PRIME MINISTER
TRANSCRIPT OF DEBATE WITH ANDREW PEACOCK, LEADER OF THE
OPPOSITION, ABC STUDIOS, SYDNEY, 25 FEBRUARY 1990
E 0 E PROOF ONLY
MURPHY: Bob Hawke says this election is the most
important in 40 years as he tries for a fourth term as
Prime Minister. Andrew Peacock says he's certain he'll
be Australia's next Prime Minister. Well tonight we'll
put them both to the test. And joining me is a panel of
four senior political journalists elected by the Federal
Parliamentary Press Gallery Warwick Beutler from ABC
Radio Current Affairs, Laurie Oakes from the Nine
Television Network, Alan Ramsey from the Sydney Morning
Herald newspaper and Paul Kelly who's political editor of
the Australian newspaper. Now let me explain the rules
of this debate. Of course it's always hard to work out
the rules but after exhaustive discussions between all
parties, we've decided to tackle it in a way which we
hope makes it as interesting and informative as possible.
The Prime Minister and the Leader of the Opposition will
talk on three issues the economy, social policy and the
environment. They'll question each other and then the
panel questions both of them. Later the panel will throw
questions to both leaders on any issues and topics that
they care to choose and we'll wind up with final
statements from Mr Hawke and Mr Peacock. Time
restrictions have already been agreed to and as we have
only one hour, I'll be rigorous but reasonable in
applying these rules. So now let the great debate of the
1990 election campaign begin. The first topic is the
economy. A few minutes ago we tossed a coin, the Prime
Minister called, he won and he allowed the Leader of the
Opposition to lead of f so Mr Peacock, the economy.
PEACOCK: Thank you very much, Paul. I think for
starters the one thing that I would agree with that Mr
Hawke has said in this election campaign is that this is
the most important election in the last 40 years of
Australia's history. For the reality is Australia needs
a new era, a new epoch and a new spirit.
You know and I know that the economy is on the brink of
collapse. Business failures are at a record level,
family living standards have been shattered, our
children's futures have been mortgaged because of the
spiralling debt and so the decision that you'll take on
24 March is in fact one of the most important in the last
years.
But worse still in the outline that I could put to you,
worse still, is that for the first time in Australia's
history we contemplate the reality that the next
generation of our children could inherit worse living
standards than their parents. This has never happened
before and it should never have happened. You know and I
know who is to blame.
My opponents deliberately chose the high interest rate
route. They deliberately chose an economic instrument
which is both crude and cruel.
They could have tightened fiscal policy, they could have
freed up the labour market and with those settings in
place, had a steadier monetary policy which would not
have had the effect of adding to the inflationary
pressures pushing interest rates up. Oh no, they took
the high interest rate route. They can not therefore
blame anything else for the choice was theirs.
Now we're saying to you, what Australia requires is a
coordinated set of programs. We will tighten fiscal
policy and we've identified in our Economic Action Plan
$ 2.7 billion of costs, of cutting of expenditure in our
first year alone.
We are of course utilising $ 2 billion of that savings for
families, for tax relief a child care rebate, a child
tax rebate, easing of the eligibility and increasing the
dependent spouse rebate. We're abolishing the capital
gains tax where 80 percent of the men and women who paid
capital gains tax in the last figures available earned
only $ 35,000 or less and that ain't millionaire stuff,
but the Labor Party keeps threatening me with the
allegation that we're doing it for millionaires. Eighty
percent of those who paid capital gains tax earned
$ 35,000 or less.
But the great stress has to be on the family and we've
produced a program which will give genuine relief for
families, a marked contrast, a marked contrast
staying with the status quo.
MURPHY: OK, I must stop you there and now ask the Prime
Minister, Mr Hawke, to speak.
PM: Next month you must make the decision as who is the
best equipped to run the Australian economy.
For the last seven years with my colleagues I've been
running the biggest business around here and that's the
Australian Government and for the first time in history
we have made a profit out of running that business
never before.
In the last three years, a $ 17 billion surplus and I have
applied that surplus, that $ 17 billion, to wipe out
Commonwealth Government debt. As far as you are
concerned, through your Commonwealth Government, you owe
no overseas debt at all. We are an international
creditor. But I've done that at the same time as we've
reduced tax rates.
I inherited from this crowd a top rate of 60 cents in the
dollar, we've brought it down to 47 a bottom rate of
we've brought that down to 21 and we've done that by
making the rich pay where they didn't pay before a
capital gains tax, a fringe benefits tax and closing off
all those tax avoidance rorts that we inherited.
But as well as doing that we've substantially cut
outlays. For the first time in history, against what Mr Peacock
has said, for the first time, four successive years of
real reductions in outlays which has allowed us to
transfer $ 30 billion of resources to the private sector
and that's where the jobs have been created 1.6 million
new jobs and 92 percent of them in the private sector.
We've done that because together, you and the Government,
have put Australia's future first.
We've had predictable wage outcomes and with that we've
been able to restructure the Australian industry.
We now have had in the last four years a 54 percent
increase, real increase, in manufactured exports. We're
sending cars to the United States, we're exporting steel
to the world, imports are coming down and we have the
biggest investment surge in history $ 90 billion worth
of investment projects identified by Access Economics to
bring on $ 10 billion worth of extra export income in the
years ahead.
There's had to be high interest rates because we've gone
too strong, but you've accepted that and I know it's
hurt, it hasn't been pleasant, but now the banking sector
says that the policies are right, that the interest rates
are coming down.
If you're going to control interest rates, you've got to
control wages, you can predict the wages outcome
under us, under Mr Peacock it will be a wages explosion.
He has a $ 6 billion unfunded set of promises which will
blow the deficit out again. So, if you are going to keep
restructuring the economy, keep up with manufactured
exports, bring interest rates down, then you must control
wages which we can, he can't you must fund your
promises. I will fund every promise I make during this
election against the $ 6 billion unfunded situation of the
conservatives.
So there it is. If you want interest rates down, exports
going ahead and jobs growth, then you must have wages and
fiscal control. We've got it.
MURPHY: Well now we go to an interesting part and this
is where the leaders question each other. First question
to you Mr Peacock.
PEACOCK: Thank you, Mr Murphy. Mr Hawke, in your 197,
1987 election policy speech, not once, not twice, but
three times you undertook to the Australian people that
you would get interest rates down. Home mortgage rates
are now at a record level.
MURPHY: Will you get to the question.
PEACOCK: Yes, sure. Well you can see that your promise
has been broken.
PM: No, what has happened, Paul and viewers, is that
I've conceded publicly that at the end of 1988 every
professional economist, every private and Government
economist underestimated, we underestimated the strength
of demand and demand grew so much in the Australian
economy, recognised and reflected by the fact that there
was an, an eight percent increase in expenditure, a four
percent increase in consumption. Now we could have, if
we'd wanted to, still having a tight fiscal policy and
tight wages policy, let a soft monetary policy which
would have wrecked the economy. You just would have had
more imports that you can afford. So we had to take the
tough decision. I'm neither masochist nor sadist, but
that's what had to be done and the banking sector has
realised and recognised now that under those policies,
interest rates will come down.
MURPHY: Do you have a quick follow up question?
PEACOCK: Not worthwhile after that answer.
MURPHY: Well, Mr Hawke, now you can question Mr Peacock.
PM: Yes, well, I'd like to ask you, Andrew, you have
said, rightly, that if you are going to get a reduction
in interest rates, then inflation must come down. Now I
guess if you are thinking about getting inflation down,
you must have some idea, some target in your mind of what
wages outcome there will be necessary to bring inflation
down. What's the target rate for wage increase you have
in the first year?
PEACOCK: You love targets because those who like
centrally planned economies always like targets and they
want people to meet ' em. We believe in the market and
we're not getting into this game. Our target, if you
want to use that term, is to get labour costs down to the
equivalent rate of our trading partners and we can only
do that with a stress on productivity and we are
underlining the drive for productivity in our wage
fixation mechanism which you're not prepared to
undertake. Together with that, of course, in reaching it
we can have our drive through tighter fiscal policy,
freeing up the labour market and a steadier monetary
policy which will be directed towards getting inflation
down. But without the program of freeing up the labour
market, without a program directed toward getting labour
costs equivalent to that of our trading partners, what
will happen is that inflation will continue to enter,
eat into wages and those real wages which under your form
will not turn around.
MURPHY: A follow up, Mr Hawke?
PM: Well, you said on 31 August, your exact words, that
Government should stay out of industrial disputes, stay
out of wage fixing as such, they just get in the way.
That means that you will just leave it absolutely free if
you meant what you said on 31 August. You'll leave it
absolutely free for the strong to get whatever wage
increase they want. Is that correct?
PEACOCK: No, that's not so. Industrial disputes..
Government ought get out of the way. They tend to play
politics with it. In terms of wage fixation, this, the
current system will remain. You will in fact have
amendments in directions to the Commission to take note
of productivity. International competitiveness and
employment in the fixing of wages and those who move out
will get wage rises in line with productivity increases.
MURPHY: OK. We now move to the members of the panel, my
colleagues, and the first question comes from Paul Kelly
and it's to Mr Hawke.
KELLY: Mr Hawke, after seven years in the job, can you
tell us where we are in terms of achieving in this
country a truly internationally competitive economy? Are
we nearly there, are we just in the middle or are we
still at the start?
PM: No, we're past the start. Let me give you examples,
as I said in my opening statement, that we are now
exporting cars to the United States. We are exporting
vehicle parts to Japan. Let me give you the outstanding
example. When we came to office BHP was contemplating
closing the Australian steel industry. I saved the steel
industry and now we are exporting steel all around the
world we are a world class competitive exporter'of
steel. We couldn't have done that without wage restraint
and cooperation, so we're there. But importantly we're
having wage restructuring, award restructuring as well,
so that the training that will take place in industry
will be relevant to modern processes. I can take you to
factories around Australia which are now competing in the
most competitive markets in the world in a whole range of
exports of manufactured goods. So we're doing it,
there's more to be done, but you can only do it under our
wages policy.
KELLY: But, Prime Minister, how can you say we're nearly
there when our inflation rate at the moment is one and a
half times that of our trading partners and we've got a
net external debt at over $ 100 billion, one of the worst
in the world?
MURPHY: And you've got 30 seconds
PM: Well, let me say this in respect of our debt. You
look at the debt. Access Economics identifies the other
side of that debt. $ 90 billion worth of investment
projects in this country which they say will project
another $ 10 billion of export income in the years ahead.
KELLY: And they say that debt will get worse. They say
that in the paper that they released last week.
PM: But, but they also make it clear that as far as the
Government is concerned that we've wiped out debt and the
debt that is being accumulated by the private sector is
increasing the productive and competitive capacity of
Australian industry.
MURPHY: OK, now Warwick Beutler puts a question to
Andrew Peacock.
BEUTLER: Mr Peacock, Senator Janine Haines, who wanted
to be here but couldn't, wants to know how you justified
further deregulation of the Australian economy and
particularly, how do you go about implementing your
policy of abolishing capital gains tax and further
privatisation of organisations such as Qantas when the
Democrats hold the balance of power in the Senate, will
do so after this election and they're to be opposed
to those policies?
PEACOCK: Well, of course, the Democrats aren't running
for office in the sense of running for Government. The
Democrats never produced programs for Government. Great
respect for many members of the Democratic Party, the
Democrat Party, but they are not seeking to govern
Australia. Therefore, if you vote for the Democrats,
you'll be voting for a group of people who want a degree
of purchase and leverage on events but do not want to
lead the nation through the 1990s. And leading the
nation through, through the 1990s, returning to
incentive, returning to programs for development, labour
market deregulation absolutely essential, following the
freeing up of the banking and finance system, the capital
gains tax I indicated in my opening statement
percent of the men and women who paid capital gains tax
earned $ 35,000 or less. So I want to return incentive.
I want to get taxes down. If Janine Haines wants to
oppose that, let her do so at her own peril.
BEUTLER: But the reality is you do have to deal with the
Democrats. Are you going to do it?
PEACOCK: Well, the reality is that they've got to get
elected. What I'm proposing for Australia is a new era.
What I'm proposing for Australia will return incentive to
Australia and Australians and let her seek to oppose my
programs which will be helpful to the great bulk of men
and women who've been slugged under this Government, not
only through interest rates, but through high taxes. I
have the programs to do it, the Democrats regrettably
don' t.
MURPHY: Laurie Oakes, a question for Bob Hawke.
OAKES: Prime Minister, a Sunday newspaper today asked
residents of a Sydney street what they thought you should
be asked and one of the questions they threw up was why
are you allowing our country to be sold out to the
Japanese? Now, if you eliminate these racial overtones,
that's a question I've heard from a lot of Australians.
What's your answer?
PM: Well, of course, we are not. And the fact is that
we have a Foreign Investment Review Board whose task is
to recommend whether any takeovers or acquisitions of
Australian assets are against the national interest and
we take account of the advice of that body. Australia
does need investment from abroad. We must have some
mechanism for taking account of whether it's in the
Australian interest or not and we are in a situation
where, in regard to many sectors of our economy now, we
have been strengthened because we've brought in
expertise, technology, equipment, know-how, which is
associated with investment from overseas. But we have
kept a mechanism in the Foreign Investment Review Board
to oversee that investment.
MURPHY: Do you have a follow up?
OAKES: No that's fine.
MURPHY: OK, well Alan Ramsey now questions Andrew
Peacock. RAMSEY: Mr Peacock, your proposal to abolish the capital
gains tax. That tax this year will bring in $ 500
million. It is a tax paid by one percent of Australian
taxpayers. You intend in abolishing the, in the,
abolishing capital gains to make it retrospective to
1985. Now how do you justify backdating, abolition of a
policy that gives a five year windfall of $ 450 million to
one percent of Australian taxpayers, one percent?
PEACOCK: Look I think, Alan, you're suffering a bit of
selective amnesia and caught it from the Prime
Minister.
RAMSEY: No I'm not one percent of taxpayers.
PEACOCK: The reality is, I've said to you, that of those
men and women, those small businesses that are copping it
in the neck, 80 percent of the men and women paying
capital gains tax earn $ 35,000 or less
RAMSEY: Mr Peacock, that's distortion.
PEACOCK: Now you can, you can in fact, describe them
as millionaires, but you'll be laughed out
RAMSEY: I didn't describe them as millionaires.
PEACOCK: And the second point about it is why backdate
to ' 85. In fact it's from ' 85 to the date of our
election to office. The reason for that is obvious.
Otherwise you'll have three categories of people. You'll
have those who purchased an asset before that date in
1985, you'll secondly have the people who purchased
assets between ' 85 and our election to Government, then
you'll have a third category thereafter. Now we've
already got a bag of snakes in the income tax and other
tax acts now. The classic way to make it worse would be
to follow your lead.
MURPHY: Follow up?
RAMSEY: Yes, indeed. Mr Peacock, you never, you always
opposed retrospective tax penalties. Why are you giving
a $ 500 million windfall gain to one percent, one percent,
of Australian taxpayers by backdating this particular
policy? PEACOCK: I've just told you, administratively you'd have
three classes of people and that
RAMSEY: Are you saying simple?
PEACOCK: RAMSEY: What is simple about, I mean, what is difficult,
what is difficult about applying the policy the day after
you're elected?
MURPHY: OK, now the answer.
PEACOCK: I have the utmost respect for you, but I would
prefer you to allow me to answer the question.
RAMSEY: You're avoiding the question.
MURPHY: Please
PEACOCK: I was about to answer it-
RAMSEY: You're avoiding it
MURPHY: Go ahead, please go ahead.
PEACOCK: My time starts now?
MURPHY: Yes it does.
PEACOCK: OK, fine. The reality is not only are the men
and women who are paying capital gains tax, earning only
$ 35,000
RAMSEY: That is not true, Mr Peacock.
MURPHY: Please, please, Alan, let Mr Peacock
PEACOCK: If you have a look at the latest figures
available RAMSEY: I have.
PEACOCK: Well, you will find that in fact of the
companies that paid capital gains tax, 65 percent of them
only had a corporate profit of $ 40,000. Now it seems to
me if you want to return incentive in this country,
you'll look at those figures and you'll recognise what
they're doing to small business.
MURPHY: Ok, I must intervene here. We must move on
because we've got three topics. We move into the second
of them now and it's social policy. I'd ask Bob Hawke to
speak first.
PM: When I talk about social policy and social Justice I
look first of all at kids. I look at the fact that now,
after seven years as Prime Minister, I can go into the
schools of Australia and see that two out of every three
of our kids are staying on in school against the one in
three at the end of the seven years of conservative
government. That means that what we're doing for the
families of today is we're training and educating the
kids of today's families, and importantly training and
educating the parents of tomorrow's families.
When I talk about social policy and social justice I look
at health and I see all of my fellow Australians now
covered by Medicare and with bulkbilling available. I
don't see the two million Australians that I inherited in
' 83 who had no cover. And I see an Opposition pledge to
abolish Medicare.
I see social justice when I see kids and adults going to
programs like Skillshare and our whole range of other
training programs that mean that people with some
disabilities or backwardness are able to be trained to go
into the employment market. our opponents would abolish
all these programs. What they would do was to substitute
for a social safety welfare net a social trapdoor. Push
the people through the trapdoor and then do nothing more
for them.
I see social justice in regard to our kids where every
major social welfare organisation has congratulated me
and the Government for now paying over two billion
dollars a year to the kids of low income families. They
have said, they have said that that's matched the promise
to ensure that there be no financial need for a kid to
live in poverty. That two billion dollars has been paid
to meet that promise.
I see social justice in a fair taxation system. The sort
of thing that Alan Ramsey's been talking about. I see
social injustice in giving, over a period of time as they
would, literally billions of dollars to less than one per
cent of the population. In the last year ' 87-88, 65,000
people, one third of one per cent, paid capital gains.
But will put billions of dollars back to them, billions
of dollars that could've been spent on health and
education and the welfare of the needy.
These are the things that are important. I don't want to
see an Australia where we're going to have a pattern of
privilege returned. Where superannuation is the preserve
of the few instead of for the blue collar workers and for
women as we have made it. It's these things, it's
education, it's health, where we have done the things
that need to be done. And through all this, despite what
Mr Peacock has said, the independent analysis shows that
average standards have also increased by over six per
cent in the period we've been in office. That's what
social justice is about.
MURPHY: Ok, thank you Mr Hawke. Now three minutes from
Andrew Peacock.
PEACOCK: Well Mr Murphy I actually think, listening to
what the Prime Minister has just said, that we may have
all been fools. It must be Max Gillies in here. This is
not Australia today that he is discussing.
Let me just say firstly we are not going to abolish
Medicare. Secondly we are not going to abolish all
training programs. And thirdly, if you want to know who's
close to the privileged, have a look at the man over
here. Because during his time as Prime Minister of this
country Australia has become an unfair society. Unfair
to the great bulk of men and women, particularly working
men and women. The rich have got richer, the poor have
got poorer, and the great bulk of Australians have not
only just been squeezed out, they've been forgotten by Mr
Hawke. The focus of social policy ought to be firstly the
family, secondly our children and thirdly the elderly.
I've said what I'll do for the family with child tax
rebates, child care rebates, assistance for spouses
through a lift in the dependent spouse rebate. And as
for our children, now I mentioned before a-. broken promise
indicated three times in the 1987 policy speech by Mr
Hawke. And if I may say the most debased promise of all
was that one that said no child will live in poverty by
1990. Well it's 1990 and 500,000 children live in
poverty and 70,000 are homeless. So much for the
undertakings that are made by Mr Hawke in his election
speech. We're on about keeping families together. That
will assist this particular problem. We're on about
working with those great welfare groups in the community
to work with government to solve this problem. Mr Hawke
will not.
In regard to the elderly to whom we have the most special
duty of all, and particularly the current generation,
some of whom went through a First World War, some of
course a Second World War, and including between that
the Depression, the duty is even more profound than at
any other time. We are going to maintain, I say to the
elderly, every program that is down at the moment,
including Medicare. And we're going to liberalise the
assets test. And we're going to end the compulsory
retiring age. And we're going to have a deferred pension
plan. And we're going to lift the tax free threshold on
lump sum superannuation from $ 60,000 to $ 125,000.
The guiding principle of social policy is to be fair.
You've seen what's been enacted out over the last three
years. Well we'll be fair while they talk.
MURPHY: Ok, we now again come to the section where the
leaders question each other. First question to you Mr
Hawke. PM: Do you agree with the statement of your Shadow
Minister for Health, Mr Shack, where he said that the
Liberals and National Party have a very poor track record
in health both in government, in opposition? Do you
agree with his statement and why was he right?
PEACOCK: Well, if I agreed with the statement I'd have
to make it relative and compare it with your record. The
reality is there is now a Medicare crisis with 100,000
people unable to get into public hospitals. The only way
to redress that is to correct the imbalance between
public hospitals and private hospitals. Before you
brought in Medicare more than 62% of the population was
covered by private insurance. That's fallen to 42,000
today. And as a consequence the queues have grown and
grown. We're going to leave Medicare in place, not only
just for the disabled and the aged and the poor, but
we're going to make it attractive to get into voluntary
insurance by not requiring those who take out a premium
with a voluntary health insurance society, not only will
they not have to pay the Medicare levy but they in fact
will get a tax rebate. So I'll stack up our record any
time you like with yours.
MURPHY: Do you have a follow-up?
PM: Why did you say on the 23rd of June last year
through your spokesman that the policy had been finalised
and the costing completed when in fact that wasn't the
case? Why did you keep saying that?
PEACOCK: Because the costing had been completed. But
then we got further material from you which had not been
made available before.
PM: ( inaudible)
PEACOCK: Well, that was the situation as it was. I mean
I openly said, when you eventually made the material
available in terms of the numbers in State hospitals, we
realised that we could make the change I've just
described to freeing that system up somewhat, but we
would have to do it in the second and third year and not
in the first.
PM: Will it be cost neutral?
PM: I told you about the costing itself before and you
know that in determining that no-one in fact will pay
more because any changes that we make in the system will
have an offset through the tax mechanism.
MURPHY: Ok, time has expired. It's your turn now Mr
Peacock to put a question.
PEACOCK: Well once again I want to go back to that
graphic 1987 policy speech of yours. You said that your
Government, and I'll quote it, sets the welfare of the
Australian family as it's top priority. In fact the
living standards of most Australian families have been
savaged since then. Why?
PM: Of course that's not true. If you look at the
research that's been done by the independent University
of NSW Institute of Social Studies you'll see that what
they say is on average real standards have increased.
Because when you ' re measuring real living standards,
disposable income is made up not only of what happens to
real wages, it's made up also of whether there are more
jobs, whether there's been a cut in taxes, and what's
happened to the level of social welfare payments. When
you take these all into account there has been an
increase in standards. So your basic premise is wrong.
If you want your people afterwards to see the statistics
and the basis of my statement, that will be provided to
you and to any journalist that wants to see it.
MURPHY: A follow-up?
PEACOCK: Well I'm going to rest with that. I mean you
know that is no answer to the question. But I'll let
other people judge that. Have I got a question now?
MURPHY: Sorry?
PEACOCK: Have I got another question now?
MURPHY: A follow-up. Do you have one?
PEACOCK: No, no a separate question. Do you want a
separate question or not?
MURPHY: It's a follow-up which means that there's a
thirty second
PEACOCK: I wouldn't be bothered with that after that
answer. MURPHY: Ok. Well we now go to panel questions. First
it's Paul Kelly with a question to Mr Peacock.
KELLY: Mr Peacock I think you'd agree that when you
mention social justice to Australian families these days,
they think interest rates. Every banker and economist in
this country knows that we need higher interest rates
than countries overseas in order to finance our overseas
debt problem. Now you've been going around the country
saying that under your government there can be massive
falls in interest rates. How do you reconcile that
promise with the interest rate differential which we need
to finance the foreign debt?
PEACOCK: Firstly what I'd say to you is that we do not
need interest rates as high as they are. They have in
fact been hitting record levels. There are two reasons
for the this. Two reasons. Firstly the impact of the
Government's tight money supplies which have forced those
interest rates up. Secondly because this Government
doesn't have anti-inflationary policies. So long as they
continue to allow inflation to be stuck at a high rate
then interest rates will remain high. Now I'm on about
getting them down. The reality is all my programs in the
economics field are directed towards not only listing
productivity but they're having a drive on inflation.
But as a consequence of the success of that, through
tighter fiscal policy and freeing up the labour market,
when I'm able to have that steadier monetary policy, I'll
get inflation down and I'll get interest rates down.
KELLY: You're talking about massive cuts. I mean how
can you say massive cuts? I mean you don't know what's
going to happen to interest rates overseas.
PEACOCK: I do know what the effect of my program
KELLY: Are you standing by massive cuts or are you
PEACOCK: Mr Kelly, I know that from day one when I'm
elected on September the, on March the 24th that on the
I will make a statement as Prime Minister
reiterating the programs of the new government. The
market will see clearly because government's don't set
interest rates, you know that the market will see
clearly that I'm embarking on the tough anti-inflation
drive that I've spoken of.
KELLY: Isn't
PEACOCK: That'll give real relief in interest rates to
families that they are desperate for. I'm confident that
the market will respond and that through our period of
government you will have sustained and significant
reductions in interest rates.
KELLY: You'd agree therefore would you that you went too
far promising massive cuts?
PEACOCK: I'm telling you we will get significant
interest rate cuts through the first term of our
government because our policies are right and we're not
relying on high interest rates to conduct the Australian
economy.
MURPHY: Alan Ramsey, it's now your turn to put a
question to Mr Hawke.
RAMSEY: Prime Minister, welfare payments of course are
eroded if you can't get inflation down and you can't get
interest rates right. Now in four of the last six
budgets the Treasurer, and you were talking before to Mr
Peacock about targets, the Treasurer didn't meet his
targets on inflation. He said it would come down and in
fact in each of those four occasions it went up. We're
still waiting judgement on his most recent budget. Your
own forecast on interest rates last year were hopelessly
wrong. Now given what you said on interest rates, and
given what he said for five years about inflation, why
should voters now believe that you now know what you're
talking about or what you're doing?
PM: Fair question Alan. They have to make a choice
between Mr Peacock and myself. The central question in
interest rate levels, as everyone knows, is the inflation
level. And the central determinant of what happens to
inflation is what happens to wage rates. You people were
at the press conference on the 30th of November when you
put the question to Mr Peacock about wages outcomes.
RAMSEY: But that's not what I'm asking you.
PM: Let me answer
RAMSEY: people believe you now when you've been so
wrong in the past?
PM: Could I answer the question. What I'm saying is
there's got to be a choice. And I'm saying that we will
have lower wages outcomes. Lower wages outcomes and
therefore a greater capacity to bring inflation and
interest rates down. In regard to the wages predictions,
let me remind you of this, and again we'll show all the
statistics afterwards, that over the whole period of
wages predictions by the Treasurer, on average his
prediction has been over what the wages outcome can be.
So we are more reliable in terms of the basic determinant
of interest rates, that is what happens to wages, than
the alternative.
MURPHY: Ok, now Laurie Oakes to Andrew Peacock.
OAKES: Mr Peacock you go into this election campaign
with no health policy even though health is very
important to Australians, Medicare is very important to
Australians. Your figures didn't add up. You're going
into the campaign saying trust us even though we won't
tell you what we're going to do with health, we won't
tell you how we're going to pay for it. Why should
people trust you?
PEACOCK: The reality is we're going into the election
campaign with a health policy. What we said was that we
could not implement it in the first year. I'd love to be
able to correct every mistake that Labor has made on the
first day and in the first year. But there are
restrictions on even those who have got well thought
through programs. And that health policy is, to be
implemented in the second and third year, to leave
Medicare in place for the aged and the disadvantaged and
the poor, and to encourage people either to cross to the
private health funds for which, if they take out a
premium there they will not have to pay the Medicare levy
and they will in fact get a tax rebate. That rebate will
be skewered down to the lower end to be of more
significance to lower income earners than middle income
earners. I'm very happy with that.
OAKES: ( inaudible)
PEACOCK: We do, because we will in fact be ensuring, as
I said, that any changes that are made in the health
policy will not cost individuals more. Because whatever
the change we make in terms of health per se of the
arrangements will in fact be offset then through the tax
mechanism which is what I mean by
OAKES: But your health spokesman said it would cost tax
payers anywhere between zero and $ 2.6 billion. That's
ridiculous PEACOCK: The only relevance of $ 2.6 billion Mr Oakes
would be
OAKES: That's Mr Shack's figure, not mine.
PEACOCK: would be if everybody went off Medicare.
Well they won't. $ 2.6 billion is the amount the
Government receives in terms of revenue from the Medicare
levy. It's not relevant to what I'm talking about.
MURPHY: Thank you Mr Peacock. We now must move on to
our next topic in the great debate. Each Leader has two
minutes to speak on the environment and Mr Peacock leads
off. PEACOCK: Well thank you very much, Paul. The guiding
dictum that we apply to the environment and it's fairly
simple and it's spelled out in our policy is that the
environment is not something that we've inherited from
our parents but rather something that we borrowed from
our children. And an effective environment policy must
be aimed at targeting and increasing our quality of life.
Now the Labor Party place great stress on what they've
allegedly done for the environment. We're always seeing
either Mr Hawke or Senator Richardson stomping all over
the flora and frightening the life out of the fauna as
they're being photographed majestically. But the reality
is if you look at our record, we established the first
federal Ministry of the Environment. We ended whaling,
we proclaimed the Kakadu, Uluru, and Great Barrier Reef
marines parks, we have a record in the environment
extending through to the saving of Fraser Island from
sandmining and that will continue.
Incidentally, I'm proud to say that, albeit for a short
time, I held the portfolio of Ministry for the
Environment. And I've ensured that we have committed
ourselves to sensible and sensitive environmental
policies not just for Australia, but for the planet.
For Australia we're committed to sensible and well
planned policies for reaf forestation. No world heritage
area will be de-listed or degraded. We will protect the
Antarctic. In fact, we were the first to take the
decision to oppose the mineral regime in the Antarctic
while two Ministers, Senators Richardson and Evans, were
proclaiming the need to mine in the Antarctic. Ours is,
as I say, a sensitive and a sensible environment program.
It calls for sustainable development, it sits well with
achieving what we need in Australia, a sensitive
environment program for quality of life and sensible
economic policy to improve our living standards.
MURPHY: Thank you Mr Peacock. Now two minutes for Mr
Hawke to address the environment.
PM: Thank you. It could not be a greater gulf between
myself and Mr Peacock on the question of the environment.
Let me first refer to his claims about what they did.
The point about that is that everyone of those decisions
that they made in government, they did with our support,
with the support of the Labor Party. But since I've been
Prime Minister every major decision we've made in terms
of protection of the environment has been bitterly
opposed by our opponents. If I were not Prime Minister,
if Mr Peacock had been Prime Minister the Franklin would
not be running free. Daintree would be logged. Kakadu
would be mined and there would be authorisation for the
Wesley Vale Pulp Mill to be pumping out 13 tonnes of
organochlorides each day into Bass Strait. The decision,
that latter one, opposed by Peacock. All the other
decisions opposed by the conservatives. So there is the
gulf, there is the gulf between us.
In terms of our global responsibilities, we are out there
at the forefront with other nations in doing what we can
within Australia and by way of international cooperation
to combat the effect of the Greenhouse emissions. We
are, with France, proudly taking a lead. Not just
talking but proudly taking the lead in ensuring that the
Antarctic is going to be free from mining and kept as a
great nature and science reserve, and we are being
applauded worldwide for that.
And in regard to protecting the soil, we instituted last
year a $ 320M landcare decade program which is going to
tackle the problems of salinity and soil degradation.
So in all these areas we have not talked, we've acted and
on every major decision that we've taken, we've been
opposed by the Liberals and the National Party.
MURPHY: Thank you Mr Hawke. Now, of course, the Leaders
question each other and Andrew Peacock you lead off.
PEACOCK: Well the harsh reality is, Mr Hawke, you were
dragged reluctantly to oppose the minerals regime in the
Antarctic. Is it not a fact that we opposed that and
took the decision before you and that your Ministers were
proclaiming a need to mine the Antarctic and only changed
their minds after we issued a policy directive?
PM: You had no impact upon us at all. This was
something that had been considered by a range of our
Ministers. It is the case that some of them wanted to go
on with the signing of the mineral convention because
they took the view that that was the only way, they
thought, which could provide some environmental
protection. I took a different view and I was persuaded,
and persuaded my Cabinet, that what we should do would be
bold and go out and say no, no mining, that it is silly
to talk about protecting the Antarctic environment
through the medium of a minerals convention. We were
told that we wouldn't be able to get anywhere but now
we've got the Russians, many of the Europeans, New
Zealand, I think, is reconsidering it's position, the
United States is reconsidering it's position. As in so
many areas of international affairs, Australia, the
Australian Government, is taking the lead on this.
MURPHY: Do you want a supplementary, Mr Peacock?
PEACOCK: No. The reality is Mr Hawke has admitted that
in fact the Government was torn on the question. It took
them quite some time and that we were the first in to ban
it.
MURPHY: Mr Hawke, you now question.
PM: Yes. I wanted to ask the Leader of the Opposition
how can he support a position where his Shadow spokesman
for the Environment, Senator Puplick, has said that you
would allow mineral exploration of the Kakadu National
Park, including the area where Crocodile Dundee was
filmed. How can you possibly contemplate endangering the
Kakadu National Park in that way?
PEACOCK: No. Stage 1 and Stage 2 in Kakadu will not be
mined and we've made that perfectly clear. Just as you
were prepared until you buckled yet again under the
pressure in terms of Stage 3 we would allow the
examination of the possibility of mining in Stage 3, in
fact the company had an environmental impact statement
which said that Coronation Hill, you could proceed. Now
the reality is if you place-any faith in those
environmental impact statements and they say that it's
not endangered, then you ought be prepared to proceed.
There will be no mining in Stage 1 or Stage 2.
MURPHY: A supplementary?
PM: I mean, why is it that in October of last year
Senator Puplick, your Shadow Minister, indicated that
they would allow mineral exploration via the Bureau of
Mineral Resources in Stage 2. Why did he say it? Did he
not have your authority?
PEACOCK: No, Senator Puplick said, as has the Party,
that there will not be mining in Stage 1
PM: Well we'll show you
PEACOCK: That we would be prepared to look, as you were,
in terms of Stage 3 and there we've been decisive. And
as with value added industries elsewhere, we are prepared
because of the need for Australia to have valued added
industries, to examine the possibility of the proceedings
and if the environmental impact statement says they can
proceed without damage, then they will proceed.
MURPHY: Now do you want to ask another question on the
environment? PEACOCK: Oh no, I thought we were going on to the panel
now.
MURPHY: Well I'm just giving you another chance.
PEACOCK: No, that's fine with me.
MURPHY: Right. Another question Prime Minister?
PM: Yes. Why, Mr Peacock, when we had advice from the
CSIRO that there would be 13 tonnes per day of
organochlorides pumped into Bass Strait by the Wesley
Vale project and they recommended against it why were
you in favour of it? Why did you criticise our decision
to stop the Wesley Vale project on the advice of CSIRO?
PEACOCK: There are two things I want to say about Wesley
Vale. Firstly, it took you an interminable time to make
a decision. Secondly, you've said earlier tonight that
there are $ 90B worth of investment programs to go ahead
and you quoted Access Economics I just happen to have
it here.
PM: You have a lot of things there, Andrew.
PEACOCK: Contained well they're notes of your failed
promises over the last 7 years, and there are a fair
number of them. Contained within that, that you've been
hotly pressing and advocating about $ 90M that you've put
in the program, contained in this is the Wesley Vale Pulp
Mill in Tasmania for $ 1B. Now you can't talk in favour
of these programs which contain, in fact, a preparedness
to proceed at Wesley Vale and then use the other side of
the argument now. The fact is if it could be done in an
environmentally sound way, we said then that it should
proceed. And that's the reality of the question.
MURPHY: A quick supplementary?
PM: Well the CSIRO said it couldn't been done in an
environmentally sound way. Why did you therefore support
it? PM: My God, you are like a human hiccup on that one.
You are all over the place. It took you a long time, and
your own Ministers have said and it's being re-examined
again as you know and what I'm saying to you, if it can
be developed on environmentally sound basis, it will
proceed and that's what your Minister says.
MURPHY: OK. We move on now to the panel. To pose
questions to both Leaders on the environment and indeed
anything else that they want to ask and the first
question comes from Warwick Beutler.
BEUTLER: Mr Peacock, another specific question about the
environment. What is your solution to land degradation
and salinity?
PEACOCK: Well the land degradation and salinity problems
of Australia are the most crucial problems that we face
environmentally. There are high profile problems
elsewhere which can attract an enormous amount of
support. In fact, we will double the funding for the
national conservation strategy and we've made that
perfectly clear. And this real drive has to be on land
degradation and salinity. The National Farmers
Federation has supported with the Australian Conservation
Foundation this approach. It has our full support. In
fact, I think apart from our commitment to more than
doubled expenditure in this arena, it's one of the
welcome signs in Australian politics that the Party's are
moving increasingly close to recognising the need to move
in this arena.
BEUTLER: What's the doubling of spending mean? How much
are you spending on it?
PEACOCK: Well you take out the forward estimates by the
Government and multiply it by two, old son. I haven't
got those instruments with me.
MURPHY: OK. Laurie Oakes to Mr Hawke.
OAKES: Mr Hawke, is the Labor Party prepared to match
the coalition's commitment to spend SiB next year on
child care and before you answer it, could I say that
since you insisted the debate had to be before the policy
speech as I hope you won't fob me off by saying I'll
have to wait till I hear your policies?
PM: Well it's not a question of fobbing you off. I can
say to you that in fact during the campaign I'll be
making announcements which indicate further moves,
substantial moves, on our part in regard to child care.
But let me say this. I do that from a position of
strength because under my Government, when this current
program of child care place increases which finishes in
1992 is in place there will have been a trebling, a
trebling by us of the number of child care places that we
inherited from the Opposition. But we're not resting on
our laurels, Laurie. We in fact, will be doing more and
in terms of being available for question, when I've made
my announcement during a campaign, I will be available as
I am each day for detailed questioning by you.
OAKES: But if I could repeat the question. Is the Labor
Party prepared to match the coalition's billion dollar
promise on child care?
PM: I will answer that by saying I will be making
OAKES: You fobbed me off.
PM: No I haven't. I've said I'll be making my statement
and I'll be available when the day I make that
announcement, Laurie, you be there and ask me any
questions you like.
OAKES: Well if you're so inhibited, why did you insist
the debate had to be now instead of after the policies,
Mr Hawke?
PM: No inhibition at all. It seemed to me a good idea
to have it now, get it out of the way and get on with the
real business.
OAKES: still things we can't talk about.
PM: Not at all. I'll be available to you every day. I
don't know whether Mr Peacock will be.
MURPHY: We must move on now. Paul Kelly with a question
for Mr Peacock.
KELLY: Mr Peacock, I think a lot of people would like to
know how serious you are about fighting inflation, which
is the cornerstone of your economic strategy. Now the
lesson of the 80s in countries like Britain and the
United States is in order to fight inflation there's
normally a cost. The cost can be higher unemployment or
cuts in real wages. Now are you prepared to fight
inflation to the extent that you might countenance either
of those?
PEACOCK: No, because by the mechanism that we're using
in fighting inflation we will in fact lift employment.
Because we'vye got to end this nexus between inflation and
wage rises and cost rises, prices just passing it on. To
the extent that you lift wages solely in line with
inflation and without regard to productivity, that in
fact workers just get diminished real wages.
KELLY: So you are not prepared to achieve your inflation
objectives if the cost of those objectives is either cuts
in real wages or a higher level of unemployment. Is that
the real situation?
PEACOCK: The reality is
KELLY: Is that the real situation or not?
PEACOCK: Listen Mr Kelly, just listen to me. That's a
fundamental point that I make because you're talking
about unemployment rising in one feature of an antiinflation
policy. What I've said to you earlier tonight
is that we in fact have a coordinated economic strategy
that doesn't rely on one element alone like this
Government does in terms of controlling demand and using
high interest rates.
KELLY: I'm just talking about price that other countries
have had to pay during the 1980s.
PEACOCK: You are very agitated in making your point but
I thought I was being asked the question, my dear friend.
The reality is our program is a coordinated one. It is a
tighter fiscal policy, it is freeing up the labour
market. With those settings in place it means we can
have that steadier monetary policy to get inflation down
and we will boost productivity not only through our wages
policy but also through privatisation and contracting
out. So we have a coordinated program which will tackle
inflation, bring down interest rates as a consequence and
boost productivity thus ensuring greater take home pay.
MURPHY: Alan Ramsey, would you like to put a question to
Mr Hawke.
RAMSEY: Yes Prime Minister, I want to go back to the
question I asked you last time about inflation and
interest rate forecasts. I remind you that two budgets
ago, which is only 18 months ago, the ' 88 budget, Paul
Keating said inflation would be coming down to three or
four per cent, three to four per cent by 1990. Well
we've arrived at 1990. Inflation is just on eight per
cent, 1 ask you again, why should voters now
believe that you know what you're talking about?
PM: Because we have been honest in saying that we
underestimated the level of demand. We were absolutely
right, as we have been each year, in our wages estimate
Alan. But we frankly underestimated the level of demand,
as did every other economist in the country. So now come
to the present. The present situation is one in which
the inflation rate will be coming down, the Treasury has
said, at the end of the year, end of last year, that the
underlying rate was There is a lessening of
demand, there is a lessening of demand. No-one questions
that. And the banking sector itself has said that
interest rates are coming down. So we have been frank in
saying yes we did underestimate demand and in that
underestimate of demand inflation was higher than we
expected. We've got an $ 11 billion surge, or more than
an $ 11 billion surge of income, from the improvement in
the terms of trade and that money surged into the country
and lifted demand. We believe that in the current
circumstances as does the banking sector that we've
got the settings right for a lowering of both inflation
and interest rates.
MURPHY: Do you want to follow up Alan?
RAMSEY: No.
MURPHY: Warwick Beutler, have you a question for Mr
Hawke? BEUTLER: For Mr Peacock actually. Mr Peacock do you
rule out a consumption tax under your Government?
PEACOCK: I've indicated quite clearly that in the
program for the first term of our government, which is
what we're offering the Australian people, there will be
no consumption tax. That's contained explicitly in our
policy document. Now Mr Hawke may have a different view
and he may dump a new tax on us if he wishes. The
reality is however that those who call for a consumption
tax can argue quite plausibly in terms of it increasing
our savings. But I do have to say to them the reality is
it can have the appearance of this juncture of a
palliative unless you start cutting government
expenditure. We've taken the tough decisions. We're
taking the dole for example back to nine months and
saying to people if you've got the capacity to work then
you've got to work. Australia is the only country in the
world where you can leave school, go on the dole and stay
there until you draw the pension. So tighter fiscal
policy again, freeing up the labour market. We will in
fact be able to get inflation and interest rates down and
that's the route to go before you contemplate any
consumption tax.
MURPHY: Mr Peacock, is Mr Elliott wrong when he says,
your Federal President, that he'd like to see a
consumption tax?
PEACOCK: He's long had the view in favour of a
consumption tax but he's been told by us that it's not
on. BEUTLER: He also has views about the removal of tariffs
and tax breaks on savings and things like that. Is it
time to start implementing those, some of those sorts of
PEACOCK: Which ones are you talking about, tell me.
What do you want?
BEUTLER: Well, ways of getting us out of our debt
problem for example. Removal of all tariffs.
PEACOCK: Well I've told you first of all the best way of
working the way through our debt problem is for Australia
to become productive again. That's not only
BEUTLER: We've all got to work harder.
PEACOCK: Hang on a flash. That's not only in
Australia's interest that we're able to compete in the
export market and compete against the import placement
industries. But it's pretty important, critically
important for Australians own well-being, and to lift
their own living standards. In terms of tariffs, then I
want a liberal trading world. Mr Hawke wants a liberal
trading world. The Garnaut Report puts a target of the
year 2000 for example, for the elimination of all
tariffs. I think it's a pretty heroic gesture. I don't
think we would in fact be able to achieve it but it's a
fine ideal to work to provided you give those industries
out there in the market place some certainty as to what
you're doing as you work to that more liberal trading
world. MURPHY: Thanks for that. Paul Kelly have you got a
question for Mr Hawke.
KELLY: Yes. Just a few days ago Mr Hawke, the
Treasurer, Mr Keating, attacked most of the employer
groups and branded them in fact, as Liberal Party fronts.
Do you agree with Mr Keating on that and does this mean
that there's now a new degree of tension in the
relationship between your Government and the business
community? PM: I would say that it is accurate to say that in the
last few weeks the noises that have been coming from the
major business organisations have been fairly pro-
Liberal. But that doesn't lead into logically the second
point. I don't believe that when we're re-elected that
there will be tensions between us. We will have a
capacity, as we have in the past, to talk and work with
the Business Council, with the Confederation of
Australian Industry. We've done that for 7 years and may
I say, that they have been very cooperative in many ways,
not least in one important area which I was involved in
this week, women. One of the great performances of this
Government is the opening up of opportunities for women
in employment, to remove discrimination and I pay full
tribute to the cooperation that we've had from the
Confederation of Australian Industry and the Business
Council of Australia in perhaps what is the most
fundamental micro economic reform, making sure that
of the population are available to be trained and to be
employed. MURPHY: OK, time is galloping on, Laurie Oakes.
OAKES: Mr Peacock, the coalition government has pledged
to flog off a string of Government owned enterprises
ranging from Qantas to Medibank Private. Your
privatisation spokesman, John Moore, is quoted in a
business magazine this week as saying professionals in
Australia are really looking at the greatest Christmas
party they've ever had. Now is that the way to present
this? Why should Australians vote to enrich accountants,
lawyers and stock brokers?
PEACOCK: Well he may have been using a touch of
hyperbole to get your interest, to raise the
understanding of the privatisation program itself. The
reality is however, it's not only us who want to
privatise what could be described as either inefficient
or capital starved government business enterprises. The
Labor Party wanted to, the Prime Minister spoke in favour
of it, the Treasurer spoke in favour of it, other
Ministers spoke in favour of it but the Labor Party
conference stopped them and they were unable to get
through.
MURPHY: Time unfortunately is really getting away from
us and I now come to the period where I ask you both to
summarise. You're first Andrew Peacock.
PEACOCK: Thank you very much indeed Paul. I said at the
outset Australia requires a new era and a new epoch and a
new spirit. The shame about tonight's debate is that it
was held before the policy speeches. Mr Hawke made that
a condition precedent. I thought elections campaigns
were all about policies.
I can tell you what we're going to do for the future. I
have the blueprint. I have the schedule. My party does.
But essentially, what Mr Hawke is telling you is that he
is proffering the status quo. That's just not good
enough. The world is changing. In fact the
international changes that have occurred in the last four
months have been the greatest since the ending of the
Second World War. Whilst all of that's happening, and so
many people have great hope for the future, Australia is
going backwards.
We've got the policies and we have the team. We are
saying to people that you don't need to in fact have your
living standards crushed. We have not only economic
programs but the associated schedules that go with them.
We've taken some pretty tough decisions to cut government
expenditure to make it leaner so that we can have a real
viable, in fact the most generous family tax program in
decades. We haven't done it just for fun. We've done it
a) because we believe in the family and b) because the
family is being crushed. And in essence, when we come to
the end of this campaign, you'll essentially have a
choice one route or the other. If you in fact want
more of the same then you'll vote Labor. But if you want
a change for the better then the answer is Liberal.
MUJRPHY: Ok, and the final two minute statement comes
from you Mr Hawke.
PM: The choice on the 24th of March is stark. Whether
you're going to have continued economic growth, Job
growth and a restructured economy where we are exporting
more manufactured goods against the most competitive
markets in the world or are you going to have the wages
explosion? Mr Peacock, when asked the central question
what happens to wages, shrugs his shoulder and says who's
to know. And if you say who's to know to wages outcomes
it means that you must have a wages explosion, interest
rates up and the economy doing what it did before, out.
You have the choice between a continuation of Medicare or
its dismantling.
You can have a choice between superannuation, a savings
plan for the future, a fair one available to all and in
which, when it's through, $ 30 a week being paid by
employers for every one of their employees or the
dismantling of that superannuation arrangement.
You can have absolute commitment to the protection of the
environment or you can have the environmental vandalism
of their opposition to every major decision we've had.
And on the question of policies you can have these buzz
words about productivity but it's all what we'll do but
you've not heard one word about how you'll get an
acceptable wages outcome.
Finally, on the question of leadership and unity, you can
have strong knowledgeable leadership of a united team or
you can have the situation opposite where John Howard has
said publicly that there can be and is no trust between
John Howard and Andrew Peacock. The Liberal Party is
ridden with internal bitternesses and hatreds and there
is fundamental division between the Liberal Party and the
National Party with whom they would go into coalition
government. A party which can't govern itself cannot
govern the country.
MURPHY: Ok, and that's where we must finish although it
mightn't be a bad idea to have another debate after the
policy launches. I hope you've found this both
interesting and entertaining. You've seen the leaders.
The choice is now yours on March 24. Mr Hawke, thank you
very much. Mr Peacock, thank you very much. Good luck
to both of you for the rest of the campaign. Thanks also
to my colleagues on the panel and thank you also for the
faxes and telephone calls of suggested questions which
have deluged us for the past few days. So from the great
debate at the ABC, good night.
ends