PRIME MINISTER 1
TRANSCRIPT OF NEWS CONFERENCt, YARRA BANK, MELBOURNE
12 MARCH 1990
Z 0 E PROOF ONLY
JOURNALIST: Have you been able to speak to Mr Kelty yet
about the problems with the metalworkers?
PK; I did have a yarn with him on the phone last night
and understand there'll be meetings tomorrow and I hope
that the matter can be resolved without a dispute. Now I
certainly hope that's the case, but as i've said even if
there is some short stoppage, there's nothing that can
detract from the record of the Accord the 60 percent
reduction, 60 percent reduction in industrial disputes
since my Government's been in office and that will
continue and particularly so will the ref ormns of
Australian industry with award restructuring. I hope
there's not a hiccup with the dispute and I hope out of
the meetings tomorrow that that can be resolved.
JOURNALIST: What was the nature of your discussion?
Will Mr Kelty be, be urging the metalworkers not to go on
strike? PM: I don't think it's appropriate for me to go into the
details of the discussions with Mr Kelty, but Mr Kelty
would share Toy view that it's better for these things to
be resolved without disputes.
JOURNALIST: Who will the meetings be between tomorrow?
PM: There'll be discussions involving the unions and
hopefully some further discussions between the unions and
the employers, but I don't really want to say any more
than that. They will conduct their affairs.
JOURNALIST: Would you say this is all unhelpful during
an election campaign?
PM: I've said I'd rather that there is no stoppage this
week, but the realities are quite clear. The Australian
people have got the starkest of choice when it comes to
the conduct of industrial relations in this country. You
can have a return to the past that's what they're
promising, a return to the past where you had the free
for all. Now I've introduced, in cooperation with the
trade union movement, the process of consultation. The
simple indisputable fact is that under our approach
there's been a 60 percent 60 percent reduction in
industrial disputes. That doesn't mean in a democracy
you're going to be disputeless, but it does mean that you
can have a massive reduction in disputes and that's,
that's the alternative. Basically consultation,
cooperation, reduction in disputes or a return to the
industrial jungle of the past.
JOURNALIST: Prime Minister, have you speaking of
jungles been able to get yourself briefed on that Burma
Railway issue?
PH: I've done more than get myself briefed on the, on
that issue. he soon as I saw the story I instructed my
people to get in touch with our Ambassador in Thailand
and ask him to get in touch with my friend, Mhe Prime
Minister of Thailand, Mr Chatichai. They have done that
and I'm very pleased to say that Mr Chatichai, the Prime
Minister of Thailand, in his words which he's asked to be
sent to me, directly to me, his words are he would never
allow the glorious memory of Australian soldiers who died
on the River Kwai to be desecrated in any way and he has
instructed the Thai Minister of the interior to ensure
that nothing is done or permitted which would in any way
allow such a desecration. So as a result of my
intervention, I had that direct personal message from the
Prime Minister of Thailand.
JOURNALIST: I project still go ahead?
PM: No it would not. If it involved any, any of the
sort of suggestions that have been put forward and I have
the word of the Prime minister of Thailand for that and
this is another example of the, of the benefits that come
to this country from the fact that I've been able to
establish direct close personal relations with all the
leaders in the region. I've been able to get in touch
with the Prime Minister directly in this way and he
realised, as soon as he had the message from me, that,
that anything of that sort would be unacceptable and..
he's undertaking.
JOURNALIST: Prime Minister, Graeme Campbell said that
Senator Richardson wasn't genuine on the environment and
should be sacked as the Minister. Has Graeme Campbell
got any case for arguing that and will any action be
taken against him by the ALP?
PM; Well, we're having history it's Sunday. That
happened days and days ago
JOURNALIST: There hasn't been any real response to it
though has there?
PM: Of course there has been, I mean, that's history.
JOURNALIST: Is Mr Campbell entitled to make those sort
of comments in the middle of an election campaign?
PM: I think he's very silly to make them.
JOURNALIST: Prime Minister, why is it inevitable that
we'd return to what you describe as the industrial jungle
under a coalition government? why in the 1990s couldn't
a coalition government work with the union movement?
PM: Well, let me put it this way. I will rely on the
words of Mr Peacock, reported on 31. August last year,
relatively recent words. His exact words were, if it's
in the interests of Australia that governments withdraw
from industrial disputes, there is, they should withdraw
from wage fixing as such. So those are the words, not my
words, the words of Mr Peacock. In other words, he's
saying let it be decided directly between the parties.
Now that's what they did at the beginning of the
eighties, that's what gave you your 17 percent wages
explosion, that's what gave you your worst recession in
years. They are the people who are condemned to
repeat the failures of the past because they will not
learn from the lessons of the past. I am merely telling
you what Mr Peacock's words are, It's reinforced by the
fact that having said that at the end of August, that is
governments get out, let the parties fight it out, in
other words take control of disputes. Let them win their
percent as they would have if it hadn't for the
Government intervention, the airlines would have given
them their 30 percent, the economy would have been
wrecked. That's what Mr Peacock recommends. That's why
the pilots have been urging his election. Now, if you're
going to have that situation there's no wonder that just
a few months later, at the end of November, on
November, when he was asked well, what will be the wages
outcome under your policies? The famous answer ' who's to
know'. Now, it's Mr Peacock's own words which is saying
that in the 90s you'd have a return to the disaster or
the early 80s. His words, not mine, saying I can't tell
you what the wages outcome would be, but I'm telling you
that governments should stay out of disputes, governments
should Stay out of wage fixing. Let's get back to the
jungle, let the strong exercise their muscle and push up
the wages to an unsustainable level.
JOURNALIST: will you be seeing Mr Cain today?
PM: No I don't plan to see Mr Cain today.
JOURNALIST: It's Moomba time in Melbourne, doesn't it
look a bit as though you're avoiding him, not..
PM: You've got to have a fervid imagination my friend to
say that I'm avoiding Mr Cain..
JOURNALIST: Well, he wasn't at the Party launch.
PM: We, I mean, we've got historians here today. We've
got, I mean, we've got something that happened about a
week ago with Mr. Camupbell, we've got a question that's
been asked and answered. Mr Cain had his Parliament on
down here and he was in his Parliament. He was invited,
but of course he had to be in the Parliament and have we
got any more history?
JOURNALIST: You're not avoiding Mr Cain?
PM; Well, it's obvious I'm not avoiding Mr Cain. why
would I be avoiding Mr Cain?
JOURNALIST: Do you anticipate playing any further role
at all in this metalworkers matter?
PH: No I wouldn't think so. I've had the discussion with
Mr Kelty. I don't see that I've got anything more to do.
JOURNALIST: Let's move from history on to forecast. Do
you think the 0pposition's going to stage a scare
campaign on capital gains tax and superannuation
industry?
PM: Yes, what we've got is the classic conservative
fortnight coming up. They never are able, in a campaign
to sustain a positive campaign. Why? Because they've
got no positive policies. So the classic case. What do
they do? They try the scare campaign. They've done it
before and they will do it, try it again. But let me say
this in regard to their classic scare campaign. They're
going to try and do it on capital gains, Well, we'll be
ready and waiting for them on capital gains. As I just
said earlier today, the classic quote in regard to
capital gains comes from Professor Russell Matthews at
the end of their previous period when he said the problem
is to get the rich to pay any income tax at all. why?
Because of the absence or a capital gains tax, the rich
in this country were able to rort the system, they did.
S They made the ordinary taxpayers of this country pay
billions of dollars more because those with the greatest
capacity to pay didn't. I brought in the capital gains
tax and that means now that billions of dollars over this
decade will go into the public revenue to be paid out on
education, to be paid out on health, to be paid on roads,
to be paid out on all the things that the great mass of
Australian people want. But Mr Peacock says no, we'll
abolish that tax, we'll take you back to the land of the
tax rort, the tax evasion where his own Royal
Commissioner said under them, tax evasion was the fastest
growing industry in the land. Well if they, if they want
to say that that's what they want to go back to, then I'm
quite happy if that's their tack in the last fortnight of
the campaign.
JOURNALIST: ( inaudible)
PM; Just a minute.
JOURNALIST: You do concede that some surely will be
worse of f because of the
PM: No it's clear that under the arrangements that were
brought in in 1988, which imposed a 15 percent tax on
super funds to cover income which they'd got from
dividend income, interest income and some capital gains,
that under that we also allowed them to have imputation
credits. That is there was a deliberate policy for the
future of Australia that would encourage these quickly
growing superannuation funds to invest their funds in
Australian enterprises and to the extent that they do
that, they get imputation credit because the company tax
that is paid by the companies is then allowed as a credit
and with a proper management of the funds there can be a
total offset of the 15 percent tax. Now any
JOURNALIST: use those credits which offset other
taxes?
PM: They can totally use the imputation credits to
offset the 15 percent. Their income doesn't come just
from capital gains. It comes from dividends, it comes
from interest income as well and if they manage their
funds in a way which involves investment in Australian
equities, then those imputation credits can totally
offset. There is no way, there is no way however you or
anyone else try and beat this up, that you'll avoid the
facts. And the basic fact is that this country was
ruined, ruined totally through the absence of the capital
gain tax. It was ruined because it was inequitable. I
meunt that your ordinary Australian paid more. They
walked out of office in 2983 with a top rate fo 60 cents
in the dollar, a bottom rate of 30 cents. Why? ordinary
Australians had to pay more because the rich weren't
paying. That's Matthews' contention. That is the
contention of every economist in the country. The
ordinary Australian paid more because billions or dollars
weren't being collected from the rich, as Matthews said.
There'd been a revolt of the rich against the poor. The
problem was to get the rich to pay any-thing at all and
that happened because you didn't have a capital gains
tax. We've brought it in and what Mr Peacock says is
that they'll abolish that. That will mean inequity, it
will mean the billions of dollars will not be paid by
those who, who should pay. Less than one percent of
Australian taxpayers pay the capital gains tax and
JOURNALIST: Is Mr Peacock telling fibs when he says it
will affect 4 million Australians through their super
plans? PM4: Well, let's test whether Mr Peacock is telling, is
in a fib telling mode. What have we had this, this
week? We had this fantastic, in the literal sense of the
word, this fantastic proposition that we have a $ 14
billion hole in our forward estimates. Now you don't
need to be an economist and certainly Mr Peacock isn't,
we all know that you don't need to be an economist to
know that that was an outright lie because what he did
was to look at the forward estimates and, and subtract
' 39 from ' 92 and get this 14 billion. was a funny
thing, because under the forward estimates which are
talking about outlays, there are assumptions there about
inflation. we had this marvellous proposition that you
can assume inflation applies to one side, that is to
outlays but it doesn't apply to the other side, revenue.
The fact is if you apply the same assumptions which
finish up with a $ 9 billion surplus at the end of ' 92,
within a half a day, within half a day, mr Peacock
because he'd been told by his own people, Andrew, you've
been fibbing boyo notice how he dropped off that?
At the same time he also tried the furphy about we're
going to bring in a consumption tax. Within half a day
that fib got put away because he was told, look, Andrew,
this fib telling will go against you. The only people who
are talking about a consumption tax are these people.
Firstly, the President of the Liberal Party. My
President is John Bannon he's not talking about a
consumption tax, but it's the same Mr Elliott who in May
of last year, after the coup, when he was asked whether
Andrew Peacock would be a better leader than John Howard
and he said yes. And he said, gratuitously he said, and
I had a lot to do with Andrew when he was the Shadow
Treasurer. I've talked to him about economic policy and
he said, I think you'll like the economic policy you see
coming from Andrew. Now that same John Elliott, the
President of the Liberal Party, is-advocating a
consumption tax. Howson wanted to include it in the
Economic Action Plan, but he was talked out of it and
couldn't have it then, but you know, might do it later,
but you can't have it in the Economic Action Plan. The
only area where a consumption tax is being talked about
is by the Liberals, but what does Mr Peacock do? He gets
up and says we're talking about a consumption tax. So Mr
Peacock, because he's desperate, because he's got nothing
positive to talk about is in the fib telling mode. The
fib telling about the $ 14 billion hole which every
economist has laughed him out of court on, down the
gurgler, a consumption tax fib down the gurgler. So what
he's saying about the capital gains tax in the same
mod. JOURNALIST: Mr Hawke, but surely you've accepted the
fact that interest rates have cost you votes and that
basically you can't predict
PM; No, no, no. Let's get it straight. I didn't say
that interest rates would cost us votes. I said that in
fact interest rates was an issue. of course it is and I
made the point that people who are thinking about
interest rates, they will vote for us because our
policies have been indicated by the banks as being
policies under which interest rates will fall. Against
that the policies of Mr Peacock must inevitably mean an
.4 7
increase in interest rates. Why? The two things that
governments can do which affect interest rates are can
you control wages and what do you do about your budget.
If you're going to have a wages explosion and if you're
going to dissipate the budget surplus as the $ 6 billion
hole of the Liberals will, then inevitably, wages
explosion, busting your budget surplus means a rise in
interest rates, And X'm saying that as far as the
question of interest rates is in the minds of the
electorates, I don't like what's happened but I think
they understand. As I've said, if there'd been an easy
way, we wouldn't have done it. If there were some other
way, obviously would have. There was no way other than
by tight monetary policy that you could slow down the
level of imports which was unsustainable. We had to do
that and the banking sector is saying that under these
policies, mortgage rates will fall. Against that, people
are thinking about interest rates, they must rise under
the policies of the opposition.
JOURNALIST: Sir, you don't think interest rates will
cost you votes?
PH: I am saying that to the extent that interest rates
are thought about as an issue, then people will vote for
us rather than the Opposition. I'm not saying that there
may not be some people who are simply going to take the
view, there've been high interest rates, we're hurt, and
they'll vote against us on that. Ion saying that on
balance, on balance, when people understand and they're
thinking about the future. Which way are interest rates
more likely to move under Hawke or under Peacock?
Those people will realise that the banking sector is
saying under our policies they're going to come down,
whereas under his policies of a wages explosion and
blowing out, blowing away the budget surplus, they must
rise. JOURNALIST: But you said this morning you couldn't
predict the outcome so it doesn't leave the electors much
confidence in you.
P14: No, and you seem may I say, with respect you are
a partial'quoter or what I say. what I said this morning
is that I can predict about those areas which 1, within
Government, control. I can do something about wages. As
I have predicted now over the past seven years on wages,
we have been either spot on or the wages outcome has been
somewhat lower than what we've talked about. Now we can
say in regard to wages what the outcome will be. Mr
Peacock can't. He shrugged his shoulders and said ' who's
to know'. Everyone's to know, that is the wages will
explode. The second thing that I can control is the
budget outcome and under my proposal, in this election
campaign, before we have promised to spend one cent we
first of all fixed the savings so that whatever promise I
make is fully funded. Against that Mr Peacock has a
situation where he has at least $ 6 billion of unfunded
promises. So the two things that, that can control as a
government which will affect interest rates, it goes my
way because we'll have wages predictability and we'll
have the preservation of the budget surplus. The other?
Can't do it.
JOURNALIST: Prime Minister, just on dividend imputation,
one final question.
PM: Yes.
JOURNALIST: Is it not so that dividend imputation was
designed to remove what was effectively a double tax
rather than, as you seem to be implying, designed to
offset the impact of CGT on superannuation funds?
PM: ends