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EMBARGOED AGAINST DELIVERY
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING, MP
INTERVIEW WITH PAUL LYNEHAM, 7.30 REPORT
2 SEPTEMBER 1992
E& OE PROOF COPY
PL: Prime Minister, welcome again to the program.
PM: Thank you Paul.
PL: Dr Hewson has been talking tough about the Japanese today. He says we have
opened our markets to them, yet they have not reciprocated. Do you agree with
that?
PM: Well they are our largest trading partner. They would have a fair point if they
made that point. We run a large balance of trade surplus in our favour with them,
so they are not that bad. Dr Hewson is out of step with everybody. This week he
attacked the nurses, he attacked the teachers, he said if you drive down an
Australian street you can pick all the houses where the renters are, he is into
renters. He is Into BLIP, Toyota and Ford, the Reserve Bank, the Tax Office, the
Treasury, thc Japancsc.
PL: And you're into portraying him as a cold hard ideologue, a frightening figure.
PM: No, no, I am just saying he is very strange. He is now saying the fcllow who drove
into Parliament House came to gct me, that's how important I am. Somcthing
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which was violent and repugnant apparently amuses him. He is going to bury me
in thc flag, he is into rentcrs, nurses..
PL: What are you saying, hc is a bit odd, are you?
PM: He doesn't understand the limits of the political debate, where it sensibly starts and
fintishes. Hc is getting more thrill, more strident and more abusive of almost
everybody is out of step but him.
PL:-Well many Australians are going to think that his comments here about the
Japanese nmarkets strike a chord, won't they?
PM: Well would you prcfer, instead of running a large-trade surplus with them, we run
a trade deficit?
PL. But what about our access to their property market, for example. He says that they
have come in hcrc in mining ventures, they have got banking licences, foreign
exchange licenes.
PM: Let's not kid ourselves Paul, no Australian developers would have been in Tokyo
in the last half dozen years. They wouldn't have had the money to start in the
game, and would be now very glad about the fact that they were not because of the
crash in property values. Companies which can market, that take marketing
strategies and take their tiruc to develop distribution systems within Japan, can get
in there. And they have improved access for beef, reduced the barriers. Improved
access for beef and other commodities. Now, they have always hung back. Part of
our general criticism in the GATT round is-opening up markets and including in
Japan. But let's understand the weight of the relationship and let's not be abusive
to them like Dr Hewson is with everybody else.
PL: But he says he is going to run this line a lot more up to the election. He could end
up sounding like he is forging his own sort of nationalism here.
PM: I am sure the Japanese will be just absolutely frigiited to death by that. They will
be just trembling.
PL: What, we are such small fry we shouldn't speak our mind?
PM: No, no, have our say. We arc the ones who have run the structured case to gol the
GATT round into place. It is the Liberal and National Parties which want us to bo
closed out of Britain, closed out of Europe. They always took no for an answer.
We arc the people who do not take a no for an answer. But again, running around
abusing the Japanese Government in Australia, just like he abuses everybody cisc,
is not going to help.
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PL: All right. Burke, Cain, Dowding, Hawke and now John Bannon, are we seeing
more then simply a generational change of Labor leaders, or are we sccing the tide
turning against Labor across Australia?
pm: I don't think so. In each case the people wecaround nearly a decade. In this day
and age this is a very long period to serve in the political system.
PL: But you could have a situation by late next year, the Goss Guvcmment is the only
Labor Government left in the country.
PM: Well I don't think we will, but if there is a tide against Labor then presumably the
Goss Queensland situation denies that case.
Pb: You could hardly deny though, that Labor's house nationally is not in very good
repair at the moment?
PM: Obviously we have been in better shape in other times in Victoria arnd South
Australia.
PL: And after all those losses, people loosing life savings in some cases, won't some
voters agree very quickly with Dr Hcwson's claim that in the end-ILabor
Governments can't be trusted with rnoncy?
PM: How could you say that Paul? This Government has produced for the first time
ever Budget surpluses in Australia. Not one dollar was ever lost from a
Commonwealth supervised bank, not a dollar of a depositor's funds. And not a
dollar of depositors funds have been lost in the South Australian States Savings
Bank.
PL: Meanwhile, last night's Cabinet meeting pep talk suggests doesn't it, by its very
nature, that the Government has run out of puff a bit?
PM: No. It says we arc not going to havc distortions put across any more. This sort of
technique by Dr Hewson and Mr Reith when they get asked they won't do pres
conferences in Parliament House. All of us Ministers subject ourselves to
questioning by the press gallery for half an hour, three quartcrs of an hour.
PL: It has been a while since you have had a good sit down press conference..
PM: No it has not, it was only a matter of weeks. The last time Dr Hewson had a sit
down press conference in Canberra where he could be scrutinised by people that
have a memory of these things was last November. He does doorstops with the
fire engine chases who are covering television news, who arc not in a position to
ask him follow up questions, and the stock answer is it's in Fightback. Well the
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PL: Well let me ask you a follow up question. if the Government is really on the ball,
bow could Bob Hogg have been urging Ministers to fill the political vacuum? I
mean surely a confident robust Government doesn't leave a political vacuum?
PM: Well until two weeks ago wc were putting a Budget together for six or seven
weeks. It is Budget time. We were as all Governments have to, governing the
place as well as represent our views and explain policy. But that phase is over and
now we will be out there telling Australians that the economy is picking up, that
the ' 9Ns do look good for us with a low inflation environment, that exports are
going gangbusters, that basically Australia is going to be trading its way out of its
troubles. And that a lot of the things which Dr Hewson is saying arc simply
doomsaying things, where he is trying to beat down the exchange rate, beat down
confidence and beat down the rest. We will be up there putting the right
construction on things and not simply sitting in the Cabinet room putting policy
changes together, as we were bound to do in the Budget process.
PL: You talk of high exports, and they were In July record level I concede, but
shouldn't wc-N5-Wofed about record imports so early in this recovery phase?
PM: Well it depends whethcr it is a spike or whether it is a trend.
PL: What do you think though?
PM: Let's just take the first thing. If it is a trend it means that the recovery Is coming on
much hotter and much stronger then we think.
PL: Worryingly so.
PM: Why would you think so?
PL: I would. Record imports at this stage, the economy is still groggy.
PM: No, no, no.
PL: Not up off the stretcher yet,
PM: No, no if imports are coming in a trend way, there's a lot more demand in the
Australian economy. So all Dr Hewson's rhetoric that we're ruined, that nothing is
happening, will bc dead wrong. Now if it's a spike it will wash itself out of the
system, if it's just one month's aberration or two it will wash itself out of the
system. The main point is that exports are as you say, at record levels by value.
Given thc fact that prices for commodities are now very low again, it just implies
that the volumes must be astronomic. We are going gang-busters In exports and
it's exports in the end which will save the day for Australia and its trade accounts.
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FL: But look, we imported $ 560 million worth of motor cars in July, Imports in the
first seven months of thiis year are up 25 per cent cars.-
PM: Dr Hewson says we ought to havc a zero tariff, so how many motor cars would we
have under his policy? That is, with tariffs at 35. per cent for cars and coming
under Labor's 15, he wants a zero tariff which you and I know would wipe the
Australian motor vehicle industry out, it would wipe the city of Adelaide, South
Australia out in ternms of manufacturing.
PL: But how bad docs it have to get before we start thinking about a pause in these
tariff cuts? Is it totally off your agenda?
PM: Hang on, you're jumping subjects here, are you worried about import volumes or
tariffs?
PL: rm worried about, for example, as tariffs come down on cars in come those
imports.
PM: If you're worried about import volumes, what I say to you is let's wait and see how
the trend goes, and secondly the markets already taken a decision, In the
adjustment of the exchange rate, in the face of those lower commodity prices and
higher import volumes. A large adjustment has already taken place in the
-exchange rate which will make imports dearer, exports cheaper.
PL: All of our Asian neighbours though have tariffs, quotas or in some cases closed
doors to protect their local industries. How come it's good for them and bad for us
this idea?
PM: What we have done is to take tariffs down in a measured, structured careful way
from 1988 to 1997 in a phase down and the result is, the proof of the pudding is in
the eating, we are exporting our heads off. The competitiveness in Australia has
risen, the efficiency of companies has risen, but there's got to be levels, end points
where an industry may survive. In the car industry, we've said when those tariffs
travel to 15 per cent, thcn at that point we don't believe that given the low volumes
of the Australian market and a glut of cars in the Northern hemisphere that
marginally priced imported cars, we believe it will simply wipe our industry out.
PL: How do you know 15 per cent is right though? Maybe that's too low.
PM: They are judgements which are made by John Button, me and others in 1991 and
1988 when we spoke to the car companies, when we tried to get the right.
PL: Does that necessarily mean they are right, these judgements?
PM: I think they are, Governments have got to make these decisions. Blut the notion
that it ought to be zero, that basically the economy, the country only bc-longs to
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economic athletes, this is the sort of Hewson view, that you sort of socially
impoverish the place and you wipe industry out and what riscs from thc ashes is
athletic and strident and able to survive. He's been told and Mr Mc~ achlan has
been told by ' I'oyota, Ford, General Motors zero tariffs no motor industry. Yet
the city of Adelaide and the city of Melbourne would suffer enormously under his
policy which Mr Mc~ aehlan just reaffirmed last week. They arc serious about it,
they would in office take the tariff to zero and decimate the Australian motor
vehicle industry.
PU But what if even at 15 per ccnt our industry looked like it was getting swamped,
would you act then as Primnc Minister?
PM: I don't think it will.
PL: If they couldn't cut the mustard, to use a phrase you're fond of.
PM: Thc answer is I don't think that will happen because one's got to make a judgement
about whether Australians gct lower priced cars or whether The difference
between us and the Coalition, we've said we shall have a motor industry, we
believe we can't leave car demands of Australia to be satisfied by imports.
PL: That would blow out the current account if we did wouldn't it?
PM: Exactly and thc world car makers would charge what the market would bear.
We're saying there should be an Australian motor vehicle. Hewson and
Mcb-chlan are saying look it's a matter for them, if they can exist fine, if they can't
bad luck.
PL: Did you notice the State Bank of NSW has put up its three year loan rate a quartcr
of a per cent, longer term rates, wholesale rates soon to be locked in there now
about a point and a half up?
PM: I saw that ycs, that's for three year fixed. But on the short end nothing has
changed. That is, the variable rate mortgages, nothing has changed.
P'L: And nothing will change?
PM: The Government is not going to be tightening policy.
PL: What happens if the current account does blow out though between now and the
election? That's your big nightmare isn't it?
PM: The current account is half of what it was three or four years ago, it came in way
undcr the Budget target for last year, we got a spike in imports. I know you are
trying to go potty about it but let's wait and sec whcther it's a spike or it's a trend.
As long as those export volumes stay there but again, I remind you the market
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has already comprehended all this and made a quite substantial adjustment on the
exchange rate.
PL: And where do you come down in the middle of this slanging match now between
Gough Whitlam and Bob H-awke?
FM: I'm basically not an " AM" listener so I didn't hear it all, any of it in fact.
PL: Just to bring you up to date the story so far Whitlamn, says H-awke was a Prime
Minister with no purpose and no policies other than the Accord.
PM: That's for them, they are big enough to look after themselves and they will.
PU But it doesn't say much about you, you were the lieutenant there for all those years.
PM: That's right, I can look after myself.
PL: I mean only a few years ago you described the Whitlam years as a period of
failure, notable mainly for doling out funds in an economic collapse.
PM: I also said of Gough Whitlani and his Government, that he put the Labor Party
back together and made it relevant again and he did. After nearly a quarter of a
century out of office he put it back together. And it was that period, even though
there was Some confusion of means and ends in his period of office, the fact that
Labor was relevant again gave us a chance in the
PL: Do you agrce with John Hewson that this is going to be thc most important and
clear cut choice type campaign since the War?
PM: I do, because basically what Labor developed in Australia is an open market
economy and efficient economy with a nice social policy wraplied around it. Thlat
is, all the social balances, access to education, access to health, support for women,
women's policies, aged care, child care, occupational superannuation. What he's
saying let's turn hack a century of social advances, industrial advances, let's have a
policy of social impoverishment and the economic phoenixes, the self made
peoplc will rise from the ashes.
PL: He is saying this hasn't worked, you've got to change the whole game, that's what
he's saying.
PM: A whole bunch of little Hcwsons will rise from the ashes. He sees himself as some
sort of economic athlete. That's why he attacks large businesses, he thinks they are
not legitimate. If you haven't owned a restaurant and been an out-rider to a
merchant bank, you're illegitimate. If you happen to run the bilggest company in
the country and it makes steel or you make cars, you're a fat bloated bureaucracy
and you're illegitimnate. If you haven't made it yourself you're illegitimate. That's
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the hard-hearted view, harder than the Thatcherite views of the ' 70s. So yes, there
will be a choice between a party which is the Govcernt, which has had to, for
the frst time a Labor government, give Australia a true open market economy,
that's had both the pride and the pleasure of stitching together one of the best
social policies in the world. And we're about keeping it; Medicare, support for the
aged, pensioners, child care, aged care, the rest, and not taking the view that
survival of the fittest and devil take the hind most and if we havc a whole lot of
little economic athletes bouncing through there, self made people, well that's
Nirvana. It's not Nirvana, and that's the choice Australians will have.
PL: Is it going to be a dirty campaign do you think, personal?
PM: Not from me, but almost every remark Dr Hewson makes about mc is personal.
PL: But you call him Gordon Gecko and all that sort of stuff.
PM: No, but that's a mild blandishment on the scene. He'll say almost every day this
man will lie, deceive, do anything, it's all that vicious stuff. Well let people judge
him, if he wants to participate in that sort of campaign, that sort of debate, fine. In
the last month we've just set up a new vocational education system, In the last
month..
PL; So you're the gentle good guy are you Mr soft touch?
PM: In policy I am, certainly and in the debate. But he won't be having a free ride in
the debate, I won't be that gentle. But I don't need to get down to the level he's at
to articulate my policies or speak with pride of the policies of this Government or
its achicvcmcnts.
PL. Prime Minister, thanks for your tim~ e.
PM: Good Paul.
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