PRIME MINISTER
TRANSCRIPT OF NEWS CONFERSNCE, RANDWICX MMOYhENT ACCESS
CENTRE AND TRAINING, 19 APRIL 1989
a a 0 E proof only
PM' because the decisions which we took in the April
Statement will put noQ pressure on interest rates because we've
financed the very substantial tax cuts and family allowances
out of the surplus that we generated by the previous tough
decisions that we've taken. The level of demand that
characterised the previous twelve months will not be theta in
the same proportions because there won't be the great surge of
income coming from the improvement in the terms of trade and we
think therefore that intrinsically there is no reason. But, as
I say, I don't got into the question of prediction of short
term rates because that, of itself, can have some impact. I'm
simply laying that the Government has made the decisions that
are neceasary to keep a level of viable economic growth but not
at the same high level that we ' ve got now because we can't, as
must be evident from the figures yesterday, we can't have a
level of economic activity in Australia which koeps sucking in
too many imports. Vow the evidence is starting to emerge I
think that we are levelling off in the economic activity in
this country. That's good & Ad I can give the commitment to the
people of Australia, am I do, that high interest rates, tight
monetary policy won't be kept there for one moment, one day
longer than is necessary because, as I say, I'm not a mug. I
know that people don't like high interest rates. I don't like
them myself. But it is necessary to protect the Australian
economy. JOuR4ALIST& do you think further tightening of fiscal
policy during the April Statement might have been a good idea?
PMe No, let me make two points about that* about the further
tightening of fiscal policy. The first is that we did take off
another three quarters of a billion dollars and we simply are
in a position now an a community where you can't be cutting
public outlays any more. Remember what we've done. In this
coming year there'll be four years in a row of real reductions,
real reductions in Commonwealth outlays. We've reduced
Commonwealth outlays as a percentage of # gross domestic product
from 30 percent down to 25 percent. We've got the Budget into
surplus now years in a row, hasn't been done for thirty
five years. We've got a tighter fiscal policy than has been in
this country since statistics have been kept. Now what
P. M.' s PRESS OFFICE CANB TEL: 61-062-732923 2.
( PM cont)
therefore does tighter fiscal policy mean in those
circumstances? It means cutting into the services of ordinary
Australian people in the area of education, of welfare, of
roads and the pension and so on. So the obligation is upon our
political opponents, if they just blandly get up as Mr Howard
did last Thursday night in the House and say ' We would cut
public expenditure more'. Easily said. The time has come for
Mr Howard now to put up or shut up and say ' this is where we'd
cut, we'd cut your social welfare, we'd cut your roads, we'd
cut your defence, we'd Cut your education'. Let him say so and
then he can be judged.
JOURNALISTs Prime Minister, Nobby Clark has said again this
morning he expects interest rates to rise to 16.5 or 17
percent. PM: Yes, well you mention Nobby Clark but he's not the only
person from the banking industry who's spoken today. That's
not the unanimous statement of the banking industry today so
why take any particular notice of him where others haven't
endorsed what he's had to say?
JOURNALISTs Do you share the Treasurer's view of the National
Australia Bank then that it's not accepting a cut in profit
where it could have?
PMs I agree entirely with what Mr Keating has said on that and
on other matters in regard to the economy over recent days
because, as usual, we are at one on these issues.
JOURNALISTi, So you wouldn't expect there to be
PMs Inaudible
JOURNALIST: Prime Minister you talked about community
cooveration today at the opening here. Are you confident
you ve got the cooperation of the community with your economic
policies at the moment?
PMi Well, obviously the community doesn't like the high
interest rates and I understand that. I don't like them myself
and so you've got a situation where, if you look at the level
of popularity of the Government, we're down a little bit. We'd
probably still win an election on the Gallop poil figurem today
and those were taken before the Statement of last Wedesday.
So there is some concern about the level of interest rates, but
basically people the understand, I think, that we've been in
oix years, we've given them employment growth better than
they've ever had before, better than the rest of the world,
lowered unemployment and brought inflation down from the very
high level we inherited. There's, as far as they're concerned,
a bit of a dip, they don't like now the financial Well, I
understand that, but I'm not going to change monetary policy
just now because there ' might be some unpopularity I What
you've got to do is to keep those policies ln place which
are necessary to look after the Australian economy. We've
shown in the past that we're prepared to take the tough
decisions, you can't cut public public outlays in the way we hav'q.
19,04,89 15: 22 No. O04 P. 03
( PM cont)
over all this period without taking a lot of tough decisions.
We'll take the decisions that are necessary to look after the
welfare of Australia.
JOIMAALISTs ( inaudible)
PH: Well, in economics you can neve~ r be absolutely certain
about any prediction, I mean, there's no economist in the
world, including myself, if you know anything about economics,
and say that you can be absolutely certain about outcomes. I
mean economics is about the aggrelate of decisions. in this
country of 16.5 million individuala and groups of individuals
and economic outcomes in this country are not only the outcome
of the decisions of 18.5 million people, well all those acting
on behalf of their children as wel l, but it's the outcome of
what happens in a world of Borne six billion people. Now don't
be silly and suggest that in that sort of world you can be
cartain about Outcomes. All that you can do is to make the
decisions which you think are most calculated to produce the
right results. Now, we're entitled to be listened to now an
the basis of six years in Government where we've oot it right.
JOURNALISTS The banks seem to be indicating that they're only
waiting for next month's inflation figures before they raise
mortage rates.
PM: Well, let's Bee. Does it mean that if the inflation rate
goes down that they'll lower intereet rate.? I meant the banks
have historically a reasonably well demonstrated capacity to
try and take advantage of whatever circumstance they see that
serves their own interest, But let me wait and see what they
do. Simply because one spokesman says interest rates are going
to go up further doesn't mean that tat's what will happen.
But I think that we have done all that we can to create the
conditions where, over the longer term, interest rates will
fall, but I'm not saying that that's an immediate prospect.
JOURNALISTS You say yourself to be concerned about the young
Australians. Are you aware of the fact that there We6
young Australians, juvenile delinquents are being held in adult
prisons around Australia at the moment even though this
contravenes the Human Rights guidelines
PM: Well that's a matter, of course, that you need to take up
with the State Governments because the question of people being
hold in prison and so on and under what conditions is a matter
for State Governments and that's a matter which you have to
take up with the State Governments concerned. All I can say is
that as far as this Government in concerned and what we've done
for youth, it is now understood by everyone-in the welfare
community that there's simply never been, in the history of
this country, a Government which has done so much and so
positively to the welfare of youth.
JOURNALISTS Are You worried about cormunity perceptions that
come of the gains that you gave in the wage/ tax statement might
be being eroded by high inflation and also by high interest
rates?
pm4; Well, I've already addressed that on a Aumber of
occasions. Let Me do it again, in fact I've alluded to it
already in an answer I've given you before. The decisions that
we took on Wednesday in the economic Statement will not, of
themselves, have an adverse impact upon either inflation or
interest rates. Why do I say that? Let's look at inflation
first. In regard to wages outcomes there is a com~ mitment by
the trade union movement for an aggregate wages outcome of
percent in 1989/ 90. Now that means, and it wil. l be delivered,
that means that on the wages front taere will not be upward
prssure on inflation. We expect inflation, therefore, to come
down. On intereat rates, I've indicated to you that as far as
the paqkage is concerned, we've paid for that out of our
accumulated surpluses. It is a paid for tax cut and welfare
pack~ age and we will have for 1989/ 90F the same level of
surpluses we had before. We'll have, as we had this year, a
zero public sector borrowing requirement. We will be making no
demand upon savings so therefore on both the Inflation and-the
0 interest rates front, there is nio reason by what we've done
see*
JOURNALIST a ( inaudib~ le)
PX:' Brian Noakes is unrepresentative of Australian employer Is.
He can't even speak for people he's been associated with
himself, I mean, the most vibrant sector of the employers that
he used to speak for, those in the metal trades, Metal Trades
Employers, they repudiate Brian Noakes. He doesn't speak f or
them. The Metal Trades Employers joined with the Government
and the ACTU in theaft?'( 1that has been taken, they endorse what
we are doing. Brian Noakes in a professional pessimist and'CAl
is, to a very large extent, is an arm~ of the Liberal Party.
You can take very little notice of them. Listen to the
employers, both organisationally and individually, who are
about, positively about, developing this country. You get very
so,. cooperation from them. For those who want to peddle their
politics, as Brian Noakes good luck to them se
JOURNALISTS some of the more cynical among us might think
you are heading for an early election
P14: as I said before, no early election
ends