PRIME MINISTER
TRANSCRIPT OF INTERVIEW WITH HEATHER EWART, ABC AM,
13 APRIL 1989
E 0 E PROOF ONLY
EWART: Mr Hawke, your critics say this statement isn't
about sound economics but about winning the next election.
What do you say to that?
PM: They are wrong. Just let me dispense with this concept
of this being something for an early election. we promised
in the middle of last year that we would be making a
statement in respect of a tax/ wage trade-off to operate from
the middle of 1989. All we're doing is delivering on that
promise and in delivering on that promise Heather we've got
one thing above all else in mind and that is to have a
control of this economy which is going to enable us to
sustain growth and employment and prevent a wages explosion
which would destroy the economy. There is no early election
in the offing, I can assure your listeners of that.
EWART: Is this
PM: I'm sorry, just let me make this point. There's only
one person who introduced the suggestion of an early
election and that was one Johnny Howard. Why? Because he
knew that we were going to be producing, in terms of the
promise we'd made last year to the Australian people, a
package which would knock him for six. So he had to try and
introduce a note of cynicism into it.
EWART: So this statement isn't directed in any sense
towards an early election?
PM: That is correct and obviously by the time we go to the
election, which will be a long time after the present, we
expect that we will be rewarded for the management of the
economy and that a judgement will be made Heather between
our control of the economy and that of our opponents.
EWART: In fact you seemed to suggest in the Parliament
yesterday afternoon that an election could be a year off.
You said, I think to John Howard, you'll get your chance in
12 months or so, and the Finance Minister, Peter Walsh,
seemed to back that up last night. That's your thinking at
the moment is it, no election for 12 months?
-2-
PM: I can't seen an election this year. Certainly I'm not
talking about an election this year. There's got to be a
half Senate election by the middle of next year and I am
just not in an election mode. I've tried to make that
clear. I repeat, we promised this to the Australian people
last year. I said to them and Paul Keating echoed
properly what I had to say we said, if you get a
responsible wages outcome during 1988-89 and we can see that
we can get a responsible wages outcome for 1989-90 then we
will announce in time to take effect from July ' 89, tax
cuts. All we are doing is delivering on that promise I made
to the Australian people.
EWART: So can we just pin that down? No election this
year? PM: I don't think there will be an election this year.
That's right.
EWART: Even with all the early speculation which you say
the Opposition has been reviving, and it certainly has some
troubles of its own
PM: Does it ever.
EWART: It's not tempting in any sense?
PM: No, it's not tempting. What's happening and I'm glad
you introduced the subject but what is well known in
Canberra amongst all who are following politics, we know
that there is a concentrated push on by Mr Peacock and his
supporters, aided and abetted by the President of the party
John Elliott, to dump John Howard. That's not surprising
because our fortunes are somewhat lower because of high
interest rates and I understand that. The vote hasn't gone
to the Libs, it's gone to Democrats and others. They have
made their decision that Howard has to go. That's where the
problems are.
EWART: If that were true, you wouldn't be tempted to go for
an early election?
PM: No, not at all. If the Liberal Party proves the
paucity of its resources by having to resort to the failed
Andrew Peacock, I'll be more than happy to see Andrew there
in the position for a considerable period of time because
the longer he's there you'll have more solidly revealed the
truth of history. That is, he was not adequate before, he's
not adequate now.
EWART: So a scenario like that, if it were to be true,
wouldn't alter your thinking that there'd be no election
this year?
PM: No.
-3-
EWART: Getting back to the statement then, is it more about
sound politics? You and Paul Keating have suggested the
workers and the needy deserve these measures, but did you
fear that you'd asked them perhaps to bear too much economic
restraint, that you were in fact driving away traditional
supporters who just couldn't cop any more?
PM: It's not a question of driving away traditional
supporters. It is the case that we lost some support in our
heartland, I don't deny that, but the situation was that in
the period from 1983 we have had to ask Australians, your
ordinary average listener, we've had to ask them to exercise
restraint. They've been magnificent in doing that and
together we've reaped the benefits. And the benefit, the
outstanding benefit is what we've done in regard to
employment. I can't repeat this too often, and I know that
your listeners are proud of it, as I am, that we've created
together, that is the Government and the people, we've
created 1.3 million new jobs. The relevant statistic about
that is that's four times as fast as under Fraser and
Howard, twice as fast as the rest of the world. Now we've
been able to do that because the people have co-operated,
the trade union movement has co-operated, there've been
reductions in real wages which we've compensated by extra
jobs. It's meant that real household disposable income has
risen while we're in there, but that's happened not because
wages have increased in real terms but because there've been
more people in the households in work and because we've
substantially increased benefits to those most in need. But
the time comes when having a strong economy the economy in
this last year has been growing at over 4% and the employers
of this country are knocking down the door of the ACTU
Heather saying we wan't to give massive wage increases. The
ACTU was saying no, we want to keep the lid on wages. Now
you can't just keep doing that forever and saying no wage
increases. So the trick, the secret, what you have to do is
to accommodate that move for increased wages in a way which
is economically sustainable. So what have we done? We've
given people on average as a result of this package a 12%
wage equivalent increase at a cost to employers of only
Now that means that people are getting the increase
in disposable income which is going to enable them to
improve their standards, but not in a way which is going to
put undue pressure on inflation. In fact, inflation will
track down.
EWART: Well, on that point, Mr Keating has had a lot to say
about tax and wages. He has had less to say about interest
rates and inflation. Do you think the money markets aren't
going to be too pleased about that, and new home buyers?
PM: Let me take the two parts of that question Heather. As
far as what the market reaction is I'm not quite sure. All
I can say is I'm told that the initial reaction was that the
dollar went up a bit so one would tend to think that that's
not an adverse reaction by the market. Now, as far as
interest rates are concerned, let me say quite clearly as I
said in the Parliament, Bob Hawke, like any sensible
PM ( cont): politician, is not going to have interest rates
one percentage point or a fraction of a percentage point
higher for one day longer than is necessary. I mean, I'm
not an idiot. I know that people don't like high interest
rates. But I think people have enough trust in me to say
Hawke and the Government are running a tight monetary policy
now with high interest rates because it's necessary. What
we've got to do is reduce somewhat the level of activity so
that we don't suck in an unsustainably high level of
imports. As soon as the level of activity comes down
somewhat, while still consistent with growth and employment
growth, then monetary policy will be eased. But it would be
a dereliction of duty on my part if I pulled interest rates
down now just like that because people are saying it's
hurting. EWART: Well finally, you say no election this year. So do
you have a date in mind, early next year?
PM: No, I don't have a particular date in mind. But let's
remember this, that the last election was held in July of
1987 which would mean that the judgement, I think, of all
commentators would be that any time, you know, from the
relatively early part of 1990 would be appropriate. What I
want to get across to you is that I am not in an election
mode. I haven't made these decisions with my colleagues on
the basis of an early election. That's not part of it, it
is the delivery of a promise I made to the people of
Australia last year. The election will be held at a time
which will be regarded by all objective commentators as at a
reasonable time. I'm not, in saying that, doing anything
more than any other Prime Minister has said in the whole of
the post-war period. It has been accepted that there is
some degree of latitude in timing but it will not be an
election which will be regarded as an early election.
EWART: Mr Hawke, thank you very much.
PM: Thank you very much Heather.
ends