PRIME MINISTER
E 0 E PROOF ONLY
TRANSCRIPT OF BRIEFING BY PRIME MINISTER AT IMPERIAL HOTEL -TOKYO
MAY 1986
PM: Let me start with an exposition of what has happened and
then answer your questions. I had a long, warm and businesslike
discussion with Prime Minister Nakasone. As you would expect a
major topic of our discussions was the Tokyo Summit. I told the
Prime Minister that I appreciated the evident willingness on
behalf of Japan to pursue the point that agriculture should have
a prominent place in the new MTN round. It was expected that
there should be decisive progress made at the September
ministerial meeting to launch the new round and that in the
meantime the work to be done in the OECD context will serve as
preparation for the later global negotiating process. Now in
all of those points we were at one. There is no doubt that the
Japanese have with us I believe a vested interest in seeing an
early as possible start to the new round.
I also took the opportunity of expressing our satisfaction at
Japan's co-operation with the regional trade initiative which I
mentioned at the end of 1983 which will believe be followed now
with a meeting we think in Manila before the September meeting.
That will either be at the level of ministers or officials. I
also noted the re-assurance of Mr Nakasone that the participants
at the Summit were prepared to take into account the interest
of the non-Summit agricultural producers and I thanked him for
taking our concerns and putting them before Summit participants.
Another major issue we discussed of course was the restructuring
of the Japanese and the Australian economies. In the case of
Japan the backdrop is provided by the Maekawa Report, the
marketing measures which they have commenced and the re-alignment
of currencies involving very substantial'appreciation of the
Yen. I welcome the opportunity which these factors presented.
tQ Australia. I express regret that so little * had-been achieved
in respect of agricultural products so far in opening up the
Japanese market and I noted that the Maekawa Report without
doubt the most positive step in recent times. I asked the
Prime Minister what was the status of the report, what could we
expect in terms of action and he told that the Japanese
leadership is pledged to promote the implementation of the
report and that this process has only just begun but there is
a commitment to it. I suggested in this context that it was a
propitious time for an agreement between us as Prime Ministers
an exchange of investment missions from Japan to Australia and
Australia to Japan. I made that proposal to the Prime Minister
and he agreed to it. We have agreed therefore in principle and
the details and timing of that exchange of investment missions
is to be worked out in consultation with the appropriate
government and private sector people. We both noted with pleasure
that the trading relationship is already broadening with
Japanese co-operation with the Australia/ Japan market strategy,
the very significant increase in tourism with now over 100,000
tourists per annum and hopefully building up to something
like a quarter of a million by the Bicentenary year. And with
the developments in finance and banking flowing from the
regulation of our system and the influx of foreign banks
including three Japanese banks. But having noted that expansion
of the relationship which has taking place I emphasised to the
Prime Minister that our Japanese market of traditional exports
remain vital and in that context I stressed Australian
reliability and international competitiveness in minerals and
in agriculture. I discussed several issues relating to our
mineral exports and I say in relation to coal where opportunities
may open up as a result of the review of coal policy and of
the Maekawa Report said that Australia would have a very strong
interest in competing on a commercial basis for any additional
tonnages which were opened up as a result of those two factors.
And I stressed to the Prime Minister as I have before that
Australia is not seeking any special treatment or advantages.
We simply sought to rely on our competitiveness and as a
reliable supplier to the Japanese market. And I received
re-assurances from Mr Nakasone that Japan would not be
proceeding in this area with any bilateral arrangements at
Australia's expense. I received a helpful briefing from
Mr Nakasone on other-major matters which arose at the summit.
That included terrorism, the United States/ Soviet talks on arms
control, Chernobyl and the need to strengthen the International
Atomic Energy Agency machinery. I might say there that on this
matter wrote earlier this week to Mr Gorbachev on a number of
nuclear issues. It was in response to his positions earlier in
the year on the announcement of the Soviet positions. I responded
to them and I called in that letter for Soviet support for our
initiative which is a proposal that action be taken at the June
meeting of the International Atomic Energy Agency board of
governors to initiate an international conference to negotiate
an international convention on notification and emergency
assistance in the event of nuclear accidents.
We also discussed other issues of importance to both countries
the Philippines where we agreed that we should do what is within
our power to give support to the Aquino Administration and I
indicated that while we had a relatively low level of-aid we
had agreed to a 50% increase in that aid. And I sa-id that it
would make sense for us in either bilaterally or in appropriate
forums to see how best our aid could be co-operatively effected
to give the best level of results. I reported to Mr Nakasone
on developments in regard to ANZUS. Mr Nakasone reported on
the good state of Japan's relations with China. And I also
thanked Mr Nakasone for the substantial involvement by Japan
in our forthcoming bicentennial celebrations. I also say I had
a useful but fairly brief discussion with Foreign Minister Abe
and that discussion covered essentially international economic
matters particularly the MTN round and he reported to me on
developments in Japan/ Soviet relations. And we had a brief
discussion about developments in the South Pacific. Well,
ladies and gentlement I think that covers country.
JOURNALIST: Prime Minister has the Chernobyl accident given
you cause to rethink your support for nuclear power particularly
your belief that Australia should export uranium to the world.
PM: No. The fact is that something like one-sixth of the
electricity power in the world is generated by nuclear means and
while there will be some reconsideration in some parts obviously
as a result of Chernobyl. The important parts of the world are
going to continue to rely and some to increase their reliance
on this source of power. We as a world community would be
foolish in the extreme if we didn't to seek to learn as much
as we can from the Chernobyl. And this is why we believe there
should be this international conference to try and create a
situation by international convention so that we are not going
to have a position where it would be the sort isolation which
existed for so long in regard to Chernobyl. We should try and
learn from experience and ensure that as far as possible
everything is done to prevent a repetition of that sort of
accident. But while the world is going to rely to the substantial
extent that it does on nuclear generation of power then I think
the reason that we have advanced for Australia's involvement
remain valid. That is we want international nuclear fuel
cycles to be as safe as they possibly can be. No country has a
more rigorous regime of safeguards on the supply o -f uranium
than does Australia. And it is still indisputably true that
if Australia were to withdraw from being a supplier then to
that extent the international nuclear fuel cycle would become
lessafe than it is. So I repeat we would be foolish not to
learn as much as we possibly can from Chernobyl. We should take
the sort of steps that Australia has initiated through the
IAEA and we will be hopeful that we will get support for that
initiative.
JOURNALIST: Mr Hawke, do you have any ideas on how you might
breakdown the international secrecy in the nuclear industry and
also in your letter have you....... have you any ideas or
suggestions....... of where the line might be drawn on what is
a notifiable incident? What constitues a serious enough
accident? PM: Well, when you are talking Paul, about the breaking down
of secrecy, obviously when you are talking about the Soviet
Union you are talking about relatively a secretive society. I
don't want to get into a political argument or dialogue about
their secrecy other than to say this that I believe that there
are certain aspects of national behaviour and events that occur
within national boundaries which by definition transcend the
interests of one nation. Clearly Chernobyl was one such event
because by definition the radioactive fallout could not be
contained to the Soviet Union. So I would hope that really in
this area of generation....... nuclear power that there could be
an acceptance that there should be complete openness in regard
to any incident or accident that may arise because I think each
country has an obligation to the rest of the world to try and
ensure that it can learn from that experience so that there
should be created the greatest possible environment of safety
for the use of this method of generation. I haven't deigned
in my initiating letter to try and spell these details out.
That seems to me a matter precisely for meetings of technical
and political experts who should be involved in drawing up
such an international convention that we suggest.
JOURNALIST: Mr Hawke, is it your view that high Yen has been
behind Australia's deterioration in terms trade and did Mr
Nakasone or Mr Abe give you any idea about where they thought
the Yen would be going over the short term?
PM: well, it is not a question of my thinking. It is an
obvious fact that part of the explanation for the deterioration
of our terms of trade have been associated with that factor
No, in answer to the second part of your question Greg. Neither
of them gave any suggest~ ion as to what they thought the
appropriate alignment of the Yen was with other currencies.
But what is obviously clear is that the very significant
appreciation of the Yen is a factor now here in Japan in their
realisation that they have to look at the restructuring of their
economy and the types and disposition of their economic activity.
And it is within that context Greg, that I think the Maekawa
Report has a very particular significance. The two things together
should mean I believe that there will be significant restructuring
of the Japanese economy. And that is why I have sought to say
to Prime Minister Nakasone that we should it as in our mutual
interests as we are in Australia are also as you know undertaking
a process of gradual restructuring of our economy. To see where
two economies which over the years have become more and more
inter-related 26% of our exports coming here, 22% of our
imports coming from here. Now obviously there is already a
significant inter-relationship. It only makes intelligent
good sense therefore in those circumstances that we should try
and see what are the implications of the restructuring that is
taking place to try and see how for our mutual benefit we can't
open new areas of joint activity or identification of areas
which we better developed in * Australia or here. And-it was in
that context that. I made the suggestion which Mr Nakasone
responded affirmatively of the interchange of investment missions
between our two countries.
JOURNALIST:. Any particular areas of the market?
PM: No, not exhaustively but let me give you one obvious-example
Michelle. There has this massive increase in Japanese tourists
to Australia. As I say over 100,000 Japanese tourists and the
expectation of a very strong continuing increase in that area.
Now it seems therefore sensible that the Japanese may consider
investment in the accommodation, recreation, tourist area.
I just give that as an example. I think there is already evidence
that in some high tech areas computer software Australia has
developed quite significant capacities. Now there is another
example I think where there may be the opportunity for significant
joint activity and investment by Japan in Australia. So I just
use those examples but it would be the job of these joint
investment missions to examine this question in more, detail.
JOURNALIST: Would you like to see visa free entry for Japanese
tourists? PM: The question hasn't been raised with us in this visit. As
you know the matter has been raised in Australia but we haven't
yet considered at a Cabinet level. Let me say this, you could
see that there could be certain advantages given the very
considerable increase in Japanese tourists. Then again we have
to look at the questions security and I think generally
Australia has a very good record in this area. It is not
something that we could just rush into. We will look at it
very closely for the reasons I have put and also it would
raise questions of comparisons with other countries. So it is
a matter that will have to be carefully looked at.
JOURNALIST: On the Maekawa Report, how widely did you interpret
Mr Nakasone's words when he said Japanese leadership......
PM: Well, he put it in terms of his Party. So I believe the
interpretation that I took and my colleagues took from his
statement was that there was a broad acceptance of the need
to accept the thrust of the Report. Let me make it clear that
he was not saying that it was going to be implemented in full
tomorrow. They were beginning the process. I believe that as I
said earlier when you take into account the very substantial
realignment of the Yen, the implications of that that the
thrust of the Maekawa Report is totally logical.
JOURNALIST: Mr Hawke, was Mr Keating wise yesterday to use
alarmist phrases such as ' banana republic'.
PM: Well, I think it is always wise Mike, when you are looking
at what is said by Mr Keating or Bob Hawke or anyone else to
make sure that you look at the whole context of his remarks.
And what Paul was saying was if you don't pursue sensible and
appropriate policies now which are-relevant to dealing with
situation that confronts then if you don't pursue those sorts
of policies then Australia could be in trouble. You could have
the sort of situation that that language was averting to. Let
me make it quite clear' and I am talking with the advantage of
having had discussions with Paul on the telephone that what he
is making clear in Australia is precisely what I said to you
people and that is that there are these elements The
internal Australian economy is in good shape. The facts are
-quite obvious there but we have suffered from a devastating
turn around in the terms of trade. And what both Paul Keating
and I are saying is that the effect of the depreciation is
working but that depreciation can't beat change in the terms of
trade by itself. Let me give you the evidence of the way in
which the depreciation is working. The export volumes are up
at this stage by more than was forecast at the time of the last
Budget. Imports have gone down by 7% in the last three months.
But just to give you some example of the impact of price
movements just look as we are here in Japan at the importance
of steaming and coking coal. Just look at what's happened in
prices. 1984 prices of steaming and coking coal were down 11%
on 1984, down 21% on 1983. If you look at sugar even though
there has been some recovery now, prices are down 45% on 1984
and 50% on 1983. A dramatic way of looking at it if had
this sort of terms of trade situation at the end of 1984
applied up until March 1986, that would have saved us
$ 4h billion on the current account. Now I am not saying that we
simply say well, if that had been the case wouldn't it be nice.
I am trying to make the point Mike, that this is the sort of
measure of the impact upon us of the dramatic turn around in the
terms of trade. Now, what is required in these circumstances is
not some dramtic new direction policy. What is required is that
we make sure that the elements of policy that we have been
working with continue to be stressed and the right decisions
made in regard to them. It certainly means that with that very
dramatic change in the terms of trade we have to recognise the
impact that has upon the capacity to provide certain standards.
And we have to make sure that the public sector plays its part
in dealing with this situation. So it gives an added emphasis
to the work on which we have been engaged in ERC. But we have
known that the work has to be done and if you like this has
confirmed the necessity for what we are doing there. The States
and public sector borrowing generally has to play its part in
dealing with this situation. And I repeat here what I said
earlier that what in a sense we are dealing with now is the
problem of success. I go ba-ck to what happened in 1983. What
we did then when we came to government was to see that the
worst recession in 50 years could be turned around by sensible
government policies in co-operation with the Australian people.
That is what we did. Now we are in a sense dealing with the
success in part of our policies, very high levels of growth and
we have recognise that we have to have the appropriate policies
to deal with. Now I don't apologise for the length of the answer
Mike. I am trying to put in the total context what Paul was
saying. I think when you do that and take into account what I am
saying the conclusion you can formis this, the Government
recognises and has been recognising the changing nature, if you
like, of the problems with which we have to deal and we will
ensure that the instruments of policy available to us will be
utilised to deal with that problem. As a community we showed
in 1983 our capacity to deal the worst economic problem Australiahad
for 50 years I am sure we can do it again.
JOURNALIST: ' Prime Minister, did you ask Mr Keating to be
careful of the sort of language he uses in the future? You
didn't put that too him
PM: No.
JOURNALIST: what did you think of the market figures?
PM: The market goes on for more'than one day. The market
yesterday seemed to react somewhat. At least there-is a
relationship he spoke and then the market moved. The market
has come up again today. The market is a strange animal as you
know Geoff.
JOURNALIST: Is it responsible for a Treasurer to make statements
that are going to cut 4 cents of the price of
PM: Well, you have got the problem that if you look at what
part of what the Treasurer said out of its total context it
could be seen as rather horrific. I suppose it was. But if you
read the total context of what the Treasurer said where he said
7.
look here are the things that need to be done and i-f these
things aren't done then you can have a dramatic sort of situation.
I would think if the whole context had been seen you may not
have had the reaction that you did. This is a constant problem
people in public life. You ought to know. Some of the things I
have said, if they had been taken out of context it would have
been enough to hang me but fortunately you are usually good
enough to put them in context.
JOURNALIST: Mr Hawke, you made certain guarantees to the State
and the last Premiers Conference about....... tax sharing. In view
of the seriousness of the situation are those guarantees up for
grabs? Pm: well, you will appreciate that what the Government provides
by way of revenue to the States is not exclusively covered by
the 2% for the recurrent expenditures. Let me simply say
generally as Mr Keating has been saying that I think the States
are going to have play their part in the exercise in restraint
which is necessary.
JOURNALIST: Mr Hawke policy adjustment as a result of
the very substantial
PM: No, I don't think so at this stage. I think if you look at
there has been a fairly substantial discount which has been
agreed to and I repeat that if you look at Australian history,
I don't think there has been a period in the past where you have
had such high levels of growth where you have had such restrained
wages outcomes. I think it is sensible at this point to continue
with the processes of the Accord which have produced that result.
You will appreciate that the Accord II does contain the vision
of the end of the Accord for rediscussion. Now that capacity is
there. I don't think that at this point that it is appropriate
to go to that. I think we have got to as a Government pursue
our task that I have referred to in the Budget area and I hope that
exercise and its associated needs of restraint on the part of
the States will meet the problem we are confronting. I don't
think there is any necessity at this point to go beyond that.
ENDS