TRANSCRIPT OF NEWS CONFERENCE, HOTEL MEURICE, PARIS, 19 JUNE
1989 E 0 E PROOF ONLY
JOURNALIST:. Prime Minister imports are obviously still
increasing dramatically. Should there be a further interest
rate rise?
PM: I'm not saying there should be a further interest rate
0 rise. I repeat what I've said consistently, that all
settings of policy will be kept as tight as is necessary to
deal with the situation. Just making a general comment on
the figures. The figures come in at about the mid range of
the market expectations. To this point the reaction to the
market on the exchange has been not in a downward direction.
It's important to note I think, that the import figure Is
dominated by the increase in machinery about a 23% Increase
in machinery $ 250M in the last month and as we've been
saying while these are imposing strains upon the accounts,
nevertheless we'll be seeing the later beneficial effect of
those figures in a strength in economic Infrastructure. But
it makes quite clear that we have to keep all policy settings
tight and they will be kept tight.
JOURNALIST: When would you anticipate a significant positive
downward movement in the May indicators?
PM: It's hard to say. We've been saying earlier on this
year that we hoped In the third quarter that we'd see that
impact and that remains my hope.
JOURNALIST: Do you think the settings are tightening up Mr
Hawke, particularly monetary policy? You've said before you
see no need for rates to go up further. Do you adhere to
that position?
PM: I repeat what I've said before.. They'll be kept as
tight as is necessary. we will watch the impact of policies
In a constant way, as we always have. I trust that the
policy settings are tight. What you've got to remember Is
that we haven't been sitting on our hands. In the Premiers'
Conference we slashed another $ 2.7B, almost $ 3B off the funds
available to the States. So that has represented a
significant tightening of policy in the fiscal area.
Moentary settings are tight and as you know in the area of
wages policy, very tight indeed, with an expected outcome of
about 6 1/ 2 per cent.
JOURNALIST: So monetary settings are tightening up?
PM: The questlon has been put three different ways. I'm not
giving another different answer to the ones I've given.
JOURNALIST: Mr Hawke do you see any scope f or helping home
owners with their loan repayments in the Budget context?
PM: What I've said before is what I repeat here and that is
that there have been a number of proposals that have appeared
in the public arena on this Issue and we are prepared to
analyse those considerations but that does not mean that
there Is any decision that's Imminent. But it does make
sense where Proposals are put to excamine them.
JOURNALIST: Increase in sales tax on luxury goods to try
to dampen demand?
PM: Well that's a proposal that has been talked about. So
any of these proposals that have been raised, and they have
been raised fairly extensively within the Party ranks, some
people in Government seem to have made the suggestion, a
number of commentators in the markets have talked about these
things. Now a sensible government will look at all these
sorts of proposals, examine them, look at their various
implications, now that's been done.
JOURNALIST: So Mr Hawke what comfort can you offer
home buyers who are now facing a crisis in terms of their
mortgage repayments because of the Government's policy
settings? PM: The first thing I would say is to repeat what must be
repeated arnd that Is that these policies have not been put in
place capriciously. They've been put there because the
economy is operating at too strong a level. It's quite clear
O from today's figuire that we can't continue to have an economy
operating at the level which brings in this sort of Imports.
Now if the community can say, ' oh well you're sloppy in the
fiscal area, you're sloppy in the wages area and you're just
hitting us with tight monetary policies', then that would be
a legitimate criticism. Fiscal policy Is tighter now than It
has even been, reflected in the very significant surplus,
reflected in the zero public sector * borrowing requirement,
reflected in-the fact that we, a. a result of these things.
are paying off debt at the Commonwealth level. in the area
of wages policy, historically never tighter, never been a
situation where you've had such high levels of economic
activity and such low levels of wage increase. So the tight
monetary settings are in that overall tightness of policy and
what follows from that is that If you didn't have tight
monetary policy like this then the impact upon the very
people that you're talking about and that I'm concerned with
would be significantly greater. Now the rich in the
community, the well off, would be able to accommodate
themselves to a situation where we just capriciously said,
' oh well we'll generally lower interest rates'. Because we
all know what would happen then. The dollar would plunge,
interest rates would go through the roof, the economy would
collapse. So it's these people who admittedly, and that I'm
very concerned about are suffering now would suffer much
more. So we'll have to keep policies tight for as long as
with this combination of other policies we can get a gentle
let down in the level of economic activity. I repeat to the
people that you properly mention in your question. I repeat
what I've said to them. That as soon as it is responsibiily
possible then the rates will come down.
JOURNALIST: the areas of sending signals. Far example
privatisation. Does it look like the Government's running
out of options unless you can move in that area as well.
PM: You're not really suggesting that privatisation is an
answer to the problems of the high level of economic
activity. I mean it's an important issue, it's an important
issue, but it's an irrelevant issue to the question of the
level of economic activity.
JOURNALIST: Mr Hawke this is still the highest figure on
record. Were you personally worried when you saw them or
heard about them this morning?
PM: Well I think it's covered by what I just said earlier
Niki, that the figures came within about the mid range of
expectations. I would've been more worried It it had been
over $ 2B. it does seem on the evidence that's available to
me Just before I cam down to this press conference that the
market hasn't reacted adversely. If anything the dollar has
gone up somewhat.
JOURNALIST: Mr Hawke about" the hail f-Senate-elect ion.
Your comments the other day about the half-Senate
PM: I've been fascinated by the way
JOURNALIST: You've set the hares running about
PM: They've set the hares running. I mean you've been
infected you people here by the Paris atmoshpere. 1-had a
look, I asked my people to get out what I said earlier on
this. I Just remind you of what I said and I have no reason
to depart from this. Nothing I've said really does depart
from it. This was the 19th January, my daughters birthday.
Now let me see what I had to say.
-4-
JOURNALIST: r* i'
PM: I'm indebted to you for your assistance but I'd rather
have me saying actually, directly, what I said rather Milton,
than some Interpretation of it or attempt to go to what I
said. " It is the case that you could have the House of
Representatives going up until November of 1990. But that
means you would have to have a half-Senate election by the
middle of the year and then a House of Representatives
election. It would be a pretty bold Prime Minister who would
try and pull that one off and I'm bold and agressive but I
don't think I'm that silly. So that really means that the
outer limit is about May of next year"
JOURNALIST: Are you that silly yet?
PM: Never been that silly, not likely to be that silly now.
It is the fact that the sort of thing that excited me so much
over the last couple of days is technically and legally a
possibility. That's a fact. I can't and won't attempt to
change those facts. But I have no difference in my
assessment and assumption of what would be politically
prudent than that statement which I delivered on the 19th of
January. JOURNALIST: Does that mean there won't be a half-Senate
election? PM: It looks like it doesn't it.
JOURNALIST: Inaudible
PM: You really have to concentrate on the trip now. You
can't sort of wind It up now, ' Hawke's thinking about a funny
sort of election timetable'. Now I've made it very clear so
now try and concentrate your attention on the trip because
there's some very important issues.
JOURNALIST: Before we get back to the trip Prime Minister,
if the f igures keep coming in at this level do you think
there's any need for a further tightening of fiscal policy In
the Budget, further spending cuts?
PM: There'll be obviously a review of that situation. You
will have seen that Paul said in his statement on the BOP
figures that we will now go into the fourth year in a row of
reduced real Government outlays and so that will require a
very careful scrutiny of program.. But we're not looking at
any massive cute. But the most fascinating thing in this
area isn't it now I read in the cuttings this morning is the
collapse of all the hoohar from Mr Peacock and the Liberals.
The * re we were getting from Dr Hewson and the rest of them the
story that we were going to have massive expenditure cuts.
The significant difference from the Hawke Government policy
and he seems to be battling to stir up the courage to talk
about another billion dollars worth of cuts. There is no
suggestion on what's come out of the weekend of conservative
politics that they are any closer to getting themselves
together. All they seem to be doing is still fighting pretty
vigourously amongst themselves. A sight which Is very
pleasing to see from the other side of the world. pleasing
JOURNALIST: How much margin is there for cuts?
PM: Very, very much less margin than has been in the past
for the very simple reason that you've never had a government
which has but as much as this one. Get your perspective
right. What we've had now is three successive years of real
reductions in Commonwealth outlays. A second year or
surplus. This has never been done before with the zero
public sector borrowing requirement. Now you can't, just by
similar definition, you don't need to be well versed In
economics to know the facts that if you've been cutting and
cutting and cutting and if you've done what's never been done
before, three years of real reductions in outlays, by
definition there Is not very much room left for much more If
you're going to continue to provide a reasonable level of
services that the Australian community properly expects.
JOURNALIST: Mr Hawke taxation is the other side of fiscal
policy. Would you see any prospect for increases In taxes as
a way of tightening fiscal policy?
PM: I've already directed an answer to a question in that
area here this morning. I've been asked a question which
said is there a possibility of some increases in taxes and if
you read the transcript you'll see what my answer to that Is.
JOURNALIST: Mr Hawke if you did increase sales taxes on
luxury goods would that hurt our trade position, imported
goods? PM: I'm not going to that hypotethical question. I mean let
me simply say that any decisions that we made would be
consistent with our proper stance on international economic
policy. JOURNALjIST: Mr Hawke earlier this year you cut $ 700M from
State and Federal Government spending programs. Do you think
you could aim for a billion in the Budget reasonably?
PM: No I've got nothing to add to what I've said on
ends