A& 6D
PRIME MINISTER
TRANSCRIPT OF NEWS CONFERENCE, PARLIAMENT HOUSE
13 MARCH 1989
E 0 E PROOF ONLY
PM: Before I make myself available for questions I wanted
to refer to the unfolding yet again of the chaos in the
Opposition when it comes to the question of unfolding
policy. You would've seen the program on Sunday where the
Shadow Minister for Finance referred to the idea of giving
taxing powers back to the States. That provoked this quite
remarkable statement by the Leader of the opposition this
morning repudiating the Shadow Minister for Finance. He
said we don't have any policy proposal of that kind on our
agenda, in fact I had a lengthy talk about the whole range
of economic policy on Thursday and I can tell you that that
subject wasn't mentioned. Well he says it's not on their
agenda. I've indicated that I've taken a very considerable
interest in their policy document ' Future Directions' which
is increasingly and properly being tagged around this place
as ' Futile Diversions'. That's what the agenda is he says
for the future. What does it have to say about this issue?
Page 91 ' In principle the Government with which the power
resides should have the responsibility for raising the
revenue required to exercise that power so that it's fully
accountable. In other words, in ' Future Directions', the
agenda document according to the Leader of the opposition,
what Professor Hewson, the Shadow Minister for Finance said
on Sunday, directly, squarely in line with the agenda. Then
when the Shadow minister comes out and talks according to
the agenda he is then repudiated by the Leader of the
opposition which is just further indication of the absolute
hopelessness of the Opposition. They cannot get to a
position of policy at all. It's very interesting also I
suggest to note what Professor Hewson had to say on the
question of fiscal policy. He says, he accuses us in the
last budget of increasing expenditures. As we know, we've
had three years in a row of real cuts. We've had three
successive years up to and including this one, 0.3, 3.1, 1.8
cuts in real terms. But he says we've had expenditures.
Now I want you to understand the implications of that. What
Professor Hewson therefore is talking about is cuts. There
has to be actual nominal cuts, nominal cuts, because where
there've been nominal increases in expenditure you tax us
for that although they have * been such a low order that it
means real reductions, which is the only concept that one
can talk about. He's saying there's been real increases and
that's not what would be the case under them. So that means
in terms of the sort of inflation outlook that he's talking
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PM ( cont): about that they are talking therefore about
expenditure cuts to get a reduction in nominal terms. That
will be real reductions of the order of real reductions
in government expenditure of the order of or over $ 6
billion. Now Professor Hewson undertook as you know on
Sunday, after we had brought in our April statement, under
persistent questioning he said they will in fact detail the
cuts they're going to make. Now on his own statement
therefore where you're talking about nominal cuts, not just
real cuts, they're going to have to nominate the cuts in
government expenditure of the order of $ 6 billion. That's
something that not only will we in Government be looking
forward to with very great eager anticipation to see their
detail in the $ 6 billion of expenditure cuts, but even more
importantly so will the Australian public.
JOURNALIST: What's exceptional about the State Government
having responsibility for their own taxes
PM: Well we take the view that the conduct of economic
policy in the federation is difficult given the breakup of
constitutional powers that does in fact exist and one of the
features that's made it in that constitutional context
easier to conduct overall macroeconomic policy is the
fact that the Federal Government has a monopoly of power in
the important areas of taxation. It would obviously make
the conduct of economic policy more difficult.
JOURNALIST: Why have you waited six years to fix it?
PM: The situation is quite obvious. The States have not
taken up the opportunity that was there under that
legislation. Our opponents are now saying, some part of
them are saying, and their agenda is saying that well,
let's put it on the table and they can make up their mind as
to whether they will, in the Parliament, take a specific
position which will be consistent with what they say in
their document. They've put it on the agenda, we'll
accommodate them.
JOURNALIST: Another point which Dr Hewson made at the
weekend was he said that they would put greater priority on
privatisation and the contracting out of services. What's
your response to that?
PM: As you know the question of the future of public assets
is being considered within the Party. Those processes will
continue and we'll have further discussions about it. It's
a subject that's on the agenda, we've put it on the agenda.
JOURNALIST: What will you say in the next election campaign
about your attitude to getting private equity into the
airlines given that you won't have a final Party policy
position by that time?
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PM: I noticed your piece which said we won't. I don't
accept that you're right.
JOURNALIST: How can you have that if there's not an ALP
Conference before the election?
PM: I'm simply saying to you I don't accept that your
analysis is correct. That
JOURNALIST: You're saying there may be a Conference?
PM: There could be.
JOURNALIST: After the 1988 Labor Conference, you said then
on the last day that you thought there was still a real
possibility the policy on privatisation could be changed
Sbefore the next election. Are you still standing by that
position? PM: It's a possibility. It follows from the answer I've
just given.
JOURNALIST: How confident are you
PM: I'm not putting degrees of confidence on it, I'm simply
saying that the processes are underway in the Party,
considering it.
JOURNALIST: Do you think you can persuade the Party on this
issue? PM: I've not involved myself in a process of persuasion.
We've established a committee process and it's appropriate
that that should be done because after all this is a matter
of long term policy and there are considerations validly to
be put on both sides of the argument. It's not a black and
white case. It should be analysed. I'm quite content with
the way those processes are going.
JOURNALIST: But hasn't this committee met only once or
twice since the Conference?
PM: I think that is the case but that doesn't mean it can't
meet more frequently in the future.
JOURNALIST: Conference not a postal ballot you're
talking about?
PM: I don't intend to go any further than saying that I
believe that it is possible that before the next election
the processes could be followed through which would enable
the opportunity to be given for a change of policy. I'm not
adding to that.
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JOURNALIST: Won't it cause problems for you in the next
campaign if you haven't got that policy on privatisation or
on capitalisation of the airlines complete?
PM: I'm confident that when the, by the time the next
election comes, we'll be in a position to have the
appropriate answer with which to go to the electorate. I've
said these issues are not black and white and you can't
apply, as I've said right from the very beginning of this
discussion, you can't apply the same arguments to each of
the enterprises. I mean I notice in today's Press that John
Moore has got a list as long as your arm now as to things
that would be disposed. I have a quite different concept
than that. In other words, there will be, whatever decision
that we take, there will be a clear dividing line between us
and the conservative opposition on this question.
JOURNALIST: You don't feel under some sort of heat from the
Liberal Party on this issue do you?
PM: No, I don't think that I look as though I feel under
heat. I can assure I don't feel under it and I hope I don't
convey the impression of being under heat Paul.
JOURNALIST: Is it also possible Mr Hawke that the processes
now under way will permit you to go to the next election
with a revised uranium policy?
PM: There are the two committees, one on the public assets,
one is on the question of uranium policy. I have thought
more about the public assets one, I haven't directed my
attention so much to the other. I guess the answer to your
question is it's conceivable.
JOURNALIST: I take it Prime Minister you would prefer a
State Government to meet its expenditure commitments by
increasing tax and charges CPI rather than, for
example, by an income tax surcharge?
PM: Well, it's not a question of me expressing preferences
what they do, I made the general point Milton about the
difficulties that are created for conduct of macroeconomic
policy if you have income tax powers back and being
exercised by the States. We've operated, in our six years
of Government, in our relations with the States in what I
think has overall been a fairly effective way. We are
excercising the central taxing power and we have been able,
in discussion with them, to arrange the levels of the direct
grants that we make to them in the processes of the Premiers
Conference, the Loan Council in the arrangements in regard
to borrowing powers in a way which overall has been
conducive to sensible macroeconomic policy. So I would see
a continuation of that sort of situation as being compatible
with the sort of macroeconomic outcomes that we want to
effect.
JOURNALIST: Prime Minister, an economic commentator who's
had some credibility with the Government in the past, namely
Max Walsh, today suggests that we're in danger of becoming
the white trash of Asia, that we can't afford the tax cuts
and that your Government has become paralysed when it comes
to policy.
PM: I read the article, I think one of Max's more
exaggerated comments. I always read him with interest and I
think it does considerably less than justice to the
considerable micro reform that we have conducted and which
will go on during the life of this Parliament. Very
considerable changes in the area of airline deregulation and
the Government business enterprises being made more
competitive. The work that is being done on the waterfront
at the maritime industries and in which we'll see progress
this year. All these things are significant and unmatched,
let me say, by anything ever done before by any conservative
Government. I mean if you're talking about Australia today
and the development in the region that he's talking about,
what you've got to remember is that for, out of the 40 years
now since ' 49, we've had 31 of those 40 years have been
conservative Government. In other words the basic
structures and attitudes in this country overwhelmingly are
the product of that period. We in six years now have done
more in that six years than has been done in the whole of
the rest of the period before in microeconomic reform, as
well as in the macro area with the deregulation of the
financial sector, the introduction of the foreign banks, the
floating of the dollar. All that we've done in six years,
more than in the whole of the rest of the period combined,
and we're continuing to do it. As I say there will be
achievements on the waterfront, in the maritime industry as
well as the areas that I've already talked about. I think
it's fair to say that a reading of Max's article doesn't
really give due credit to those facts.
JOURNALIST: concern to you that America is to have a
Defense Secretary who regards Australia under your
Government as an unreliable defence partner?
PM: Yes I read that with some interest this morning. I
would be certain from my knowledge of the President with
whom I have a very, very, very close relationship, that
whatever outbursts there may have been before from Mr Cheney
in those circumstances will not be reflected in the attitude
which this administration will continue to have towards this
Government. That is now a matter of public record as
expressed by the previous President, by the previous
Secretary for Defense and as a matter of record by this
President. That is that the overall relationship, including
the defence relationship between our two countries has never
been better. That is the position.
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JOURNALIST: sense meeting with Mr Cheney to try and
convince him he's wrong?
PM: I doubt if he has that view now because all the
evidence of the period up to the present would confirm the
basis upon which the previous President, this President and
the previous Secretaries for Defense have spoken in glowing
terms on the nature of the relationship. That's not
something that was said four years ago. That's the position
of all relevant people as of now.
JOURALIST: Doesn't it worry you that the President has
appointed a man with such publicly expressed hostile views
of Australia?
PM: Well it was said at a particular time. I don't think
it reflects in any sense the current thinking or current
realities. I doesn't worry me one iota, not one iota.
JOURNALIST: Are you going to send Mr Beazley to find out or
try and square off?
PM: No I wouldn't be sending Mr Beazley to find out or
square off. I would regard that as a waste of public money.
When Mr Beazley sees Mr Chaney in the normal course of
events I would you know I'm a punting man as you know
Laurie I would bet you pounds for peanuts now I'd give you
any sorts of odds you like, one that the relationship,
personal relationship will be good, will work and that
there would be a continuation under Mr Chaney of the
attitude towards the relationship that I've expressed. That
is the attitude expressed by the previous President, this
President and by the previous Secretarys' of Defense.
JOURNALIST: Do you know Mr Chaney?
PM: I'm not aware of having met him.
JOURNALIST: Mr Hawke you told the Housing Industry
Conference this morning that there would be some scope for
lower interest rates as activity eased off over the year. A
new survey out today shows that there was a slow down in
activity in the December quarter and that activity could be
falling off a lot quicker than people have previously
anticipated. Do you think there is some scope for lower
interest rates to prevent another in the economy?
PM: No I am not predicting that in the immediate future.
You're right in saying that there are some signs of easing
in the level of activity and I've been through those various
indicia. But we've got to say at this stage a little mixed.
I mean if we look at the latest employment figures which
came out last week which showed further growth in
employment, which now takes the jobs created to 1,318,300
since April of 1983, it's been with an increased
participation rate. Further reduction however is still in
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( PM cont) the unemployment rate down to You ought
to take that into account. So the indications are mixed.
We hope and indeed believe that the level of activity is
starting to climb as we want but I'm not going to say
therefore now we've got an immediate future reduction in
interest rates in sight. What is happening however is that
the policies that we've been applying I think on the whole
do seem to be working, I think we can be looking as we go
through this year in a reduction in the level of activity.
As I've said this is a fine line we're walking between
reducing the over-heating which brings in too many imports
but not getting down that low that we can't sustain
employment growth. I think the policies are working and
within that framework what I've said this morning to the
Housing Industry Association Conference is the appropriate
way of putting it I believe.
JOURNALIST: One of the banks is making noises about
increasing the home loan rate, dealing with some trepidation
the balance of payment figures out on Thursday. Are they
jumping the gun a bit?
PM: Well they seem to be. I mean let me say this is a
figure that we have I kind of guess I don't need to say
this as it's quite clear that we have no prior knowledge
of the figures. I think that's probably a good thing
We have no prior knowledge of this figure and I assume, and
I certainly hope it's true, that the bank doesn't either.
JOURNALIST: Prime Minister in your speech this morning on
interest rates you say, " as soon as it's economically
responsible to reduce interest rates it will be done". Does
that mean that the Government rather than the market sets
the rates?
PM: Well as we are copying the odium in some quarters for
the combined operation, the market and Government monetary
policy, and it is a combination of both, we're entitled when
it comes down as I've said it will before the end of the
year to get the credit. Of course it's a combination of
official Government monetary policy operating through the
market. JOURANLIST: Mr Hawke you said a few minutes ago that
privatisation's still on the agenda. Are you talking about
the agenda for the April statement or do you mean the agenda
for later on in the year?
PM: I wasn't talking about the April statement.
JOURNALIST: Sydney Airport Prime Minister, when can we
expect a decision?
PM: We'll be going to it tomorrow. I hope we may be able
to get a decision tomorrow. But as I've said I'm not going
to rush this decision. It's quite clear. I've indicated
that all the options are on the table as distinct from the
impression of some commentators that that's not the case,
they are. All the options are on the table and I'm not
being defensive about this. It is an extraordinay, complex
issue. I mean a whole lot of assumptions have to be made,
worked out about patterns of growth and so on and I want to
make sure that we get it right. We are going to get it
right. If I can be satisfied that we've got it right by
tomorrow, then it'll be tomorrow, if not it will be later.
JOURNALIST: Does it worry you that your Cabinet is split on
it Mr Hawke?
PM: Split? I wouldn't talk about a Cabinet split in any
sense. I mean if you're talking about splits this sort
of nonsense from the opposition, the Shadow Finance minister
getting up on Sunday and being disowned within 24 hours by
the Leader of the opposition, that's where the splits are.
There is a situation where there are differences of opinion.
A difference of opinion on an issue is not a split. We have
no split.
JOURNALIST: Will the Wesley Vale decision be made tomorrow?
PM: Again I hope so. I've not had the opportunity of
talking with my ministers since the Tasmanian position has
been translated. I know that they have in discussions
some of the Ministers are having discussions tomorrow with
the joint venturers and I haven't seen the results of the
study requested of the CSIRO. So I'm not in a position and
both of them those discussions not having taken place yet
and not having seen the CSIRO report. I couldn't honestly
say to you yes an answer will be given tomorrow. But again
this is an issue in which we want extradition consistent
with a proper consideration of the facts. It'll be done
quite quickly but not necessarilly tomorrow.
JOURNALIST: Mr Hawke can home owners expect any relief from
the April statement?
PM: It's not only home owners. I think the general
community in Australia will be entitled to expect and they
will receive from the Government a considered statement
which will be consistent with the previous 6 years. That is
of the conduct of economic policy in a way which is relevant
to the circumstances and the challenges confronting this
community. We are entitled now to " look, look what
we've done in changing external-imposed circumstances we've
adjusted economic policy which has maintained the level of
economic activity consistently in a way which has produced
this massive employment growth". Without a return I remind
you to the interest rate levels, we haven't reached the peak
of interest rates under our predecessors and as far as
unemployment is concerned we've reduced successively
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( PM cont) unemployment with this rate of employment growth
4 times theirs and twice the rate of the rest of the world.
Now these are the things that have come from successive May
statements and successive Budgets. We've got the runs on
the board. What home owners and the rest of Australia will
see in April and then in the Budget is a continuation of
relevant and successful policies.
JOURNALIST: Mr Hawke would it be acceptable for your
Government that it could take two months before the results
of the ACT's first election are
PM: Of course it's acceptable in the sense that we can't do
anything about it.
JOURNALIST: You introduced the system.
PM: It is true that with the support of the Liberal Party
we introduced it. This is something that was passed by the
Government with the support of our political opponents.
Both of us must accept the outcome of what together we've
done. ends