PRIME MINISTER
E OE PROOF ONLY
TRANSCRIPT OF INTERVIEW WITH THE PRIME MINISTER BY HAYDN
SARGENT ( RADIO 4BC BRISBANE) -1/ 12/ 86.
H-S: ( missed the beginning of' the question but it went
along tile lines-)
How has your position on uranium and other things affected
your Government's performance and standing In the
Community? And the call f or restraint?
PM Sure as we come to the end of 1986 there's been an
acceptance and appreciation by those people and others
that they have a government, that's prepared to take
tough decisions, not for the sake of being maco and
saying look how tough I am, Out when you lose $ 6 billion
of* national income as we did then adjustments have to be
made, Therets got to be restraint all around and we've
been prepared to stand up and do that, to make tough
tax decisions, to withstand a lot of dishonest advertising'
misrepresentation and I think in the end the people,
including the ones you talk about, will say well I'd
rather have that than the deception and opportunism of
our opponents,
HS If you had known the furors that the FB? was going to
create would you have handled it differently?
PM. Well it's clear from the fact that we made some changes
that we didn't get it right the first time. That's
almost Inevitable because because the whole maze of
contrivances that Come under the category of' trilige
benefits were so extended that It was I guess almost
impossible we were going to pick it all up exactly right
first go. If we could have known what the uninte~ nded
consequences were well we wouldn't have done It obviouslythe
way it was done. but again I think r know the
general public-pretty well and I think in the end the
majority approves of a government that says well all right*
we didn't get it exactly right, the principle is unshakeable
we'll make adjustments in line with that principle-and
get it right the second time. I think they approve or
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Do you think Mr and Mrs Average understands what the
fringe benefits tax is trying to do?
Yes I think they do now, They know, Mr and Mrs Average,
that they pay their tax on their full income every'
week on their PAYE system. I think they are becoming
increasingly aware that there is a minority of their
rellow Australians who don't get their full. remuneration
in their pay packet in the way Mr and Mrs Average do
and that that had meant that minority has been avoiding
paying the full tax obligation and-the fringe benefits tax'
is calculated so that Mr and Mrs Average is not put at
a disadvantage and I think they Increasingly understand
tht. is.
Talking about the economy and you mentioned the
disappointment during the year as far as the economy's
concerned, As I understand it by 1988 our Bicentenary
we could be up around about $ 100 billion In national
debt compared to $ 3.5 billion in 1970...
Well I wouldn't say whiat the figure would be now, what
I am concerned about is will we as we go into 1987 be
seeing the turn-around in that growing monthl y deficit
in current account rigures, and I believe that we will.
That will be happening for two reasons firstly the
volume of Imports will continue to be falling As the
impact of' the depreciation bits and our own manufacturers
become more competitive, arnd on the export side we will
be exporting more, so that on the two sides that deficit
will be coming down provided that not only we but the
international markets sees that that approach is workin.-'::
and that we are not going on accumulating debts in an
accelerating fashion arnd that we're~ restructuring our
economy in a way that is relevant to the changed
circumstances* theb the-Australian economy will be in
good shape not just because we will be doing the
restructuring but because the judgemenit about the
Australian dollar by the market will be one of stability
and we won't. therefore, be under those pressures to
maintain a high interest rate to protect the dollar, the
dollar will be stable, and that menas you will be able
in that circumstance to relax monetary policy to have a
downward movement through 1987 in interest rates and the
Inflation rate coming down in 1987. Those are the
important things.
But that'sa fairly slow process really, isn't It?
Sure. You don't overnight change the accumulated
problems of decades. I mean the Liberals were in for
seven and a half years, they kept our dollar over-valued,'
they ruined the structure of our manufacturing industry
meaning it wasn't competitive, and in those circumStances'j;
what you've got to do is gradually make the changes in
restructuring the manufacturing industry so that we can
retain competitiveness that's now been brought about
by the fall in the value of the dollar, and that's what
we'll do.
HS John Leard Who published the book " The Worst is
Yet to uome" made an Interesting sentence, and I
don! t apply it just to your government but to the
previous governments including the Fraser government,
the Whitlam government and maybe even before that,
he made a sentence " This generation has mortgaged
Australia and future generations will have to pay",
do you think that's true?
PM It's a matter of definition that If any generationhas
a situation where it Is undertaking significant
borrowings let me remind you there is an overwhelming
proportion of the overseas borrowings which we have now
which has not been done by governments, it's been done
by the private sector like Mr John Leard, and I'm not
saying John Leard I don't know what's he's borrowingbut
I'm saying it's the private sector who borrow Overseas,
they have borrowed overseas on the basis of a
commercial judgment that they can invest money that
they have borrowed in enterprises which they judge will
be economic, so that over that longer period they will
be able to generate income which will meet the service
costs of that capital that they borrowed. So in that
sense borrowing of itself should not be seen as something*
which is negative as long as the country has the economic
capacity to service that debt out of future income.
HS We're servicing some of our debts out of borrowed money,
aren't we?
PM Well that of course happens to some extent and we-could
not go on as a country where at the government leyel
you were having budget deficits which I remind you when
we came to office, the upcoming deficit which we inherited
from Mr Howard as Treasurer amounted to 5 percent of
our gross domestic product, and you can't go on doing that,
you can't go on maintaining standards by way of public
expenditure.
HS What is it now?
PM We have brought it down to 1.4 percent.
HS individuals and companies suing unions for
losses experienced as a result of unauthorised strikes.
What's your reaction to that?
PM Our response to this whole question of industrial
relations and sanctions will be delivered in the Parliamei
in the Autumn session when. we resume In 1987 and our
consideration in this matter will come out of a process
of considering the Hancock Report which consisted of
representatives of employers and trade unions from with
an independent chairman, Professor Hancock. They've
made recommendations to the government on how the whole
system of industrial relations should be reviewed and
changes which go also into the question of sanctions and
obviously I'm not going to announce in advance Haydn, I * s
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can say this that I believe when you see the decisions
we'll be making in that area of sanctions that you will
approve of what we do and importantly I think there will
be a widespread community approval of the way we go about
this.
HS What do you think of the achievements of your government
in 1986?
PM Oh there's no questions that the main achievement if the
bringing into place the most far-reaching reforms in
the taxation system of this country ever, without going
into it in all its detail what we inherited was a tax
system which waw virtually on. the point of collapse.
and the most outstanding feature of that collapse was
that an increasing burden was placed upon the ordinary
) honest taxpayers of this country who are PAYE taxpayers
and they can't avoid their taxation obligations, and in
the event the marginal rate of tax comes far too high.
Mr Howard's legacy to this country when he walked out of
his office of Treasurer in March 1983 was a top marginal
rate of 60 cents in the dollar. Now I have already now
as a matter of law changed that, the first element of the
tax cuts in this program coming in today and by legislatiot
the second lot coming in on 1 July 1987 that will reduce
that top rate from 60 down to 49 and corresponding
reductions from 46 to 40 and that will mean the avrager
tax will be cut in the order of $ 10 to $ 12 a week and.
that will restore incentive. You can't have incentive
when the top rate if 00 cents. in the dollar so we've
brought that down to 49 cents, Now we've financed that
by ending the rorts the entertainments allowances, the
fringe benefits so that there's been a whole
restructuring of the burden and those that have avoided
their obligation now have to pay it. and as we get
contributions from those who have avoided it in the past
it means we can lift part of the burden on the ordinary
honest taxpayers. That will restore incentive and it
will also make for more efficient economy. because
resources will now be going into productive areas rather
than into concocted schemes using resources.
HS I raise the question of your defence of Paul Keating who
has embarrassed you on two occasions one was on this
question of living away from home allowances,. the other
was on the tax return that he failed to lodge.,...
PM Let's take the two points first the travelling allowance,
Paul Keating has acted absolutely within the rules
relating to travelling allowance laid dewn by the
independent Remuneration Tribunal as have those people
sitting on the front bench of the Opposition who are
acting in exactly the same way. Neither Keating nor the
leading members of the front bench of the Opposition who
are drawing that allowance are acting other than within
the rules of the independent Remuneration Trubunal as
Paul Keating's also acting within the strict guidelines
laid down by the Cabinet.
The tax return thing must have been a bit of an
embarrassment though?
I'm glad that Paul Keating has, without equivocation
acknowledged that he is at fault and he has unequivocably
expressed his regret for that fault. There* s no excuse
and he doesn't attempt essentially to excuse himself
for that fault. Let us have this fact clear there has
been no impropriety the loser as a result of Paul.
Keating's fault is Paul Keating because he will be getting
a refund in respect or that return which he hadn't put In..
and again correspondingly therefore has been the'
Commonwealth revenue. That doesn't excuse his fault
nor do I condone it but there is no question of
impropriety. I, of course, wished he hadn't made that
mistake, but if I nave to draw up a balance sheet about
. Mr Paul Keating and what his activities have meant t0 the..-.
welfare of ordinary Australians then I say that his
unsurpassed achievements in bringing in a fairer tax
sysLem, in seeing that there's going to be an end to
the rorting and that those honest taxpayers are going to
be able to get a fairer go, you can put all that against
this mistake which has cost. him money, then at the bottom
of the balance sheet I have a remarkable man.
Prime Minister on a personal note you had a fairly
meteoric rise to the job of Prime Minister, few other
people have come into the House and spent as little time
on the backbench of the Uppositlon and then into Prime
Ministership what are your thoughts about politics In
Australia? Are you disappointed with what you rind, are.:,
you disillusioned, is it as you expected?
No I'm not disappointed, what you've got to remember is
that politicians in any country are not really going to be*.;
any different to the people of that country itself and
politicians, therefore, of Australia reflects the trengths
and weaknesses of the Australian people.
So we get what we deserve?
Yes and in some respects you get good things and in some
respects you get bad things because Australians are a
mixture. Let me say because I love Australians and.
because without any bullshit if I can use that which is
not offensive but which really picks up what I mean,-
Australians are great people but in their makeup they
have excesses, they have rough spots, they have a toughnesd"
about them and that is rerlected in our politicians,
Australians also have a sense or a falr go. they do I
think have an underlying sense of concern for the under dQI,œ
they do have an underlying compassion and I think all
that's in our politicians, so when you say Austral. lans
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get the politicians they deserve or however you want
to express it, we as a group of politicians are In a
sense a microcosm of our fellow Australians.
HS What happens to Bob Hawke after the next election if he
wins. Will he stay on for a full term
PM When we win the next election we will go the full
distance*.*,,
HS You won't call an early election?
PM No.
HS You'll go the full distance?
PM Yes.
HS In spite of whatever may come?
PM My position is that we go the full term amd I can't*
see any reason to qualify that,
HS So if you win you stay on for another full term
PM Oh I would be looking at that full term. I mean I
don't want to stay in politics forever, if I get another
term I would have to take It and at the beginning of. the".
1990s I would have been there seven or eight years..
HS You could become an emmlnent person then...,
PM Well our people might describe me so Haydn but er...
I believe by then I will have put my mark on this
country I
HS Is that a fairly good feeling?
PM Yes I hope it will be a good mark I'm trying my best
to make sure it's a good mark not so I can sit back and
say ' look what a good Job I've done' but I do really
believe this period the latter part of the eighties. is
a critical turning point for the future of this country'*
and let me frame very quickly why I mean that, itts
just at this period that Australians I think have come
to be able to be persuaded and to understand that great
changes have to occur, we've had it luckly I'
fundamental respects we've had our meat and our wool
and our dairy products, and the world wanted them, then
we had our iron ore and our coal and the world wanted them'o
but now suddenly, rather than by a gradual process, the
world has marked down massively the prices of those things*
which cost us about 3 percent of our export income. They
said we're not going to pay you your prices for those
things. Now if we're going to prosper we have to change'
and restructure our industry and the more competitive
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manufacturing sector, have a more competitive
services sector, and so if we're going to be
competitive In the world we've got to be prepared
to change our practices and our habits, we've
got to derer our expectations somewhat. So it's
hard but it's also a glorious opportunity because
we've got so many great resources, both politically
and naturally, we're prepared to make those decisions
now we, this generation. this time in Australia and the
people in it, can make an enormous contribution to the
future welfare of the coming generations of Australians.
I'm not being dramatic that is factual that to be put in
a position where you've got the opportunity of leading
the country to make those changes is a privilege
and an opportunity something that hasn't been given
to anyone before. I'm excited about it but more
importantly I'm optimistic about it.
And if at that next election you happen to lose, would
you sit in Opposition?
No I wouldn't think that would be appropriate, if y
party pressed me to I would consider it if there was a
suggestion that that wasthe way forward but I know that
by the time we go to the next election the people will
know we've had enormous achievements and for that reason
I-believe we will win,
Prime Minister, thank you.
Pleasure Haydn, always to talk to you.
a . e I
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t i ' I ' S
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