M6 9LIA
PRIME MINISTER
INTERVIEW WITH MIKE CARLTON, RADIO 2GB, 13 APRIL 1989
E 0 E PROOF ONLY
CARLTON: Can we get the election question out of the way
first? will you go to the polls this year?
PM: No, Mike. I've made that quite clear in a program I
recorded last night, you just jumped in front of Am by a
quarter of an hour
CARLTON: Rightly so.
PM: So, it's quite clear that all we're doing is what we
said we'd do last year. I mean this is a situation where I
made a promise last year, middle of last year, that I'd
deliver tax cuts July 1, 1989. I delivered my promise,
something I gave twelve months ago. The only person who's
talked about a July election is a little bloke called Johnny
Howard who's tried to introduce this note of cynicism in on
the delivery of my promise. If I hadn't delivered my
promise he would have said you can't believe the Prime
minister. I deliver my promise and he says it's only an
election ploy. Now all he's doing of course is what
everyone knows is that there's a numbers game on in Canberra
this morning. It's not a numbers game about what you get
out of this package, it is can Andrew Peacock get above the
34 votes that he's got in his pocket now to knock Howard
off? That's the numbers game in Canberra today.
CARLTON: Alright, so no election this year?
PM: No election this year.
CARLTON: Alright, so what happens now? What happens
PM: now is that the people of Australia get the tax
cut and the increase in their family allowance as they
deserve. we've had to ask them to do it reasonably hard for
some time because of the toughness of the situation. we
said we'd remedy that when we could. We can now and the
real question as to what happens now is what does the
opposition say about what they'd do.
CARLTON: Alright. Well what happens if Australians spend
the extra money, we don't save it? Is that going to pour
kerosene on the fire?
PM: I think it's a very legitimate question. The answer is
basically this Mike and I don't want to get into technical
jargon and statistics for your listeners, but I'll try and
put it simply as it is in this past year we've had an
eight percent growth in consumption. This has been
associated with historically high investment, more money
being invested by business as a portion of our output than
ever before, a massive improvement in our terms of trade
which has meant extra billions of dollars flowing into the
economy and historically high investment in housing and
non-dwelling construction. Now those things will not be
repeated, so those elements of demand won't be there. Of
course, on the public side we are again going to have a
reduction in real Commonwealth outlays and a situation
therefore so there is no fuelling of demand from us. In
those circumstances the economy can accommodate the extra
demand that may be associated with this although some people
of course may use it, as we hope, for saving purposes.
CARLTON: Well you've really got to punt on that haven't you
because everyone rushes out and throws money around? Surely
our imports will rise again and interest rates will rise
again. PM: No, but that ignores, with respect Mike, what I said
about the other factors. I mean, that assumes that all the
other elements of demand that have been making a high demand
on imports in this past year will continue. It simply is
not possible that you will have the same high levels of
investment, you will not get an improvement in the terms of
trade of the dimension that we'd had, you know, of the order
of about 11 or 12 percent in this last 12 months, which of
itself, has brought extra billions of dollars of demand into
the country. You are not going to have those elements there
in 1989/ 90 that you had before. So there is room, it's not
as though this is adding on top of existing demand in terms
of the pattern of 88/ 89.
CARLTON: Can I put this another way and see if you agree?
PM: Yes.
CARLTON: You're saying that business has now made its
investments, they've got new factories, new technology, new
computers, they've done that. So you're now saying that
Australians can spend a little and buy the products of that
business investment?
PM: To a very considerable extent. Business will tell you
they won't undertake those same levels of investment. We
wanted them to do what they have done because that will put
us in a stronger position to be competitive with imports and
to improve our export performance. We're glad that that's
happened, but you're right, but could I make this point Mike
and I would appreciate it, because I think you understand
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( PM cont): these things I would appreciate it, if the
message could be sold that the extent that your listeners
spend what they get now, a lot of them will want to save it,
but to the extent that they spend, spend it on Australian
made goods. If people want to continue the great
cooperation that we've had with them in this past six years
and they have been truly magnificent, then I plead with my
fellow Australians, if you are going to spend what we've
given you and not save it, spend it on Australian made
goods. CARLTON: Do you intend to campaign strongly on that, I mean
is there going to be a big buy Australian campaign to follow
this up? It makes sense.
PM: We'll enlarge the emphasis on the campaign that we've
had in the past. It's always been right, it was right when
we had the tough situation where we lost so much in national
income with the decline in the terms of trade before. It's
at least as important now, in a sense more important, that
where we've got to deal with this external problem, not too
many imports, that Australians spend on Australian made
goods. It's the great contribution. We have given to the
people the money in tax cuts and family allowances that they
need and that they deserve. Their great contribution as
part of this can be to intensify their effort to buy
Australian. CARLTON: Alright. You've done long and hard talks with the
unions, the ACTU, much will depend on their attitude. I
assume that you are firm in your belief the ACTU will stick
to the bargain and not go for big wage rises?
PM: Yes and I think Mike, it's a good question and I'm
entitled to say to you as I know you will appreciate, look
at their record and mate if you look at their record why is
it that we've created 1.3 million new jobs? Why is it that
the profit share has gone to a historically high level? It
is because the trade union movement have stuck to their
bargain. They could have been out there getting much more,
they haven't and they've given us an undertaking that in
this coming financial year, ' 89/ 90, they will adhere to that
and that the wages outcome in total will only be six and a
half percent which, given the level of activity is
historically unprecedented. Could I just say to you Mike as
a quick thing, I know most of your readers won't have the
opportunity of reading this, but I do ask you sincerely to
read Attachment A with Paul Keating's speech. It sets out
there in about 15 pages the whole essence of that story and
it really is worth reading.
CARLTON: I'll take it to bed tonight.
-4-
PM: I don't know where you should read it, that's a matter
for your discretion my friend, but I know you're dinkum and
that you will read it.
CARLTON: Alright. All the punters this morning though are
predicting an interest rate rise, at least that they'll stay
high or perhaps they will go higher. Do you see that?
PM: Let me make this point, that as far as our decisions
are concerned, there would be much more basis for that
proposition some significant rise in interest rates if
we had increased our demand on savings, but what we've done
is to continue what we've done in the past three years. In
the past three years we've had real reductions in our
outlays, real reductions in the Commonwealth's outlays and
we've indicated for the next year there will be a further
real reduction in our outlays. The public sector borrowing
requirement will remain at zero. That is we, as a
Government, will be making no demand on savings. So as a
result of what we've done and with our own operations there
will be no increased demand on savings and therefore no
pressure from us on interest rates. So you go back to the
answer I gave you before Mike, that is we've had high levels
of demands but the elements that I identified will not be
there or not there to the same extent as before. Therefore
there is room to accommodate the sort of increases in
personal demand that may be to some extent be associated
with these increases.
CARLTON: OK, but surely interest rates will have to stay at
least where they are for quite some time?
PM: Sorry, I was just going on to say, now we have said we
are going to keep interest rates high as long as is
necessary to protect the public. I mean as you know Mike,
Bob Hawke wouldn't have interest rates higher one fraction
of a point for one day longer than it was necessary. We
can't have a fiscal policy any tighter, that is we're not
going to cut services to the people any more than we have
and we can't have wages policy any tighter. So monetary
policy has got to carry the burden for a bit longer, so
interest rates will stay high for some time until we can see
that level of activity coming down from the high levels that
we can't sustain.
CARLTON: Alright, well there will be people paying off
mortgages and people paying rent wanting to know how long
that will be, how long will rates stay high?
PM: Well, as long as is necessary. I've said in January
this year that I thought interest rates would be coming down
before the end of the year. I think that's right, but I'm
not going to speculate as to the exact timing because
speculation by me about that can, of itself, have an effect
on the market. I'm not going to be in that, but your
( PM cont): listeners can be assured of two things. One,
that interest rates are where they are because if we didn't
have them where they are there'd be a further massive surge
of imports, the whole show would collapse. Now we can't do
that and that reinforces the point I made before, buy
Australian. The second point is this, that the very
significant increases that we've given them now in
disposable income by way of tax cuts and increased
allowances for family and the kids, that that's going to
help them at this point meet the high interest rates and
when the high interest rates come down they are still going
to have that money in their kick.
CARLTON: Alright. You sound very buoyant this morning, I'm
wondering do you think the economy is buoyant as well, that
we will get down our foreign debt, that we will eventually
export more and drag more money back in?
PM: Yes I am buoyant and on the question of export, let me
make this point. Our export perfomance is good, it's the
net export position which is important. That is you can
have an increase in exports which we've had, a very
significant increase in exports but if your imports increase
more than your exports then, what we say in the jargon, the
net export position has not pulled its weight, not because
exports haven't increased but because we're bringing in too
many imports. So I keep coming back to this central point,
your listeners, great people that they are, they see
Governments making decisions and they approve/ disapprove in
varying degrees but they wonder ' well we're a bit remote
from that'. Now can I just repeat the plea that one way in
which every single one of your listeners can play a personal
part in helping Australia and I know they all want to, they
are glad to get the cuts and the increase in family
allowances, what can they do to help? Buy Australian.
CARLTON: Prime Minister, thanks very much for talking to
us. PM: My pleasure Mike.
ends