TEL: 22. Dec. 92 16: 12 No. 018 P. 01/ 05
PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON PJ. KEATING MP
DOORSTOP, WEST TORRENS COUNCIL HALL, ADELAIDE
22 DECEMIBER 1992
E OE PROOF COPY
PM: I might just say a few things first and just get things started. I noticed the
Coalition's Fightback, or ' crawiback', policy is starting to unravel and most
particularly with the Opposition spokesman on communications, Mr Warwick
Smith, saying that timed calls are an option. He is not used to precise political
speak, MT Smith, so he has for the Liberal Party uncharacteristic candour
indicated that with a private owner of Telecom, that John Hewson would very
quickly be ablc to establish what is, in all practical terms, a telephone tax just
as he ceascd to tax all other things, goods and services as well. And I notice
thc Liberals arc now saying oh well, no, this is not what we have in mind
but one Telecom is in thc hands of a private owner, it is a matter of what they
have in mind. And there is no way private owners are going to be paying
billion for Telecom to have it commercially constrained in a way where it can't
secure what they would think are appropriate tariffs for its services. And most
privatcly operated telephonc companics in the world charge for timed calls.
They charge by the second. And this would happen with a privatiscd Telecom
as well. But in the unravelling, there are quite a lot of people who come out
now saying that a lcading stockbroking firm has told the Opposition it can't
possibly raise $ 20 billion it nccds to fund its package. Telccom, ffhcrc is no one
in their financial markets bar a few people with a Liberal Party ticket burning
in their pocket who believes that a float of $ 20 billion is possiblc. Which
mcans that the basic key funding point, the key underlying funding of Dr
Hewson's package is starting to evaporate.
As well as that, there has been a number of attacks upon Fighitback Mark 11.
Mr Ian Baldock, the Exccutivc Director of the Queensland Retail Tradcrs and
Shopkeepers Association, asked this morning, he said, how arc small
businesses, supermarkets, corner stores going to differentiate between food
which is GST exempt and that which carries the GST? Remember this, with
the consumption tax, there are 750,000 taxing points only one-tenith of that
with a wholesale sales tax, less than about 40,000. 40,000 with a wholesale
sales tax, 750,000 taxing points with the OST, and that will mean every small
business in the country. And every small retail business will then have to
distinguish betwecn basic food and all other items. So that it is not even a
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simple system to oper~ ate, and the retail traders today are saying it will be an
administrative nightmare for every corner store, supermarket which becomes a
tax point for Dr Hewson. And then we have got the Building Owners and
Managers Association ( BOMA) a very powerful business lobby in this country
asking correctly why is the construction industry being dealt out of the game
by Dr Hewson? Fightback Mark 11, they say, will mean net increases in costs
bctween 4 and 10 per cent plus the one-off inflationary impact to major
building and construction. And hie has told thcm basically to go jump. In State
services, we had the Queensland Treasurer today saying Fightback equals
cutbacks, and he is dead right. Let me say here, that States like South Australia
will lose hundreds of millions of dollars and thousands of jobs under
Fightback. Because he has cuts for the Statcs, very large cuts in government
spending for the States. Now in South Australia, a large part of the South
Australian economy runs on government funding, government expenditure,
govermecnt programs. And when you have got a government in Canberra,
wants to bc a goverment in Canberra, saying that they think we ought to have
a smaller public sector, there ought to be cuts in payments to the States, this
will react on South Australia. But of course, the part of their policy which is
going to react on South Australia more is zero tariffs. As I said yesterday, zero
tariffs in political terms to the Liberal Party mcans zero Adelaide. They would
start carving into the basic fabric of Australian manufacturing industry in South
Australia with a policy which is ideologically driven for which thcy did not
vary one jot in Fightback Mark Il.
So let me conclude on these points. Fightback Mark 11 is funded by the
improbable sale of $ 20 billion of assets, Telecom, to the Australian financial
markets. T7hey can't digest it, therefore the funding package is unreal. The
capital raisings of this year werc $ 12 billion with the private sector. Dr I-cwson
says he wants to induce a private sector investment recovery, but he wants to
crowd out private sector recovery by raising over two years, $ 20 billion for
Telecom, for one public instrumentality alone. In other words, at $ 10 billion
each for two years, he will take up prctty well all of the funding the Australian
capital markets can provide. And becausc that is improbable and unlikely, his
whole funding package falls down and this is where the scrutiny of the package
needs to be focussed. On thc fact that he reserves the right, unlike the
Goverrnent, to introduce unfunded packages, packages which are improbable
and unreal and irresponsible, and it is all to be regarded as sort of slick political
trickery. The fact of thc matter is the markets would kick any govcrnmnent to
pieces trying to fund a package of this size. The alternative would be to drop all
the promises, or alternatively to blow the budget dcficit out. Now these are the
options which we have in the sort of one and a half week revamp of Fightback
which we have seen from Dr Hcwson. His package is unravelling. The markets
say it can't be funded. The Building and Owner Managers Assosiation saying,
What's Wrong with the construction Industry, it is a major generator of jobs, why
do that? Warwick Smith, the Communications spokesman, is saying that timed
telephone calls are an option. The Shopkeepers Association are saying the GST
will be too complex to manage. All in all you can see thc weight is now coming
back on Dr Hcwson's Proposal, as it should because Australia needs a
consumption tax like it needs a hole in the head. And trying to fund these
proposals with an improbable sale of $ 20 billion of public assets will only lead
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to the destruction of fiscal policy which has taken this Government ten years to
put into place.
I Mr Keating, couldn't there be offsets for timed telephone calls?
PM: Look, if you sell Teleconm to private owners, they are going to make the
business run commcrcially. And nobody is going to buy the thing on the basis
that suburban or city calls or country long distance calls are not appropriately
priced and charged. Now the whole idea of the cross subsidies that's inherent
in the currcnt Telecom structure will go out the window. It will be just a*
business. And the Liberals know that, and that's why I think Mr Smith today
dropped his guard and said yes, it is an option. well of course it is an option.
J: How much do you think Teleconm is worth?
PM: Well we are not selling it. We constructed a competitive model. We had
Telecom which absorbed OTC and we have given OPTUS a competitor of a
mode of companics of international competency the right to run a trunk
network in opposition to Telecom and to run an international network as well.
in othcr words, wc have a cornpctitivc model in place. mean, Tclecom works
for Australia, what is the point of selling it? So the Labor Party is not
interestcd in selling Telecom.
J: But giving their estimate, what do you think in dollar terms?
PM: We have not done a close estimate of the value of Telecom. The simple point
Is, the Australian financial market was flat out digesting the Wcstpac float and
even that couldn't be placed, that was sitting in the hands of the underwriters,
CS First Boston, for months. It was only when Packer came along that Some of
that stock was actually moved out of the underwriters' hands. The underwriters
couldn't place it. And that is why Woolworths pulled out because the market is
getting choked with issues as we are rebalancing thc debt to equity ratios in this
country, as wc arc displacing debt for equity. Now to come along with a
choker like $ 10 billion a year and say, look hang on all get out the road here
comes the government here is a $ 10 billion a year float for Telecom. They will
be told by every underwriter in Australia, this can't bc done. So the whole
basis of thc funding falls to bits. I said these things last Friday, you know,
some sections of the media regard that as just political comment. The fact is,
go and ask underwriters of substance what they think about floats of
billion a year.
J: Won't the question of timed locail calls, won't people accept Warwick Smith's
assurance that there won't be forced timied local calls?
P M. His assurance can't miea n anything. It might mean something while Telecom is
owned by the Govcrnment. But it can mean nothing whci Telecom is owned
by a private owner. I mean, is any private owner going to bid $ 20 billion for
Telecom and have its hands tied about its charging regime? Of course not, its
rubbish.
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J: Prime Miiaiter, how difficult is it going to be to sell your cnvironment package
if you have only got lukc warm response from the environment movement?
PM: The environment movemcnt is basically not interested in ' brown' isues. They
arc not interested in dirty water. They are not interested in salinity. They are
not interested in soil degrcdation. They are interested in trees. The Wilderness
Society is interested in trccs._ The ACF is interested in trees. But thc rest of the
community is interested in the range of issucs. The environment lobbies have
110 moal lien over the environment. This issue belongs to the nation, it
belongs to the government, to the nation. We don't have to have the
approbation of these groups because thcy arc not listened to much anymore.
Bob Brown and people like that say the same thing no matter what a
government does. This is a major program to restore the health of one of the
primary river systems in Australia, the Murray Darling, on which the city of
Adelaide depends for its water amongst many other users to deal with the cold
question of dry land salinity and salt moving through the whole catchment
area, taking phosphorus out of the water. These are important national issues.
But the greens say, well unless you arc rcscrv-ing another stand of trees it
doesn't matter. So all of thesc issues, feral animals the destruction which is
done to the Australian fauna by cats and pigs, particularly to flora by feral pigs,
is profound. It can't be handled on a State by State basis, it is a national
problcm, we are dealing with that. We are dealing with one of thc great
heritage areas of the world, Kakadu, which is now being threatencd Mimosa
pigra. We have a study going on for thc last large great area of thc East coast
of Australia still in virgin state, Shoalwater Bay. Now that is why the
Government's record on the cnvironment, and its initiatives on the
environment, frankly take weight in precedcnce over the claims of
environmental groups.
J: Does that mean you won't be depending on their Preferences at the next Federal
election?
PM: flow can they vote for the Liberal Party? The Liberal Party would mine the
Botanic Gardens in Adelaide here. The problem in Australia is, a lot of the
grccnics would like a rainforest in Pitt Street in Sydney and down Rundle Mall
in Adelaide while the Liberal Party would go and mine the Botanic Gardens in
Adelaidc and Hyde Park in Sydney. Those extremes nobody wants. It is a
sensible majority of people who want a good result on the environincnt think
that inatters. So whcrc are the greenies going to go, are they going to go and
vote ( or the Liberal Party? Are they really going to go and votc for this crowd
who want to get back into uranium enrichment, who want to open up more
uranium mnines, who want to basically let the economic imperative be the sole
Imperative? I mean this is a good Statement and the public will recognise it is
a good Statement and the great pity is that people in the ACF and others don't
have the courage ard the leadership to say what they say to us privately about
it. I mean the trouble with the green groups now arc they are all watching each
other to say thcy say the samne thing. No one will be radical, no one will jump
out of the pack and say where they think the agenda ought to go or what they
should believe, We don't havc any leaders in the environment movement
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anymore. Wc have just got people who arc basically matching press release for
press release, and this is a grcat problem.
J: Will the Fcdcral Government provide the $ 23 million called on by the State
Government here in South Australia for rural relief?
PM: There are long standing arrangements. Thierc are standing permanent
arrangements for drought and flood relief betwveen the Commonwealth and the
Statcs and they are there bccausc we have lots of droughts and lots of floods
and this is a real problem for the South Australian community and fortunately
those arrangements are in placc for the Commonwealth and the States to deal
with it and then beyond a certain levcl of costs the Commonwealth takes 100U
per cent responsibility for it.
J So that request went there yesterday, did you see that coming through?
PM: Well they were not requests, it has to be a declaration about the flood, But
once it is declared, it is just a mechanical set of arrangements in place.
ENDS TEL