TRANSCRIPTI OF INTERVIEW WITH DEPRYN flINCH, 3AW, 12 JUNE 1986, E 0 E PROOF ONLY
Hi P resumably anybody who did what you had to do last
nig ' would be disappointed when you see the papers and hear the
rea~ ction to it, the rejection of a lot of the spirit of what you're
saying?
H. one would have liked a more fulisone response but I've been on the air
this morning Derryn and 1 think the sound media has been very, very
much m~ ore perceptive, if I may say so, I hope you keep that record
up. But, people who were expecting a budget speech, where you were
puLLiny out, setting all the details of the budget, simply had the
wrong set of expectations. I think the judgemient needs to be made
now In terra5 of the next steps that are involved, starting tomorrow, with
the Premniers' Conference. And then with the Budget, and I've promised
that the decisions will be tough and necessarily tailored to meet
the challenge confronting the nation. Now I just simply have a
great faith in the ordinary Australian people, I thihk they'll respond.
Aind the other thing I'd like to say is it's fascinating to me to see
the statements of the Business Council of Aus. saying, " oh yes not
bad in some respects, but we're a bit sorry that the PM supported the
productivity superannuation case" e they come out and say that now, but
what they've been saying to us in our consultations is that they think
that's the right thing to happen.
Hi What you've done or your support for it?
H. Support for it.
Ill. . he main issue of your speech, sure ly9 was it aimed at the Australian
people, * to say let's all get together or was it aimed with your
eye over the International Market hoping that you'd breat-he some life
into the dollar?
H. A good question Derryn, and you have two markets. You obviously are
talking to the Australian people and that was my main concern, talking
to them. Obviously, also~, you're trying to get a message to the business
community here and internationally. Unfortunately I don't think that
they have been as pcrccptive as they ought to be in understanding that
the policy and approach that I outlined is the best possible one
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because if you doh't have the centralized wage fixing system and theI
reduced real wage outc6me that I believe can be obtained under the
approach I'm outlining, then the alternative is the free-for-all
situation that's been advocated by the opposition whichlin their lastI
year, produced 16% explosion in wages and that will be disastrous for
the business community. Now I think gradually they will have the
wit and the wisdom to understand that.
sort of buried in the middle of the Age story, a comment that I found
very pessimistic and a bit disappointing, was that you were asked about
the reaction of the financial markets overseas in London and New York
and you said anid I quote " I wuvld have to ask the international
community what moxe can a Govt. do?" It sounds aS if you're almost
throwing your hands up over it? I
That was directly related, just to fill out the context in which I was
saying it. in the areas in whioh the Govt on macroeconomic considerations1
in the area under the Govt's control or influence what more can the
Govt do. I said. There are areas that I referred to. one was the
area of budgeWv policy, fiscal policy, now I said we are exercising
in our processesq getting ready for the budget very.) very considerable
restraint. Already identified a billion dollars worth of savings against
Govt. programs and more to come, and we will be tough with the states,
so we will bring in a budget which will be tough and then secondly
I said in the area of wages which is a second importat-. area, there we
don't set wages but we can exercise some influence, put a position
and what we're talking about is a wages outcome of only a 2.3% increase
in 1986, the only National Wage Case increase. Discount involved
in the delay in this case, a further discount by no further wage increase
till January ' 87, and then arguing for further discounts. So I was saying
In that sense what more can a Govt do in these important areas?
Hi Alright you've mentioned the states, getting tough with the states,
I had Premier Cain-on a few minutes ago and, not exactly his words,
but I think it-gives the message, he believes if you don't give the
states the 2% increase that he believes they're legally entitled to,
it will be the equivalent of you stealing from a trust fund?
Hi. But what you've got to understand, and I know that John Cain does that)
the components of Federal Govt. outlays to the State do not consist
only of the 2% grant, the current grant. There are other areas of
Govt. outlays to the state~ and I'm sure that John Cain does not delude
himself that we're not looking at those areas.
Hi Would I be right in saying that the " deal" if you can use that word
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is they will get their 2% but they'll also have the screws tightened
in making pledges over overseas borrowings?,
H. Well) you appreciate Derryn that I'm not going to 90 before I meet the
Premiers, I'm not going to talk about what we're g~ ing to be puttingI
to them, that's not fair to the Premiers. The fair thing is to give
them a good clear indication that weure going to be tough, -The details
of our toughness should properly be put to them.
Hi Alright, a different issue, one you raised last night about voluntary
work for people who are unemployed especially young people. And I
preface it by saying that I know that 14r Howe believes that I have
contempt foi the millions of Australians who are in that situation, so
he sdid in the House recently, but do you really believe that the
way you outlined It it can work. You say that you want to have
voluntary work, community work for yot# 5 people especially, who wan t to,
and you quoted Priority one and say that's what they want to do.
In your travels do you really believe that the young unemployed people
now, some of them, many of them even really want to do community work,
voluntary work?
H. All I can say is that I met literally hundreds round Australia as I did
hto( A1 CM-. 1 don't make things up Derryn~ whatever criticism you have of me
you know I don't make things up, the talking I did vith the young people
of Australia was that they overwhelninI. felt, firstly they wanted a
job if they could got one, let me put a parenthesis in here, of course
there are some people in the Australian community who don't want to
work, I'm not saying there are not some, but-the overwhelming majority
want to do something. And they said well if we can't get a job Mr Hawke
in the ordinary market we'd at least like to do something for the
community.. So our responsibility now is to sit down with the voluntary
organisations with the States and local Govt and try and build up a
bank of community work which the unemployed can do, not five days a
week because they've got to be given the opportunity of continuing to
look for work, but it's not something that~ being imposed. you seelupon
what I believe is basically a reluctant constituency, I think they
want to do it and I know that the community feels that it should be done.
ty( te\. e as
Hii Well I as A a Prime Minister that you're wrong. I believe there are a lot
of people there who don't want to work, and I think in terms of the onev
who do want to do voluntary work, and it's laudable, are already doing
it or trying to, and you wouldn't know the name Allison Rooks-she's
a young girl from Geelong she's about to lose her unemployment benefits
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because she does voluntary work and the CES says she's not allowed to.
M. Well 1 am not prepared-to accept that as the total explanation of the
facts, if you would like or she wo ld like to give me the details
I will guarantee to have that case looked at. I can't accept that
the explanation that you give is accurate.
H. deiibdrati misrepresenting gomething, but I don't think that that's
necessarily all the circumstances.
Hi Alright.
H. I give you and Allison my undertaking that if she or youor she
throughyou send me the details here at Parliament House I will have
that looked at.
Hi I can leave that one case alone, it's not fair to drop that on you,
H. There's no question of dropping it, I'm just simply undertaking that if
you send me all the details I'll have it looked at.
Hi But if you look at it this way surely if young people, who you say the
ones you've all talked to, who are getting unemployment who can't find
work and some of them just can't find work, really want to do
voluntary work, they'd be doing it there is plenty of voluntary work
out there for kids right now, anybody any age?
H. Well you say that but with respect to you Derryn what you've got to
understand is these kids haven't got the opportunitythe capacities
for communicating, identifying with the areas where you say these things
exist. What we as a community should do is to say, we will organise
the availability of community work, we'll accept as a comminity the
the responsibility of doing that so that it can be identified to the
young people, so that there can be supervision. What we want to do is to
have a situation where~ while it's not work experience in the normal
sense at least there will be some sense of identity amongst the
unemployed with the community. The only nexus at the moment between
this P6xmmunity and the unemployed is the sterile connection that
exists when they pick up an umemployment benefit cheque. I want to see
a situation where the relationshipthe nexusbetween the community and
the unemployed is a much more positive one so that the unemployed can
have the feeling that they do have a relationship with thetnmunity
which is providing the benefit and vice-versa that the community can feel
that there is some return.
Hi Why wouldn't you make it compulsory?
H. Because the realities are it'ssilly to talk about compulsion now when
we won't have the opportunity at least for a considerable period of time
of getting a sufficient bank of community work which would match the number
of the unemployed. i'm quite certain that as we build up this bank
the problem will not be one-of compelling people to get in, I believe
we will not have, certainly in the early stages, enough work opportunities
to match the number of people who will want to do it. I've said that
if much further down the tracklyou reach the position where you are able
to create more commnunity work opportunities than there were there to
be filled and there did emerge then an identifiable situation of
people saying'no', not prepared to do anything, then I think at that
stage the community would be asking the Govt to look at the question
you raised. But it's an irrelevant question in the realities that
we're facing, what we need to do, and what I know the community wants
and what I believe the unemployed community wants is to get them the
opportunities to do this sort of work. And that's what we're going to
address ourauelves to
Hi You* re well aware Mr Pm there' s a growing feeling out there in Aus.
when you travel roulhe country one of thO-, I mean GovtS suddenly find
-themselves confronted with one big thing like the Fraser Govt may be
hit with one big thing that starts to grow in the community. Here at
the moment under the Hawke Govt. after your second election out there
there are thousands of ordinary working Joes who are paying their
PAYE taxes and they look at what they conceive to belperceive to be,
massive welfare fraud and they are sick of it.
H. And I'm sick of fraud and may I say that one of the basic reasons why
I want the Australia Card in, the best way of stopping fraud is to have
an Australia Card with photograph.
Hi I couldn't agree more.
H. it will save us millions of dollars.
Hi What are your chances?
H. Well let me put it this way, if you have any influence with the Liberals..
Hi I doubt I'd have anymore influence with them than I have with you.
H. I don't know about that I wasn't implying that you did. If you can
persuade the Liberals and the Democrats-that this is necessary to get
the most effective-means of stopping social security fraud then that's
whais necessary. My party, the Govt, has make the decision that we
should have an Australia Card with photograph, for two reasons. one
to ensure that people don't dodge their obligations to pay tax and
secondly that we nail social security fraud. Now that's the best
way of doing it and if people want that to happen then they should
pressure the Libs and the Democrats to make sure that they allow
that legislation to pass the Senate.
Hi Yeah I go along with that.
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Hii You invoked last night in youv speech, you invoked the names of people
likeDeCastellaJohn BertrandRen Lexcen, Joan Sutherland) and I agree
they are not only heroes and achievers but out there there are
thousands of unipmed Deeks and Bertrands etc etc but the argument can be
put that by what your Govt has done in the past 2 or 3 years is that
you are putting hurdles in the way of a marathon runner that you're
taking the wings off the keel when it comes to people trying their
best in small business getting them going, things like the fringe
benefits packages, things like that.
R. It can be argued. but it's argued wrongly because let's look at the facts.
As a result of a combination of policies followed by this Govt
business profitability, that is for large and small business, is back
to the record levels of the late 60' s and early 70' s and far beyond I
what operated under the previous Govt. So the combination of policies
already there has acted to their benefit. So anyone who wanted to I
argue it would be arguing incorrectly. Let me just give you, read to
you~ from a letter that was sent to me earlier this month from a company
in Victoria which gives you a concrete illustration of the truth of
what I'm talking about. ( Read letter "$ 70M plant" CJ L)
Now there's a specific example of a company writing to us saying
thanks Mr Hlawke as a result of what you Govt has done this is what we've
been able to do. You refer to the EDT akay, I'll take that head on.
I am absolutely committed to a proposition that-we had to end a system
where a very small proportion of the people in this country were able
to avoid their taxation obligation, where the great majority of people
the great majority of your listeners had no opportunity of doing it.
And it meant that the great majority of your listeners were paying
more tax because a small majority were able to get their remuneration
in a non-wages/ salary form to avoid tax.
Hii I agree with part of that Mr PM, but haven't you thrown the baby out
wth the bath water? Because it's not only to get people who are say"
hiding or getting their school fees paid or the big company car, it
spreads across a heck of a wide spectrum. And people sotne in factories
and some in Department Stores and some school teachers and..
H. You can talk about the wide spectrum, and I'm telling you that as far
as the actual recipients of fringe benefits are concerned at the maximum
it was about 11% of the total wage and salary force. And that small
proportion was imposing an added burden on the other 85-90% and that's
not the way equity works as far as I'm concerned. The second thing,,
remember this when you talk about the FBT. The Govt. is not going to
get an extra net cent out of it. All the money that comes to the Govt
i~ i s.
from the FET is going back to reduce the marginal rate from 60 down to
49 and the other intermediate rates. We can't give incentive to
people in the community, including people in thebusiness community
the salaried area, we can't give them the incentive of very substantial
reductions in their income tax rates so that they're Paying so -mucbout
of every extra dollar in tax unless we make sure that we get revenue
in and we get it in from the areas of people who in relation to the
rest of the community were on a rort.
Hi Then people on a rort, as you say it, that would also include the country
policeman Lhe country school teacher whose rent in the State of Victoria
may go up by $ 30 $ 40 $ 50 a week.
H. WellI'm saying to you that as far as the implementation of the fringe
benefits tax Paul Keating has worked meticulously, has worked
assiduously, to listen to all representations about particular difficulties,
a large number of adjustments have been made and in the overall
approach I believe that he has done a magnificent job of trying to
accommodate as far as you reasonably can while retaining a system of
getting at those people who have been rorting. And as I say, without the
income that you get from abolishing the Fringe Benefits we would not
be able to be producing a result where the top rate will be coming down
from 60 to 49 and the other intermediate rates will also be coming down
very significantly. This Govt. cannot manufacture resources out of thin
air. As I said in my Speech to the Nation Last Night, it's not Bob Hawke's
or Paul Keating's or the Govt's money that we're using. it's the moeny
of the people of Australia for their collective purposes and welfare.
And we've got an obligationDerrynto see that that money isas generally
as possible, raised as fairly as possible so that undue burdens are
not being put on the majority by the opportunities provided to the
minorities to rort the system.
Hi well, I think despite what you say it's a minority rorting the system,
and I think those people should be rooted out, but I think you've got
a time bomb on your hands with the extent of the Fringe Benefits Package.
H. Let me say this, that's your view. ll the research that we've undertaken,
and independent research shows that the overwhelming majority of the
Australian people approve of what's been done 6n the Fringe Benefits Tax. 1
the research shows it. And it's not surprising when you have the great
majority of the Australian people being ordinary PAYE taxpayers with
no opportunity Lo rort the system they applaud a Govt. which is going to
say we're going to reduce the burden on the majority by ensuring that
a small minority can't rort the system. I'm not worried about the
reaction to the IBT because the overwhelming majority of people are in
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Ct situation where they can't rort the system. They are Pay as you earn
taxpayers, they go to their office) they go to their factory, their
tax obligation is taken out under the PAYE system and they are sick
and tired., as they ought to be, of knowing that over the years they'Ive
paid billions more in taxation because a minority have ripped them of f.
They support it.
Hi Alright. One final question Mr PM and I ' said this was a speech
last night both for here and for abroad, the reaction abroad was not
good, I'm sure you'd concede that with a drop ift the dollar..
H. Oh well just wait a minute about that. The international business
community might have had some quite false expectations and had an
immediate reaction to it. If they were expecting a budget speech in
which we were going to detail all our cuts and expenditures, they were
wrorty. And I think they will come to understand particularly when they
start to see the evidence tomorrow of the toughness of this Govt s
position, when they understand that what we're saying about wages
will produce a significant outcome. I am~ confident that they will
make the appropriate and the correct judgement then, that you've got
a Govt which in the macroeconomic area is setting up a policy
framework best calculated to produce the appropriate outcome.
Hi. with respect Mr PM, it doesn't matter if they misconstrue it or if they
have wrong expec tation s, they did it.
H. ,,, irmnediate reaction, i am saying that I am confident that as the actual
decisions are borne out that they will make a positive judgement,
that's what I'm saying.
Hi Alright, if it doesn't work do you devalue again?
H. Well I don't think that's going to be necessary because I think that
we~ have had the worst now of the massive decline in the terms of trade)
because since June in that very short period of about 9 months there was
about a 9% decline in our. termns of trade, I don't think that is going
to continue. I think now, that provided there is the appropriate
reactions from the business the trade union community and the Arbi Comm3
believe in those circumstances we will have the right setting. I
HI. One final question should you have made the s peech a year ago?
H. With respect, a silly question mate, this speech is made because in the
last 12 months the world by what it has done in regard to our prices
that we get for our exports, they* ve marked us down in a way which has
lost us three percent of our National Income, it is because of what's
happened In the last 12 months that I've had to make the speech nlow.
Hi Alright Mr PM I thank you for your time.
EN4DS