approach
that we are putting in the Budget.
BEUTLER: Will you offer the. ACTUJ a tax cut in return for wage
discounting? PM: We will not be discussing on this programme or anywhere else
the overall strategy that we will be adopting in the future in
this area.
BEUTLER: But is that an option?
PM: Well, living standards are made up of disposable income and
in that sense it is always a fact that what people are able to
take home in the post-packet situation is what determines
relative standards. But I am not in any sense indicating the
range of avenues that are available. I mean, the Budget speech
doesn't refer to the spinning out of the productivity case. That's
obviously one of the areas that we will be talking about but
I'm not on this programme going to be developing the whole range
of discussions that we'll have to hdve ith employers and trade
unions to give continuing effect to the outstanding economic
success that we have had to this point.
BEUTLER: Well, how far are you prepared to push this issue,
as far as to effectively destroy the Accord?
PM: I don't believe that the Accord is in danger of being
destroyed. BEUTLER: Why not?
PM: For the reasons I have put. That is, that I believe that
we have delivered the goods, that is, 410,000 new jobs. I believe
the trade union movement shares the commitment of this Government
that the No. 1 priority is the creation of the maximum number of
job opportunities for their fellow Australian men and women.
BEUTLER: When it comes to the crunch would you accept anything
less than full discounting?
PM: We will be putting the case for discounting as I have said.
The ultimate decision is the decision of the Arbitration Commission.
BEUTLER: Don't you run the risk, if you push this whole issue
too far, of powerful unions getting their wage rises elsewhere
by going outside the centralised wage system?
PM: Well, let me say this. That from day 1 in the election
campaign at the beginning of 1983 people were saying you won't
be able to make the Accord work. It is just an election gimmick.
I have said from day 1 it will work. It has worked with
spectacular success, success increasingly acknowledged overseas.
We have the Financial Times. Wde now have the latest issue of the
Economist pointing out that the rest of the world should be
looking at what we have achieved. Now, we have achieved this
3.
/ 7because we have been able to persuade the whole community including
the trade union movement of the correctness of our policies.
We have got the runs on the board. No one is entitled now, it is
getting rather boring if I may say so ankd tedious for people after
two and a half years of spectacular success to say ' Oh, it might
not work'. It has worked, it will continue to work.
BEUTLER: Well, the lower deficit means less Governmenit borrowing.
That should mean lower interest rates, when?
PM: Well, let me say this, I am not going to be making predictions
because I don't think that's helpful but I will say this and say
it with pride that as a result of the decisions we* ye made not
only in this Budget but prioi. to the Budget, Government has taken
all the action that is within its power to reduce the pressures
in the capital markets on interest rates. We had a magnificently
successful outcome from the Premiers Conference in getting their
co-operation. I pay tribute to them and as a result of what they
have done in containing their borrowing requirements and as a
result of the enormous reduction in our deficit there will be a
significant reducti~ on in the public sector borrowing requirement
as you indicate. That means as far as the factors within our
control, we have created the situation for the least possible
pressures upon interest rates.
BEIJTLER: And you won't any predictions?
PM: Well, it is not proper but all I can say, I want to say ittis
not proper in the immediate environment of the Budget. I don't
want to be saying something which is going to perhaps of itself
have a positive or negative effect. What I can do in conjunction
with my Treasurer and my colleagues is to make the decisions which
creates the best possible environment for the lowest practicable
level of interest rates. We have done that.
BEUTLER: Mr Hawke, you are about to address this ALP breakfast
in Melbourne your home city and you have brought some of your
most senior Ministers from Victoria here this morning......
PM: When you say I brought them, physically they travelled with
me. They were bursting out of their skins to come.
BEUTLER: Well, you have got a good new story to tell this morning.
How much is that undermined by the factional fighting going on
here within the Victorian branch of the ALP at the moment?
PM: I know you are a member of the media and you do your job
well. But one day you people will come to understand that
Mr and Mrs Australia and young Australians are concerned about
jobs, are concerned about growth, are concerned about economic
performance. That is what will determine their position and their
judgment about the magnificent achievements of this Government
and by the way also by way of contrast to those pusillanimous
non-entities that occupy the benches opposite us in the Parliament
and where they will continue to sit because of the their economic
and social irrelevance.
4
' 3EUTLER: Well if you have got the economic runs on the board.
What are you going to do about the Australian cricket team?
PM: Well, now you are talking about an area of very great
difficulty. This Government is capable of solving most of the
problems confronting this great country but you are now putting
your finger on an area where I haven't got any instani: or even
medium term solutions. It was an enormous thrashing that we
received. I think we should be sensible enough to recognise the
fact that it was a thrashing. The better side in that test match
won. I say to Allan Border who has developed into a great captain,
I say to him get them together, make them realise they've got the
potential to win that last and deciding one and I wish them the
best of luck.
BEUTLER: Mr Hawke, thank you for joining us.