TRANSCRIPT OF NEWS CONFERENCE. EAGLEHAWK TOWN HALL
7 JUNE 1989
A 0 E PROOF ONLY
JOURNALIST: Prime Minister, do you believe at the moment
that we could be looking at a civil war with the army units
In China moving Into position to fight with each other?
FMi We've been In continuous contact with our embassy there
and while they're saying that the possibility of conflict, of
serious conflict between the armed forces is still there,
they ares saying as in the last report to me that there's no
firm evidence that it's reached that stage yet of serious
significant fighting between units which would constitute the
beginnings of this civil war syndrome that's been talked
about. Nevertheless there is tiring going on still. One
story that we've been told Is that a convoy that was going to
our embassy to pick up luggage of those people that were
flying out was In fact In a situation where there was firing,
It was involved in firing upon it and it had to turn back.
The luggage was In tact not picked up. So that will be
Indicative of the seriousness, the continuing seriousness of
the situation there.
JOURNALIST: It does seem that there wan actually of one
of the diplomatic compounds. That would seem like there's
some sort of animosity at least towards foreigners perhaps.
PM: I haven't received a report. It's different from when
I'm back in the office and I'm getting them fed in In an
almost minute by minute sense what's happening. At the last
report I had which was a couple of hour. ago I hadn't had a
reference to that and certainly if it has happened it would
represent a serious escalation of the danger for the
non-Chinese community.
JOURNALIST: Will the embassy staff In Beijing be remaining
there for the time being?
PN! We have evacuated a lot of the families and I think we
would not be continuing to fully man the embassy there. But
clearly we want to keep in place a capacity to monitor the
situation, to be able to report to us on what's happening. I
must say that the work that's been done so far has been quite
outstanding and those involved are to be congratulated on
their commitment anid tenacity.
JOURNALIST; The situation seems to have deteriorated In
Shanghai as well. Have you had any information on that yet?
PM: Well yes, that it has become more tense there. But the
problem that's plaguing us, not merely in regard to Shanghai
but in Beijing generally Is the lack of absolutely firm
evidence an to the state of play. For Instance the
suggestion that now there is a new Secretary-General and that
that confirms the disappearance of Zhao Ziyang. This has all
been put to us in terms of it looks as though this may have
happened without there being definitive statements, which is
a reflection of the fact of course that effectively there is
no governance of China now. The areat hope must be, as I've
said in the last 24 hours or so, the great hope must be that
the action that's been taken by those who are issuing order's,
including the elements of the army, will not go to the point
where Zhao Ziyang is going to be taken out of the picture
entirely. Because he is in my judgement not merely the voice
for moderation but the person who has the capacity and the
vision to bring China together and to enable it to come out
of this absolute tragedy which In such a short time has set
back the years of constructive work that had preceded It.
JOURNALIST; Are you concerned that he might have been hurt
or in
PM: There was one report at one stage that they were
considering execution. Now that seems not to have been given
effect to, certainly therelve been no repor'ts to confirm
that. It really Is my profound hope that he Is not only
going to be spared but that the forces of moderation will
come through in a way which will see Zhao Ziyang being able
to assutm a position of leadership. Because I think the
welfare of his country very signficantly depends upon his
capacity to survive and to be reinstated into a position of
leadership. JOURNALIST: You're backing Zhao Ziyang against Deng
Zlaoping? PM: Obviously you support a man who has opposed the use of
force, who has counselled moderation and consultation.
JOURNALIST: Do you know anything of the man who is supposed
to have replaced him?
PM: Nfo, the only indication that we have is that Waio 5b, has
been connected with the intelligence area. I believe it's
suggested that he may have had a son who spent some time in
Australia but I don't profess at this stage to know anything
more than that general observation that he has been connected
with the intelligence area. I repeat. I can't emphasise too
much the significance that I attach to the survival and
re-emergence to a position of power of Zhao Ziyang. I just
know the qualities of this man and it would be an absolute
tragedy for China if he was removed from a position of
authority.
. B
JOURNALISTz On another issue, it does seem today that the
message is coming on loud and clear that inter'est rates are
hurting. It does also seem from the finance industry, as we
saw then today, they'd very much like you to consider
assistinlg Ausutralians to save more. Can you hasten that
process in any way or
PM: Justt me pick up the two aspects of that. Obviously high
interest rates hurt. I've made it quite clear that I know
that. They're not high because we want them to be high,
they're high at this point because it's necessary that we
lower the level of activity In the country because we can't
sustain the high level of Imports that are associated with
that high level of activity. I think that's Increasingly
understood, I think people know that I wouldn't be stupid
enough to have Interest rates higher than it was necessary to
have them. I hope and believe that they are under'standing
that. I repeat, they will not be kept higher f or one day
longer than is necessary to achieve the economic purpose of
that. As to the second part of your question about proposals
to Increase savings, as I've said, and I really haven't got
anything to say in addition, that Is that we observe, take
account of various proposals 7hat-are--mad_. I* h--them
examined, they are'ldoked at. But You've got to understand
thli9, that while it's easy for some people to say from their
perspective, If you do this that will mean an Increase in
saving of benefit to us in the finance Industry or somewhere
else, but you've got to understand that If that Involves tax
concessions then that is substituting certain savings, the
certain removal from consumption for an uncertain
corresponding saving If that saved taxation concession Is put
back in the hands of Individuals. Now this doesn't mean that
the proposals are not worth looking at. You have to have
that particular point clearly in mind when you refer to these
sorts of proposals.
JOURNALIST: In the longer term do you see any merit In a
scheme which taxes only real interest rather than nominal
interest with the corresponding
PM% On both sides of the ledger. Well. that is one of the
proposals that has been around and it comes within the
category Michelle of'what I said before of It being examined.
But I've got to insist that the fact that we say that these
things are being examined does not mean that they are on the
agenda, that we're deciding that we're going to do theme
things. But It is a responsible thing to do when people
express concerns about these Issues and make suggestions,
it's a reasonable and responsible thing to examine all the
implications of them. That's been done.
JOURNALIST! Can you elaborate on your point earlier today
that it wasn very good advice to say to people to save the tax
cuts?
PH: Well for' the very simple reason that why we have high
interest rates at the moment Is because the level of demand
is too high. if you look at the national accounts figures
for the last 12 months you have a situation where the local
production Is only able to satisfy about 50%, just under
of the growth In demand. So what we need to have Is a
situation where both on the investment aide and the personal
consumption side, there is a reduction in the level of demand
for goods and services. That's why it is better, If people
can, to save the Income that's derived from the tax cuts and
the family welf are payments. We recognise of course that
obviously there's going to have to be some expenditure,
people are going to need to do that. But where there is in a
sense a choice. In their best interests and the best
Interests of the country are Involved in not spending but
saving because that both reduces the level of demand
necessarily, and it also reduces the call upon overseas
savings. The more we can save internally the lesrn we have to
borrow trom abroad.
JOURNALIST: Do you think many people have that choice in
realistic terms given the tax cuts are all skewed to midd.
and lower income earners?
PH: TO the extent they are skewed to middle and lower income
earners, that's the direction which you would want the
skewing in term. of giving the greatest assistance.
JOURNALIST: But they are the people with greatest need also
to spend that money higher Interest rates...
PM: But what I'm saying is that they relatively are the ones
who are going to get the greatest benefit. As I wan saying
on television the other night, ift you look at the average
income level with one income and a wife and two kids, the
average picture will be about $ 24 a week derived benefit in
tax reduction which is obviously over $ 100 a month. On
average that would be well in excess of the increased payment
involved for a higher Interest payment. Now, that is an
average picture and I don't f or the moment ignore the fact
that that average will describe some circumstances where
people have much mare to pay out than they will receive. But
on average that will be the situation. What I'm saying to my
fellow Australians in this sort of situation. may I say a
situation that I've been through myself. I remember when I
first went to work at the ACTU I had real problems about
meeting mortgage repayments, so it's not something of which
I'm unaware. I'm simply saying to people that they are going
to get signticiant tax cuts starting in just a few weeks time
in July and I ask them to the extent obviously that they have
to use those to meet additional burdens like mortgage
repayments f or some of them, well obviously that has to be
done. There are some items of outlay which they need to
undertake, I understand that. I really am saying use the tax
cuts to meet the added burden that you may have of interest
repayments for this period, purchase what you've got to
purchase, but to the extent that you've got the choice, save
because that will be in your interest and in the country's
interest and it will make the sooner that point at which we
can look at a reduction of these high levels of Interest
rates which are currently necessary to lower the level of
activity. I hope that's putting it in non-technical jargon
in terms that people can understand. Putting it as simply as
7 what$= hs,. w" v" 4VFV 4T% &, iu4-eMi4m wh-t watr mr%+ 4 h4, y
interest rates is that the level of demand for things that
people are purchasing and the level of Investment by business
Is at such a high level that it's involving bringing in so
many import* that we can't sustain. Therefore we have to
lower the level of activity and If in those circumtances
people get more money coming to them with the tax cuts, the
sensible thing to do Is not to use that to increase the level
of demand but to help us to save more as a community. In
that way there can be co-operation with Government in trying
to bring a situation where we can reduce interest rates
sooner rather than later.