PRIME MINISTER
TRANSCRIPT OF QUESTION AND ANSWER SEGMENT, FOREIGN
CORRESPONDENTS' ASSOCIATION LUNCHEON, HILTON HOTEL,
SYDNEY 10 DECEMBER 1990
E OE PROOF ONLY
JOURNALIST: Can I ask you to expand on your thoughts
about APEC? APEC was formed as a group to encourage free
international trade. It doesn't appear to have had
enormous success in this area. What can it do in the
next few weeks to encourage the current trade
negotiations? And if these are not successful, how could
APEC change in your view to be more suitable as an
organisation Australia to promote its interests?
PM: I don't think APEC as such next few weeks, to
take your term, can do very much. The individual members
of APEC I hope will be in their various ways trying to
put pressure, particularly upon the Europeans, to come to
their senses. I was asked a similar question in the
Parliament the other day by Mr Sinclair, the Member for
New England a very sensible question. He asked what
may happen in a worst case scenario situation. I
reminded Mr Sinclair then that when I had moved, or had
begun to move to the establishment of APEC in January of
last year in Seoul, I had around that time indicated that
in a worst case scenario basis we may have to ask
ourselves the question of whether APEC could in fact
assume some new form. I said that in the context that we
in Australia and those looking to the creation of APEC
were absolutely committed to doing everything we could to
try and create: a freed-up international trading system.
And we of course have been true to that. APEC has been
remarkably successful in a very quick time in moving to
try and create a framework for doing those things which
it is appropriate to do within that hoped for new
international system. But I take this opportunity of
saying again that if against all our best aspirations,
against all our best endeavours that we take both
individually and as head of the Cairns Group, that the
Uruguay Round breaks down, then Australia will have to
reassess its position. If we then get a picture of the
world breaking down into increasingly protectionist blocs
with East Europe, with Europe there, the European
Community and with the United States and Canada, and
Canada and the United States now working with Mexico to
enlarge that,, then we'll have to ask ourselves whether in
fact those nations comprising APEC may not have to move
to some sort of similar bloc. Obviously we in Australia
would, in those circumstances be prepared to look at
that. We would have to look at the question of some
possible association with the United States, Canada and
Mexico. But let me emphasise, so there can be no
possibility of misrepresentation, that that, from my
point of view and the point of view of my Government, is,
as I put it, the worst case scenario exercise. Because
there is no doubt that the world will pay a very very
heavy price if we slip into that sort of economic
autarky. As I said in a speech I gave at Davos now
several years ago where I directly addressed this issue.
If history teaches us anything it teaches us that where
nations are not able to have rational and mutually
advantageous economic inter-reactions, where they have
relapsed into that sort of economic autarky, political
conflict has not been far behind. There is no reason to
assume that history would be any different in these
circumstances. JOURNALIST: A follow-up question Mr Hawke if I may.
Have you or the Australian Government or any members of
APEC had any talks, formal or informal, about what APEC
might become if the GATT talks completely break down?
PM: There've been no formal talks. I would have no
doubt that on some occasions officials and perhaps
Ministers may have addressed the issue, but there has
been nothing formal on the agenda. Nor should there have
been at this stage.
JOURNALIST: According to an opinion poll like 74% of
French people said that they were happy to subsidise
three million farmers if it meant maintaining their rural
way of life, French political other
international political susceptible to pressure.
What can Australia and other Cairns Group countries do to
influence the GATT negotiations and get a better deal?
PM: Let me go to the poll first. I'm not aware of it
but one of the truths of politics is that, generally
speaking if you let me prepare the question I will
guarantee you the answer. I would like to have seen the
way in which that particular question was framed. The
statistics should be put in mind first of all, from which
to answer this question. If you take Europe and the
United States together and throw in Japan, something like
$ 200 billion a year are spent in transfers to farmers by
either pricing or, and-or the taxing mechanism. This is
an absurdity which cost the 93 or 94% of the communities
in question, cost them dearly. Cost them dearly in the
sense that it increases their cost and price structure in
a quite stupid way. The competitive position of their
countries is adversely affected by the inflated cost in
price structure associated with these transfers. It is
also inefficient in terms of delivering assistance to
those in need. If you are trying to justify these
policies in terms of looking after the farmers most in
need then of course it is self-contradictory because the
greatest beneficiaries of these systems are the largest
most successful farmers. So it has no good sense either
in terms of economic competitive terms or in social
transfer terms. It fails on both those grounds. As far
as we are co ncerned we have tried in the years leading up
to the present time to convey to the 94% the absurdity to
which they are parties. For instance when I was in
Germany last year I had a very interesting meeting with
the leader of Germany and they were at one in a) their
assessment of the economic insanity of the CAP, b) of the
absurdity of the great majority of their people
tolerating it and c) on the need for change. We have
encouraged them to try and educate their people. Indeed
it is the case that the banks in Germany for instance
have taken out advertisements I understand in the German
press, the German media to convey the economic insanity
of what they are about. There is no doubt that the
political leaders understand the economics of what I'm
saying. I can't in a gathering like this betray the
confidences of head to head diplomacy and discussion.
But allow me -to say this, that in my discussions with
important European leaders they have been relatively
frank in saying Bob you don't really need to waste your
time in persuading me about the economics of it but I've
got some farmers down there pretty strategically placed
in certain areas and I'm a bit worried about them. Now
what I say to them is what I've had to say in the United
States when talking about the same issue, and when I've
been talking 1to the United States about their absurdity
and not having the courage to face up the budgetary
issues. In the end leadership is about leading and
making hard decisions and educating your population about
where relative good sense lies. It is the case that
whether you talk about France or Germany, the Germans and
the French would be better of f as would the Americans if
in fact they followed rational economic policies in this
regard. Their people would get their food cheaper, they
would have a lower cost and price structure, their
employment levels would be higher. It is just my hope
that in the period now that only be Australia and the
Cairns Group, it will be others trying to put the
pressure of good common sense upon our friends in Europe.
And in the end I've always taken the view that morality
is a pretty poor horse to be riding in politics. Not
that you shouldn't have moral positions. But morality,
as I've said before at a number of gatherings, doesn't
have a great track record of achievement when it comes to
national political decisions. But enlightened selfinterest
is a more capable steed and that enlightened
self-interest should be mounted and ridden hard so that
the French and the Germans and the Americans understand
that the interests of all their people are going to be
better served as well as creating a more stable,
prosperous and secure world, if they get rid of this
nonsensical insane proposition that you pervert policies
and proper rational policies to try and look after three
or four or five per cent of your farmers. And as I said
in the speech, one thing that sticks in my craw more than
anything else is to witness these representatives of
these countries either bilaterally of as they sit
pompously in the of the World Bank, or the
International Monetary Fund looking into the eyes of
these developing countries and saying to them, rightly I
might say, look, you must be economically rational, you
must take hard decisions. We know it's going to be
politically difficult for you, you might even lose
office. They tell them that. They know all the jargon.
They've got it right in preaching to the developing
countries about what they must do to give effect to
rational economic policies and principles if they are
going to really look after the interests of their
country. But when the test comes to them they fail
abysmally. That's massive hypocrisy.
JOURNALIST: Would you do it? Would you do it?
PM: I've done it here. I've made tough decisions here.
I mean I don't go to the United States and preach to them
about balancing your budget and saying it's difficult.
I've done it and from a position of strength I say have
the guts to do what we've done.
JOURNALIST: You raised interest rates several times
during this year. I'd like to know if you are happy with
the current level of interest rates or whether you would
see another increase say over the next three months
because unemployment is rising above the budget
expectations. And the second part of that question is
related to trade. Australian manufacturers and
farmers could sell more overseas if the dollar was lower.
Do you foresee, are you happy with the current level of
the Australian dollar or would you like to see it lower?
PM: You wouldn't think that such a dynamite loaded
question could come from such an innocent package.
Sweet and innocent. Bob will you yourself up for me?
No, darling. Well let's get to the facts. You're right,
we've had five successive reductions of interest rates
since January of this year. That has been the delivery
of the promise that my good friend and colleague, Paul
Keating, and I have made together since the beginning of
the year, that we would deliver on lower interest rates
as we regarded the economic situation as being capable of
delivering them. So we've done that five times. The
straight answer and the non-avoiding answer to your
question is that if we assess the position in the future
as being consistent with and requiring a further lowering
of interest rates, that's what will happen. But the
guiding principle has been what is required in the
overall interests of the economy. I make no prediction
about if and when that next point will arise. Of course,
you ' re right to say that as far as the exchange rate is
concerned our exporters would very much like to see a
further lowering of the exchange rate. Now there's been
about a seven per cent lowering of the exchange rate in
the last couple of months. It got up to, on the US
dollar, it got up to about 83 cents, as you know. It's
come down seven per cent since then. Again what we've
said and what we mean is that when we floated the dollar,
we floated the dollar and that will be set by the
judgement of the market as to what's the appropriate
level. It would be counterproductive if I were to say,
well I would like to see it at x or y. I simply say that
I would expect that if events were to produce a further
lowering of interest rates, and you've heard what I've
had to say about that, but if they were to produce a
further lowering of interest rates then all other things
being equal you'd see, or expect to see, a further
lowering of the exchange rate. But I can't responsibly
add anything more to that.
JOURNALIST: Could you give us your assessment of what
you think will happen if Saddam Hussein does not withdraw
his troops from Kuwait when the January 15 deadline
arrives?
PM: Peter, that's a massively important question. The
first thing to say is I don't know and neither does
anyone else in the world. If I had to bet, and one of
course wouldn't bet on these things, but if you had to
bet, my belief still is that the Gulf crisis will be
settled without war. If that happens, as I profoundly
hope is the case, then it will happen because the world
has shown its determination that aggression will not go
rewarded and that Iraq and its leadership will have been
informed in the strongest possible way that the
aggression and annexation by it of Kuwait will not be
tolerated. So that's my belief on balance that Saddam
Hussein will come to the conclusion that it would
literally be insane for him not to meet the requirements
of the international community. Let me just make a
couple of points about that so that there can't be any
misunderstanding of my position and the Australian
Government's position. We are saying that it is
absolutely essential that Iraq meets the three
requirements, that is; total withdrawal, release of all
hostages and the return of the status quo within Kuwait.
I've made it clear from the very beginning that this does
not mean that if Iraq believes that it has some
legitimate cause of grievance against Kuwait, be it
territorial or otherwise, that it should not have the
right to pursue those issues peacefully within the
framework and the institutions of the international
community. Indeed, it is our position that if Saddam
Hussein meets those requirements then every facilitation
should be put in the way of allowing a consideration of
any such grievances that they may say they have. Now,
going finally to the question of what happens if against
my on-balance expectations he doesn't withdraw then it is
obviously, in those circumstances, inevitable that force
will be used by the international community to bring
about the satisfaction of those three conditions. My
Government has made, and I'm pleased to see with the
clear support of the Australian people, has made the
decision that if that is necessary Australia will be part
of it.
JOURNALIST: Minister Evans has mentioned a few times
that he would like to see a security arrangement in this
region similar to that of the CSC in Europe. What are
your thoughts on that and would you like to expand on it?
PM: Yes, what Gareth Evans has said and let it be
understood that we're not trying to push this ahead of
what will come naturally by the events but we would
like to see reflected in the Asia-Pacific region the
degree of detente that has occurred in Europe. That has
occurred in Europe as a result of a combination of
factors. Of course, firstly, just the fact of the
reduction in tension between the two superpowers, the
United States and the Soviet Union. Secondly, because of
specific agreements that have been met in regard to the
reduction of classes of missiles and the reduction of
conventional forces in Europe. But as well as that
you've also had, now, in an increasingly important sense
underpinning those important facts, you've had the
influence of the Conference in Security and Cooperation
in Europe which has brought together all the countries of
the region. Now, we in the Asia-Pacific area have not
had the benefit of all those structural arrangements. In
a sense, we in this region have been very much a residual
beneficiary of the fundamental changes that have been
taking place between the two superpowers. What Gareth is
talking about in this way is saying, well the time may
well be coming when we, to maximise the opportunity in
our region of the reduction in tensions that Europe is
enjoying, that we may need to look at some formalised
arrangement which will give impetus to what essentially,
as I say until now has been a residual benefit that we've
derived from what's happening in Europe. Now, of course,
we've got to understand that you can't necessarily be
rushing into these things because we, in this region,
have unresolved issues which distinguish the region from
Europe. For instance, you have North and South Korea
and, for instance, you have the unresolved issue between
the Soviet Union and Japan in regard to the four islands.
Now those two issues create circumstances which
differentiate us from Europe to some extent and which
raise concerns as to whether yet is the time in which we
can move to that sort of formalised arrangement. As well
as that, of course, we still have the unresolved issue of
peace in Cambodia although here I speak, you know, with
great pride as to the role of what we've been doing and
very much with a sense of gratification of the enormous
contribution of Foreign Minister Alitas, from your
country. We've got grounds for hope there. But we've
still got that unresolved issue and, of course, over all
that we've still got the uncertainties that flow from the
events of 12 months ago in Tienanmen Square. So when you
take account of all those issues you can see that we
can't quite as easily and as readily move in a structural
sense as they have in Europe but hopefully the time will
come in the not too distant future when we can.
JOURNALIST: You mentioned a few minutes ago your good
friend Paul Keating. What do you feel about his comments
on Australia's lack of leadership and are you concerned
about any sort of leadership challenge by your Treasurer?
PM: I've got no comment about the first and the answer
to the second, no. As I said at a doorstop early before,
I'm looking forward to having a very fulsome discussion
with Paul later on today. I hope he's looking forward to
it as much as I am.
JOURNALIST: If I could ask a double-barrelled one about
the Gulf, follow-up of Peter O'Loughlin's question.
Firstly, do you share the concerns that seem to be
arising in Britain and France, particularly the proposed
US-Iraq talks in some way represent a weakening of
American resolve in response to their own domestic
pressures. Secondly, if the worst happens and still
in Kuwait on the 15th of January, what is your
understanding of the fundamental political decisionmaking
process by the allies and most specifically
will Australia be consulted in any way before any guns
start firing?
PM: In regard to the first, no, I don't share that
concern. I think there are two points that need to be
made. Obviously George Bush wanted to reassure not only
his domestic constituency but the world constituency of
what is, I believe, the truth. That is that he doesn't
want war. And. I say that on the basis of personal
conversations with him. I'm convinced that George Bush
would profoundly prefer that this matter be resolved
peacefully. So he wanted to go as far as he reasonably
could for domestic and international constituency reasons
to make that perfectly clear. Those who think there are
some other reasons, I think, are wrong. And secondly, as
well as wanting to reassure his constituency, I mean the
second point flows from it and that is that it would be
his hope that out of the Foreign Minister of Iraq coming
to Washington and Baker going to Baghdad that there would
be left absolutely no chance of misunderstanding on the
part of the leadership of Iraq of the firm commitments of
not merely the United States but of virtually the rest of
the world to proceed under 678 if that became necessary.
So I think he : moved with good reason and wisely and
hopefully in a way which will produce the result that we
all want. As to the second part of your question, Don, I
obviously don't want to go into the details of that other
than to make this fairly obvious point; that because
Australia's ships will now be moving up into the of
the Gulf and will be exercising with the ships of the
United States as well as with those of Canada and
Britain, in the very nature of events because we are
going to be part of the processes our capacity to be
involved in knowledge and to therefore have some
opportunity of is the greater than if we had not been
there, although that of course is not the reason why we
moved to that point.
JOURNALIST: The Cairns Group and the US on the one hand
and Australia on the other, sorry, the Cairns Group and
the US on the one hand and the European Community on the
other are so far apart on the GATT negotiations that it's
hard to see how any can be made. Do you see any
areas of compromise perhaps on a longer
PM: Well there are areas of compromise. Let me make it
clear that while the Cairns Group and the United States
have put down, as you know, the broad details of the
proposals, they are not identical but they are quite
similar. They are a long way from the totally
unrealistic 30% proposal of the Europeans, only in regard
to one leg of the troika of domestic support, of domestic
access and of export subsidy and based on 1986 have
virtually been more than half delivered now at any rate.
So there's an enormous gap between the Cairns Group, the
United States on the one hand, and Europe on the other.
But I do believe there is a possibility for a compromise.
We obviously want the Round to succeed and we've
indicated that what's required as a first step is for the
Europeans to negotiate on their offer. I mean no-one
takes their offer seriously, including themselves I
think. Now there is evidence that within the community
there are those who would wish to see movement on their
part. It's my hope still that Chancellor Kohl, now with
his very substantial victory behind him from the 3rd of
December, will use his undoubted influence to give the
political thrust and impetus to change there. So I'm
clearly saying that if the Europeans were prepared to up
their offer and direct it to the three elements of
domestic support, domestic access and export subsidies,
which they must do, then there's a possibility of
negotiating a compromise.
JOURNALIST: If you were to step down tomorrow as Prime
Minister of Australia-
PM: I thought this was the real world we were in.
JOURNALIST: What would you as your failing
seven years in office. What are some things that you
have not been able to achieve and the record, will
you stand next election as Prime Minister?
PM: The answer to the second one is yes, obviously.
Well I am very disappointed that we haven't been able to
get constitutional change in this country. I know I've
been asked that question before. I've said that looking
back the thing I would've done differently, I would've
put myself more into that campaign. I think we got
lulled into a false sense of security by all those polls
which showed the clear majority of Australians in favour
of each one of the four proposals that we put up on the
last occasion. In terms of satisfying the true criteria
for constitutional change, that is in favour in a
majority of States and in favour of the majority of
Australia as a whole. I think I got, together with my
colleagues, lulled into some false sense of security and
certainly the picture changed very rapidly under the
pernicious and totally false sense of arguments that were
put by our political opponents. I still need to pinch
myself to some extent to believe that the Australian
people would vote against a proposition which, simply
put, said that there would be entrenched into the
Australian constitution a provision that if any citizen
has had his or her property compulsorily acquired by any
government then there would be this constitutional
provision for fair compensation. I find it difficult to
believe still that the majority of people voted against
that proposition which is proof positive of how difficult
it is to get constitutional amendments carried in this
country. So that is one area of regret. I mean if I'd
realised how difficult that was going to be I would've
myself got myself more involved in that campaign.
ends