" MEE~ T THE PRESS"
Ztjeyision InterviewL givenu by-tbg Prime Minlister~ the Rt. Hon.
R. G. Menzies. on Channel TCN. Sydney onSunday_,*" th November,
MR. McNICOLL:
PRIME MINISTER:
Q.
P. M,
Q.
Pam. Good evening Ladies and Gentlemen, We are
very honouxed to have as our guest this evening,
the Prime Minister of Australia, the Rt. Hon.
R. G. Menzies. Mr. Prime Minister, good evening.
The members of our panel Mr. John Gibbs, who
is financial editor of the tSunday Telegraph," l
Mr. Alan Reid, whom you well know from Canberra,
and Mr, King Watson, the Editor of the " Daily
Telegraph." Mr. Prime Minister are you satisfied
that we are spending enough money on defence?
I think so. I think that the programme announced
the other day by Mr. Townley is pretty good.
It represents some increase, and will represent
a little more as the next three years go on.
But the essence of it is a well-balanced programme
and, of course, it is a flexible programme, It
is not to be assumed that, because you have a
three years' programme that you are unable to
alter it in case some new circumstances blow up.
WJe are hoping we will not have new circumstances.
You are ignoring the motives that may have prompted
it. What do you think of Dr. Cairn's suggestion
that the two Parties should come together on the
volume of taxation that should be devoted to
de fence spending?
Wll, 1 it is very interesting to me to gather
that Dr, Oairns thinks we ought to spend more
money on defence, because I have been under the
exactly opposite impression for years. But I
think the Government will take its own responsibility
on that matter, Certainly, until recently,
we were spending far more money on de-fence than
our opponents wanted to spend. They appear to
have had a change of heart recently.
Would increased spending at this stage on defence,
in view of the expanding economy, retard the
development of that economy?
Well, I think it would. But, of course, there
are times when you have to prefer defence to
development, but there is no occasion, at this
time, to sacrifice one for the other. The truth
is that to spend substantially more on defence,
and I don't mean a few millions, but a very large
sum more, would mean more manpower devoted to
defence, more resources devoted to defence, and
therefore less manpower and less resources
available for other matters and what we have had to
do, and it has been a very aifficult task, is
to balance the urgent need for increasing the
population and resources of the nation against
the undoubted need to have an effective defence
force. oeseeece. e/ 2
-2
Qo Some people talk about our defence in terms of an
anrms race witL Indco sia9 Is this the way the Government
sees the problem?
P. M2 It never occurred to us. We have had a three years
programme operating, and we are now having another
three years programme. It has no relations to some
arms race with Indonesia. It is all related by what
is regarded by our competent advisers, as the nature
of the th. re& t, our strategic position, and emphasis
upon having forces which are available immediately and
can be made mobile and be made effective in a few days,
In the past we have had a capacity for producing soldiers,
but it has taken months to put them into the fi. eld
We, for the first time in time of peace, have permanent,
professional, ready, well-armed and highly-trained
mobile forces.
Q, Is our state of preparedness much better than it was
in 1913 and 1939?
P. M. When I look back on 1939, when I was Prime Minister
for the first time in April, 1939, I think it vas, our
defences today are much more powerful.
QC To what extent, Sir, could we rely upon America in
the event of a crisis in this part of the world?
P. M. If the crisis consists of an attack upon us, and that
includes Australian New Guinea and Papua then I would
have no doubt whatever thab America would instantly
come to our assistance, I am happy to say we stand
very well with the United States of America. They
regard us as their friends, and even though they are
a very great country, and we are a very small country
comparatively, history shows that great countries like
to have some friends, even small ones.
Q. One point is how the outside world views our safety,
Is the amount of capital investment coming in?
Has there been any diminution in the flow in recent
months? No, there has not. In fact right through the somewhat
controversial period in Australia, the capital has
kept flowing in. You are quite right when you suggest
that this exhibits confidence in our future which,
of course, must include confidence in our future
security,
Q. But, Sir, how is that capital made up? Is it capital
investment into factories, or is it investment money
going into, say buying shares in BHoP. Have you
any figures on that which would guide us?
PoM. Well, I can't give you a percentage, but as you know,
it is a bit of each. Portfolio investments I think,
rose in proportion some little time ago, but I would
have thought that, overall, looking back over a term
of eight or nine years, the bulk of this money has been
for investment in industryo
.3
An'd do you thinlc that there is any . ot money, mcAcy
that may come Jin temporarily, an-Ld goes out again?
T,. M0 I donvt think there is very much hot money, There is
some, of course which is the product of credit buying at
a time of imporz restrictions, eana so on. But I think the
quantity of that has fallen away considerably. I am quite
certain that the great bulk of what we call new capital
money coming into Australia is not just for portfolio
not hot money, but is for direct Investment in Australian
industry.
Q. A. L. P. policy demands a nuclear-free Southern Hemisphere,
Is this in the rea2! nof practical politics with you, Sir?
P. M. Well, quite frankly, from the * point of view of Australia,
it is the craziLest proposal that I have ever heard,
Why, Sir?
P. M. Beceause they say " We want a nuclear-free zone. No
nuclear weapons are to be installed or used in the
Southern Hemisphere, south of the Equator." Now, here
we are. America i~ s our friend and our ally under the
ANZUS Pact, and you have places like Manus, soutK of
the Equator, all included in the Labc-Ir resolution. Are
we to say to the United States of America " Look, we
want to tell you that under no circumstances, if you have
to fight alongside us and for us, under no circumstanices
can you use nuclear weapons, or fire one off from
Australian soil, or from any place south of~ the Equator."
What do you suppose the Americans would say? I know very
well what they would say., This is a suicidal policy.
We do not want to be a nuclear power ourselves if we can
avoid it, I personally believe that the fewder countries
that have nuclear weapons, the better. There is less
chance of an accident and, therefore, I stood out against
it and so has my Government in the case of Australia.
But the question of our defence arises in its crucial form
if we are attacked. If we are at war. And to say to the
most powerf'ul. ally we have in the world " Don't you come
here with guided nuclear missiles. Don't you come here to
defend us, You keep away with those things. We won't
have them" this is the policy of suicide,
Q. In -view of the Chinese-Indian instance, would you accept
an assurance from mainland China on nuclear weapons
without adequate supervis-ion?
P. M. Noi Noi I am getting old, I know, but have not become
so decrepit as to accept assurances from those sourcgs, 0
Q. Mr. Prime Minister, over the last week there has been the
greatest interest in Cuba. Do you regard it personally
as a great coup for Mr. Kennedy, the outcome of the Cuban
missile trouble?
P. M. I think, if I may sayr so, that we ought to avoid claiming
something as a coup. I do not think that our relations,
or hi s relations with tChe Soviet Union e by any means
conclusive, This is just his first move, and a very
successfuil one. But, I think we don't want to get into
the atmosphere of saying, " Ah. Khrushchev was compelled to
do this or that." And yet we know that when President
Kennedy made this dramatic announcement, there were quite
a few people around the world, maybe even some here, who
said " Oh this is a very dangerous thing. This is
brinkmanshIp" or whatever the word is. We in the Cabinet
0 0 0 a. 00/ 1+
-1
POMO
( Contd,) h~ appened to be sittiLng when this news arrived and I at
once afterwards in the House, as you know, made a statement
stanaing behind this statemen6 by ]) resident, Kennedy. It's
very interesting to realise that it was the first statement
of support he had from anywhere, and I think that we did
not lose marks by our promptness on that matter. The
second thing is that, ' uc. doubtedly, this display of firmness
was the thing that has been needed for a long time,
I have had a theory, based upon knowing something of
Khrushchev that the air would begin to clear the first
time he had sitting opposite to him, metaphorically or"
physically, a man of immense powEr, who must be the
President of the United States, who could say to him,
" This is not to happen. If it does then the consequences
will be yours,'" My theory is that the first time that
happened and he believed what the man said, we would begin
to see a little light in the gloom, and that is what
happened here.
In that case, following that through, do you think that
possibly, while it was terribly dangerous for a while,
and a very anxious time for everybody,, that the seare
the people have had, that the next time the big powers
make the next moves, especially America and the U. S. S. R.
and meet on the question of disarmament and nuclear testing
and so on that they may be more inclined to make some
progress towards the road to disarmament?
P. M. I am not without hopes that this may be so because, you
see, the Soviet resistance to the proposals about nuclear
testing has really been outrageous. Everybody else wants
to get rid of nuclear testing, to bring about this business
of fuirther development in this field to an end. Everybody
does, But, of course, naturally, the Western Powers want
to have a system of inspection bothi ways, But, as you
know, you cannot take some people's word very easily, and
as the Russians said " Noth1ing doing." They may perhaps
change their minds now.
Q. So you had the opportunity now to to meet and have
discussions with Mr. Kennedy on three or four occasions.
What is your opinion of him? Is it growing all the time?
P. M. I think so. I saw a considerable amount of him a year
ago 15 months ago and then this year I have twice had
considerable talks with him, and I think he grows in
statuire all the timo. It is impertinent of me to talk
about the President of the United States but, still, I
have met a lot of people in thae course of my life, and
I have some reason to wrork up an opinion about them.
I like Kennedy very mucht, and I respect his intelligence
very much and I think he is a man of courage and this
is a pretty good combination, intelligence and courage.
Q. Apparently he has a rather remarkable wife?
P. M. I have never had the pleasure of either seeing her or
meeting her,,
Q. Have you not?
P. OM. But our Ambassador tells mne she is charming.
Q& Australia's balance oii payments in the September quarter
showed a deficit of œ C90 million or more, and this included
the invisible, of course, and imports rising, and most
people in the trade expect that, as the economic recovery
continues in Australia we may get more imports., Does this
suggest that we may have another balance of payments
crisis?
1"
o, I don't th. in. so. We thought;, and am sure you
h thought in all relevant t; iomes in the past year,
as the econcmic position strengthened9 there would be
an increase in imports. It inevitably happens that way
particularly remembering that a good proportion of our
imports consist cf materials for local manufactures in
Australia, Therefore, it is no su.-prise to find that
imports have been rising. But the rise in the imports
has not reflected itself fully as you know in the
overseas reserves, because of this remarkable inflow of
capital to Australia, But there is no doubt about it
that the tendency for imports to rise is, I think, a
continuing one when the country is well and happy, and
therefore our great problem is to do what we can o
stimulate exports in order to cut down the difference.
Q. With this expansion, Sir, the banks have been a bi. t
confused lately over the Bank Act, There has been a
calling up of the extra depcsits into frozen funds.
Some banks have apparently seemed to feel that this is
a contradiction, and they adopt the attitude that if
we are going to expand, we need all the credit, so why
call up the funds?
P. M. I do not want to become involved in a tectLnical argument
with an expert, but the banks have been, and are,
extremely liquid. No bank would deny that. There is a
very fine state of liquidity. A very high percentage,
and therefore they have a very high capacity to make
advances. Porhaps some of the weakening of confidence
in the last twelve months has reflected itself in the
fact that people who could got finance from the banks
have not done so. This is a weakness of confidence on
the part of the customer, not on the part of the banks.
But, still, they are very liquidWell now, the Reserve
Bank it has the power to call up special reserve
deposits, and it is intended to exercise this power to
maintain a general control over the credit position.
That is what a Central Bank is for, as you will agree.
How, this time they have made a call. Not a big one.
Relatively speaking, a small one. We gave some thought
thi3, because we were informed as to what the Bank
proposed. I can tell you my own view, which was the view
of the Government on this occasion. We have been accused
in the past, I. n 1960, of delayi. ng, and then doing something
too big and too sudden. This time, let us learn from that
experience. Don't let us quarrel about giving the economy
a little nudge occa3ionally and this is a nudge, It is
better to do a little bit at a time and see the effect,
than to save it up until perhaps the autumn of next year,
and then come out with a call to S. R. D. ( Special Reserve
Deposits) three times as big as the one that has just
been made. I think the lesson I have learned from all
these things is that it is better to do things a little
at a time, at the right time, than to delay them for
reasons of the kind you have just mentioned, and then
find yourself compelled to take some much more severe
action if you are going to keep the economy on an even
keel, No, I would not quarrel with what the banks have
done at all.
From what you have said, Sir, some people may interpiet
the fact that your action is precautionarybut it also
indicates that the Government is very confident at the
moment that this recovery and expansion is going to move
along at a pretty fast rate perhaps, what in a few
months? o o. oo../ 6
P. M. I thixn c that the recovery is going along very well0 I
know there are diffevences of opinions on this matter,
but all the industries that we have indicate that there
is a very considerable and marked recovery, and everybody
wants that to continue, but nobody with whom I have had
discussions business or otherwise, wants it to develop
into an inflationary boom. And that is why, instead of
waiting for some highly inflationary circumstances to
arise, it is a very good thing to do whatever little
dampening down has to be done at the right time. But
we want a high level of prosperitVr, a rising level of
prosperity, but we don't want the conditions that existed
in 1960 to recur nor does any panel of business or
financial men with whom I have had. discussions,
Q. If you were a doctor, Sir, and Australia was your patient,
and you were running the measure over your patient, would
you say that the patient internally was now in a healthy
condition?
P. MO I think so. Very healthy indeed, and if I were a dcctor
which, my dear boy, Heaven forfend, because the patient
would be dead the thing I would be afraid of about this
very healthy patient of mine would be that we must not let
him run into a high blood pressure,
Q. I am sorry to hark back on the question of funds, Mr.
Prime Minister, but there is one other point which I think
should be cleared up. In England, the Bank of England
recently reduced the amount called up into their equivalent
to our from two per cent to one per cent. and they
pay, I think, four per cent. interest on this money. Now,
this one per cent. rise of ours has increased our percentage
to 11 per cent. on which we pay, I think, three-quarters of
one per cent. Why the discrepancy?
P. M. Why draw an analogy between our condition and the condition
in Great Britain?
Q. I thirk the banks draw the analogy, I think they think they
tave been hardly done by.
P. M. This is permissible as a delating point, but the position
of the United Kingdom is affected by her own balance of
payments problem, h: 4 oni circumstances just as ours are
by our own circumstances, and you can't identify thiese
circ-amstanceso
Q. If, Sir, our circumstances improve, does that suggest that
the banking system might re. eive that overhaul, or flexibilit;
that was referred to early this year as far as fixed
deposits are concerned, and the call-up into the
Is there likely to be a more flexible attitude toward the
banks?
P. M. I think you can take it that the door is always open for
that. We had extremely useful discussions with the trading
banks, who were most helpful on this matter early this
year, or earlier this year, and we certainly will be very
happy at any time to discuss in the light of the circumstances
from time to time,
Q. Do you think they are capable of handling their own lending
operations? We have seen the release of funds to the banks.
We know that they have increased the limits and approved
new overdrafts, but the public has not taken them up. Do
you think they are competent to operate and supervise the
proper lending of funds? / 7
-i
FP0M. T. u* O. I have thFa greatest respect for the capacity of the
trading banks to do these things', and We don't want -to
in~ terfere in tho exercise of their own discretion and
experience. They know far more about it than we do sitting
in a room at Canberra., We are concerned with what I would
call the wholesale aspect of credit. They are concerned
with the retail use of it. But, in that field, they are
the masters as far as I am concerned.
Q8 Is your slim majority in the House of Representatives giving
you much worry, Mr. Prime Ministe:-?
P. M, That is the only slim thing about me. No. You know, it
is very interesting. I am by way of being an expert on
this matter, because I once had a majority of half of one,
That is to say, an Independent, years and years ago. A
majority of one is not a bad majority, as long as everybody
is present and correct and your team is in good order
and enthusiastic, and i must say that the morale among my
own members has been superb. I really have not had any
worry about our Parliamentary position the whole of the
year. In fact, my opponent, my friend, Arthur Calwell
he is a friend of mine complained one day that I was
behaving as if I still had a majority of 32. Iasee
that that was just how I feel.
Q. I understand that Dame Pattie thinks that you have never
felt better in your life, and that it has added ten years
to your life having this slim majority. Is that right?
P. M. Well, sho knows me better thean I knaow myself, but I
would~ n't deny it, I always9 I think, if I may-say so,
do best in difficulties, and I have had them,
Q. Sir, reverting to the economic one, If your guided
optimism, and the optimism of your Labour Minister, Mr,
McMahon, over the placement of school leavers is
unjustified is the Government prepared to take measures
to get a raze of absorption that will ultimately, within
a discern-ible -oeriod, absorb them?
P. M. Now, that is an easy question to answer. After all,
as you know, tU'his is true under our predecessors, it is
true under us, and will be true under our suCcessors.
You m'rist ha-v. e some rise in the number of people applying
for work in Januaiy and February, because you are going to
have wliatever the number may be 50, 60 or 70 thousand
people leaving school, and the moment they register,
they appear on the nominal unemployment list and, therefore,
you will always have a little rise, perhaps a big one,
in January, the real test. Now, this is what happens a
couple of months thereafter when these have been absorebed.
My colleague Mr0McMahon, is justifiably proud of the
fact that quite shortly after the last January and February
flush, the bulk of those school-. leavers, the great bulk,
had been absorbed into employment, and he is very confident
that that problem can be handled more easily this year,
and I would share th~ at confidence, because I believe that
the morale of the manufacturing and business community
is rising. I know there are still a few people that have
some complaints, naturally, But the general improssion
I get and, indeed, I got it the other night at the
Chamber of Manufactures Dinner, is that -there is a good
state of optimism, a good disposition to look forward, and
a good disposition to realise that there is no occasion
to be gloomy about the future, Those things, of course,
wi.]. l translate themselves into productive activity, increased
business in the re-tail stores the whole line running back
to the manufacturors. All this affects the tertiary industries
transport and so on, I share the optimism of Mr.
McMah~ n,
8'
Q, How about outside Australia, Sir? What about replacing
soe of these markets that we are likely to lose with the
Common Market discussions?
P. M. Well, I think that this is of the first importance. I
think that increasingly well, let us put it this way:
there are two tasks here. As far as the Government is
concerned, we have been trying to do it for years, to
provide certain financial means and so on, for assisting
the development of exports, particularly in manufactured
goods where there is such a fertile field for purchase in
South-East Asia. But the other th'ng relates to the other
responsibility, that of industry itself, because we are
always a little bit disposed in a conservative way, to say
that the things we make which can sell in our own country
must be the things that other people ought to buy if we
send them to another country. That is not necessarily
true, We want to diversify our production. I think
there is an immense amount of room for the application of
scientific research to manufacturing procedure and products
so that, if it turns out that Thailand wants a particular
type of thing which is readily saleable, we should put
ourselves in a position to make it. There is a great
challenge here for Australian industry which is eminently
capable of meeting it so long as it does not think too
constantly that the development of export markets is a
matter for the Government alone,
Q. Well that suggests what has been mentioned lately.
People have been thinking we may have an inferiority
complex, that we cannot match people in these overseas
markets,
P. M. Well, if we have, we ought to get rid of it, An inferiority
complex is, anyhow, a silly thing,
Q. Do you think that this present impasse in the Common
Market talks is put down to the fact that Britain is not
very happy about the insistence of the other countries on
her cutting out her subsidies to her farmers. Do you
think that there is any element of hope in it of Mr. Heath
pushing some of the things that we have asked him to push
for us, or is it purely his domestic matter?
P. M. Well, you know those have been rumours that have been
published. I am quite certain myself that some of his
greatest difficulties at present arise from his pushing
our vie: s on the temperate products that concern us and,
I am sure, he is doing this very well. But whether Great
Britain has improved her negotiating position by the events
of the last week or two, I do not know, because the Government
seems to have made it overwhelmingly clear that it is
going in. Well, I respect that view. I do not want t,
repeat what I have said about it. But it did not strike me
as being as strong in a negotiating position as some I
have seen occupied by the Government of the United Kingdom,
Q, Are any moves by the U. So likely to help us replace the
losses that could emerge from Britain's entry into the
E. C. M.?
PoM, The new trade law which President Kennedy has now got
through Congress, and which gives him a discretion to
deal with tariffs up and down within the broad limit, I
think and he thinks is going to give him a great opportunity
of intervening in trade discussions and so to speak
" offering a cutlet for a cutlet", if that phrase is not / 9
( Contd.) Q. P. M.
Q. PoM. too cld-fashioned, " We, the United States. are prepared
to concede this as long as you concede a ]. owered rate of
du ty on certain commodities passing into irope11 Some
of those commodities, with which America will be concerned,
also concern us, Then we would be in a position to secure
the advantages of the reduced common external tariffs on,
sayr, canned fruits,
This is under the General Agreement on Tariffs and
Trade?
Yes. It ought to be negotiated through as they
call it, But the capacity of the American administration
with this flexible instrument that it now has should not
be underestimated It is, I think, full of promise.
I don't say that this is going to solve all our problems
by a long, long chalk. But it is going to be helpfal,
May I ask you a personal question, Mr. Prime Minister?
Do you ever get depressed or dornhearted by the fact
that you never seem to be able to say or d anything right
in the eyes of the " Sydney Morning Herald?"
Never. I am not easily depressed anyhow, I assure you.
If I were I would not still be in office. I would be
dead, or f would be certified.
MR. McNICOLL
PRIME MINISTER Sir, I would like to thank you very much indeed
for coming along this evening to talk to us and
I know that I will be expressing the views of
those watching the programme tonight in saying
how pleased we are at the wonderful. accord that
you obviously came through with President
Kennedy, which I think is something very close
to Australia's heart at the present time.
: Thank you, Thank you very much. I have been
delighted to be here as perhaps the viewers
have gathered,
MR. McNICOLL Ladies and Gentlemen. Good evening from
0 " Meet the Press".