Subjects: visit to Japan; economy; Mitsubishi.
E&OE................................
JOURNALIST:
[inaudible]
PRIME MINISTER:
Yes well the main purpose of my visit is to meet and have discussions with Mr Koizumi, the Japanese Prime Minister. We've not had an opportunity of meeting since he was elected. He clearly has a very strong popular electoral mandate in his own country. It's very important to us and to the world economy that there is economic reform in Japan, that the very flat economic conditions in that country be improved. Japan is Australia's major trading partner. It has been Australia's best customer for many years. And although we have been fortnuate in that most of our exports have been relatively untouched by the Japanese downturn, over time there obviously is a threat when an economy as strong as Japan's continues in the doldrums. Now I welcome the opportunity of talking about his plans for the Japanese economy. We have a very close relationship with that country and he is obviously going to be a very influential figure on the world economic stage in coming years and we have a lot in common, we have a lot to talk about, and I hope also while I'm there to have an opportunity of meeting senior ministers in his government.
JOURNALIST:
[inaudible]
PRIME MINISTER:
Well certainly he has a reform agenda. He arrived on the scene in a different way to most Japnese prime ministers. He apparently beat the factional system in getting there. He does have very strong support within the community. He's just had a very strong win in the upper house elections. It's a very big challenge but he does seem to have a great deal of commitment. In the end of coruse that's a matter for him. But we are very interested and very sympathetic observers because there's quite a bit at stake for us. Our economy of course is performing very strongly and the latest indications are that the signs of economic faltering that may have appeared earlier this year have disappeared from the Australian economic scene and all the figures now indicate that we are well and truly back onto a strong growth path and that is quite a remarkable achievment given what is occuring in the United States, given what is ocurring in Japan and given the relatively subdued economic conditions in other parts of our region. It really is a very impressive performace by the Australian economy.
JOURNALIST:
How much concern is there that our exports to Japan might be affected by the fate of their economy?
PRIME MINISTER:
Well up until now those exports have been relatively unscathed because many of them are in commodities, many of them have long term supply contracts and in some cases we've even got some price improvements. And of course our exchange rate is helping us, our super competitive exchange rate is a very important side, not the only side, of our strong export performance. You've got to remember that over the just completed year Australia recorded a trade surplus. Now that's a remarkable performace. It's due to a lot of things, the super competitive exchange rate, the new tax system which means we don't have taxes on exports, the improvement in the productivity of the waterfront as a result of Mr Reith's reforms in 1998. That means that you are now getting far more efficiency as goods are exported from this country. You add all of those things together and you have this remarkable turn around in Australia's trade performance. It really is very encouraging.
JOURNALIST:
[inaudible]
PRIME MINISTER:
Well I'm going to talk to the Mitsubishi people. I will obviously be arguing very strongly for a continued major presence by Mitsubishi in Australia. It's been a very welcome participant in the Australian motor car scene for many years. I'll be pointing out of course all of the things that the government has done to make conditions for motor manufacturers in Australia very attractive. We have the tariff pause that was decided upon in 1997 and that means that we've frozen tariffs for a period of five years until 2005, frozen tariff reductions. I might also make the point that since then we've had a depreciation in the Australian dollar against the American dollar of about 28%. There's also been a very significant depreciatoin on the trade weighted index. When your dollar depreciates that increases the effective protection for the local industry. When people talk about tariff variations they often forget that an exchange rate variation can mean as much if not more than a tariff variation. So the dollar is more competitive, it means that increases the effective protection for the local manufacturer. It also makes our exports more competitive. On top of that we have a new a tax system. The GST means cheaper motor cars and furthermore we announced in the budget a bring forward of the capacity of purchasers of cars and fleets in particular to obtain refunds on their input tax credits which represented a multi.a three or four hundred, perhaps five hundred million dollar bring forward of benefits to the motor car industry. So I'll be mentioning to Mitsubishi all of things that we have done to create a more beckoning economic climate. I'll naturally listen to what the company has to say and I'll be putting very strongly to the company the enormous benefits of continuing to have a major investment in this country and we are naturally very committed to doing what we can to ensure that Mitsubishi stays here. But of course I go there against a background of all the things that we have done already which represent truly an effort on our part as a government to create good economic conditions for the motor car industry.
JOURNALIST:
[inaudible]
PRIME MINISTER:
Well I'm not at this stage getting into talk about bailouts. I mean we have done a lot of things already and the right thing for me to do is to point out all of those things to Mitsubishi, to listen to what it's got to say and can I also say in this context to express real concern about the timing and the apparent insensitivity of the manufacturing unions strike at this operation in Sydney. It's really appalling timing and it shows an insensitivity towards the need to avoid giving any impression, however remote it might be of any kind of disruption or instability in the industry in Australia.
When you're in a global environment and you are all the time trying to demonstrate that you're the best player on the field you shouldn't be doing anything at all that detracts from the impression you're trying to create.
Thank you.
[ends]