TRANSCRIPT OF JOINT NEWS CONFERENCE WITH THE TREASURER,
PARLIAMENT HOUSE, 18 MAY 1989
E 0 E PROOF ONLY
PM: We've just completed the Premiers' Conference and Loan
Council meeting and very significant decisions have been
made there.
In essence what has happened is that we have taken $ 2.7
billion off the public sector demand on the community
savings. That's made up by $ 1.15 billion off the borrowing
limits of the Commonwealth's own authorities, $ 1 billion off
the State's globals in respect of their authorities and $ 550
million off the financial grants to the States. That means
$ 2.7 billion reduced demand by the public sector when taken
into account with the $ 360 million savings in the April
Statement. That comes to over $ 3 billion, which is
equivalent to one percent of the Gross Domestic Product, so
it can be seen that the Governments of Australia have
responded to the economic demands of the situation
confronting this country.
In opening the Conference I said, and of course Paul
supplemented what I was saying in detail, that the problem
confronting the Australian economy is that we have too high
a level of demand.
In the last year, eight percent increase in demand and only
a four percent increase in our output which meant, in fact,
that something like half of the increase in demand had to be
met by imports. This is not situation that as a country we
can continue to tolerate and the exercise today therefore
was simply to ensure that all levels of Government made an
appropriate contribution to the reduction in demand in the
Australian economy.
I would like to pay tribute to the work that's been done by
the Treasurer and our own people in preparing us for this
situation, but I'd also pay tribute to the positive
cooperation of the States.
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PM ( cont): I believe there's been a certain amount of sound
and fury that they've found it politically necessary to make
in talking to the media. That's part of the game, that's
part of life. But we can talk about what happened in there
and I think we can say, Paul, it was one of the most docile
and, in a sense, most cooperative meetings that we've had.
This was our seventh one
KEATING: The most.
PM: And it was the most docile and cooperative and what
that reflected was the fundamental acceptance by the
Premiers. Indeed they indicated this. There was a
fundamental acceptance of the economic analysis that I and
the Treasurer had put to them, an acceptance of the need for
responsive and responsible Government reaction.
In essence the decisions that I've referred to reflect that
agreement and to that extent, as I say, despite the
necessary sound and fury that they feel it necessary to go
on with in talking to the media, we thank them for their
cooperation. Paul, do you want to add anything?
KEATING: Well, just to perhaps recap the point the Prime
Minister made that when we announced the April wage/ tax
statement we said we'd be looking at a zero PSBR for next
year, at least a zero. Well, we're probably now looking at
the better part of one percent surplus on the PSBR, which
just means the public sector's continuing to push the pace
of change in our financial structure.
That would simply mean that whatever savings we made today
are ultimately savings off the current account deficit. If
we are not making these bids on the savings pool, the
savings, Australians would be making that much less of a bid
upon overseas savings and hence the current account.
PM: Perhaps one other point which ought to made is that in
the area of housing, as a result of the decisions that we
had made and with which the Premiers agreed, there will be
an additional amount of funds for public housing. We agreed
that some $ 311 million have been converted from Loan Council
borrowing to grants to be made available under the
Commonwealth State Housing Agreement.
That will mean, as a result of their cooperation with our
initiative, that there will be further funds therefore made
available for public housing.
KEATING: And just to add to that, it will be spent on
public housing.
PM: Yes.
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KEATING: That is by taking away from the nominating
arrangements where they were not particularly spent on
public housing and put in under the CSHA, they will be spent
on public housing
PM: They must be.
KEATING: And then yesterday, of course, we announced this
change in relation to the rental trusts which will give us
about another two and a half thousand units a year, or about
twelve and a half thousand over five years. So there's a
substantial boost in there for housing.
JOURNALIST: Mr Hawke, Premier Ahern indicated during the
conference today that he was going to refuse to sign the
Loan Council Agreement, which included those about $ 311
million package. Did he back down or have you come to some
sort of deal?
PM: It's not a question of backing down on these things. A
lot of noises are made in the lead-up to conferences and
sometimes during them. It's what happens at the end that
matters. So I don't want to talk about backing down, I mean
this JOURNALIST: So there's no deal, he's just agreed to go
along with the proposal by the Commonwealth?
PM: No deals.
JOURNALIST: Mr Ahern has indicated that you've agreed to
consider some further borrowings under the economic
infrastructure PM: Well see, what was being put to us was that they were
being hardly done by and we were able to point to the fact,
as it was conveyed to us by the officials, that they seemed
not to have borrowed up to the limits that were available to
them last year. That position was not consistent with cries
of pain. Now he has a view, which he put to us, that the
view put to us by our officials was not an accurate
representation of the position. I did make the point to him
that it is rather difficult if you've been refusing, as the
State of Queensland has for a year, to provide the
information. And we get given the information at midnight
last night, which is when we get it, for us to be taking
very seriously their cries, but being the reasonable people
that we both are we said ' well, OK, if there is some dispute
between you and your officials and ours, we agree to discuss
the matter' and if, out of those discussions, there were
some substance in what he was saying we agreed that we would
look at it.
JOURNALIST: Mr Keating, you said today a number of times
that the States should reduce their investment. Are you
saying that particularly New South wales and the Greiner
Government there should try and fix up very badly in
need of repair road system and hospitals and schools and
things?
KEATING: No just that we should be reducing public
investment overall and if the Greiner Government wishes to
increase road funding or deal with pollution or whatever, it
does that at the expense of something else.
PM: Just as we've had to do.
KEATING: Just as we've had to do.
PM: We've had to get our priorities in order and we've, as
I said there in the opening, if you go back to the period
which is relevant we've knocked off the order of
billion. That's each year now and compared to our earlier
outlays. Now that's required a series of very, very
difficult decisions. I mean we sit for hundreds of hours in
ERC making tough decisions and that means reordering
priorities. That's not something just which should be and
needs to be the prerogative of the Commonwealth Government
alone. JOURNALIST: Mr Greiner also claims that New South Wales has
been singled out and always does at Premiers' conferences.
Is that true?
PM: No, no and there's no basis for making that point. We
have given effect to in terms of relativities the
recommendations of the Commonwealth Grants Commission and
he's got no basis for that claim.
JOURNALIST: Taxes and charges, Mr Hawke, have you received
any assurances from the Premiers of a likely increase in
PM: Well, I must say Paul may have a comment on this I
was pleasantly surprised, looking back over the discussion,
at the lack of threats that what we were going to be seeing
was some great charge now in increases in the area of taxes
and charges. That was not an element which in any sense
pervaded the meeting.
KEATING: I think they accepted the fact that we want the
public sector smaller, so therefore the call on the current
account is smaller rather than them simply taking a cut here
and then picking it up somewhere else in charges to maintain
the same level of activity. I mean I think they understand
that. They've been understanding it for a number of years,
but they understand it better now.
JOURNALIST: Mr Keating worthwhile projects may have to
be abandoned or postponed. What does worthwhile projects
mean, you know,...... talking about major road projects or
what? KEATING: Well, I don't know, it depends, it depends. Look
most things in the public sector have virtue.
PM: Yes that's right.
KEATING: I mean nearly every proposal which comes across
the Prime Minister's desk or mine from ministers has some
virtue. The public sector's about doing things in the
public interest. That's essentially what the business is
about. But if we all took that view in national terms,
we'd have a massive current account deficit because our
0 savings can't tolerate it. So it's about setting
priorities. So whenever you hear a Premier with a hard-luck
story what you generally know is he or she is not setting
priorities, or he's not setting priorities.
PM: in other words the other way of, just if I could sort
of supplement what Paul's saying, is that the public
interest is not to be seen simply through the prism of
projects. I mean the public interest would be much more
devastated if we in fact said yes to every spending proposal
on a public project because the whole economy would
collapse. So it's not as though they've got a monopoly on
a perspective of the public interest. I mean our view of
the public interest demands this sort of restraint and the
important thing is that none of the Premiers question that
fundamental analysis of the economic requirements
confronting the country.
JOURNALIST: Prime Minister, what effect will this package
of measures have on interest rates?
PM: Well you know that we're not in the business of making
predictions in the immediate sense about what's going to
happen to interest rates. All that you can say, and I want
it understood the way in which I'm putting it, to the extent
that we have reduced significantly the demands by the public
sector in the way that we have then that is relevant to
having the best possible environment in regard to both the
current account and the interest rate situation.
JOURNALIST: How significant a change does this represent in
fiscal policy and does it reflect concerns that the..
haven't been
KEATING: No, it just means that we're continuing to keep
that tone or if you like keeping the public system taut. It
is not an attempt though to find four or five percentage
points of GDP as some people would require us to do. It's
about moving the public sector along with the change as far
as we think it can reasonably be taken.
JOURNALIST: But you're over one per cent. Is that an
important shift?
KEATING: It's a shift, yes. It's an important shift, it's
a shift but it is not in satisfaction of the simplistic
notion that we think that will just buy us a one per cent
shift in the current account.
JOURNALIST: You said in April that you'd have at least a
zero PSBR. It seems from that to represent you know some
tightening. But how would you characterise it?
KEATING: It just means that the Government remains
ambitious to keep the policy direction on the right track.
I mean this has been true of its full entire history hasn't
it. We have these debates when we are not turning
handstands on fiscal or monetary or wages policy, every
three months we get the occasional maudlin debate at these
0 press conferences ' have we gone stale, have we slowed up',
when in fact we're still the only Party, the only Government
prepared to make the kind of changes Australia really needs.
That's just obvious again today.
JOURNALIST: On the topic of interest rates, a few of
Australia's leading banks have posted record profits today.
How do you feel about that fact in light of this week's talk
after the balance of payments that interest rates will
continue-to rise?
KEATING: Well it's not a matter of how I feel about it,
it's how their customers I mean their relationship is
between themselves and their customers and if they want to
shorten terms or lift repayments and post profits it's a
matter of their relationship with their customers.
JOURNALIST:.. KEATING: It's not a matter for me to be making judgements
about them.
JOURNALIST: Your state colleague called for a moratorium on
interest rates, Mr Carr. Would you agree with that
proposal? KEATING: Well everyone's got to live by their own rhetoric
in this business.
JOURNALIST: on page 2 you indicated
KEATING: That's just generally the fact that the deflators
we had in there were, for the forward estimates as published
in April, were from those which were obtained at the end of
the calendar year. All that's happened since then is that
the consumer price index and other things have changed.
That was worth about $ 110-120 million.
JOURNALIST: What's the new..
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KEATING: Off the top of my head I can't tell you.
JOURNALIST: Exactly how much money did you take off NSW and
put into these new taxes that they're raising for sewage
system and
KEATING: What we did was we implemented the Grants
Commission recommendation completely rather than phased it.
we introduced it completely, the full transition in one
year. JOURNALIST: NSW also have the same sort of effect
on West Australia?
KEATING: It's a one year implementation and it was larger
than I think most States thought it would be. And it's
larger because population shifts have been larger, that some
States have enjoyed higher revenues than other States
because of property and share market booms etc, and because
of that the States always regard the three year adjustments
as being too long and the adjustments therefore too big. So
they thought that if went to a one year adjustment the
adjustments would be small. In fact the adjustments have
been much bigger than they thought. So the States which are
dealing with those adjustments have really got to be then
wrestling with their budget as a result. So we thought you
can't very well phase a one year adjustment so we introduced
it in completely in one year.
JOURNALIST: very large cuts in global borrowings for the
Commonwealth authorities. What does this mean for example
for Qantas a few less jumbos over the next couple of
years? KEATING: No, Qantas wasn't dramatically cut. We basically
tightened up on most of the other authorities and in part on
Qantas. But by and large Qantas still has a very big
* re-equipment program which we are funding.
JOURNALIST: Out of internal funds or
KEATING: In part internal funds but a lot of it borrowings.
JOURNALIST: as a result of this cutback..
KEATING: Telecom as I said in the meeting is financing
about 94% of its program out of internally generated funds,
in other words without an increase in tariffs. But whether
it wishes to increase it's tariff over the years is a matter
for Telecom. But we just simply make the point, when some
State authorities are not even covering running costs
Telecom is actually funding, by internal generation, 94% of
the biggest budget in the nation. There is no authority
larger than Telecom, there's no authority with a program of
$ 3.1 billion, and it's doing 94% of it on its own fat
without borrowings.
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JOURNALIST: What did implementing the Grants Commission
recommendation in one blow instead of phasing it mean? How
much money would they have got if you continued to phase in
the Grants Commission
[ KEATING: It doesn't mean anything for us, it just means
within the pool some give up funds and others pick it up.
JOURNALIST: So how much less does NSW get because of this?
[ KEATING: I can't remember precisely what NSW got but
whatever they lost another State picked up, we didn't pick
it up. You understand?
JOURNALIST: Yes I understand that but how much did they
forgo by deciding to raise taxes in the middle of..
0 [ KEATING: They didn't forgo, they picked up another $ 200
million in tax and charges.
JOURNALIST: So they lost $ 200 million.
[ KEATING: No, no, they picked up $ 200 million.
JOURNALIST: responsibility. You're giving them a
certain amount less. How much less are you giving them
because of that?
[ KEATING: Well, we didn't make any adjustment in relation to
that. What we did was just fully introduce without phasing
the Grants Commission adjustment.
JOURNALIST: Which had what impact? I mean, what does that
mean in tax terms.
[ KEATING: To NSW?
JOURNALIST: Yes.
[ KEATING: I can't recall but it means nothing to us because
it's paid to the other States, it's part of the pool. The
only saving to the Commonwealth comes off the bottom line
which is $ 550 million.
JOURNALIST: That's not the way NSW is looking at it?
PM: Bad luck.
[ KEATING: I'm sure they will because they understand the
Grants Commission as well as I do. Obviously better than
you do.
JOURNALIST: Mr [ eating, are you concerned that the States
may creative accounting and get around the global limits
and have you considered more tightly defining what
constitutes senior Government authority..
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KEATING: I think the Prime Minister's recollection of these
events and mine, and I'm sure over the last six or seven
years has been that by and large we've had very substantial
compliance with the global limits. I can't remember any
year when people were actually flouting them.
PM: it's also that you get many examples of
underspending too, of underutilisation of the limits.
JOURNALIST: Mr Hawke, the Northern Territory thinks they've
been treated fairly generously, especially with the housing
subsidy being continued. Will that help Labor keep
Warren Snowden's seat
PM: Warren Snowden was going to keep the seat very very
comfortably for two reasons, one that he's an excellent
Member and two, the alternatives are atrocious. So he was
0 there, he was home and hosed. I can't imagine that what
we've done today in the reasonable approach that we've
adopted towards the Northern Territory will disadvantage him
in any way. The decision wasn't taken for that purpose, we
didn't have to save Warren Snowden, he as I say was home and
hosed. But we did take account of the very very narrow
revenue base of the Territory and so we felt that the
process that we'd initiated last year of grants to help the
phasing in of the adjustment that they must make should be
continued this year.
JOURNALIST: Mr Hawke, the National Australia Bank..
PM: They've announced did you say? I didn't hear your
question, what did you say?
JOURNALIST: The National Australia Bank has foreshadowed a
in the next couple of weeks, basically cancel out
the tax cuts?
PM: No.
KEATING: No, the tax cuts are enormous. Where have you
been living, under a rock?
JOURNALIST: Mr Keating, do today's decisions signal new
parameters of constraint your discussions?
KEATING: It just means that the discipline which we've had
on, we've been saying that a fourth consecutive year of
negative outlays is our objective and you can't have it any
tighter than that.
JOURNALIST: Mr Keating how would August Budget in
the light of today's decisions.
KEATING: It will have all of the discipline and style of
all the others.
JOURNALIST: Mr Keating you've already wrapped a total of
$ 910M in cuts from the States and the Commonwealth so far.
would you be tempted to go for the extra $ 90M in the August
package of a round billion?
KEATING: I don't know. It might just be lost in numbers I
guess. JOURNALIST: Mr Hawke why single out housing for special
treatment? PM: Well I wouldn't say it wasn't singled out for special
treatment but it made much more sense to, in a sense,
regularise the concepts that have been there before. It was
money available for housing but which wasn't in fact being
specifically utilised for that purpose. It's interesting to
note that the proposal that we put up was agreed, I think,
virtually without
KEATING: inaudible
PM: I mean there is a need in the area the arrangements
that had hitherto applied had meant a looseness and a lack
of certainty about the application of available funds for
housing. What we've done now means that the funds that have
been there notionally available will be used.
KEATING: And it's for the bottom end of the market. I mean
all of this goes to the bottom end of the market. It all
goes to CSHA Commonwealth State Housing Agreement funding
will increase. It'll take our program from something like
$ 700M to about $ lB which will be spent directly rather than
some subterfuge ways which is now being employed under the
nominating arrangements and a rental trust will also be
directed at those sorts of low income accommodation.
JOURNALIST: Mr Keating the NSW Government has put out some
figures this afternoon based on CPI forecasts for next year
They claim they got that figure from the Federal
Treasury. Is that an official forecast for the next year?
KEATING: 6.9 is a number that we have put about, I think,
as our best guesstimate at this stage for the CPI.
JOURNALIST: Average over the year?
KEATING: I'm not sure it's average or through the year. I
just can't remember. One of you asked me before about the
parameters for That's not the..
JOUNALIST: inaudible
KEATING: And I couldn't remember what that number was.
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JOURNALIST: Mr Hawke changing the subject slightly.
Tuckey and Mr Moore's comments on 4 Corners program, can we
have your view on that and secondly are there any parallels
between Mr Howard's demise as Opposition Leader and that of
Bill Hayden?
PM: Well really I don't think you need my comments from the
performance of Mr Tuckey and Mr Moore. I think the comments
that have been made by their ' friends and colleagues within
the Liberal Party' are devastatingly accurate enough. The
sorts of things that have been said by Mr Howard about their
performances that it indicates the pattern of treachery, I
think that's a reasonably fair discription and I wouldn't
seek to engage in any hyperbole. I think that's a fair
enough, accurate enough, telling enough discription of
what's happened in the sort of environment amongst that
happy bunch of pilgrims which constitutes the Liberal Party.
As to the parallels now I've obviously thought about this.
This is very interesting and I suppose I can speak with as
much authority as anyone in the land about challenges. Now
on the basis of that authority it would match your own
intelligence and that is in my case I was very much aware,
fully aware, of what was going on during the process of the
challenge. I was not at arms length from what was
happening, I new. I wasn't a challenger without knowledge.
And for Mr Peacock to suggest ingenuously or dishonestly as
he has that he was the draftee knowing only on the Thursday
before the event, does not correspond with my own experience
or with the intelligent appraisal that would be made by
anyone who knows anything about politics.
JOURNALIST: None the less, what's the point of having
numbers men if they can't tell you what the numbers are?
KEATING: Very profound. Well said.
PM: That's a brief and abpupt and accurate analysis An
analysis that would be shared by everyone in the country
except Mr Peacock, who would have Australia believe
otherwise. JOURNALIST: Mr Hawke how much has the state of the economy
stopped you testing popularity of the new Liberal leadership
at the polls?
PM: Well let's just get back to what I said before.
Remember this. There's only one person, only one person,
who was talking about an early election and that was a bloke
called John Howard. And John Howard was doing that for two
reasons. One because Keating and Hawke had brought down
what Keating and Hawke had promised twelve months before
that is very significant tax cuts to come in on 1 July. So
there's an attempt by the late Leader and I use the word
late only in a political sense the late Leader of the
Liberal Party to try and divert attention from the delivery
of that promise by saying, ' well this was just an election
gimmick', that was the first reason he did it. The second
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PM ( cont): reason he did it was that he was aware of a
fairly considerable degree of dissatisfaction if not the
extent to which that discontent had developed but he was
aware that there was a discontent and he hoped, I think,
that if he was able to create the suggestion of an election
just around the corner that the forces seeking to change him
may be dissuaded. For those two reasons Mr Howard was
talking about an early election. I never talked about it.
I mean you realise that we still only two years not two
years from the last election I hadn't been talking about
it, Paul hadn't been talking about it, no-one had been
talking about it but Mr Howard. So why do I keep getting
questions, ' am I thinking about an early election?' I mean
I'm not. Hadn't been and am not. I mean they know I have a
very, very strong constitution. They are doing their best
to tempt me, I know, but I've filled up now a very, very
good and enviable reputation of the capacity to resist
temptation. JOURNALIST: What about the prospects of a half Senate
election to hold off Bob Hogg option open for
consideration. How seriously is it being looked at?
PM: I just go back to what I'm not thinking about
elections. I'm not thinking about elections.
JOURNALIST: Can you understand with your track record..
PM: Our track record's quite clear. In 1984 there was
bringing the elections together. We had the situation there
where the Parliament then ran the second Hawke Government
ran virtually its full term, very close to its full term,
84-87. The third Hawke Government will run much longer I
would think than the average of Parliaments in the post-49
period. Now how long the fourth one will run, I'm not sure,
but you don't want to go that far ahead, do you?
JOURNALIST: The admission of high interest rates are in
fact impacting badly on the Government.
PM: No. You're a strange crew loveable but strange. I
mean if there's an easy, direct, uncomplicated answer to
something, repudiate that because there's no story in the
easy uncomplicated answer let's try and find something
devious. I mean I would think you know your track record in
recent times in actually forecasting and seeing what's
happening, you're not too good. I mean you really want to
sharpen up your game. I mean I told you in the Parliament
I didn't go down and secretly tell a couple of you I stood
up in the Parliament and told you what was happening. I
told you the numbers, I told you the timetable. But you
didn't have the wit, wisdom or the pertinacity to follow the
lead that the Prime Minister gave you.
JOUNALIST: Mr Hawke who told you?
PM: I have my deep throat. And deep throat is staying as
deep throats should. Totally unidentified.
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JOURNALIST: Was it Mr Greiner's office, Prime minister?
PM: Now if I say no to that then you say, ' was it?' and I
say no to that you might get me, mightn't you. I am
remaining above temptation again.
JOURNALIST: Back to the economy for a minute.
PM: Yes Peter. You're much more interesting on Liberal
Party machinations.
JOURNALIST: If monetary policy fails to slow down imports
in the next couple of months, are you prepared to take
fiscal adjustments in the Budget?
KEATING: Well to offset I mean are we prepared to adopt
JOURNALIST: If monetary policy does
KEATING: Let me put it in more simple terms. Are we
prepared to adopt the crazed, manic Sydney Morning Herald
prescription? The answer is no. No. The answer is no.
Unambiguously, definetly no.
JOURNALIST: inaudible
KEATING: No, no. That is not to say we stop or move the
other way. I mean they're still arguing their line about
their billion dollars. As I say to you it'll be whatever
number we end up with, they'll be $ 1B in front of us.
PM: At least.
KEATING: Yes $ 1B. They still will say that they're a
comfortable billion ahead.
ends