PM Transcripts

I
TRANSCRIP~ T OF INTERVIEW WITH JOHN I1AWS, RADIO 2US
THURSDAY, 22 MARCH 1990
EW9 PROOF ONLY
LAWS: But in the meantime, miy guest in the studio, the Prime
Minister of Australia, Bob Hawke. Good morning and welcome.
PM: Thank you very much, John. Pleasure to be with you.
LAWS: Good or bad at the moment do you reckon?
PM: Oh, I think we're going along reasonably well. As you know,
I never got cocky or complacent about elections. I've done the
best job I can in the campaign, John, and I'll1 continue to do
that until late tomorrow night.
LAWS: Any regrets about the campaign? Any areas whereu you think
you might have been a bit light on? Any things you think you
should have brought up earlier and didn't?
PM: I think if I could have it all over again, there wouldn't
be much different, John. I mean, obviously you don't do a
campaign perfectly. There's some things here and there that you
may have done a little bit differently. But substantially, I
think, I've tried to get the balance between being positive,
* telling Australians about the vision I have for Australia and how
we can get there, the good things about this country. And I've
also had to discharge that part of the responsibility of pointing
out what I think are the weaknesses of my opponent and their
positions. I hope I've got the balance right,
LAWS: Yeah. The National Account figures, Paul Keating calls
them, pd I was fascinated with his phraseology, a ' beautiful set
of numbers';% others are saying we're in the first stage of a
recession and certainly by technical definition we're halt way
there, aren't we?
PM: Well, the technical definition is two quarters in a row of
negative growth. well, of courser the quarter before this last
one we had 0.9 percent positive growth. we'Ive had about 4
percent for the year. And you've got that large statistical
discrepancy of 0.9. That, when it's redistributed an they are
in later quarters, could quite possibly have us into positive

., I. l growth. LAWS: Yeah, but i mean
PM! Really, really, what we've got, John, is a situation where
tight interest rates have done their 4ob. I mean, we had to have
tight interebt rates, you and I have talked about this, we had
to have them tight ( yeah) to slow things down because we couldn't
sustain that level of imports. They've done their job and
without any doubt I can assure your listeners, John, if we're
returned there will be very, very quickly a further reduction in
interest rates ( yeah) because the high rates have done their job.
LAWS: Okay. Well we'll get back to that in just a moment.
PM: Sure, sure.
LAWS: But, in the meantime, by technical definitiun, we are half
way Into a recessioni, aren't we?
PM: Yeah, if this, it in the next, when the figures come out
next and they revise this quarter, if this quarter stil~ l stays
at that just in negative at 0.2. But what I'm saying is, with
that large statistical discrepancy, that m~ ay be revised to
positive. But if, you're right, I mean, if this were to be
confirmed and then you've got another quarter of it, that would
technically be the case.
LAWS; Yeah. But, I mean, as it stands on this very day we've
had one out of two quarters that have shown we're not in great
shape, except in one way we are in great shape..
PM: We are in great shape.
LAWS: because you've achieved -what you wanted to achieve.
But technically two quarters indicates that we're in a recession.
Now one quarter has indicated that. So technically there isn't
any arguing the fact that we are half way into a recession?
PH4: If you've got another quarter that would be technically
right. But what we've had to do and what I think Australians
understand ib Lhat We couldn't keep the level of growth going
before that was bringing in all those imports. And so what we've
got in these figures, John, is precisely what we wanted to see.
We haA that big gap, there was an, before there was an 8 percent
growth in consumption and a 4 percent growth in production.
LAWS: Oh, yeah, no, I understand you brought those
PH: And we've got those
LAWS: Together.
PM: So interest rates have done its job. No0w we can bring
interest rates down and 1I'm sure that, in the jargon of the

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economists, there's a soft Idnding. We're goinlg to continue to
have growL; arid employment growth. sut, in a sustainable way,
the big thing is what Australia's doing now, it's putting so much
more of its productive effort into export~ s.
LAWS: Okay. Now you've stopped spending and that was the
intention, wasn't it, to cut down spending?
PH: To slow it down, yes.
LAWS: Yeah, to slow it down. You've not slowed down, however,
Government spending?
PM: On the contrary, John, on the contrary, that just isn't
right. we've done, for the first time ever in the history of
this country, we've got the fourth successive year of real
reductions in Government spending.
LAWS: So you maintain you have cut~ Government spending?
PM: Well, not, no, T mean, you ask any economist, we have. I
mean, the fact that Dr 2Iewson, who has abandoned the integrity
of being an economist and Is just tioundering around as a
prejudiced politician, every economist acknowledges. I mean, you
ask any economist, has this Government cut Government spending
in real termis? Answer yes. rour years in a row, an 8 percent
turnaround, equivalent to $ 30 billion turnaround of our demands
upon the public saving~ s.
LAWS: Okay. But consumer spending hasn't gone down though, has
PM: Consumer spending. Consumer spending -no. it's up a
little bit, but the rate of increases has'-been bought about to
acceptable levels.
LAWS: Okay. Well if consumer spending has gone up a little bit
which y'ou can see, then surely it means that where we have
reduced h spending must be in the area of investment?
pzM: yeah, investment, but it had to come back. I Mean, every
economist will tell you that the rate of investment growth was
at simply unacceptably high, I mean, you couldn't keep, YOU
01o'Idn't sustain it at those levels.
LAWS; Well, how did that come about in the first instance?
PM: Well, well, it came about because of the massive shift from
wages to profits which was engineered with the agreement of the
trade union movement so that we could get an investment boom.
what we had to have was a restructuring of our industry. SO we
shifted from wages to profits, profits went into record
inveetment. Last year 13.5 percent business investment at the
highest ever recorded. And that has meant that our restructured
economy is doing things now that it's never been able to do

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before. I mean, we've had, john, this mausive increase in the
exports of manufactur. ed goods.
LAWS: That's right. And it all happened very quickly. And, I
mean, you created that environment and you, 1 note, are 1 suppose
in many ways justifiably proud of it where people were
investing, where people were expanding, where people ware
employing, 93 percent was in the private sector.
PH: In the private sector.
LAWS: But now It seems to me that the private sector, who in
fact employed 93 percent, so 93 percent of your good figures of
1.6 million improvement in employmnent, was employed by the
private sector. But it would appear to me from what we're
reading and what we're seeing and what those figures showed
yesterday that d lot. Of the private sector has got .2 lot of
worries? PM: It is the case that when you blow the economy down, and the
93 percent was of the 1.6 million increase in jobs, 93 percent
in the private sector, it still, if you take the economy as a
whole, it's, the private sector accounts for, you know, between
and 80 percent of total employment.
LAWS Yeah.
PM: And obviously when you've -got to slow things down in the
economy, the private sector will take its share. And I've said
in my policy speech, I know there's been some hardship,-but i had
the alternative as a responsible Prime Minister, John, of doing
one of two things.
LAWS., Yeah. And I understand that.
PM: I could have said, okay, let the thing blow. Now if I'd
have let it blow, then you would have had what the Libs left us
with in ' 83 the worst recession in fifty years. 1 couldn't do
that.
LAWS: Yeah, but I understand that. But, as I gay, you created
this environment that you're proud of, that your Government is
proud of, it's not fair to just say you, the Government created
MXe environment of which you're proud. 93 percent of the
employment came from the private sector, but now the private
sector is in dreadful trouble. I mean, investment, that's where
the spending has dropped in the area of investment?
PM: No, but look, John, at the most recent statistics in terms
of the next year. The business sector has said it's expecting
a nominal increase in invtetment of 33 percent in 1991.
LAWS: Yeah, but people are hurting flow?
PM: There is some hurt now, John. But, John, you can't, yOU

can't have.
LAWS; But you created the hurt?
PM: But, . Yohn, you can't have It both ways. We can't have a
situation where we' re told Dy your listeners, rightly so, ( yeah)
that they're worried about the growth of debt and our current
account deficit and the growth of imports. We can't have that
worry and not do something about it. And the only way to s1ow
down that massive growth of imports was to slow economic activity
down and it you slow economic activity down, sorne people got
hurt. LAWS: Some people huve got to get hurt. Yeah. But you created
the environment where they went out and invested, they went out
and employed, then they got hit with high interest rates. So
really you have created the hurt t. hat exists now, well
intentioned though it may have been, but your Government has
created the hurt that these people are feeling now?
PM: Well, what has happened, we created the conditions for
growth. LAWBI Yes.
PM: That's right.
LAWS; Then they grew too quickly.
PM: And the economy grew too fast. And I'Ive said quite
honestly, John, I mean, I say it again to your listeners because
I have the greatest respect for their concern about these things.
LIke every other economist in Australia, 1 and the Government,,
early last year, we under-estimated the strength, or at the end
of ' 88 and into $ 89, we under-estimated the actual strength of
the economy.
LAWS; Mistake?
PM: I mean, every private economist, every public economist, and
we were part of it and I concede that.
LAWS: Mistake?
PM: Yeah, we didn't see early enough the strength of 9rowth.
If we had had the benefit of hindsighte we would have applied the
brakes a little bit earlier. But I've been honest about that,
I've said it time and time again. I mean, every economist in the
country was wrong in our estimates of the strength of demand.
It wee growing stronger than we appreciated.
LAWS: Okay. Well now some people might argue and are, inl fact,
arguing that you have now deliberately, not you, the Government,
has do 1 berately pushed the economy towards recession?

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PdMo: w n. No, w e cebretliaeivnel, y nwoitt. h thWee ' vme ajdoerliityb eroaft eelcyo nsolmoiwsetsd# ththe ate cwoen'olmly
got, in the jargon of the trade, a soft landing which means that
we believe that economic growth will continue and employment
growth will continue, but at a level where what will be happening
is that more of our production will be going into net exports.
When we talk about net exports we 4imply mean going into exports
and imports replacement. And that's what we need to happen.
LAWS: Yeah. Can I say this to you. Back there you said about
our exports having eCSalated. If our exports have been that
good, why is the balance of payments so bad?
PM: Well, because, as we wore moving to greater performance in
exports, we still had the backlog of this high level of imports.
But what's happening now, if you look at the figures for, the
most recent figures, then we have moved into a plus position
that our net exports has improved. That is, our rate Of
improvement in export growth is better than what's happening in
imports. T mean, you see, imports are a lagged thing and they
represent o~ rders that were made, you know, a long time ago.
They've been growing. But now we can see that import. are
tailing off and i! you look at the...
LAWS: How can imports be really tailing off if consumer spending
! s up? I mean, what I'm trying to say is the balance is in the
wrong area, isn't it, the balance i~ n the investment area?
PM: WellI I mean, I can give you, I mean, if you like I can give
you the figures. I mean, I don't know whether you want me to go
into the details of the figures, but 7. can do that in regard to
what's happened on...
L. AWS: No, well the detail isn't necessary. it's only the
overall PM: Okay. But what I ' m saying is that the figures now Show,
John, that we are movi. ng to a position where we, our growth of
exports is accelerating and the balance of activity in the
economy is moving more to a position where more of our production
is going into net exports. More exports and more import
substitution which is what happens when you get this slowing down
and where we're getting the benefit now, John, of all that
inlvestment in our industry. I mean, let me give you the
statistics. in the last four years where we've seen, starting
to see the benefit of this investment in our industry, we've had
a 54 percent increase in manufactured exports. I mean, the
classic example of it, John, is steel. I mean, that's where we
as Australians are entitled to be very proud, all of us, because,
all of them, it's not oust Government. You know, when we came
to off ice, as you know, Bit? was going to shut down the steel
industry. Now we saidi that's, I'm not going to accept that. So
we negotiated with Sill and the unions and in the result now we
have a world competitive steel Industry. In this last year,
John, exported three-quarters of a billion, dollars of steel into

all the competitive markets and that's going to treble by 1992.
LAWS: Okay. But it doesn't get back, it doesn't alter the fact
that if our exports art up, why aren't our balance of payment
figures batter?
PM: Well, because I was saying, we still had a position where
we had high levels of imports, we had high levels of imports.
What's happening though is that they are now coming back
LAWS; And when will we see the result of this though. How
long's it going to take?
PM: Well, I believe that we can see, getting into a
stabilivation of our external position inl something like three
years. Now let m~ e explain just briefly what that means. We've
got to get to a point where the current account def icit is
running at a level which doesn't increase your aggregate of debt.
We did that right though the 1970' u, running at about, with a
current account deficit of about 2 1/ 2 percent of gross domestic
product. I don't want to sound too complex, but that was the
sort of f i ure. In the most recent few years that current
account deficit has moved up to about 6 percent. So we had a 3
1/ 2 percent, you know, figure that we had to pull back.
LAWS: Okay. Now look I understand all these figures are
Important, but you also understand they're very difficult to
understand.
PM: Yeah and that'Is why I don't want to get into it in detail.
LAWS: Okay, so let's
PM: But i had to, it's very difficult to answer your question
without saying what's happened and how we are now#-9
LAWS: Yeah. Well, you're saying it's likely all to come about
in three years?
PM: Oh, what I'm saying, it's our assessment that within three
years, because of what's happening in the Australian economy
where we are showing ourselves more capable of exporting and more
capable of substituting with our own production f or imports, that
we V111 have a deficit on our current account of a much smaller
proportion which will not add to debt and which will gradually
allow us to run debt down.
LAWS:, Okay. Does that mean that people are going to have to
suffer for another three years?
PM: No, no, no. on the contrary, on the contrary, it doesn't
because our estimate for this year, john, is that there'll be
increases in real -Income for people. That will come f rom a
combination ot wage increases ( yeah) and tax cuts.

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LAWS: Okay. What do you say to Nobby tlarki-assume you've
been alerted of what he's had to say, head of the National
Australia Bank. He claims your monetary policy is irrelevant,
stupid and unconscionable, managed in a way that would make
Atilla the Hun look like a nanny at a Sundayschool picnic. Quite
a turn of phrase, isn't it?
PMH: Yeah, well, let me say this. That Nobby Clark's lack of
impartiality in politics is one of the well-known features of the
Australian scene. I content myself with referring to, I mean,
if you've quoted Nobby ClarX, could I just quote just one or two
other sort of figures. From the Commonwealth Bank, just a couple
of days ago. They say the most recent figures, retail figures,
confirm the softer trend which should prompt a further stepped
easing in monetary policy. That's what will happen.
LAWS: Well, obviously you'd rather cop that than Nobby Clark's
comments? PM: Well, yeah, I'd certainly. Let'e also take the, let's take
the Reuters screen just two days ago. I mean, this is not Nobby
Clark, a player in the political scene and known to be a player,
a Tory. Okay and Nobby's entitled to be a Tory and he's entitled
to have his views. If he wants to espouse the Liberal cause,
good on him. But let me quote the Reuters screen to you of two
nights ago. Traders said credit markets ended the day firmer
in anticipation of a further easing in monetary policy in the
next few weeks assuming the Hawke Labor Government is re-elected
at Saturday's federal election. I mean, what the market as a
whole is saying -is that interest rates can come down provided
that the Hawke Government is re-elected ( yeah) and i'll take the
market instead of Nobby Clark's blatant politicing.
LAWS: Okay. Well, Paul Keating says Nobby Clark's comments are
an endorsement of your intention to pressure, use the word
cautiously, the Reserve BanX into lowering interest rates. Now
does that mean if Paul Keating has said that that's what it
means, does that mean that Paul Keating agrees with Nobby Clark?
PH: No, no, no. Nobby is saying that rates can come down. What
I'm saying is that his critique of monetary policy stands
uneasily. His critique of policy stands uneasily with the
asscesment of the market that the Government's policies have
worked, that they've been necessary, they're working now and
that, as a result of these policies and assuming a return of the
Hawke Government, we can get a lowering of rates.

LAWS: Yes, but surely if Paul Keating says Hobby Clark's
comments are an endorsement of the intention you have to
go to the Reserve Bank and lower interest rates. Doesn't
that mean that Paul Keating agrees with what Nobby
Clark's saying?
PH4: Paul and I agree with Nobby in terms of him Baying
that rates can come down, to the extent he says that, but
to the extent that Nobby has been a critic of policy and
this talk about Atilla the Hun, neither Paul Keating nor
I endorse that.
LAWS: The report that's been leaked from the
Government's Bureau of Industry Economics says a quicker
pace of adjustment including deregulation of the labour
market could deliver average additional wages and so it
goes. Now, what do you say to that
PH: ( inaudible)
LAWS: of that report being leaked? You know
PM: I'll tell you what I say about the report. It
wouldn't be a bad idea if the fellow, I think it's been
Milne in The Australian, who's gone to I think it's
M4ilne, yes, it is, Glenn Milne in The Australian
LAWS: Yes.
PHI Wouldn't be a bad idea if he went to the whole of
the thing and pointed out that the paper, in f act,.
contrasts tvo hypothetical scenarios, case one is where
all policy stops and then case two is where a level
playing field, as he put it, is created very quickly
without taking account of any adjustment costs. Now
what's the condition of this case two that they're
talking about? The condition is, the assumption there is
that you have in fact four times the growth in taxation,
four timues the growth in taxation. Now it wouldn't be a
bad idea if they spelt out the assumption in that and if
you want to, you know, go to some of the parts of the
paper which is purely a draft, hasn't been endorsed by
the BIE, one of the areas I see from the report I have is
they say in the later years of the l9BOs a host of
industry policy reform issues were addressed
LAWS: Why would
PH: ( inaudible)
LAWS: Why would the newspaper be so selective in what it
published from that report?
PM: Well you'd have to ask them wouldn't you?
LAWS: Well, what do you think?

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PM-Well, I think that Mr Milne thinks he had a good
story by putting it the way he did and. f air enough. But
I'm simply saying that if people want to argue for that,
take the assumption that's involved with-. the -four times
increase in the, in the taxation that's involved. I
don't think people would want that.
LAWS: Yes. Every day, as you know, I talk to lots of
people all over the place who are reaching desperation
point. They can't meet mortgage payments, their food
bills they maintain have gone through the roof and they
have, they say that their standard of living has
declined. They've had it with politicians and their
promises generally. Now what can you say to those people
that can give them some sort of hope and do you blame
them for being cynical?
PM: I don't blame people who've been huart from being
angry and perhaps cynical. All I can say to them is
this. I've devoted the whole of my adult life to public
life, the whole of my public life has been devoted to
trying to help people in the community. First as a
research officer and advocate, advocate for the ACTJ, I
put in 21 years of my life working to improve the
conditions or people. Now I moved on to the
parliamentary sphere to do the same thing. You look at
the whole of Hawke's public career. It's not been about
personal aggrandisement, it's been about trying to help
others. The last thing I would do as a person who's
whole life has been devoted to helping others who love
this country. I wouldn't be about hurting people.
LAWS: Deliberately.
PM: Deliberately, no. I had a situation-
LAWS: But do you, do you concede that they have been
hurt? PM: Had a, had a position where my responsibility was to
tighten things. I would have been irresponsible to the
future of this country if I hadn't slowed things down.
Now in answer specifically to your question, I simply ask
them to ask themselves this question on 24th March you
can have the re-election of a Hawke led Government which
the markets is now saying will produce a reduction in
interest rates because our policy works. Against that
you can have Peacock as Prime Minister with the certainty
that interest rates must explode because he's got no
wages policy, wages will go through the root and he'll
blow the budget surplus both of which must ruin the
economy and put interest rates through the roof. N~ ow
that's the alternative.
LAWS: OK, now can I ask you this. You're saying and
very clearly that within two weeks of the election that.
you would bring interest rates down, that you'd be in

I I
touch with the Reserve Bank and have a yarn to them.
Isn't the Reserve Bank supposed to be independent?
PM: No, under the legislation monetary policy is
conducted, the combination of the Government and the
Reserve Bank and if there is a conflict, in the end, the
view of the Government prevails, but that, that conflict
doesn't arise.
LAWS: OK.
PH: Well, we've been able in seven years to conduct
policy amicably with the bank.
LAWS: Well
PM: But the important thing, John, the important thing,
John, is what the market is saying. The market is saying
I could give you more quotes, I've just given you some
O havbeu t bemeanr kcertse ataered nthoewm fsoerlv eas resadyuicntgi onth aint trhaet esc. onditions
LAWS: Yes, now I have no argument with that. It's also
said in the paper this morning that it is likely that
there will be a reduction in interest rates, but it's
also being said that they couldn't be sustained so they
may come down, but they're more than likely go back up
again as they're going up in other parts of the world.
PM: No, no, but that's there's no argument there
because the, the argument that's run is that because
there've been some slight increase in rates in Japan, for
instance, that we wouldn't be able to sustain a fall
here. The tact is that there's an eight percent
differential, John. We can sustain a fall.
LAWS: Yes, alright, well if it's possible for you to
negotiate with the Reserve Bank, which you say you'd do
within two weeks of winning the election, the question
that all those people out there that have been hurt, and
you concede that there are a lot that have been hurt, is
why didn't you ring the Reserve Bank before and get
interest rates down?
PM: Well, the two, two points to say to that. Before the
election started, in fact, there were conversations
between the Treasurer and the Reserve Bank and the prime
rates have been lowered. They were lowered there and
they've come down over two percentage points. Now,
obviously during the election campaign, it was not proper
and it hasn't been proper during the actual election
campaign to be pushing this issue. We started the
process before the election campaign and as soon as the
election's over and we're returned, then the conditions
will be there properly to have a further reduction which
will then be reflected in mortgage rates.
LAWS: OK, Well

PM: And the mnarket is saying that will only happen under
us. LAWS: Alright, well, if, if you as leader of the
country can simply call the Reserve Bank and say we've
got to have a talk about interest rates, if Andrew
Peacock becomes Prime minister, why can't he simply do
the same thing?
PM: Because of what I said before. You would have the
situation where we can do it because the policies that
we've had in place have produced the conditions for a
reduction in rates. Under Mr Peacock he's the man,
John, who stood before the National Press Gallery in
Canberra when asked the critical question about
interest rates, what would happen to wages, he was asked
the question. The classic reply, shrugged his shoulder
and said ' who's to know,. Everyone else knows there
would be a wages explosion because it's a free for all.
You have a wages explosion and the second point is that
he will blow the budget surplus.
LAWS: So what you're saying
PH: And what I'm saying, the conditions simply wouldn't
be there.
LAWS: OK, so what you're saying is that you, if you're
re-elected, can bring interest rates down, will bring
interest rates down. Is that correct, to say will bring
interest rates down?
PM: Yes, yes.
LAWS: But Andrew Peacock can't.
P14: He can't in any sustainable way because the only way
that you can sustain any fall in interest rates would be
if you've got a wages policy and a fiscal policy which
will sustain lower rates. If your wages blow out and you
dissipate your budget surplus, with his $ 6-7 billion hole
that he's got, and giving back billions of dollars to
less then one percent of the population by abolishing the
capital gains tax, you blow your budget surplus and you
have a wages explosion. in those circumstances you can't
sustain a fall in interest rates.
LAWS: OK, well can I ask you this. If you, if you can
and he can't, you will if you're re-elected, be in touch
with the Reserve Bank and interest rates not might, but
will come down?
PM: Yes.
LAWS: Will they stay down?

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PM: I believe so for the reasons I've put. I couldn't
say that if I didn't have a wages policy arnd a fiscal
policy of appropriate firmness to allow me to say that.
But I can say to you that we've negotiated the wages
outcome, we know what it will be and John, every year
we've got the wages outcome right, so we know what will
happen to wages-
LAWS: Yen, but-
PM: And the surplus will be sustained.
LAWS: In fairness you, you might have had the wages
right, but you got a few other things wrong, didn't you?
PM: Well, look I as I've said earlier in your program,
John we underestimated the strength of demand. I mean,
I don't know how many times you want me to, sort of,
confess. But 1, but I've dones it openly. we got the,
the level of demand wrong because one of the things that
happened, we had this enormous turn around in the terms
of trade and because we got a very big increase in our
export prices, we just had billions of dollars streaming
into the country which did inflate demand.
LAWS: Doesn't it say a lot about this campaign that with
only days, literally, left to go we get bogged down with
the Multi Function Polls? Surely one would have thought
that isn't one of the big issues of the election, but it
now seems to become one of the big issues?
PM: well, you know who introduced it. Wasn't me. The
position of the Opposition, John, the week before was
this on the Multi Function Polis and let me quote you
LAWS: Yes, they were, they were in favour of it.
PM: Let me quote it so that your listeners know what
they were saying a week before in a considered replay to
a question, what's the position on the Multi Function
Polis? Here's the answer. In one short sentence, the
Liberal National Party position the proposal is unique
for Australia and deserves extensive consideration. And
John Howard, the Shadow Minister I don't think we
should bury the concept in a sea of hostility. Now, that
was there position and so then he comes out with this
story about enclaves. Can I just read to your listeners
what the principle, the binding principle was that's
adopted by the commonwealth and the State Governments and
everyone involved in developing it. Principle four,
develop the MFP as an entity which is not an enclave but
is linked with the remainder of the Australian economy
and provides a leading edge and technology transfer.
And that was accepted.
LAWS: Sure, and I understand that. We see the wisdom in
all of that, but would you concede that politics is a
great deal about perception?

PH: I concede that leadership is about having guts and
having a vision for your country and having the courage
to stand up for that.
LAWS: Absolutely, but would you
PH: And, and that was what was accepted to the credit,
to the credit or the opposition, that was accepted
LAWS: That's right
PM: until the last week of the campaign because they
knew that what this was about was not an enclave and what
it was about attracting, not just from Japan, but
attracting from North America, from Japan and from
Europe, the best technology that we could get into this
country so that we were going to secure the future of our
kids and our grandchildren by marrying the best
technology from overseas to an increasingly well trained
Australian workforce.
LAWS: Absolutely and there should be no argument about
that. PM: And there shouldn't have been the reduction of that
issue, John, which they understood and which they
endorsed. There shouldn't have been this miserable,
behind-hands sort of decision which ignored John Howard,
John Howard the Minister, the Shadow Hinister, who was in
favour of it, said it shouldn't be buried. But in the
last week in the campaign to tap some vein in, in
Australian politics, they gave away not the Polls, we
haven't decided on it what's being done is that there
is a high level inquiry, you've got the captains of
Australian industry including John Elliott involved
LAWS: Oh, yes.
PM: will Bailey, what we're doing is investigating
whether there is a way to bring for Australia and its
future, the best technology to this country.
LAWS: Yes.
PM: in an acceptable way and these people are saying
now, we won't even allow the investigation to go ahead.
LAWS: But can I go back to what I said? Do you concede
that politics has a lot to do with perception, with the
way people see things?
PM: Of course it has.
LAWS: Well now many Australian people, because I talk to
an awful lot of them, many of them perceive the Multi
Function Polis, as it's extraordinarily called, as being

something and the, and the media ran with it, which would
be eighty percent Japanese owned.
PM: And there was never
LAWS: There mightn't have been
PF4: Never any justification f or it.
LAWS: There may not have been but what I am saying to
you is, if it was perceived as such by the, by the people
of Australia, even incorrectly, I understand as well as
you understand and everybody else understands, that we
need the Japanese. By God we need them, we need their
investment, we need their help, we need their
cooperation, but there is a perception within, within
certain areas of Australia that is fundamentally racist
and it can't be argued, but nobody seems to want to admit
it. Now if people perceive this as happening why didn't
you, earlier in the campaign, and you must have been
aware of it if I was aware of it, you were why
didn't, why didn't you verbally put your arm around the
shoulders of some of these dear old ladies who are
concerned about Japanese involvement in Australia and
explain it to them?
PM: Well, John, the answer to that is very simple.
LAWS: Yen.
PH4: Because I and the Labor Party and Will Bailey and
all leaders of Australian industry who are involved in
this LAWS: You.
PM: acted on the assumption that we were entitled to,
that we had a responsible Leader of the opposition and
they meant what they. said that they supported a
position, as did Nick Greiner, the Liberal Premier in
W this State
LAWS: Yen, well I understand
PM: Yes, but what I'm, I'm answering your question, I'm
not avoiding it. You asked me why didn't we put arms
ar~ und people. I'm saying that we had a bipartisan, a
tripartisan position, the National Party, the Liberal
Party and the Labor Party all supported this issue. It
was a non issue as far as policy was concerned.
LAWS: Yes, but that in itself might have been a non
issue, but that triggered what really is an issue and
that is a feeling that does exist in this country of
concern, rightly or wrongly and I believe wrongly, but it
does exist that there is a, a great. feeling of concern
about the Japanese literally buying out this country.
-1

PM: Well let's have a look, let's have a look at the
facts, John.
LAWS: I know facts and I..
PH: Well, no but let's have a look at the level of
foreign investment in Australia.
LAWS: Yes, we do that constantly and the Japanese level
is down by comparison to New Zealand, the United Kingdom
PH: The United Kingdom $ 44 billion.
LAWS: Yes.
PM: The United States 39, Japan 26 and overwhelmingly
Japanese investment is in tourism, in tourism and what
does that investment mean for Australia? It means jobs,
it means an enormous number of jobs.
S LAWS: I understand that all of that.
PM: It means, we were talking about our foreign debt
before LAWS: Yes.
PM: It means an attack Last year tourism earned us
$ 4.4 billion and the fact that the Japanese are investing
in tourism here, it means that we're going to continue to
get Japanese tourists here which is going to be a great
source of dealing with the problems that you and I are
concerned about.
LAWS: That's right, but do you understand the anti-
Japanese sentiment?
PM: Yes but John, can I ask you a question?
S LAWS: I mean, I understand you don't like it any more
than I do, but do you, you understand it exists?
PM: Yes, but I also understand, John, the political
leadership is about putting the facts to people which I
have done. The simple fact is that if I wanted to think
of one single thing which would hurt my children and my
grandchildren and all the future generations of
Australians, all the kids and grandchildren of your
listeners, the one thing that I could think of that was
most calculated to harm my kids and my grandchildren and
all the kids of your listeners is that we put a
calculated insult to the Japanese. The Japanese are
biggest customer.
LAWS: Absolutely.
PM: And as Asia is the biggest, fastest growing part of
the world

LAWS: OK, now
PM: And if we want, if we want to hurt our kids, let's
insult the Japanese, let's insult the Asians because
what, what Japan and Asia will say thank you very much
Australia, we can get our coal, our iron ore, our
aluminium, increasing amount manufactures from your
country that were let in, we can get all those elsewhere.
If you want to insult us and say that we are second class
human beings, OK Australia, you do that and we'll look
elsewhere. 17

LAWS: Yes but nobody is suggesting that anybody do that,
least of all me and least of all a lot Of people I talk
to PM: I know you are not your suggesting
LAWS: I am certain~ ly not suggesting
P14: i know you're not, I know you never have, but what i
am saying John is what to the duty of leadership in these
circumstances? LAWS: Well I think the duty of leadership generally, I
think the duty of Goverrnents is to try and understand
the thinking of the majority and if the thinking of the
majority is incorrect and is unobtainable then placate
them by at least giving some explanation of the
importance of it and I don't believe that you have done
that. PM: On the contrary. What we have done, what we have
done Is to quite openly set out the principles, we did
that three years ago. The principles were known, they
were published and as I have read out to your listeners,
principle four no enclave. it is perfectly well known
that we have enlisted the best brains of Australian
industry, we've given our bit, now it has been out in the
open. LAWS: OK but the people,, and they are the only ones that
netter, the people saw the Multi-Function Polio as being
something that was going to be popul~ ated by 80t Japanese
PM% Which is wrong.
LAWS: Which is wrong true. Which was going to be a
separate City, now that was run and allowed to run and
S nobody like X always thought that immigration and
integration should go hand in hand and I am sure that you
would agree with that.
0PM: Absolutely.
LAWS: NJow the impression given with the Multi-Funotion
Polio was that it warn going to be virtually a Japanese
city and they were going to be within a ghetto virtually.
Now nobody denies that.
FM: Of course It has been denied. It has been denied
all along.
LAWS: Yesterday and the day before
P1: It is like Mr Peacock getting uip and saying Bob
Hawke is going to sell Darwin to the Indonesians, and I
am against Darwin being sold to the Indonesians. I mean

17
that is the equivalent. Talk abouta creating a s+ voa.
have got to defend a position, according to the thssxsl
you are putting, where this has been out in the open,
respected peopl1e like Bailey and Elliott have been
identified with this, Greiner and so onl. No suggesting
that is an enclave
LAWS: But aren't you the people who don't
understand, I'm not talking about the people that do
understand. PM: But John I am saying that as far as the community
was concerned, until just a few days ago, you had the
position in this country of total bipartisan support for
It. It wasn't a political issue.
LAWS: Thea right which has raised some problems.
PM: Can I ask you the question
LAWS: But obviously the Opposition sees the anti-
Japanese sentiment which do you concede exists in
Australia? PM: There is some. I do not acept that is a majority
position, because
LAWS: Well I think you are wrong, and I think they are
wrong. PM: I know you think they are wrong John, but what I am
saying is that I have a different perception of
Australians than you do. I believe that Australians are
essentially decent, I believe they are essentially
intelligent. Australians know that this country of 17
million people, thats what we are, 17 million people in a
world of 5 1/ 2 billion. In a region which is the fastest
growing economic region in the world where Japan is far
and away our biggest market.
LAWS: Absolutely
PM: Biggest trading partner. I Just happen to believe
that the majority of Australians and not the ones who
make the noise, you think about Australian politics, the
-majority of Australians are not the noise-makers.
LAWS: Well you listen to a lot of the noise-makers.
PM: Of course you have got to listen to a lot of the
noise-makers.
LAWS: OK, but can I Justago back to this. You say that
Australians are fundamentally docent
PM: And intelligent*

LAWS: And intelligent. Well you don't have to be either
indeenrt or unintelligent i-f you are a widow and your
husband died in the Second World War at the hands of the
Japanese. When you hear that Japanese investment in
Australia is large, when you hear that the block of laend
next door to Kirribilli House, where you live when you
are in Sydney, is being sold to the Japanese, can't you
understand that that woman at that time thinks well what
my husband died at the hands of these people. She needs
to be told that her husband died in vain if we didn't now
do business with the Japanese that thats what the whole
thing was about, but don't you understand that that
exists? M14 aohn, I also understand that I do a lot of meeting
with and talking with people who fought against the
Japanese. one of my closest friends, one of my closest
friends in Australia today is Sir Williami Keys, the bloke
who was the outstanding President of the RSL
LAWS: Certainly.
PM: A great Australian and Bill Keys in conversations I
have had with him said, Prime Minister we have got to
understand, we've got to understand and all my members
have to understand that their future and the future of
their kids, and he has talked about the grandchildren and
of their grandchildren, depends upon us learning to live
construotively with our former enemies. John, I
LAWS: Well that is exactly what I am saying.
PM: I know this John, I do not question your position.
LAWS: And you know Bill Keys has said it and he is a
wonderful PM: He's a wonderful man
LAWS: Remarkable man but you didn't say it until just
then.
P14: I have been saying it for years.
LAWS: You have but during this campaign I know you did
not want to make it an election issue
PM: And I did not make it an election issue.
LAWS: N~ o you didn't, but it has become an election
issue.
PM: And once it has become an eleotion issue John I have
responded. But I ask you the question, may I put this
question to you? Do you think that Andrew Peacock hoe
discharged the responsibilities of leadership, a man who
would lead this country by six days before an election,
after having said this is a great idea and deserves to be

studied in full, do you think he has discharged the
responsibilities of leadership for the future by what he
has done?
LAWS: I believe that he made an effort, rightly or
wrongly, and I happen to think wrongly, to placate the
people t~ o which I have just referred.
PM: Exactly, I agree with you.
LAWS: But is that wrong?
PM; Ytes you said wrongly and I agree with you because
what leadership is about is not tapping in to lowest
common denominators on antagonisms. Leadership, John, is
about recognising that there can be misunderstanding,
antagonism but understanding where the future of your
country and where the future for your kids lies and I
repeat the future for all the kids of your listeners and
their grandchil. dren absolutely depends upon Australia
being able to be eneshed into the dynamic growth of the
Asia Pacific R~ egi~ on of wI~ ich Japan is an Integrally
important part. We don't lie down for the Japanese but
what we sensible do is to say we want to tap, not only
yours, but Americans, Europeans the beat technology, we
want it to come here under our sovereign control so that
we can marry the best of your technology with our
Australian skills so that we are going to becomne
competitive in a very competitive world, that is what
leadership is about.
LAWS: Back to the Japanese that we both agree are
tremendously important to us and particularly in the area
of tourism. We suffered a slump in tourism because of
the pilots' dispute, what are pour plans for tourism?
PM: Thanks John. Could I just very quickly give you the
background to what has happened in the period since we
have been in office. We have put $ 250 million, a quarter
of a billion dollars was invested in the Australian
Tourist Commission and that has led, in thislperiod that
we have been in office John, to over $ 50 billion of
investment. It ha. led to over 300,000 new Jobs and a
turnover increase from 7 billion to 27 billion and an
increase in international visitors from 900,000 to obout
2 1/ 2 million.
LAWS: We have suffered a bit of a slump.
PM: Yes we have and let me say this that In the build-up
of those figures a very important role was played by Paul
Hogan and I pay tribute to him, he provided his services
free to the Australian Tourist Commission and I thank
Paul Hogan, but he is not going to do any more. I have
got good news and that is that another great Australian
of international atature, Greg N~ orman, as a reult of
discussions that I and your mate and my mate 33 Brown.
Discussions with Johnny Brown and I have had with this

Oteftt Australianl, Greg Norman has agreed free of charge
and you know what his fees would be if he wanted to, he
has agreed to do f ree of charge for us through the
Australian Tourist Commission, promotional films that
will be shown around the world. I guess particularly in
the United States and Japan, but elsewhere, to attract
tourists to Australia and I just want to take this
opportunity of saying a great thank you to Paul Hogan and
a great thank you to another great Australian in Greg
Norman who loves his country, wants to see It grow end
prosper and is prepared to do this for Australia and I
think we are going to see as a result of that, we6 1l make
sure that the Australian Tourist Commission is in a
position to be able to take advantage of Greg's
marvellous offer and we'll see a resumption of the great
growth in tourism which is going to be very important for
this economy.
LAWS: The aforementioned mutual friend one 33 Brown also
reckons you haven't put enough money into tourismn, * re
you going to put more in?
PM: To be f air to John, he goes out of his way to say
that the before we camne to office there was nothing done
and that we have done a marvellous job, Johnny would
always like to see a bit more and we will be 1listening to
what he has got to say.
LAWS: Are you going to give him a bit more?
PM: Well we hae in this year, we've given a very big
boost as you know to try and meet the problem created by
the pilots' problem
LAWS: Yes but will that be ongoing?
PM: We are going to examine it. one, let me say this
that I give the guarantee to the Australian Tourist
Commission will be put in a position where it will be
able to take advantage of this offer of Greg Norman, it
won't suffer financially.
LAWS: Who's idea was Greg Norman?
PM: I think I have got to give, basically give credit to
33, to John Brown. X mean I am a good friend of Ore ' a
== be you know and he is very close to me, he is very clo se
to JJ, but I give credit to 33 for really getting the
idea and when it warn mentioned Greg said Yoh love to do
it. Australians are going to be terribly indebted to
this man who can command millions of dollars for doing
things but he is going to provide his services free.
LAWS: Tell me this, I think you have done a strange
thing, obviously you thought it was necessary or you
would not have done it or your advinors thought it woo
necessary. You have virtually gone out and bought the
green preferences. -k

Pm: oh come on John.
LAWSi Ye~ s, you have.
Pm: John, can I
LAWSt You have pitched advertising right at those voters
and sold make up your mind but make sure you give us the
preferences. PM: John, what we have done is to accept the reality of
world politics. You're a student of politics beyond this
country as weil as, it there is one feature of yolitio.
cround the world for the last five years or so t is the
emergence3 of the environment as an issue of concern and
that concern, as you made John, It crosses the Income
barriers, crosses social barriers, there are just many
many more people concerned about the environment then
they were before and to the point where in this country,
as in others, people are prepared to vote their concern
by giving their first vote to a candidate who they think
has the environment on the top of their list. So what I
have said, and the Party has said, we recognise that
reality and said alright if people are going to cast
their first vote for a Democrat or a green candidate
because they went to emphasis* their concern with the
environment I am simply mak~ ing the logical point to each
one of them. If your maj~ or concern is the environment,
remember this, the Democrats and the green$ are not going
to form the Government. its either going to be Labor or
the Liberal -Notional Coalition, so make sure that your
second preference goes to Labor because we have got the
best record and the best policy on the environment. That
is just sensible politics John.

LAWSt well, it's sensible politicking.
PM: Sensible politics. I mean wouldn't I be silly,
knowing that the truth is that there will be a higher
vote of people who are going to cast their f irst vote on
environmental grounds, if I didn't remind them' that their
real important decision is what they do with their seCond
preference vote. I mean I've got to that. From their
point of view and certainly from mine. I want their
preference. LAWS: Is this the first election that you've found this
necessary, to go seeking preferences?
PM: Yes, because it's the first time in which the
evidene is that the non-major parties are going to have
a reasonably significant vote. And understanding that,
I've got an obligation to them and to my own party and to
the people of Australia to say well, what you do with
your second preference isi important.
LAWS: Just bock to the airline dispute. in it true that
you gave a sizeable reduction to Ansett for the cost of
too, government aeroplanes?
PM: No. if you read the whole of that~ report you'll see
that the officials have indicated there was no
justification for that. I had no approach from, and I
certainly would not do deals for anyone. You know me
wall enough that. I mean I think the reality, and I
mean the best way of exploding that reality is this.
That the big thing that Ansett had going for them over
the years until I became Prime Minister was the two
airline agreement. It was a guarantee to print money.
And who is It that smashed the two airline agreement? A
fellow called Bob Hawke.
LAWS: True. But did they get a reduction?
0 PM: No. what happened was that the initial figure that
was suggested was questioned, as I understand it, by the
airline. There was further discussion within the
Department of Pefence. My Department was referred to.
There was no approach to me. The decision was made at
the level of the Departments concerned and with the
Minister of Defence authorising it. . There was no
approach to me and no decision by mes.
LAWS: No, but all that aside, did they get a reduction?
PM: The figure was a lower one than the one that was
initially put up.
LAWS: Ok, that means that
PM: But what I'm saying, but not through my
intervention. ' A

r
LAWS: Nobody's suggesting that.
PM: Some people were.
LAWS: Ok.
PM: Not you. I mean But some people were
suggesting in the press that it was Hawks. And they had
the snide did you notice the snide line said sir
Peter Abeles is a friend of Bob Hawke's. I mean, lovely
line. Nice snide line, but inaccurate. It wasn't Hawke.
And as far as Ansett's concerned the bloke who's knocked
Ansett of f from a privileged position, not just in term~ s
of one year but into the future, is Hawke. I've ended
the two airline agreement.
LAWS: Ok, but the short answer to the question is yes
they did got a reduction?
PM: But when you say reduotion, what was being -Imean
I'Im not being semantic or
LAWS: I think you are.
PM: I'm not. Look
LAWS: I mean and it became x minus y
FM: It wasn't a This was at the beginning of the
arrangements. We were going to use the Airforce and so
details had to be worked out as to what they were going
to be charged. in the first place, someone, somewhere
within the bureaucracy, suggested that figure. It wasn't
the one that was applied. That was the one that
Then there was argument and discussion. They didn't get
a reduction from something they'd been paying. Some
bureaucrat had a figure there. That was questioned. And
the figure that emerged was a lower one then the fi lure
that was mentioned by the first bureaucrat. They d dn't
got a reduction from something they were paying.
LAWS: No. Did the some thing happen with Australian
Airlines? FM: Australian paid exactly the mnia as Ansett. Exactly
the isome.
LAWS: I think it's very important to clarify that.
PM: Sure, I appreciate it.
LAWS: In light of the cynicism that you say exists, I
Must tell you inoidentally that I had a telephone call
yesterday I imagine from a coalition plant suggesting
that it was laughable, but it's the sort of thing that I
imagine you have to put up with if you want to be in
politics, suggesting that your daughter had bought a
house in Canberra and had paid for it with a cheque

signed by Sir Peter Abeles. So that's the kind of
nonsense that
PM: I wish they'd have the guts
LAWS: They don't.
PM: No, of course they've got no guts. A total
falsehood. A total falsehood and I just challenge that
person to have the guts to come out and say it.
LAWS: But they don't.
PM: of course they don't.
LAWS: around long enough to know that they never
have the guts.
PM: No guts.
LAWS: And that'a the way it is.
PM4: That's the way it is.
LAWS: Now tell mne this. Back in the early, seven years
ago when I used to see you, you'd come bounding in here
full of energy and full of enthusiasm. You st ill appear
to be full of energy. A lot of people have put it to me
arnd I've heard a couple put it to you that you might be
tired. PM: I've never felt better.
LAWS: I heard someone say to yesterday, they cited what
they called an old adage, which is a double something
because an adage is old, that if you have a job for two
years you should make a move, if you are there for four
it's really time you got out, and if you were there for
six it was too long.
PM: The Liberals seem to have an adage like that. If
you're Leader of the Liberal Party for two years, that's
long enough. Then the hurdy gurdy goes round and then
the next bloke hops on then the hurdy gurdy goes round
over the next years and the bloke that was on before gets
back on. They seem to hove the adage. But as far as the
Labor Party is concerned, the truth is that in 1983 they
picked Bob Hawke and they were pretty enthusiastic then.
LAWS: Yes, they..
PM: They are more enthusiastic in 1990 than they were in
1983. 1 have the total support, total support of my
Party. And I've never felt more enthusiastic about the
job.

LAWS: Do you really believe that it's right and proper
that the people of Australia should be encouraged to vote
for a Party rather than a person?
PM4: Look, you're never goinlg to be able to disentangle
the two John.
LAWS: But isn't it proper that they should do that?
PM: I think they've got to, they do both. I think
leadership, for better or for worse, is an important part
of politics. I mean the truth is that when people wake
up on the 25th of this month they're either going to have
Bob Hawke 88 Prime Minister or Andrew Peacock. Who leads
is very important. But so are the policies. I simply
say in respect of the question you put. of how I f eel, I
oen honestly say to you I'va never felt fitter, I've
never felt more mentally alert, and may I say this, I've
never felt more exuberant about being Prime Minister of
the best country in the world. I mean, the future of
this country is enormous and I just want to be identified
with bringing to fruition the sorts of basic changes that
are happening now in education, in science, technology
our capacity to go out in those export markets and take
on the best in the world and beating them. I mean that's
what we're doing and I just want to see those things come
even more to fruition.
LAWS: Could you tell me just in the two minutes or so
that we've got left, just in your own words, what you see
for the future, for people like me, for people like the
rest who are listening to us all over Australia, for
their kids and their kids' kids.
PM: Sure. I see a better educated Australia where every
kid, irrespective of the income level of their parents
are going to be able to go on and develop to the full
whatever talents they have. We've already gone a long
way in doing that. That's the best thing for the future.
LAWS: Irrespective of colour or creed.
PM: irrespective of colour, creed, income. Every
Australian child is going to be able to go on in the
education system and have his or her talents fully
trained. That's the best thing for the future of
Australia. It's the most fundamental building block.
We're going to have an industrial award system which gets
rid of the irrelevancies and the ossification of the past
as has just happened in the Metal Trades award. Three
hundred and sixty classifications out and now fourteen,
so that we're going to have an increasingly competitive
Australian industry. We're going to be an Australia
which is increasingly enmeshed in this most dynamic
Asian-Pacific region. We're going to help shape that,
not just accept it as it happens. But we're going to
help shape it by this initiative that I've taken in
establishing the. Asian-Peoifia Economic Co-operation

body. And most importantly, John, these kids are going
to grow up with a greater chance than any kids ever
before of living in a world of peace. Fortunately, and
waive been part of it, the superpowers now understand
it's more sensib1e, as it is in Australia, not to have
conflict but to have co-operation. I can look the kids
of Australia in the eye in a way I never could before and
say you are going to grow up in a world at peace and
Australia's been part of bringing that about.
LAWS: Thanks very much for your time. It's been good to
talk to you as always, Let me say, as I've said on mlany
other occasions, and I know you agree with what I'm about
to say. Whatever happens on Saturday, let's all hope and
pray if we're that way inclined, that it's ontob
for the betterment of the f uture of Australia,
PM: Yea.
LAWS: Bacause it's all that matters, isn't it?
PM: it's all that's ever concerned me John.
LAWS: Ok, thanks very much for your time.
ends -1