PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING, MP
INTERVIEW WITH DEAN BANKS, 3AW
27 FEBRUARY 1992
E OE PROOF ONLY
J: Good morning. Are you happy with the initial reation
to the package?
PM: Yes I think so. It is a reasonably good response.
People believe, I think, that now is the time for the
Government to lift activity in the economy, to spend some
money, after all we, were very abstemious in the 1980s,
turning these huge deficits into surpluses and when private
spending was strong in the ' 80s we pulled the Government
back. But now private spendings weak, this is now the time
for the Government to spend and do a lot of sensible things
like railways, like roads, like technical and further
education etc.
J: Reaction is all important for you and I suppose
economics is supposed to be a fairly clinical matter that is
easy to work out, yet you have the situation where someone
like Robert Gottliebsen comes out this morning and says that
he basically likes it, whereas your old sparing partner
Terry McCrann comes out and gives you a right old bucketing.
PM: But he always has old Terry, he's to the right of
Ganghis Kahn, but it wouldn't be fun if he wasn't there
would it? That's the point, I mean if he came and gave the
package an endorsement I would have to have a good hard look
at myself.
J: It would be the kiss of death do you think?
PM: The fact is it is a great package for the community in
general. For the business community it is a revolutionary
change, it's depreciation for business, and for the
community in general, apart from the payment to families, it
is rebuiulding a lot of our basic infrastructure and getting
employment from it. That is, in rebuilding the whole
railway system, in doing the ring roads around the capital
cities, in a new electricity grid, all these things are long
term things for Australia and they can only be done by the
Government, t~ hey can't be done by the private sector. The
private sector is not going to rebuild a Sydney-Melbourne
railway, the private sector is not going to put a standard
gauge rail from Melbourne to Adelaide, it's not going to do
any of those things, so if you get John Hewson on the
program he won't be doing them. Nobody of that ilk
believes, that McCrann doesn't believe it, but we know that
it's crazy to be carrying around our merchandised freight on
trucks between Sydney and Melbourne, crashing into each
other, killing people on roads, breaking up highways, these
are the things that Government should be doing.
J: Prime MiLnister, Dr John Michael Hewson as we dub him,
has been talking about paying by bankcard and also where
there's a will there's a way.
PM: Yes that: is an absurd simile. Look, in the 1980s I
cut, as Treasurer, the public sector back by $ 30,000 million
a year, 7 per cent of GDP, $ 30 billion a year. We have got
a structural surplus laying under the current account
deficit, as soon as the economy starts to pick up it jumps
back into sur7plus and it does under this package by 1995.
So all this stuff about bankcard and that is simply him,
exploiting what he thinks is the ordinary persons lack of
understanding of the national budgetary accounts. The fact
is, this is hialf a per cent of gross domestic product, half
a per cent of the size of the economy. The economy is about
$ 400 billion in size, this is $ 2 billion, it's half of a per
cent. When : 1 became Treasurer, I picked up John Howard and
John Hewson who was his adviser, I picked up their deficit
and it was 9 per cent of GDP, nearly $ 9 billion, about 5 per
cent of GDP. This thing is half a per cent of GDP. Talk
about bankcar: d, he didn't leave me bankcard, he left: me a
mountain of debt to scramble over in the ' 80s and then
tottled off to the private sector and came back when the
dirty work had been completed.
J: We all : Look for deals in this grand economic statement
and we all wonder whether there will be some pay-back to
Victoria. You've no doubt, just done an interview on Sydney
radio with A: lan Jones, is there significant whining from NSW
about special treatment to Victoria?
PM: No, NSW has done exceptionally well. The big projects
are the same in most of the capitals. For Sydney and
Melbourne, for NSW and Victoria the principle project is the
rebuilding of the Sydney-Melbourne railway line. To get the
efficiencies of that up and giving quick access out of
Sydney by re--buiiding a line out of Enfield and re-building
that whole structure at Dynon in Melbourne and for Victoria,
then the standard gauge rail from Melbourne to Adelaide
which will do a great deal for Melbourne as a transport hub.
It's the place where freight can be shifted north to Sydney,
west to Adelaide, west to Perth and south to Tasmania and
what we are doing in this package is giving Melbourne the
chance to really have a new industry, that is a service
industry in freight.
J: How are you going to sell it, are you going to spend
time now out of Canberra and across the country?
PM: I will be doing a bit of that, but I will also be doing
a bit of this. The good thing about communications is you
can be in Canberra and talk to you this morning here and not
on a telephone, also with voice quality radio.
J: What about this extra couple of hundred dollars that
families are going to get. Is that enough to kick start the
economy? PM: Well what we tried to do, because the big projects like
the ring roads, for instance that ring road around
Melbourne, we are re-building another sector of that between
the Hume Highway and the Calder Highway. Now those sorts of
projects are important for the city of Melbourne, it takes
traffic out of the city, but it takes a while to build it
up. It will take a while now to get that cracking. We
wanted a way of being able to inject some fiscal stimulus
and spending power into the economy early and we thought the
best way of doing that was a payment to families. So
they'll actually start spending and lift consumer spending
and it will lift it early, we can do that in April, whereas
the other things will take more time. So we wanted
something in the spending profile to happen earlier and
that's why we think the best way to do it is to inject some
money into the economy and the best place to do it is into
families. J: This country isn't the only country that is suffering
from a recession, as your old mate Max Walsh observed last
night, aren't you being a little ambitious trying to lead
the world out of recession?
PM: No because we are in the fastest growing part of the
world. We are not sitting waiting on the European community
to tottle along at 2 per cent a year or the United States at
one. We are in the Asia-Pacific which is growing at 6-8 per
cent a year and the other thing is because for 40 years we
were in the Rip-Van-Wrinkle years of Menzies, and as a
result we missed the whole post-war trade in goods and
services. We are now picking that trade up in tourism, in
manufactured exports. In other words we are getting a share
of something that in the past eluded us, so that is why we
can actually grow our merchandise trade account faster than
say a comparable country could if it were part of the
northern hemisphere or part of Europe or part of North
America. We are in the fastest growing part of the world.
So Max ( Walsh) was carrying on last night about how we
shouldn't be spending any money does anyone really believe
with Australia in a recession as we are, trying to get out
of this hole that we should do nothing, do nothing? To
spend $ 2.3 billion in a budget of $ 100 billion?
4
J: Dare I say it., we're not waiting for the world.
PM: No# we're getting cracking.
J. Were you concerned when they came to you, or somebody
advised you, that this package needed a name called One Nation.
I mean we've had all these names, Priority One, Fightback and
Clever Country and all these....
PM: What I want to do is to give the sense that this is a
partnership proposition between government and business. The tax
concessions there for depreciation are really quite profound.
They put Australia back in the big league, in terms of tax
provisions for business, and the big capital works programs are
also about trying to get employment going and use parts of the
business community to supply those goods and services employed in
those programs. We're also involving the trade unions who have
given a committment to keep Australia's inflation rate at our
trading partners' average. In other words, we're bringing the
place together, One Nation, and that's why I thought, well look
we are bringing i. t I'm not Hewsoi, I'm not saying we'll wipe
unions out, I'm not saying there'll be no national wage cases,
I'm not saying, as he said, don't talk to business, they're only
after handouts. Hewson criticized me for talking to the business
community in those consultations. He's about dividing and
splitting the place up and I wanted to make the point that
Labor's about saying look, we can do this but only do it together
as one nations
j: T. get a strange sense of deja vua, Prime Minister, about One
Nation because it was vaguely reminiscent of the basic approach
that your predecessor took when he took over in 1983, about
ending divisiveness.
PM: I think we proved in the eighties that a country that talked
to itself, where unions talked to government and government
talked to business and unions talked to business and particularly
now with enterprise bargaining, you end up with a better economic
outcome. You see we grew every year for eight years at twice the
pace in the eighties than we grew for the previous eight years in
the seventies. We had five times as much employment growth in
the eighties as we had in the seventies and we had that because
we had a more cohesive society. Consultation, talking to people
and getting their support for things is the way governments
should run the place, and this idea that you're governed by a
press statement, that some Liberal Cabinet sits in a locked up
room then puts a statement in the press boxes and the nation
springs to attention is a bit of old nonsense, because they did
that In the seventies and what we had was 1.8% growth a year
instead of 4.2. And we had three hundred thousand jobs tn seven
years instead of 1.5 million as we did. I mean it just works, it
works.
J6. Prime Minister, we get locked into all the terminology when
we talk about economic statements. Can you help us with the
estimate,, the forecast and the scenario?
PM; Look what we try and do in these things is we have these
things called national forecasting models and we try and forecast
activity some years out, and what we believe is that we'll have a
reasonably strong pick-up in activity in ' 92-3 of about four and
three quarter percent through the year, and we believe that over
the forecast period which is four years that we'll be able to
produce about eight hundred thousand jobs. In other words,
reducing and not just finding enough jobs to take up new entrants
to the workforce, the school leavers etcetera, but to actually
then cut into unemployment, the pool of unemployment.
J: Your colleague John Dawkins has said that some of the
figures are based on scenario. How close does scenario get t~ o
rbak guess?
PM: There's 9L fair bit of science in all this but these models
picked the turn in ' 84-5. when I first became Treasurer we
forecast a through the year growth phase of six percent and
people said oh this is terribly optimistic Treasurer, thin is
only a bit of greenhorn stuff because you're new in the job. But
the six percent turned up. I mean we're not always correct as
you know. I mean these estimates are done by the Treasury and
the Reserve Bank and the statisticians, in the main. They're not
always correct but they're the best summation that can be put
together. is We were ta: lking about the theatre of the moment earlier this
morning Prime Minister. I mean is it the same for you as Prime
Minister of a nation, the reaction of the newspapers around the
country this morning, those headlines, the critics'
observations. I mean are you happy with the response there?
PM: I think so. From our point of view it couldn't be any
fairer than it:' s been. You'll always have the McCranns of this
world who say don't give anybody an even break, just make it hard
and tough, survival of the fittest, if you haven't got a quid
you're a bludger, if you're not a millionaire you're a bum,
that's the McCrann view of the world, that's fine. I just reject
that absolutely.
6
3: Well today is sort of make or break day for you in a sense,
isn't it, because you are out selling it today, and I note with
interest that you are doing a television interview tonight with
Derryn Hinch. At which precise moment did you two kiss and make
up? PM: It's not a matter of kissing and making up but just that the
sort of form-at of his program he had in the past has never quite
suited me, the time Blot and everything else and I never did much
with him. But the fact is I'll be pleased to talk to him. The
main thing is, look this is a four year plan for Australia. The
main paint about this is it's Labor doing what it does best and
that is the b. Lg building programs of Australia. It's only ever
been the Labor Party that's built the big railways and did the
big road developments and the ringroads and the rest, that's what
we're doing again, a national electricity grid. The Liberals
gave us a two airline policy and high airfares, we're junking it.
We're letting Qantas fly internally, we're letting the domestic
airlines fly outside of Australia. It's only Labor that picked
up all those kids and gave them university places in the eighties
and gave them places in school. We're going to do it again now
in technical and further education. This is not a miserable
exercise in accountancy like Dr Hewson's Fightback , you know,
changing the tax system from income to expenditure I mean
essentially an irrelevant change. Apart from being an unfair
change, an irrelevant change, because that change is not going to
improve a railway line, it's not going to improve the airports or
the seaports. It can only be done by governments and that's what
this huge package is about.
Jo: Small business in the country has been crying, naturally,
you've made some changes there as far as small business is
concerned. Could you outline those changes as far ats the banks
are concerned?
PM: The ban): change is quite important. At the moment a bank
can't write off a debt unless it sends a business into
receivership. J: Does that apply to all banks or is the Commonwealth exempt
there? PM: No, all banks. Now what this means is that a bank can now
write off a partial debt. So let's say somebody owed a million
dollars for instance, and the bank decided to put them into
receivership and they wrote off the million. What they could do
now is write off half a million and let the business remain
viable. Do yo'u understand?
J: Yes.
PM: It's quite a big change.
J: And somebody could've been caught in that position by say the
mortgage on their house and the valuation of their property today
to be a lot less which is worrying the bank.
PM: Well it could be that somebody says look this person's been
good, I don't want to sell them up, what we'll do is we'll take a
partial write-off here and we'll keep them going. Because peopl. e
might be able to service half a debt or two thirds of the debt
but they can't service it all. So it's a big change for the
banks and the Treasurer met the banks and said look we're doing
this for you, we want you to do something for the community. We
want you to start opening your pockets up again. We're tired of
this sort of conservatism where you've pulled your head in,
you're turning everybody away, you're withdrawing lines of
credit, cut it out, let's get cracking again, help people that
need help, that's what the banking system's for and we'll hel. p
you. J: Look at you personally, your image. There have been some who
say that the wimp, lever has been operated too strongly on you and
that you in the past have been a mongrel and they wouldn't mind a
bit of the mongrel back.
PM: Well look, the problem I've always had is that in the press
conferences I had over the years as Treasurer it was always ray
job to entertain the'press gallery, crack the funny, to educate
them to do all these things. But the bit that always got run on
television was the -hard comment about the day's balance of
payments or something else. But in my normal life, my dealings
with the Cabinet. with the Caucus, with the media, it's always
been discursive, and I think people are starting to see a little
bit of that as me as Prime Minister and they think there's a
change. There really has been no change, that's as I really am.
They're starting to see now me as I really am and not really
through the ofle minute grab or the thirty second grab on the
monthly balance of payments.
Jt On that note, Minister Ros Kelly broke Cabinet
confidentiality with us not so long ago. She told us that you
responded to her in Cabinet by singing the Billy Joel song
Allentown.
PM: Oh yes, that's right. When we were doing some of the
railway discussions and we were talking about some of the
investment allowances for the heavy plant and equipment, you
know, some people Bald well let's not forget some of the short
life things like the computer industries and these sorts of
things. I said look it's not all going to be the Billy Joel
number, it's not going to be the field town, it's not going to be
Allentown, you know, and I gave them a little song, you know.
J: Is there a song for One Nation?
Pm: well it doesn't spring to mind but Advance Australia Fair
will do because this is about advancing Australia. This is about
a bit of vista anti vision and faith in the Australian people.
It's not about basically sticking your hand in their pocket,
taxing the food they put in their mouth, the shirt they put on
their back, and of course, look let me just make this point to
you. If you're earning twenty or thirty thousand dollars a year,
everything you earn you spend, so whether you tax the income or
the expenditure is immaterial, you're taxed a lot. But if you're
earning a hundred and fifty thousand a year, you spend maybe
sixty and you save ninety. IHewson's package -is very unfair to
the low paid and a big' break to the high paid and as well as that
he puts on a tax cut. we've got a tax cut in there of thirty
percent for people from twenty and a half thousand to forty
thousand, a thirty percent rate, but with no fifteen percent
consumption tax. we've got the same rate as he has, thirty, but
no fifteen percent consumption tax. so this package is a package
that helps the average person, the person in the street who's
doing it a bit tough or hasn't got a Job or who's got a job, is
paying a higher marginal rate than they ought to be. This
package is about ill that and it's about building a better
Australia, a more competitive Australia.
J: It's also a very political statement in a sense and you've
got to face an election within fifteen months. Do you
realistically suggest that we be popping down to the TAB and
backing federal Labor?.
PM: Well get on early, that's what I'd say to you. While you're
being offered good odds, hop on. Because look, Dr Hewson's been
terrific while the games's been running his way. For two or
three months he's had a dream ride, but he got a little bit of
criticism in the House on Tuesday from me and he was up yesterday
with a censure motion saying how dare I criticise the economist
who did his Fightback package. The economist who said it will
actually reduce gross domestic product in the economy, it'll
actually increase unemployment, it'll actually increase
inflation, under the three scenarios the economist had proposed
and examined. So what does Dr Heweon do? Get up and move a
censure on me for it. I mean what a shocking thing. I've
actually pointed Ithat his package reduces the size of the
economy, it reduces3 employment and lifts inflation. So as
sensitive as one can be, bang, in he goes with a censure motion
and of course we cleaned him up in fine style.
J: Airight Prime Minister, you've been most generous with your
me this morning. When will you be in Melbourne next?
PM: Well I think tomorrow, I think tomorrow.
J: Alright, we obviously won't be catching up then but maybe
PM: I don't think: so' but I'm there a lot these days. Anyway
thanks for your time.
J: No worries, and you'd be pretty happy with Collingwood's preseason
form.
PM: From what I read l am, yes.
J: Apart from being beaten by the West Coast Eagles...
I'll be seeing Alle= n McAlister soon, he'll bring me up to
J: Alright Prime Minister, thank you.
PM: Thank you again.
ends