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TRANSCRIPT OF THE PRIME MJFNISTER, THE HON P. 3. KEATING; Nip,
PRESS CONFERENCE, THEATRrE~ PARLIAMENT HOUSES
WELLLINGTON, 21 MAY 1993
E& OE PROOF COPY
PM-Good afternoon. I might just Opel) uip with a few introductory comments and
invite you to then put questionis. I will begin by saying that this has been a
valuable opportunity for me to talk to Prime Minister Bolger ad the cabinet of
New Zealand and it is of course the first opportunity I have had to go ira
86n4 the election, The opportunity presented has been an important one for
two countries which enjoy a very close relationship, two peoples who enjoy a
close relationship and where conternporafy issues can be discussed and
advanced. We have had useiM talks on a whole rangje of bilateral issues as well as the
international issues in such areas of course as the Uruguay round and in APEC
where the New Zealand view and the Australian view is pretty much at one and
where in we seek to try and integrate our two economies with the region
ground us in the same way as we have integrated with each other.
On the bilateral issues the subjects we covered were taxation, the trans-Ta-sman
travel arrangements, social security, inmmigration pre-clearance in relation to
domestic airline travel or international travel at domestic terminals, mutual
recognition of standards and defence relations. There may be a few other
extraneous niattets which have entered into discussion, but they art principal
topics. So I'd be very glad to take questions from you.
J: Prime Ministr... over the welfa-re pAymnts?
PM-We discuss . ed the wclfare payments and we have agreed to expedite negotiation
aimed at a more equitable arrangement for Australia and this will focus on
pensions and long term allowances and I think relevant mninisters are going to
mcet next month so our travel arrangements of course facilitate an exchaenge of
people that Australia doesn't facilitate with other countries and therefore this
occasion arisc-b41 our social security systemn where trorn time to time situations
emerge wherein Austradias case, iin this instance Australia is carrying a
disproportionate level of the burden or the cost and I think the Government of
New Zealand recognises that and it is whky I think we have alrvady been
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discussing It and why today we have agreed to expedite that discussion in the
near fu~ ture.
J: So without looking a bit crass you are going to get more money?
PM: It ha been the historic truth of the situation that people who have spent a large
part of their life in Now Zealand have for a minior period of their working life
come to Auqtralia and then been in receipt of an Australian pension and that
means that we are carrying a substantial burden that would otherwise be carried
in New Zealand,
Are you looking at extending agreement to include pensioners who have
been in Australia longer than that period or do you want to add new classes of
beneficiaries to those established already?
PM: We are not talking about unemployment beneficiaries or benefits which are of a
short term nature, only a long terni tiature, We did come to an agreement in
1999 about the methodology of picking tip costs for people after that point.
This is about going back, looking at the burden that we are now carrying, but
again on rules that are sensible and equitable and fair for both sides,
J: Mr Keating, how can Now Zealand and New Zealanders avoid Australians or
prevent Australians from thinking that this country and the people in it will
want to bludge on Australia?
PM. I don't think that is true at all. I don't think Australians think that at all. But
that is not to say that there won't be issues from time to time which arise like
this one. We have had other social security type issues arise with other
European countries for instance and I don't think the Australian community
would conclude from that that they were to use your words, about to bludge
on us. It is just an issue that oeeds to be dealt with and I don't think people
should read more into it than it is.
1; Prime Minister, do you think New Zealand can maintain a credible defence
posture in the South Pacific with Australia while it remains outside or excluded
from the ANZUS alliance or would you prefer to see New Zealand back in?
PM: That is a matter for New Zesland, New Zealand and its relationship with the
United States. The ANZUS alliance is an allitince of value to Australia, I think
it is an alliance. of value to the United States. It was concluded at a time when
there was a premium on such alliances. I don't think such a premi~ um exists in
the United States today. So it is an alliance of value and it is one which the
Australian goverinent puts substantial store in and makes substantial defence
eff'orts on its own part to meet. or course, were New Zealand to decide to
becorme a full parter again in ANZUS that must of itself, strengthen~ the
ANZUS alliance. But the allian~ ce still remains, Australia still has, exercises with
the United States forces from time to time and not only that, of course we
have regular ministerial consultations between the Secretary of State and
defencc secretaries of the United States and the appropriate defence and
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foreign afibirs ministers of Australia, So it is for us a fully operationa l aljce
and one which we go to lengths to keep the tone on. I think the other issue
which we did discuss this morning is the thing about the role of defence
generally and national. efforts towards defence and I did expres the view to
Prime Minister Bolger and to the Cabinet that it is important for both our
countries to be able to maintain a minimal, at least a miinimnum credible defence
as the expression is used in New Zealand. Now we are spending about 2.4 per
cent of GDP on defence, that has declined fiomn 2.9 to about 2.4 per cent and
we have Yielded from our changes over the years substantial efficiency
dividend New Zealand is spending now about 1. 1 per cent of GDP on
defence and while there is no doubt that efficiencies have been yielded if you
like, brought to bear in that process, I1th ink it is important to say that it is
important for both our countries that New Zealand does indeed have a credible
defence policy in place. Prime Minister Bolger agrees with that as does his
Cabinet and that is an issue which I think is of fundamental importance
whatever ones view of the ANZUS overlay mi~ Iit be.
J: ( inaudible) credible defence policy?
PM:, No, we are not in a position to second guess and don't attempt to seconld guess
New Zealand about its defence spending, but it is important to keep core forces
in place. These are not things you can build up quickly. Defence experience
and capacity is something which is built tip over a long pvriod of time and that
experience and operability and all the rest can if it dindnishes, can take a very
long time to repair.
I Prime Minister, so you wouldn't necessarily see out of this an agreement for
New Zealand is to increase their defence spending?
PM: We didn't ask for a commnitment ftrm New Zealand, but the Prime Minister
made it clear that they wouldn't be spending any less on defence.
J: Prime minister, are you convinced that the New Zealand Labor party is also
committed to a credible defence policy?
PM: I am seeing the Leader of the Opposition after I see you and I'm sure he will
take about that subject.
J: Ptrme Minister, is it your view that the purchase of one or two ANZAC frigates
by New Zealand is sufficient to core a New Zealand credible defence force?
pM: I think credible defence goes more than material purchases or
procurement or weapons procurement in their own righit. It is a total thing
which is operational forces, combat readiness, capacity logistics as well as
equipment. These are very sophisticated issues which require sophisticated
judgements and most defence mainistfles and armed services try and imake thosc
judgements aU the time. The important thing is I think that ( he Government of
New Zealand is convinced itself that its policies can maintain a credible
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minimum defence posture because that is of material importance to Australia or
the integration Of Australian and New Zealand forces,
3: How long before minimui core is increasing over the years as Asian nations
increase their defence capability which they are doing already?
PM: It depends I think what ones strategic outlook is and in which way one is
planning ones defence force. Ours has been substantially re-oriented to the
defence of Australia rather than as it was earlier participation with US forces
in the Pacific. That change occurred in the 1 980s and if the key criteria is
defence of ones own land mass and interests then I think that in a sense
describes the policy rather then reference to what someone else is doing nearby.
Whatever someone else is doing would be always part of some strategic
assessment, that has to be fed into any cailculation. But again I don't think
there is any mechanical link between what someone else is doing and what we
that is Australia or New Zealand might be doing.
1; Is there any scope for ifurther integrating the defence policies?
PM-. As the Prime M~ inister said over lunch, there is a lot of defence co-operation;
we call it CDR occurring between Australia and New Zealand and I can only
wish and believe that that will continue.
J. Are you saying though that CDR is in danger of
PM:. No, because the Prime Minister takes the view that the maintenance of a
mi~ nimal credible force Is paramount in public policy. That is the key judgement
for us,
P What issues were raised in the taxation context..
PM. Two things: the re-writing of our double tax agreement between the two
counitries which is now quite an Old docullent and so much has changed of
course, and it needs to reflcet that change and the other is the question of
mutual recognition of dividends, dividend imputation and progress on that
issue. The problem for us an that issue is that the preservation of the integrity
of the Australian tax system and there are of course ma * ny Australian companies
investinS all around the world, and the precedent problem for us is were we to
provide imputed dividend cre~ dits, the tax paid to another Treasury, the
Treasury of another country in this case New Zealand the pressure would
come on to Australia to pay imputation credits for tax paid to the German
Treasury or the British Treasury and other places where Australian companies
have $ one abroad.
J: Are you effectively ruling it out?
PM-I think what we arc saying is for the moment is that we are not ready at this
stage to agree to a change in dividend imputation. If we are prepared to leave
it tinder discussion so that if ways can be found of dealing with the quarantining
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problem we will examine them. But there is also another great difference in
the tax systems of New Zealand and Australia and that is New Zealand does
not have a capital gains tax and Australia does. So companies could take their
incomne profits in Australia and their capital profits in New Zealand and again
this would not necessarily guarantee the objectives of such a change for us.
J1: If Australia's focus on actually Sctting greater reparation from New Zealand or
on minimisinS eligibility for frequent pay outs..
PM: We have a very tight social security system, there is an assets test and income
test and over the period of time with the social security review teams and the
rest we have got now by world standards a fairly tight system. So eligibility is
not I think as primacy here, it is just a question of the balance of the costs
which in this case for about 270,000 New Zealanders, 30,000 of whom are
taking pensions in Australia, means that the great body of the burden falls upon
the Australian budget and given that this occurs principally because of travel
arrangeeznts between us that therefore it needs to be remedied.
I: Australian government prepared to recognise, these tax contributions
working between
PM-I think we do and vice versa, but that I don't think deals with this problem at
all.
3: ( inaudible)
PM: Yes, I was happy to reaffirm the strength of the existing arrangements. I think
they have worked well that is basically the avenue by which there is an
exchange of people between the two countries and it works well and I amn very
happy to endorse those arrangements.
3: What did you decide on iim'igrafion..
PM: Thac we should like to be able to establish a pre-clearance regime by the end of
1993. We agreed to make every effort to do that and we are originally
targeting November, there mnay be a bit of slippage in that, but it would be very
nice to do it if we could before the end of 1993 because this will facilitate flying
between domnestic terminals. So it would be international carriage of people,
but to domestic terminal to domestic terminal wvhich means immigration preclearance
and customs and quarantine clearance would obtain at the domestic
terininals, I can't think of any better way of removing impediments to people
travelling between the two countries than to travel through the domestic
terminals and this of course, will mean also enhanced opportunities for the
airlines and those enhanced opportunities can only mean that the tourist
industry between both countries is ernhanced. B~ oth of our countries rely upon a
substantial services sector of which tourism is a rapidly growing part and
therefore getting this done and getting it in place has to be a good thing for
tourism between Australia and New Zealand and of course, in that the airlines
and need I say that this arrangernent is part of a larger arrangement where
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AuStrelia has already agreed beyond rights for New Zealand Ailines out of
Australia to North America arxd to Asia. SO it is not a policy which sits alone,
it is pan of a broader Policy Of a closer integration of our two airline markets
into a single airline market,
3: Prime MInlister, you said in your discussions today in termns of benefits for the
long term like superannuation, do you anticipate at somne stage You Will have to
look at things like the uneCMPloyment benefit?
PM: It has not been On the agenda at this Point in our discussion and I think from
Our Point of view it is that these Mre payments of a shorter term duration, there
is a flux of people moving backwards and forwards, there is not so obvious a
longer termi cost and so therefore I think it is wise for us to concentrate on the
longer term benefits and pensions, aged pensions in particular. I think it is
possible to arrive at a formula where this can be reasonably well constructed,
operate effectively and efficiently and make the system just that much fairer.
Are YOU going to flee up thle travel between the countries is there going to
be mnore New Zealanders with freer access?
FM: The mode of travel would be freer, more subtle, but the basis of the travel is no
freer than what is now eminently free. That is virtually visa free entry into
Australia. Do you resent that New Zealand will have a credible defence policy if it doesn't
increase its..
PM: r sot asked that earlier. I responded to that earlier.
P: Prime Minister, regarding yourvisit to the Savage memorial, are you the New
Zealand government to praise the value and ideals of...
PM: I don't know whether that is supposed to be a leading question. You have a
fusrry thing in your hand there, I take it it is a microphone and that you want
therefore an approprite flurry answer I suppose. I was able to say in -my
remarks a few minutes ago at lunch that I think the thing about these countries
is they are deeply democratic countries. When you say in countries like New
Zealand and Australia, you inake a speech to the Parliamentary folk, you say
these are demnocracies, people say oh yes% d emocracies, but democracies like
ours are few and as old as ours are few. This is a very old democracy in New
Zealand as is Australia's and it is the transmission of demnocratic values around
the world is I think one of the things we do best. With that democracy has
come I think in both societies a deep sense of tolerance. I think tolerance
comes from ones sense of democracy, an innate sense of democracy and the
tolerance has led to different kinds of societies being developed. A different
society here In New Zeal and say to Europc. Certaitfly a different society in
Australia than say Europe, indeed different socictics between Australia and
New Zealand, thcse are different places. That tolerance has also Itik
produced a view of society, a view about the role of ilovernment and the role
22. May. 93 19to N'u. u-
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of society which has seen both Australia and New Zealand break many of' the
muoulds of social justice and break them in a way which enhance the social
agenda of both countries. I think Michael Savage when he was Prime Minister
did these things. We have continued in our couritty to do these things and
much of the Australian election just passed, the debate was about these things.
There is a role for government. but again too substantial a role for government
is disruptive of private investment and in the end employment, so it is a matter
of finding that balance, to do what i3 fair and just and sensible and at the same
tune pay appropriate due to that sense of democracy and tolerance that Is in
our society and that sense of fairness which comnes froin it. So I think that the
work of great pioneers and 1 think you have to put the former Labor Prime
Minister Michael Savage in that class has laid down the style of New Zealand
life, the sort of society it is, That is not to say these things are immutable, can
never be changed or shouldn't be changed; of course governments will come
along and chop and change them all the time, but the values which arm them I
don't think are going to change and I think that is the good thing.
Prime Minister, going back to your comments on tax you said as I understood
it that Australia was not able to move towairds imputation of dividends because
if you did that it would set a precedent on the countries to have follow. Does
that comment not belie the relationship that the two countries have under the
CER agreement and the progress that has been made on that agrecment?
PM: Yes, but I'm quite sure the US Commerce Department will immediately write
to the Australian Treasurer and say we want the same for us were we to
introduce a dividend imputation system or any other country which wants to
claim the same benefit. But certainly the companies of Australia will seek the
beniefit, they are already seeking it, they have been seeking it for years and were
we to conceive the benefit in New Zealand they will seek it more strongly for
Western Europe, North America, the Asia Pacific.
J: But you have free trading goods and services with New Zealand and you don't
give that to every other country.
pm: No, that is true, but again it is a matter of where th~ e antecedcnts of the
argument come from and this one I think tie argument is that we should give
tax credit for tax paid to a foreign treasury. Now I don't agree with that.
While we would like to see businesses in this country in New Zealand and
Australia integrate more closely, but again it is worth recording we have
already seen an enormous integration of investment between the two countries
particularly since the early 1980s-enormous growth in investment. The other
problem is of course, were Ncw Zealand to extend its imputationl System to
other countries, were it to decide on a few bilaterals on the side, then people
will bring dividends through New Zealand which will end up costing us so we
are defacto extending our imputation system to other countries via New
Zealand and the problem then is saying, we will withdraw the imputation
credits, once businesses have established themselves oil the basis of such credit
you can barely then say, it is possible to say, but ctrtainly business would resist
it, any Australian government sayinu that the beiiefis now be withdrawn, So
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were we to extend this to New Zealand wed have to have a vezy clear
covenant that it would not be extended elsewhere by New Zealand. These are
all the issues involved and that is why I say at the moment we are not ready to
agree, but we are quite happy to continue examining the policy implications.
3: Prime Minister, your relationship with Mr Bolger, has that been affected at all
by earlier comnents about Joan Kirner?
PM: Earlier, that's much earlier. Months earlier,
1: So exactly what sort of relationship do you have with Mr Bolger?
PM: Very good I think. He is as you know , an affable, easy going, easy to talk to
person who is conscientious about his country's interests and very savvy about
the relationship between Australia and New Zealand and about the issues
involved, So I find dealing with him and on the issues, but beyond that just
knowing him to be a very easy thing to do,
J. Can you say what progress has been made on mutual recognition?
PM: One of the good things is that we do have quite unique, I made reference at
lunch to the fact that New Zealand ministers meet with Conunonwealth and
State ministers of Australia in so many of these functional areas of our
economies and our societies and we have been seeking as States of Australia to
develop a set of uniform, mutual standards so that we don't have one standard
in Melbourne and a different-standard in Sydney or Victoria or NSW as the
case may be. And in that of course, it becomes an obvious thing to extend that
uniformity of standards, classification of standards across the Tasman so that
Australasia has the same standards In these respects and we are making
progress there and I'm sure we'll make substantial progress together on this in
the ensuing period.
J: ( inaudible)
PM. There is a formula that is being discussed, there has been a formula discussed
about,.
3: have you put in any idea of how much the Australian government would
consider reasonable?
PM: You must write for a tabloid do you? No. no I haven't.
3: When will you be announcing the details
PM; We are going to meet I think in a couple of months, within three months there
is going to be another mereting of our respcctive ninistcrs.
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