13
PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P. J. KEATING MP
INTERVIEW WITH FRAN KELLY, ABC RADIO " AM" PROGRAM,
WEDNESDAY, 11 MAY 1994
E& OE PROOF COPY
FK: Prime Minister, no new taxes, that sounds like a slogan say, for a preelection
Budget, is this an omen?
PM: No, it's not an omen. This is a Budget which builds on the changes
which we have made in this country and in budgetary terms over many
years and it is a Budget basically set up for growth and jobs. We've
got the economy growing at about 4.5 per cent; we've already grown at
4 per cent in the year to March; we'll accelerate to about 4.5 per cent;
we are predicting 3 per cent emrn poyrpent growth, which is just under
250,000 jobs and all in the context of the deficit coming back and
winding down to the 1 per cent or actually noW, better than 1 per cent
forecast as a deficit for 1996-1997.
EK: Well, you've delivered a deficit figure to the markets, what if they don't
buy it, what will you do then?
PM: I think market reaction so far has been pretty good. The long bond
rate dropped back a bit, I think, during the course of the day and
tentative signs from market commentators have been not too bad. The
fact is that the Budget is well predicated and premised. That is, the
revenue is coming from growth which is built on growth in employment
and a growth pick-up in average weekly earnings.
FK: The Treasurer said the Government will use monetary policy to keep
the inflation. figure in check. Will there be a rise in-iri-r-t rates this
year as part of your economic strategy?
PM: Certainly not because of the Budget and I don't think there is any
cause at this point in time why interest rates should rise. One can
never say interest rates will never rise, but that is the very point of
having a monetary policy. But, with growth of this order and low
inflation in prospect remember Fran we've just had the inflation rate
for the quarter at 1.9 per cent; we've got it in the Budget at 2 and 1/ 4
per cent for the coming year, so we've very subdued inflation which is
a very good sign for interest rates.
FK: You could have reduced the deficit further and faster, instead you
chose to deliver a Budget with no tax increases and minimal spending
cuts. Why such a benign Budget?
PM: Because I think it is not a matter of being benign. One doesn't go out
of ones way to say, bang up taxes. I mean, we gave tax cuts late last
year which is another election promise fulfilled. This Budget fulfils with
the White Paper many of the election promises we made to introduce
those tax cuts which have now been paid; to introduce the Mabo
legislation which has now been done; to bring up the unemployed and
deal with that through the White Paper which we have now announced
and in this Budget to produce the jobs we said would be produced and
the growth as well as doing a lot of other important things. There is
billion over ten years for the Aboriginal Land Fund for those who
won't secure benefits from Mabo; there is $ 500 million over five years
for Aboriginal health and Aboriginal health programs; there is $ 209
million'over four years for breast cancer; $ 135 million over six years
for the preparation of our Olympic athletes for the Sydney 2000
Olympics; an increase in foreign aid, but we have done ail that within
the context of falling, over time now to 1996-97, falling outlays to GOP.
EK: You've also done all of it though, mostly, from the growth dividend.
Why did you choose not to take the harder path, but in fact people
have probably been expecting, given last years Budget, a few more
spending cuts?
PM: The growth dividend so called, there should always be a dividend from
faster rate of growth, faster employment growth, better company
profits, more people in work and we made a judgement a week ago or
a couple of months ago that the White Paper and the efficiency
effects, the broad economic efficiency effects of getting 350,000 longterm
unemployed people back to work and case managing young
people under 18 years of age and setting up better linkages between
school and work were both more efficient things to do, were things
that should have been done in equity terms and we've done that. And,
even in the doing of it we've still got the Budget deficit down at $ 11.7
billion 2.5 per cent of GDP, actually lower than we forecast for this
year last year.
FK: The Opposition says you are fudging your figures, though. You are
including asset sales to fund general recurrent spending. Is this a..
are you selling off the family silver as they say?
PM: Look, that is just absolute nonsense. Outlays growth this year is less
than GDP growth. Outlays growth is 3.1 per cent. If you wash the
asset sales out of it, it is 2.9 per cent: 2.9 per cent as again from 3.1
per cent. Look, the Liberals in the House listening to the Treasurer
deliver the Budget, I'm sure if somebody had stood up and said at the
end of it, I move that the Liberal Party wind up, it would have got a
majority of people. They looked so dispirited. Some wag yelled out
' let's get the smelling salts out'. They have got nothing to say about
this Budget. It is strong on growth, it is strong in employment, it has
got the deficit coming down, it's got outlays running at less than the
rate of GDP, it's got no tax increases, it's forecasting strong business
investment and yet it is consolidating the White Paper changes and
doing all those other things I mentioned as well.
FK It is counting in though, the selling off of Qantas. You have been
trying to sell Qantas now for the past two years, ' what makes you so
sure you are going to sell it this time?
PM: We can sell Qantas, it is just a matter of when we choose to go to the
market. At a time of maximum opportunity for the Government.
FK And that time is now?
PM: We think it is in the course of this coming financial year.
FK You've given $ 1.5 billion to the Aboriginal Land Fund over ten years in
this Budget, but there is no mention of who is going to run it. How will
it be run?
PM: There is a structure there we are considering, but we've also got to
have further consultations with the Aboriginal community about that.
But, for this year we have allocated $ 200 million. It will be a revolving
fund, a proportion of that will be spent on land, but a high proportion
will be retained and it will be the earnings of the fund in the long run
that actually pays for new acquisitions.
FK: But will the Prime Minister's department want to hang on to control of
that spending?
PM: It will be set up under the auspices of the A TSIC Act, but the express
structure, it will probably have a couple of functions. One will be
financial management of the funds that's the funds management side,
because it will be the accrual of earnings on the fund which will matter
for land acquisition and there will be a property management and
property acquisition side.
FK Will this Budget be held up in the Senate again or did you deliberately
avoid tax increases to avoid the minor parties having the power to hold
over you again.
PM: No, but the fact is we gave tax cuts as promised and what is the point
then of coming this year simply to produce an even lower deficit, of
lifting tax? We made a judgement about that, it has got nought to do
with the minor parties in the Senate and, I think, many of the things
that we are doing on Aboriginal health and the Land Fund and national
Asian languages program, homelessness, mental health, breast
cancer, medical research, child immunisation, are all things which I
think probably the Greens and the Democrats would approve of.
FK So you don't expect them to hold it up?
PM: No, I don't.
FK: What about, you mentioned the tax cuts that you've delivered. There
is a second round of tax cuts promised. There is no mention of them
in this Budget, when will people get that second round of tax cuts?
PM: I said this at the Press Club about a year ago. I said that they would
be considered for payment in the latter part of the 1990s, probably
1998. Now, the Government can make a judgement about that closer
to the time.
FK But, they will get them eventually?
PM: I said so and it will be a judgement which, I said it in terms that if fiscal
conditions permit. That is, if the growth in the economy, the
investment phase, the cycle we're in then permits their payment.
FK: But the guarantee of them eventually being paid is still there?
PM: It sits on the words I've said very clearly a year ago.
FK Prime Minister, thank you.
PM: Good Fran.
ends