TRANSCRIPT OF PRESS CONFERENCE
HOTEL SHILLA, SEOUL
31 JANUARY 1989
E AND OE PROOF ONLY
( Journalist) Prime Minister, I have a domestic question,
if I could, how concerned are you about the CPI
( Mr Hawke) Obviously we are disappointed that it's as
high as it is but you will have seen from what my colleague,
Treasurer Paul Keating has had to say, that there are some
very special reasons for the figure being as high as it
is and that is the way in which there's been effected into
the calculations the movements in housing costs. Now, the
fundamental point is that it assumes that every household
in Australia buys a new house every quarter which is quite
unrealistic and if that's abstracted, the figure for the
December quarter would not be the 2.1 but 1.4% and for the
year not 7.7 but 6.8% and as the Treasurer points out if
you make a comparison between Darwin and Sydney you can
see the unreality of the figures. So when you look at the
Sdownward movements of the elements in the index of beer,
pharmaceuticals, the health sector, fresh vegetables, we
are convinced the fundamental scenario that we believed
at the time of the budget is taking place that we are looking
at the downward movement in the fundamental inflation rate
Sand there is no reason therefore, in our judgement, to
for instance in the area of wages, suggest that there has
got to be some revision of the strategy that we've had in
mind there.
( Journalist) Do you feel confident that inflation has
come down this year.
Mr Hawke Well what I said when I was asked, I didn't proffer
a view, I was asked will interest rates come down this year,
I was asked within the latter part of January, I expressed
the view then that I think they will sometime in 1989. / 2.
-2-
( Journalist) Do you still hold to the view, Mr Hawke,
that they won't go up before they come down.
( Mr Hawke) : Well let me put it this way. As far as we're
concerned, I share the view expressed by the Treasurer today
in his press conference on the release of these figures,
that we believe that the monetary policy as far as the
government is concerned is appropriately tight. Now obviously
with the release of these figures there may be some reaction
in the market, but the important question is what the
government' s attitude is as far as we're concerned we believe
that it is appropriately tight.
( J ournalist) : How much more difficult does this now make
* it to achieve a satisfactory wages outcome.
( Mr Hawke) : Well I only had the opportunity of seeing a
brief reference to ACTLJ reaction since I returned from lunch
with the FTA, but it does seem to me that the public statement
from the ACTU is that * there's no reason to depart from the
existing wages strategy and I certainly hope that will, be
the case.
( Journalist) Even with those adjustments Mr Hawke you're
still a long way off budget projections. isn't there a need
to assess your fundamental ( Mr Hawke starts speaking)
( Mr Hawke) : Well 1.. 4 I mean you'd be, 1.4 for the December
quarter. -I'm taking into account the September quarter,
itself appropriately adjusted for this factor. You are not
that far above the sort of order of figure for the end
1988/ 89. I don't see any reason on those figures to panic
in any way. The question is are the things that the government's
doing having the sort of impact on inflation that we want
Wand that is it. Are we looking at a fundamental downward
trend I think the answer is yes and of course I should
make the observation as Paul Keating said today after consultations
with me by phone this morning, we will specifically address
the issue which has been reflected in this large increase
that is housing costs. I, as you know, wrote some months
ago to the Premiers to address this question, asking them
to address the question of making more land available so
that you could have on the supply side an impact on costs and for
our part we ' ye got our own task force looking at the question
of what Commonwealth land in capital cities may be released
to release pressures and I've agreed with Paul Keating that
I'll summon a meeting of the Premiers to address this aspect
of the impact of rising house and land prices. So, in the
area that we're responsible for we think it's going in the right
direction and insofar as we can do something further to address
this element we're going to tend to do it.
( Journalist) Mr Hawke are you suggesting that the housing
factor might be abstracted out somehow or other in terms
of the wages outlook.
( Mr Hawke) Well I think, let me put it this way. It would
be ridiculous for instance wouldn't it to apply nationally,
the national wage case approach a figure which is dominated
by Sydney where wage and salary earners throughout, the rest
of Australia have not been affected by that impact and where
existing householders are not effected. If anything the
impact of the rising prices to those that have got the
houses to increase their equity to make them better off
not worse off, as the Treasurer said. So I think that the
ACTU will responsibly understand that in those circumstances,
Jeff, it doesn't make sense to jeopardize the whole wages,
Sprices, competitive position outcome because of this factor.
I mean it's not a terribly esoteric thing that we've got
to explain to them and I think they understand it.
( Journalist) Given that all families either pay rent or
repayments is it not cheating to just ignore the impact
of housing costs.
( Mr Hawke) No because what I've said in substituting 1.4
for 2.1 doesn't take rents out of it. I mean that leaves
the rent component in it.
( Journalist) When you say you're confident the ACTU will
understand, Mr Hawke, have you had any indication of the
executive's position or are you just ( trails off)
( Mr Hawke) No, I'm I'm I'm as I've said, Michelle, I'm
going on the report that I've seen the fax report of some
comments that have been made. I've had no personal discussion,
SI've obviously had no chance to do this but I would believe
that in the discussions with the Treasurer will have with
the ACTU that they will understand the good sense of the
approach that I'm suggesting and which the Treasurer is
suggesting. I wonder if a question
( Journalist) Could you say something about you visit for
those of us who aren't from Australia.
( Mr Hawke) Yeah sure. It's a bit esoteric this stuff right.
( Journalist) Can you tell us about your meeting with
President Roh 4.
I I
-4-
( Mr H-awke) : Yeah sure. Well let me, just before I do that,
if there are any further questions afterwards about this,
we'll come back. Before going to that meeting in particular
I'll make some general observations about the visit, I want
to say as I said at the luncheon I've just attended sponsored
by the Korean business community, that in 1988 in our
Bicentennial year, we were really at home and at host. We
had people coming from all over the world. Now, 1989 I'll
be undertaking a number of visits, to a number of countries,
and it is significant, I think that the first country that
we are visiting in 1989 is Korea. It comes soon after the
meeting I had with President Roh in November and at that
meeting I think firstly we established a warm personal
relationship and it's certainly been consolidated by the
meeting I've had with him and others of his Ministers and
leaders of this community, including the opportunity I had
tis morning of meeting with leaders of the Opposition
Parties. Something of course that I wouldn't have been able
to do in my last visit here in 1984 and it's a measure I
think of the change in the situation in Korea that some
two and a half years ago the Australian Ambassador was in
trouble with the authorities for daring to actually have
a dinner meeting with Kim Dae Jung. On this occasion he
was a welcome guest at the dinner hosted by the President
last night and I had a meeting with him today so that gives
you if you if you like some sense of the background, generally.
and by way of comparison with my last visit. Now, in the
meeting with President Roh, essentially our discuss; ions
came into these categories. We talked about the global context
and agreed that we do indeed now lead our countries at a
uniquely important time. In that he agrees with me that
this is an occasion more than at any time in the post-war
period when there is ground for optimism in the assessment
one makes of the relations between the super powers and
that that has created not only a thawing of the relationship
between the United States and the Soviet Union and China
has been involved in this thawing vis a vis particularly
with the Soviet Union but that this has been reflected
in the easing of tensions in a number of spots around the
world most obviously Afghanistan, Nambibia, Angola which
both the United States and the Soviet Union had an important
role to play and there is increasing evidence in Cambodia
that there are grounds for optimism there and of course
within that context really that we had the next Cabinet
discussion that is the regional impact of these changes
and other regional initiatives in the political field. I
again spoke in some length with President Roh on the question
of his Northern policy because when he was with me in Australia
in November he outlined in some detail his intention to
pursue the initiative of trying to have contacts with ' the
North, his Northern policy and in that period there have
been developments. The details of those developments and
indicated to me his intention to continue that thrust of
policy to try and increase the contacts, the level and
depth of the contacts, and of course he had encouraged me
in Australia in November to on Australia's behalf to open
up contacts with the North. Since we've met him we've done
that, we had some of our officials in the North earlier
this month and then just on 26 January we had our Ambassador
in Beijing meet with one of the Deputy Prime Ministers of
the North in Beijing and we, had further discussions. We
have kept the President informed of those developments,
he welcomed them and we have undertaken to keep them informed
of those developments and I've made it clear that insofar
as we are opening up further dialogue with the North there
will be a conditionality about that approach in that
Australia's preparedness to go further in substance will
be a function of how ready the North is prepared to engage
in constructive dialogue with the South. And the third
category, if you like of our discusions was with our bilateral
relations and we were pleased to see that the initiatives
that were launched in Australia. In November are being
effectively progressed in particular agreement to establish
and Australia-Korea Forum is proceeding. I have nominated
the Australian co-Chairman of that. The Koreans are in the
process of doing that and we are expecting them by the end
of this year that important Forum meeting will be * held.
The Cultural Commission which we agreed to establish in
November will have its first meeting here in Seoul in April
or May. So you can see that we've discussed a range of issues
and I think it's fair to say that we found ourselves at
one on virtually every issue that we discussed. I see this
visit coming on top of his visit to Australia as consolidating
very much the already strong relations which exist between
our two countries and providing the basis for growth not
only in the economic relationship but in other areas which
will underpin the economic relationship. I
1j IJ . I ET: it; Austra I i cons ieinc r-saJ in
:-ce '? tih North Xorea 2
ttivt-It isnum has b e~ e v. i r s~ d 1 . L n o t uo v e L~ lie
poe~ int i: vt o-f.-st3IAll.. 1; Jhnq dipIca. ntc t e ai nS. I think, the. y
91lwdvr'; Land that bPCauS-e it ; ovs bacr-k vr hat 1 soj . d beftore.
The:~ re '.! ill rbe cronditionality in our a 1.) prna ch to thase
jA ns tI would tiot be . lppropr jate fni Mi. stral. t o
IMt'. 1VF. '; hU iC'. S1ui'iption o diplo: matic i Fatlciiis in aJ coii': cit
thert notL i sati sfactory pon it! ion cobta iininq in tile
d) i u e b et en 1h1 i: l a nd thlie S ou thI And the 14o: rth
'. latdirstJinds this J. th litk t is a ppi -our jate aitl ce Ira inlly i~ t
i'~ thyV. 1'.!' Utile Ropub.[ i c of Kntre-a thal. ' s int thef
intitcests of? everyonie that th-: i. P. UI-300t in* f Nolrth torcea
hol') d comie 1. o an eind inl t he samie ars t. th Xnk or.
ir -! 11 if you look al~. Nor th Koyt~ a anld % Vgi t. niai. to USC? a
n'ivsthca . Iviised bet'ott.-inl ocrinrrJ iart.. 0'.' lar lv to
V~ rn~ thEdiv .3rG i.). ands of qtianti in a znP~ l are-iL
'~ cot*' iicproqi o!; s and its. s noither ill the intrr-sts o. thp
1j~ 1', Qof. V'ietnami or North ' K( orpa or of tht, yvq Vn i tsvijf thi I
' ts. iso) ttion should con t i fue. So :) III di sCUSS1.01S thle
; o'Lit~ creans w ill be inl tr~ rius of (! Ali i cr uase 1) erlvaps
0Q'Q0ttQhiiXC : olat i.' inslip.-, and so m) n. But -iil c'r : hAt
I. ke r'ishing in 1: o , .3 rvsuipl: i o-n dip loia tic relatIionswr.
T' vr e iJ. be, as I saj, a concl: tinalitv that
1 1-1410. I'lave you rf-OChed an1 accord concerni2nq di rcr-ct
N :' itonj has, bgeonl v. ei y Jei t-C-xp Iaijn i t
vhei President Roh u'as in Atastral a th.-tL Lsrue as
r~ a icirt~. od that gjiven the devel opments Litat have
t.-AvP' plaIce includinq tho total. reia> at4 ' on of travlel
Wer'ol3ictions ei-a Korean citizens, giveri tile in'orease in
tradn'; relations that have tcnken 11ce betw'een us w.. hich see
-ill r~ norjiious explosion in tw.. o %" aytr ade ! Oti lfl is it'rat tile
oi-' 3r of billi. on Austrain, 4-,; ivwxj thusn factors then
tt'e,! ir. a case, a very 5: tro, aqi case for the estab. is; hmenit of:
L.? o-% way airl1~ inze reJ. ations-hiv WpVhat haive done is.
vabts 4: 1" r tu the IXoreans a draft air Iine servic: es .' ureemnllt.
Phat has boen passed over and . lnoe tha t lhar bpeii discussed at
' 2te i . Jel: v el1. Tuie Xoreait airlJitxxn as; ked j re r tal. aI
* WO w 1. oy" re hap.' py about. that. The o ~ ks .31. the off: icia
level will resume in February, next nmonth, and I see no
r-eason why now that should not. proceed from the official
level of discussion to a point where by the end of this year
the agreemtent will be in operation. 1 expect that to happen.
JQU I'MALJJST the I1% orian G; over~ nment asked the Australian
Covcornment to 1investigate ajnd expose anty assets owned by
Churi-Loo Hlaan arid his family. is the investigatibri going
on right now anid what have the~ y found so f ar?
PH: I t is true that we iere .3ske~ d to do that, and we agreed
to do it. Thp iiventiqatiori has takeni place. I haven't yet
received thce final report.
JOURN4ALIST: When are you expectinq it?
P1M, I do'n't k~ now. . I don't interfere in thesse matters. You
ask the authorities to undertakS 3 i eport. We have
confidenco in our authorities that they will efficiently and
effectively undertakq the request that you make of them.
rliey are dtuinq that and we'll rocotivo i~ t in due course.
URIMST: Are * you satisfied that the intorination that
4U'aVLIrcie from the South Korean C'ovternment is
sufficient to undertake such an investigation? There have
been sonme repo~ rts that Australia was utnhappy because it had
been asked to investigato but not really been given enough to
go on to make such a..
PH: I've been around in public life, in politics, in the
P'rime Minister's posi tioii now for six years and as my
colleagues from the Australian media know 1 don't always
believe every report I hear and read. ' That's one I don't.
JOURNALIST: Are you satistied witti the iniformation?
11-: Yes, yes.
.1JQUF NAL Is T Do you think that thn hevalth of the Australian
economy is now being hold hostage to the Government's tax
cuts in July?
0: No, I see the provision of t-ax cuts as art approprilate
part of both econom~ ic and social poJlicy. I repeat that what
we've said from the beginninq, ri. qjht back1 last year, that
the~ re is a rs1~ tionship between what we'il do ini the tax area
w'ith what wiill happen in the wages area. We are waiting to
spe what wvill happen in the waqes area. my colleagues in my
absence will be enciaged In discussions wiith the trade unions
arid as I said I hope well be beginning to see discussions
with the employers as well. [ t would miake sense front the
point ( if view of tire health of the Australian economny if tho
satisfaction of the leciitininto aspirations of Austialians for
maintoaaatc and graduai improvement of I i'iing stanidards can
to, smec extent be affected by the tax cut mechanism rather
than by an otherwise higher level ot w. aqe increases. That
MiaKeS econonric sense as wel~ l as socia. sense.
j CIU ItNAL. I ST You said to'. day and you'vce sai~ d conisistently that
the Montreal Review fa.' iud. Do 1Nc'-rth Americanm trading
bloc.. ks, the European tr-ading blocks remain in [ low do the
As ian P'aciftic countri es tackle it -it they don' t form their
ow., n pr'jtrctivHi mechanism?
111-1 1 think you'vye got to look at. thIis in stl. ens I liav" i
. is you know, cons intentl,, y madr) it c leal that the ? tUSLt I~ a. ial
position is one of undil ted c61inmit. ment. to the multilat ~ eral
tl' 3dlnJ sys temn. I do that in an his. tor ical in a broad
hiustorica1 sense.. I'm tiot sure that you have the Davi;
spe~ ech& I inade at the foref~ rontI. iA' yc'iri mind, you should, it',
ai very ( lood speech. T'he point I made there is that if you
ñ-tudy history, thern are inany lessons you can qpt fromi
hiistory, but one less; on you can certainly qet from~ history Is
that economic autarchay lias alIways been the precursor to
political conflict. There is no reason to bolieve as come
to the end of the 20th century that history is c ioin'j to
change now because e happen to be hers and that it would be
inconveiiient for history to repeat itsolf. History is verly
likely to repeat itself. So on that basis there is a vested
iiiterest, a political interest as well as the obviouis
ieconoimic interest in tryingi to seo that thle multilatern] l
system prevails. Australia will be second to none both
b individually and in terms of trying to harness the capacities
anid abil ities of others to try and achieve that objectivo.
As I naid in my speech today, ons of the benefits of a move
toward:; the creation of a regional iranoiwork of the OFCD
U/ po, not a trading block typie, wias that I believed that that
cu-i--d help to harness the capacities of the countrien of the
regi n to pressure the rest of the wo) rld to understand the
truth of what I'm talking about in this regard. N~ ow havinq
said that, as you know I amn by naiture an optim. ist. arid we wi. l
do overything we can to achieve that result.. I don't want
this to be * misunderstood, what I say. Listen carofuLly
what, I say. If you took the riost pessimistic scenario for
the future and the best dedicated elforts ot Australia and
like inrded countries. were to fadi and the mnu] tilate-ral
system , fere to break down and the GATIT systitt wern to fall
apart and you saw, in other words-a determination an the
part of others to conduct their internationatl trading
relationships via blocks, then in those circumstances if the
countries of this region had advanced along the path that I vi
talking about and for the purposes that Ci m talk ing abo. ut,
* you would I suppose have the building blocks then for a
ire-ourse that in those, I hopn, entirely hope in hypothetical
circumstances, you would bo able to take tho action that
would be necessary to protect yourself.
JOURNALIST: on the meeting with Premiers. Is that In
addition to the Premiers'I mecting in June?
PM4: Yes, it will be before that.
JOURNAL I sr: Will, industry associations be invited?
P14: Well as you know this Cor. vsrnient has always had vegry
e, lorso and constructive relatiLonships with thet Housing
Industry Association. They have m~ ade some usefuil inputs into
t. hin areca and whether 1n fact they wore formally part icipaniLs
in the conference, that may ntot. be-at ' propriate, I would
certainly see that. they wepre . Involved in understanding the
pronarations and if they any part icular input theoy wanted to
mnake I ' d welcome it.
. C1A U RNAL I[ ST YOM' % to œ SG CaSl? G-OMI~ A i. 1o tLhit. % fou jilut qitvre us
About the bui .1dinq blocks~, is thtt I the way' Vre-; Ident IRJh a ivo
w-. ould pureevi've the worso cose scenario?
PM: No, we didn't go to that, point. WP arle totallyv at ono
in our purceptions thp noed to save I ' he , iuitilatEral
systemt. Soi our discussions wsre hield in that fromie-oik. I
didn't gii to your point triat I'vo just nent. Loned but 1 think
thero is a certain, ii I c: ould piit itt thal. way, hypnthutiva1.
lij)(; ic about that. It Is~ very impor tant bpeauso I doni't. w. mnt
Australia's posit . on to be m'isuirderstood or misiepresonted.
There iv no country ha. the % tor Id more committed to achievingi
the succe~ ss of the uultilaterAl n-Eqatiations thtan we are-. No
country urill do imore ti. achieve t hat. Thoi sucqqesti. n that I
h1dVe nadiU and to which I rceiveid a totally enthusiastic
response from' President Rolt is cal~ culated to help in the
achuievemenrt of that obiloctivdO The obserinIns I v just
' tade are, if you like as I put it a hypothetical,
all-back, wnse case Lcenariu situiation. I just wonder if I
could add to an answer I qjave Li. the quertion about the
discuss ions with Pres ident. Rh and I know,, thiFs willi be of
itLerest to Australian col.. Llaque. as well. Tlhere were one or
wo spec iiic puiAnts that wo d iscissed a. nd on -, mio'h w'e had
aqreement that may * be of interest. I indicated toc Iho
Presidenit that' one of th1 wIa turps that. i emerq incl in tho
world today is ai c irowinj realisationa of the ( Ire-t dangers of
the depleict of the 9lzcne layer, the treuiih( otise of tect anid
that vio in Australia have anted i~ n this area in two bas ic
ways e have muoved to imuplement tho Mmitrea I Protocol and
indeed by legislation have imived well beyond the minimuJm
requirmnuts of that piotocol that was the is? protocol
Secondly we are simulating researrch ina Jtustra tia to see' t-hat
it is that, we can do both withlin Australia in co-oper3tion
with international bodies and other countries to advance tho
cause both of understaniirnq anid Lit action. We have in
Australia an associdt ion Of chlorof louvocarbc'n consumers arid
manuacturers which art? in tho proucr. s o( developing
technology for the recovcling of chiortof Iouroca rbuns. I
indicated to the President Ihe importance we attach to this
and indicatod that theire would be a p'rep~ aredness, a
wi Llingness on our parrt to look at the transfe~ r of the
Lochnoloejy which is buinq developed in this regard.
President Roh agreed with me on the importance of this issue
and weYlcomed the suggestion for the possible traniztor of
technology arid v-e have agireed that thorn willitie a moeting
between our off icials to fO* tb'. W this fflattOr. rChe second
specific point is that I welcomed thme recommendations of the
Presidential Commission on E~ conomnic Restructuring that the
Pre~ sident appointed here which make rocc', nmnudations flor
market liberalisation. I invited members of the PresWLdeuitdcl
Commission of Enquiry to come to rAustra.). ia anid thie Preo ident.
responded pos itively to thtat. I bnlieve tirid hqope niou that
i lL be having a visijt of i1vw uiemers ( it that commhiss5ionf to
P. uistra ia i think that will be ur: oful bothl inr torms of oUUY
biliatLera] relationsh ips and further understanding of the
regional insues to which ' O rlerred.
JOURNALIST: Do you know how much support there is for your
regional initative and how do you think it will tit in with
thae proposal that was coming from Japan the other day about a
possible ministerial meeting?
PM: The letter wsent out relatively recently raising the
question of the need for further consultation. What I've
done here is to advance that one step further. So the answer
to your question Michelle is it's too earl y yet to know what
the reaction is. All I can say is that tho only leader that
I've tested the idea on, President Roh, has embraced it
completely and enthusiastically. I hope that In the
relatively near future we'll got further responses. There
may be different perceptions. I think there'll be unanimity
about the need for further co-opexation. The processes and
the end objectives obviously there'll be some differences
about. The important thinq I think is that we have g iven
qf rom Australia's point of vinw a thrunt now in the-region
yowards pursuing the need for further co-operatiocn. We have
ut up a suggestion if you like as a sort oñ type of model
and we don't want t~ o be prescriptive about it. What we do
WAnt to do is to ensure that tho dialogue and the discussion
develops reasonabl. y rapidly.
JOURNALIST: Do you think the major trading nations of the
region up till now havo done enough to) support the GATT
system or have they been sitting baick a bit?
PM4: Yuu can't, when you're talking about a region, think of
it in monolithia termis. Let mie say this, that there has been
a very substantial response to our twn initiatives. Firstly
the November ' 8i3 initiative which I launched in Banqkok which
asked the countries of the region to be involved with us in
pre-Urugjuay round discussions. There's been a very
substantial and continuina response to that. Secondly with
the establishmen * t of the Cairns Group there's also been an
invol~ vement in that. I think t~ hat generally speaking the
* 1 ountries of this region do see, share our perception of
the need to ensure that the mnulti~ lateral open trading system
is rescued and strengthened. I tend to believe that that
perception will increase. After all, time is running out on
thq Uruguay timetable, it's a tour year timetable, they're
more than half-way through now. There's going to be the
meeting in April. They have reached aqreement on 11 areas,
as you know, there were four that weren't. Yut the attitude
will strongly be of mnxy countriles who have given agreement
to the 11 areas that they will make their agqreement on those
conditiunal to achievinq agreement in the other areas which
are, as you know, textiles, intellectuail property safeguards
and agriculture. There's not a great dea. l of time and 1
think that that sense of pressure will heighten the
perceptions of the countries in the region. Ju. st one fina. l
point just before I go off to an important meeting with the
Vres ident is Lhis. it is remarkablie, the paradox of our
times, it is a remarkable paradox in that we see in political
teivms a greater reason, broader grounds for optimism than at
any time in the post war period fur the reasons I've outlined
to you betore and which I don't roiterate now. It is a more
congenial international political environment which gives us I
PM ( cont) moro ground for hope and which is producing in
various areas of . the world concrete results. The paradox is
that while there is ground for political optimism, on the
economic front, which as I've said before ultimately can
dHtermine political outcomes, the world is being far less
than sensible and is in some rospects going somewhat
backwards. I hope that that paradox will be resolved in the
right way.
ends
0