TRANSCRIPT OF THE PRIME MINISTER, THE HON P. J. KEATING MP
PRESS CONFERENCE, ERAWAN HOTEL, BANGKOK, 7 APRIL 1994
E& OE PROOF COPY
PM: I will try to give you an indication of some of the things which I
discussed this morning with the Prime Minister and members of the
Government. The first thing to say Is not enough people in Australia
have understood the potential in the rela-tionship. with Thailand.
Whatever the reasons, I would like my visit to be the moment at which
Australia and Thailand begin to pay each other more attention.
Whatever the reasons in the past, things like the level of investment,
while increasing does not do justice to the relationship which we might
otherwise have. We need to take steps to maximise the conditions in
which investment can flourish and trade opportunities develop.
This is the second largest ASEAN economy, soon expected to be the
fastest growing. During' our-dscussions this morning the Prime
Minister and I and members of the Cabinet, his Ministry and my party
discussed the relationship in the broad, the elements In our bilateral
relationship, its prospects, we discussed APEC, developments in the
region, security matters. and I have got fftihr opportunities to discuss
some of these questions tonight with the Prime Minister over dinner.
We agreed upon a number of things also today. One important thing
was an agreement to establish a new ministerial commission which will
give us for the first time a regular riiinisterial level forum to discuss
ways of expanding trade and Investment links. You might remember,
though Australia has now with a number of countries, two others
Japan and Indonesia a joint ministerial forum. This will be our third
with Thailand and it means that many of the, if you like, intra portfolio
points can be raised in this context. For instance, I raised today
questions about Qantas's growth potential out of the hub of Bangkok
and the Inhibitions it faces. Such a question could be raised in a
ministerial council context. At the same time, the Prime Minister raised
with me barriers to Thai imports into Australia. This would be typical of
the kind of matter which would be discussed there.
I also indicated today and you may be aware that Bob McMullan, the
Minister for Trade, will lead a major Australian trade and investment
mission to Thailand later this year. Our trade is growing especially in
manufactures, but we can and should do better and I think this trade
mission will help enormously.
We decided today In what I thought was an important decision to
explore further what prospects there might be for the establishment of
a link between the ASEAN Free Trade Agreement and the free trade
area of Australia and New Zealand. So that is a link between AFTA
and CER. We had a reasonably long discussion about this point and
we have decided that I will raise this matter formally with New Zealand
and I was invited by the Deputy Prime Minister to raise the matter
formally with other ASEAN states, other members states of ASEAN. In
the discussion I made the point that the combined GDP, of ASEAN
which Is now an important regional trade area is approximately the
same as the combined GDP of Australia and New Zealand. So, It
would be a doubling of that market in terms of access. So, we have
decided to pursue discussions around this point.
I was also very pleased with my discussions with the Prime Minister
and the Government about APEC, about the prospects for multi lateral
resolution of trade problems , and expanding growth and trade
opportunities on a multi lateral basis as distinct from the problems of
unilateralist approaches and bilateralist approaches and, I think, our
understanding of APEC Is getting closer, we see it having quite an
ambitious potential and I am looking forward to further discussions
tonight with the Prime Minister about the November meeting of APEC
and its agenda in Indonesia later this year.
I was also glad I raised with the Prime Minister the question of
Cambodia. The fact that we have the United Nations sponsorship of
the Peace Accords has produced an outcbme of great satisfaction, but
work remains to be done. The Government has to succeed in growth
development and the equitable government of the country, but I was
glad to have an assurance from the Prime Minister that Thailand will
not be supporting any individual factions in Cambodia. We articulated
the importance of isolating the Khmer Rouge from trade and Income
and to encourage them to be part of the processes of government In
Cambodia including, of course, the incorporation of the Khmer Rouge
into the army of the Royal Cambodian Government.
I might say I am meeting General Wimol this afternoon because we
have a long standing defence relationshil'with Thailand and the Thai
army is an Important element in Thai society.
Finally could I say, the Prime Minister invited Australia to participate
more fully in other regional growth areas of this part of the world and
commended Australia on its aid program, most particularly mentioned
the Friendship Bridge and the enhanced trade and investment
opportunities which it will bring to the region.
J: Prime Minister, what signals did you get from the Thai Government as
to their sounding with other ASEAN nations about the prospect of a
greater Asia-Pacific free trade zone?
PM: This is In a link between AFTA and CER. The Deputy Prime Minister
told me in having raised it informally with member states of ASEAN he
had received no indication other than a positive one from his efforts.
He said it had not been formally discussed at the formal meetings of
ASEAN, though he had discussed it Informally with ASEAN member
states and governments. But, in enjoining us to do the same, he
believes Australia could play a role Itself in opening up this discussion
and just making the point that the economy of Australasia is as large or
larger than the combined GDP of the ASEAN member countries. So,
in a regional freer trade area, we would be extending the concept of a
free product market between Australia and Now Zealand as they would
be extending the concept of freer trade and diminished tariffs between
the ASEAN member countries.
J: And do you have a time frame all over which you think this might be
achievable?
PM: No. We have spoken of it now over the last six months or so. You
might remember Deputy Prime Minister Supachai raised this publicly in
Australia during his visit and we will progress it I don't think with any
time frame in mind. The other issue which the member states of
ASEAN need to discuss is the rate of decline in tariff protection which
is now scheduled for a 15 year phase down. I think, there is becoming
a general view with the outcome GATT that that time profile is out of
sync with GAIT commitments and also the natural economic
expectations of these regional economies.
J: How important would such a move be for Australia and its trading
prospects in the region?
PM: Where ever we can extend the notion of freer trade we ought to. We
have done this now over a long period of time with New Zealand. We
have an open goods market and we have now a much more open
services market and to open that opportunity up further in countries
with a GDP of roughly the same of our own, obviously, extends market
opportunities for Australians and Australian business, it would further
underpin our trade efforts in the area and more rapidly lead to the
prospect of higher economic growth and more employment.
J: context of APEC, would you see this as a sub-group of APEC
initially which could form. the nuclei of a broader and more
comprehensive free trade region for the APEC area as a whole?
PM: I think APEC will be an umbrella which covers a number of free trade
areas. The most obvious one being the North American Free Trade
Agreement and area NAFTA, it already covers NAFTA, CER and
AFTA, it Is a matter of whether we could make AFTA and CER fit which
would just extend, if you like, that free trade area, but within the
compass of greater multi-lateral, If you like, a broader multi-lateral
frame work with APEC.
J: Do you see the integration of AFTA and CER eventually allowing trade
as free as it is now between Australia and New Zealand?
PM; These are complementary economies, there are higher levels of
protection extant in these economies than there is in Australia. There
would need to be some understanding about the pace with which that
changed. In other words, were we to, let's say have such an
agreement this very day, the agreement would only be of benefit where
the trade liberalisations had already occurred. If they are going to
occur over fifteen years It would mean there would be benefits, but
over a much longer time frame. So, I think there is two elements to
this. That is, quickening the pace of tariff reductions within the ASEAN
free trade area and at the same time then seeing what complementary
benefits there would be in Australia and AFTA doing something
together.
J: Prime Minister, if I can ask a domestic question, unemployment figures
came out today suggesting that another fall in unemployment down to
10.3. How soon do you think Australia will see unemployment back In
single digits?
PM: I. I don't think I can say precisely when because of the complication of
the participation rate which has been dancing around now for the last
couple of years. So, you could actually see quite a pick up in
employment, but a shift up in the participation rate which would still
leave unemployment In double digit figures. It is my hope though that
consistent employment growth will consistently chip away at the
unemployment level and with reasonable participation rates see
unemployment slip down under 10 per cent.
J: The OECD. report warned that the level of unemployment benefits are
reaching a stage where they are a disincentive to some peo ple to get
jobs. Is that going to be addressed In the White Paper?
PM: 1 The answer is yes, it will be. I know something of the OECD report but
I have not read it. We are looking at a set of incentives amongst other
things in the White Paper context which would encourage people into
work, particularly part time work, but I think all that will be revealed In
due course.
J: The OECD has also said that Australia is suffering from a narrow and
declining base and suggested that broader based taxes... It is
basically a favourable report a concern to the bureaucracy certainly
in Australia.
PM: It Is part of this, sort of, euro centricity of the OECD, but basically they
are Into bigger government than we are. Bigger government in
Australia in the 1970a dislocated Australian private investment and
getting a smaller but better government which is what Australia did
through fiscal consolidation in the 1980s leaves us way outside the
OECD pack in terms of fiscal effectiveness. Therefore, the frame of
reference of the OECD Is not the frame of reference of Australia in this
respect. Ours is an ambitious experience way beyond the general
OECD experience and these writings would come with the context of
the OECD experience. Were the OECD general member countries
able to consolidate their fiscal scene as Australia has and make its
outlay programs more effective, you know , it is a turn up for the books
to have the OECD arguing for higher taxation. I spent most of my
decade going there when they were arguing for lowering taxation.
J: after compensation with Australian authorities though, it must reflect
there..
PMV: No, it doesn't. You can never assume that. I like the OECD, it is a
useful body, but no OECD assessor could ever have anything like the
fiscal experience of the Australian Cabinet and therefore it is like most
OECD reports you take the parts which are useful in our experience,
but the notion that Australia should go down the route of consumption
taxation to build a second tax base in the tax system, to dislocate
Australian private investment would be ultra-vires of our interests in
the next fifteen years.
J: What about their comments that we should also follow the New
Zealand experience on labour market reform and having to move away
from..
PM; As I understand It, the OECD said that the labour market changes of
our new industrial relations act provides a frame work which would
assist in flexibility. I think that Is Important. I don't know whether too
many of you read the Australian Magazine last weekend on Britain in a
piece by Phillip Knightley where he recounted women working seventy
and eighty hour weeks for the equivalent of $ 120-13OAUS a week.
Yet, the managerial classes of Britain had enjoyed very high salaries
and, of course, there was great wealth being generated in their stock
market. Australia will not go down that route, that is why it
unashamedly and unambiguously will always put a floor under these
6
so-called processes of flexibility which denies the opportunity of some
people to make poor people poorer and hence the importance of the
award system as a base for enterprise flexibility. In other words, what
Australia is doing in this respect is superior to what Is being done in
some other countries and the frame of reference again is euro centric
and needs to be seen against the broader aspirations of a social
democracy of the kind fashioned by a labor government in the 1980s
and not the Thatcher government of Britain for instance. Thank you
ends