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Transcripts from the Prime Ministers of Australia

Transcript 8682


Photo of Keating, Paul

Keating, Paul

Period of Service: 20/12/1991 to 11/03/1996

More information about Keating, Paul on The National Archive website.

Release Date: 30/09/1992

Release Type: Interview

Transcript ID: 8682

TEL: 30. Sep. 92 18: 00 No. 008 P. 01/ 19
JL: How are you alright?
PM: Fine thanks.
JL; I suppose you've come dashing In here to tell me whon
the election is.
PM: No, I haven't.
JL: They rang me up last night and said, he and that's how
they said it with some reverence wants to come in, I
8ai it's obviously to tell me when the eletioni is8
going to be.
PMi JL; Really, couldn't you tell me when the election is going
to be, couldn't you give me a hint?
PMI I don't think it's going to be before Christmas, put it
that way.
JL: Would you like it to be before Christmas? I rather
fancied the sluond Saturday in December.
PM: NO, I tnink the public are entitled to value out or
these polls and this one goes until about the middle of
next year, so that's probably the most likely time.
JL: You want to give us value?
PM: Always.
JL: Mr Hogg certaIjnly gave us value yesterday in this " Poles
Apart" stuff that he released, trying to get to the
e-derly people, is that sporting?
PM; I think it's entirely legitimate for b political party
to respond to a program like this with if you like, a
manual ) n the various changes and what they mean
changes proposed by the Opposition.
JL: I think it's a bit tragic that in a way and I think
you'll probably agree, that the Opposition haven't,

30. Sep. 92 18: 00 No. 008 P. 02/ 19
because of lock of ability or lock of opportunity sold
the GST package properly, so we really don't quite
understand it and consequently we can't totally trust
what's in " Pole5 Apart" can we?
PM: Well it will make obvious points and that is, look
. Eightback" 8o-called iS bSi81lly a crude tax switch,
It'a a-wich from the taxing of income to a taxing of
expenditure with polloies grafted onto the edge. One is
to basically get rid of Medicare the other is to change
the industrial relations system. Now we think all that
iu going to be inflationary.
JL: Well Medicare is a bit of a monster and
PMt No, it's not, no.
JL: Well it's only not a monsteor because the good old tax
payers of Australia who were promised there wouldn't be
an increase in the tax levy by the afore mentioned
Dub", have increased the payment that they make
to Medicare and consequently Medicare hae survived. But
had the afore mentioned Prime MinIster bean truthful
when he said that he wusn't going to increase the levy
Medicare would be on its bottom.
PM: Not really, no. What Medicare succeeded in doing is
giving people universal access to health insurance, to
health cover, health protection at a national cost about
two thirds of that of the United States, about eight per
cent of GDP, eight per of the size of the total economy.
We've Rept that eight per cent constant all through the
despite the fact that people know there's been a
great proliferation of services. What you compare now
to say ten years ago, the number of diagnostic Imaging
and pathology and the varlous teats and services people
receive today are much reaterx then then, yet the cost
is still the same. So Medicare has been quite
JL: But the cost isn't the eome, the lev has been
PM: The national cost is the same. The Commonwealth always
paid muney intu health insurance, even before Medicare.
JL: The Commonwealth didn't, we did.
PM: The Budget did.
JL: Where did you get your money?
FM: Are we going to have one of these semantic arguments?
JL: No, you see you can't just brush it aside as that.
People have allowed charming politicians like yourself
to simply brush these things aside * TI make us feel

30. Sep. 92 18: 00 No. 008 P. 03/ 19
good; the Government did that for us, oh what a
wonderful our money.
PM: That's why I made the overall point, it's not a matter
of the tcansfers, the tax payers to the Commonwealth
budget to health because there are a whole lot of people
poying different things there. There are people who use
the health system more, some people pay less. The whole
question is what is the cost to the nation? And it's
about eight per cent of GDP, it's about two thirds of
the American cost and yet you still get doctor of
choice, universal access to heolth insurance. we won't
have a position in this #; ountry like they've got in
America where millions of people are walking around
uninsured, millions of people in America are sick and
can't afford to protect themselves.
JL: OK, let's not get too deeply Into Medicare, but let's
also be realistic about it, you don't pay anything, the
tax payers pay everything, your Government said that the
levy wouldn't increase, your Government lied, the levy
did increase and consequently Medicare has survived, but
only for thQSC roosons.
PM: The levy has increased, but what has it increased for
basalealy to give public patients better access to
public hospitol core. In other words it is a modest
increase, very modest, couple of decimal points on* it
is to make it beater tgr people to get access to public
hospital. Under John Hewson's proposal he says well
that's all gone, you go and Insure yourself, I'll let
the doctors set the fees, the common fee will be set by
the AMA not by Medicare schedules and then basically the
system will charge what the traffic will bear and if you
don't like the price go and Insure yourself, it will
cost $ 30 o wetA and we say don't you think that's a bit
unfair John, particularly for low to middle income
families to shell out another $ 30 a week for health
insuranc? He says well if they went health cover
that's what they'll hove to pay. Basically John's into
lifting doctors salaries.
JL: Has he said that?
PM; me told the AMA. You see John Oates unions, he'll tell
you on your program hQw uilaoi. s cs& this and the unions
are that
JL: I think hate mignt be a bit hostile?
PM: No, I don't think so, but lets say he has no regard for
unons eloept the AMAunion, the doctors union. He
addreseed them on Sunday about four months ago and told
them that they could fix the fees for medical services
in Australia.
jL: Ie probably has about as much time fvr unions as Brian
Howe has for doctors.

30. Sep. 92 18: 00 No. 008 P. 04/ 19
PM: Brian I think ha* a greater sneaking regard for doctors
than John has for unions.
JL: He'd just rather die than let us know?
PM: Maybe.
JL: This document, 200 pages of It, there are not too many
people who are going to read OO pages.
PM; NO, it's basically a manual for anyone interested in it
the media, members of our own Party. " Fightback" was
a proposal which was dropped on the table about a year
ago, it had a dream ride in the media, the media didn't
take it to pieces; it's getting some scrutiny now and
this is an attempt, a manual of all the various
proposals and a cofwnentory on those proposals and a
reference to the toots.
JL: Yes, you're not including me in the media are you?
PM; No, I'm just saying the broadsheet media in the main.
JL: Because I took it to pieces, particularly in the area of
tariffs, I trust I woe right though.
Fm; You have, but from last NovemDer on this thing was at
the time, hailed as something new. I think people now
understand that what it is baeielly a crude switch in
taxations with a few other quite nasty policies grafted
JL: Yes, but you thought it was a good idea at one time, so
dd I think it was a good idea at the time you did in
1985 when you diecussed it with me. You thought It was
a good ideo,
PM: That was the only chance Australia hod basically to go
to a consumption tx, that was basically with a Labor
Government, that was doing it with a fully compensated
change, over compensation for people down the bottom
JL; Are you sorry you didn't do it?
PM; and discounts in the wage system for inflation.
That way you could have possibly accommodated such a
change, but again it wasn't 15 per cent and now I've
just been to Japan; they've introduced a three per cent
consumption tax and it seized their whole commerce up,
they had fights in the Diet, shop keepers brawling with
cuutu. n= ze, 15 per cent will just absolutely seize this
CounLry up.
JL: It seems very complex and as I say I don't Know whether
It's lack of opportunity or lack of ability, but they
haven't expldied it very well ana to many people it
does seem very complex and to the elderly people that

30. Sep. 92 18: 00 No. 008 P. 05/ 19
you have aimed this document of yours at seem very
confused by it, but best I don't ask you to explain it,
best I ask them to explain it and I think it would be
important that they do because I do believe that what
you've done lil this " Poleo Apart" document is be a bit
alarmist. Did you read it before it was released?
PM; I haven't read all of it, only bits and pieces of it,
it's a relatively biV document.
JL: Two hundred pages and 1 dO think It is a bit alarmist.
But listen just before we get away from the doctors,
it' seeme to me that Lebor isn't terribly good a
resolving white collar disputes and you would agree that
this is a white collar dispute, didn't have much luck
with those pilots. You're going to have your very Own
pilot dispute on your hands With this one unless you do
PM; This is the doctors yQU mean?
JL: Yes.
PM: The proposal for this additional training came from the
AMA and the College of General Practicioners, it was a
yroopl thot came to us from them. The objection to it
s from a lot of younger doctorv.
JL: Yes, most of them a that additional training because
they want to.
PM; They don't have to and it they do it they eoUrs a
benefit from what's called the Family Medicine Program.
JL; Why are they having a fight with you?
PM: A lot of young doctors think that the system is
basically there, thw unes who are disputing this,
thinking the system Is there to give them the income to
which they believe they have become entitled and yet the
AMA itself I think, and the general Practicioners
society have said that a program which does have the
emphasis on deliverIng health care in ways which are
more affordable for the community at large does confer
upon everybody a benefit and if doctors undertake the
oours~, the extra two years; they'll secure an
additional income benefit from the so-called Family
Medicine Program. If they don't wish to, the don't have
to, so I can't quite see what the argument is about,
JL: I think it would be worth keeping an eye on, frankly
because I think it could be a hell of a mess.
PM: Probably.
JL: One you don't want.
PM: Worth keeping an eye on i'm sure.

30. Sep. 92 18: 00 No. 008 P. 06/ 19
JLz The. Asian.-trip; you've now been accused of tugging the
forelock of Japan which conjures up a fascinating
picture in one4 mind. What's your response to that, or
need I ask?
PM; I'm pretty happy with the results of that visit. I'd
like to put Australia in a position where we can respond
to the big chngees now unfolding in the region. About
sixty per cent of our exports now go to North Asia John,
about sixty per cent, so we are largely integrated with
the region. What I was seeking to do both in Japan and
Singapore was to eutablish Australia's position, to say
that we wont to trade with the region. TO say we want
to trade with the region, to bring the United States
into the region through APEC in a more institutionally,
commercially closer way thot is, to have them there not
just in strategic terms, but to have them there more in
invtutment and institutional terms and in so doing give
Australia a more secure place in the part of the world
that's growing fastest and the part of the world where
most of our trade is going.
JL: Yes, i know you'll be delighted to know that in your
absence it seemed that the biggest worry thaT Mr Fischer
and hui hat had was the fact that not one single
solitary grain of Riverina rice is SOld in Japan. Mr
Fisvher seemed to fail to understand that it wasn't Bold
in Japan because the Japanese wouldn't let it sell in
Japan because they were protecting their own markets and
yet he couldn't understand about tariff rates here in
AuVtralia. Did you get anywhere with rice for example,
have you broken down any trade barriers at all?
PM: I just made the point that if mhe GATT, this is the
General Agreement on Trude and Tariffs, the thing which
has been under discussion for a couple of years, this is
a world trading background which is the international
arrangement where we're now discuesing agriculture
insisting upon is so-called tarifflcation of
agriculture. That la the protective device not be
quotas, but only be price devices such as tariffs.
JL: What's the device that they have in Japan?
PM: At the moment they have 1uotas,
JL. Not tariffs?
PM: No tariffs.
JL: But it is protecting the industry?
PM: It is, but it's not a price protection, a quota is an
infiiity level of tariffs, in other wolds it doesn't
come in at any price, whereas a tariff has a price. So
the Europeans and the Americans want so-called
tariffication of agriculture which in Japan's case

30. Sep. 92 18: 00 No. 008 P. 07/ 19
includes rice. I argued that case to the Japanese, but
again when you look at important as Mr Fiacher may think
rice exports are to Japan, they are nothing in
comparison to iron ore, coking coal, motor vehicle
engines, all the other things that give ve 8 $ 20 billion
trade with Japan and a $ 6 billion trade surplus. So I'd
be preLty cOazy to go up there and say look, you can put
all that asunder for rice, we are not
JL: Yes, but the thing I don't understand and you can
explain it to me is that we have Mr Fischer on one hand
or anybody else for that matter, It'u not fair to cite
him necessarily say¬ĺ 1i that we can't eell rice in Japan,
we can't sell rice in Japan because Japan proteots its
industry and yet the same Mr Fischer and other People of
his ilk want to free up induatry in Australia so that
they can sell as many of their motor cars to us as they
like. Isn't he being a bit contradictory? I moan he
wants them to free up; What they're doing is obviously
protecting their industry, he's not prepared to protect
our induetry
PM: it's a big agricultural question, A lot of the ruling
pt& L y tho LDP the Liberal Democratic Party of Japan
a lot of ita support comes from the countryside and
comes from rice growers and it's a political thing. In
a sense therY-r like the National Party of Australia In
some respects in teams of their rural component and
their protectitig rice. In my view they're fighting a
losing b ttle because rice will be as we said earlier
talIrfea, that is it will have price Mechanisms applied
JL; So they will have, just so we all understand, they will
have on rice what we at the moment have on motor cars?
PM: Exactly, but they'll have it at a level where people can
bring rice to Japan and jump the barrier because the
barrier will only be a price barrier, it won't be a
quota barrier as it is now. At the moment they say no,
no, no at any price. Whereas we're saying give us a
price to ae if we can better It.
JL; Ok, if they're prepared to protect their industry
understandably, and you are to a degree, prepared to
protect our industry, but only to a degree, why would it
be that the Coalition doesn't want to protect our
industry and yet they're complaining that we can't sell
our prodvQk, a particular product to Japan? Japan is
just doing what we should be doing.
PM: Tariffs have been a long running, as long as I've been
in public life John which is now twenty three years,
tariffs have been an issue. What the Menzies and McEwen
governmenuiL did was build a tariff wall around Australia
which bsicall. y rendered Australian Industry
uncompetLtLve, gave us the dearest cars in the world,
gave us very high prices and didn't give us the export

30. Sep. 92 18: 00 No. 008 P. 08/ 19
potential we should have had. What we did as a
Government, this Governament in 1998 we started to phase
tariffs down to 1992 and then a year ago in 1991 we
adopted a new phase down which will take us to the year
JL: Ok, but if the lowering of those tariffs from 57 per
cent or whatever they were in 1988-89 down to 25 per
cent or whatever they are now, that should have caused a
dreaoe in the cost of motor cars.
PM: It has.
JL: It hasn't,.
PM: Yes it has.
JL: No it hasn't, and the importation of motor cars has
increased by 50 per cent in that perlod of time.
PM: Can I say this, the Ford Company say that the basic Ford
Falcon vehicle today which is i think $ 23,000 before the
tariff cuts would have been $ 33,000, but the general
point is I don't accept Dr Hewson's argument that you
can keep a motor induotry at zero tariffs because I
went to Toyota lout week tn Japan, tney're producing on
the one run 300,000 vehicles. On the one run here, the
best we can produce is about 38,000, in other words
about one tenth.
JL; The best we could do in a whole year is 300,000.
PM: The best we can do in a year is 300,000 that is from six
monufocturere from six models. There's not any chance
In my view of the Australian motor vehicle industry
staying alive at a zero tariff. Why would Toyota for
instance, want to build a car in Australia with a morket
this amall when it can basically Just get better
economies out uC its existing lineg of production? I
don't accept the zero tariff and while the Government
has brought tariffs down from 253 per cent for motor
qoro down to an effective rate of 35 per cent by the
year 1996, it's that 35 per cent which will guarantee
the viability of the Toyota investment in Melbourne, the
Mitsubishi investment in Adelaide and I don't believe
that those car compnniea can survive at zero. I think
anybody and this includes in particular Dr Hewuun whu
takes the view that it's zero and if they survive good
on them, and if they don't bad luck. That simply means
we won't have a mutor industry and if we don't have a
motor industry we won't have a firm manufacturing base
in this country.
JL: So we should have a motor industry?
PM: Absolutely. TEL:

30. Sep. 92 18: 00 No. 008 P. 09/ i:
JL: Well if we should have a motor Industry and the tariffs
have been reduced at the rote they have been from 57 per
cent in 1988, the cost really hasn't come down of motor
care and the importation of motor cars has Increased by
per cent, then surely you can't take away any more
toriffe on thot.
PM; We had these discussions with the motor companies in
1990-91, I vaw the Executive Vle President of Ford, USA
who was then in charge of the non-continental USA Ford
investments and their export markets, I spoke to the
Toyota company, I spoke to all the people. With a bit
of whinging and moaning the long and short of it is they
indicated they would live with the Government'a phase
down and after we announced that in 1991, Toyota company
made it's announcements. But again that is for an end
point of 35 per cent protection.
JL: But you're talking about coming down to 15 per cent.
PM: That's 15 nominal, an effective rate of 35 per cent by
the time you throw in te export faclLitation and
everything else
JL: Ok, if next year and what I'm saying is right because
you would have known that I did te numbers, we have
increased the importation of motor cars since 1988 by
per cent, the small four door, four seat passenger cars,
increased by 50 per cent. If we continue to increase
the importation of motor cars then surely that's going
to self distruct, will you then sit down with the motor
industry and say look we don't seem to be selling more
local cars, if we're Impofting more surely we should
reassess this, are you prepared to reassess it?
PM; We're exporting now $ 1 billion worth of cars since then.
Since 1988 it's true that tariffs have come down and It
is true that imported care have come up, but we are now
exporting a billion aollars Worth of motor vehicles and
motor vehicle engine$ and components.
JL: I understand all that's true.
PM; It's all part of the run John. To say to a motor firm,
you make a new engine but you can export so many hundred
thjousand units of this to Japan or SOmewhere else makes
it viable for them. So it's the total package which
they're living with and the Indications we have is tnat
they are living. We've got no indication from any of
the companies; Toyota, Ford, General Motors, any of them
that even though this is putting structural pressures on
them that in the end they can live with it. What I'm
saying is they can't live with zero, they can live with
an effeotive rate of 35, a nominal rate of 15, but tney
can't live with zero and that's what Dr lIewson is
seying, r'be qayiI) g give them zero anO they should take
it like a man and know what's good for them.

30. Sep. 92 18: 00 No. 008 P. 10/ 19
JL; Ok, if next year all indications are that it's not
working the way tt should work, are you flexible? Are
you prepared to sit down with the motor industry and
reassess it, that's the question?
PM; But we were flexible. The time to have asked me that
was two years ago in 1990 when basically we sat down and
said look where should this end point be? Should it be
an effective rate of 35, an effective rate of 50, an
effective rate of 20. That's when the flexibility was
displayed by the Goverinment and we put into place know
what we thinK, well it's a cnange from the year 1988 to
1996-97, it's a very long Change, it's nearly a decade
of Qhange. In other words it gives companies a decade
to adjust.
JL; Yes, you're telling me that you've been flexible, but
you're not answering the question, are you going to
continue to be flexible?
PM; We don't have to be beoause the things announced.
JL: So the answer ia no?
PM; No.
JL: That the decision is made and that's immovable.
PM: Absolutely, because we've got it right and the proof of
the pudding is the fact OLuat Toyota ie going to invest
$ 800 million in Victoria and it did it after we made the
announcement. But by the same token, the Government
should be user friendly to the industry and that is
where they do run into problems, we try and sort them
out for them and again we've done that in these export
facilitation plane, that's one of the reasons why now
the Japanese company are selling the motor vehicle
engines. For instance, can I give you an example John,
part of those imports of care are Mecedes cars, but
there is a credit for Australia; they are now one of the
biggest markets for Australian aluminium wheels out of
Adelaide. So we give them a benefit which allows them
to import more competitively, but part of the benefit is
a cost for them; that is they take loads of aluminium
wheels for Mecedee. You see Mecedee Benz cars running
around in Europe, but running around on aluminium wheels
made in Adelaidu.
JL: What about the rural sector, what help are you going to
give tho rural se0tor? What does the toriff policy do
for trhe gucal sector?
PM: tic McLachlan who is the Liberal spokesman on industry
was formerly the President of the National Farmers
Federation and the zarmers have said for years that the
tot. iff is a monkey on their back, it's a cost that they
as primary exporters have had to wear, that is largely
true. But it ia a case ( f tiever going to extremes,

30. Sep. 92 18: 00 No. 008 P. 11/ 19
taking the view that tariffs should go to zero, tO have
the farm lobby get square with manufacturers is not
wise, it's not sensible and I don't think It's
Australian. We've all got to git on in this country and
we've got to make sure people get their share of the
cake, but at Vhe same time there's got to be a bit of
give and take. Now if the farm community given
expression by people like Mr McLachian saying look we've
taking the high tariff medicine for years witn Mr
MOEwen, paradoxically was leader of the National Party
and Mr Fraser and the reeV of them, now's our chance to
get square so we'll chop into the car companies with a
zero tariff, whlln you've got the mining industry arguing
the same
JL: out how will that benefit the rural industry?
PM; The cost of tariff protection is the rural industry
are paid on an international basis for their products,
they get the international price for wheat,
international price for various products. Whatever
input costs they bear, tre higher input costs have come
by the protection which local industry Aave had by % ne
tariff. They've haa to pay the tariff yet not be
recompensed by the internatiOnal market. So they argue
they've carried the burden, too great a burden, and that
has been largely true. but with a tariff coming down
now they've really hod a very good the farmers have
kicked an enormous goal in the last six to eight yeazby
a reduction in tariffs. To go and try and drive the
nails into the manufacturing industry and into the car
industry by zero tariffs is on the part of soMe ex-farm
leaders like Mr McLachlan going right over the top to
try and extract a bounty or a penalty based on old 1970s
prejudices about how much the farm lobby paid in
tariffs. It shows no wisdom and in my view no
comprehenslon of the fact that the farm conmunity have
picked up an enormous benefit in competitiveness, now
lower tariffs and they should live with the Government
phase down.
JL: Getting back to the original question le what are you
going to do about the rural sector. The short answer is
PM; No, that is a different thing. I thought you meant in
relation to tariffs. The problem with the rural sector
is not of their own making, some of thpir own making.
There ore three thiigs: the ones nor of their own
making Iiavo btuj) drought, the second has been wheat
prices noL of their own making, and the one of their
own making has been wool. They decided to double the
price of wool, and the world sai* ' thank you we don't
wnt; U it; tiiyinue'. So they let the atock pile build up
and finally we are to abandon the wool price scneme * no
that hurt farmer; s on the way through and it's now
starting to improve. But wool prices have started to
atabJlRSe again, wheat prices haven't been too bad* The

30. Sep. 92 18: 00 No. 008 P. 12/ 19
Government, we guaranteed $ 3 billion to underwrite the
wool stock pile, we spent about $ 1 1/ 2 billion in
national Interest cover or insurance on wheat sales in
the markets that might not have otherwise been
commercial. The Government has basically put about
billion on the line for the farm community. And alsO
things like structural adjustment, rural adjustment
schemes ( BAS), that is helping farmers who are really
nuver going to be viable to get off the lend and pay
them, help them leave, to pay their Gebts out and also
carry on financially...
JL: What happens to that land?
PM: Well some of it should never have been farmed, only some
Of it was farmed at a time when wheat prices were very
high, you could take eub-optimal farms and make them
work. But once the surt of cost of interest rose and
then the prices came down, it came, again, sub-optimal.
JL: So are you saying that the Government will buy these
people out of the farms?
PM: Well we help them, that is the people, there are two
parts of the yural adjustment scheme RAS so called. One
IS carry on finance, for -to'e who -re viable, but who
have just bud difficulties we give them concessionl
loans, but for those woo know they have got no chance,
we help them get out of it.
JL: And what do you do with the land?
pmt Well boeioally it goes back to, it ts either aggregated
into bigger parcels, or it is not farmed anymore,
JL: What happtv to it them, it just becomes Crown land?
PM; No, it probably ends up being privately owned, but it
may be farmed less intensively, See our soils are Often
not strong, and in some places people who have been
using land for agricultural purposes, which might work
in the very htgh paid seasons, but doesn't work in the
low paid seasons.
3L: By the lOOk of it you'll be going to the Polls with
unemployment at more than 10 per cent, it seems that the
argument concerni~ ig unemployment has shifted, that
rathor we've got involved in tariffs and your overseas
Vivit, wluoh was very important to us admittedly, but we
seem to forgetting about unemployment. Hopefully you're
PM: No and that's why the Government has got all the
instruments at its disposal flat chat to try and do
something about it. We've got fiscal policy. We've got
$ 2 billion being spent in this year from the One Nation
statement, most of it being spent from 1 July. we've
got the additional spending in the Budget. We've got

TEL: 30. Sep. 92 18: 00 No. 008 P. 13/ 19
interat rates at low levels. The whole thing Is geared
up now to basically see the economy rise, And we are
coming into recovery. In the year to June the economy
grew by 1.6 per cents By contrast in the eame year the
British economy contracted, declined by 1.5 per cent.
So we are actually now doing better in terms of growth
then most comparable countries, And this year we hope
to gee that strengthen to about 3 per cent.
JL: Some figures come out yesterday from the Bureau of
Statistics, that I imagine would have been brought to
your attention, showing unemployment amongst migrants at
12.5 per cent, with Australian born workers 9.9 per
cent. Now isn't that a bit crazy, I mean more migrants
are receiving dole payments than Australian born
PM; it's partly the problems that migrants have and that's
why we have considerably stopped up spending onEnglish
as a secondangu~ ago, that program, to deal with'
d id v a nt' e, whether the disadvantage be with migranta
Bi' 6i) ier workers, to give them a chance to get back Into
the workforce. But employment will grow as the economy
grows. The link between growth in the general economy,
growth in GDP and employment is such a tight link. Onoe
we start seting that growth in employment coming., But
John the other thing ie, Is the country is more
productive. Now yesterday I went to two places In
Victoria. I join Joan Kirner and went to the
Williamstown dockyard where AMECON have just handed over
the second frigate to the Navy, built under cost and
under time, and the Navy told me it's the first time
they have had a ship presented to them without faults on
its ship trials. Of higher quality of the same ship
built in the United States.
JLt OK, but we are rather & hifting from the point.
Pm: I just want to make Chis point here. The same in
respect of clothing, textile and footwear. Now in both
companies, the productivity of that plant had gone up
800 per cent. That means we are getting more product
from fewer people, in other words we are now a very
productive oountry, businesses are stripped down, but
the flip side of that productivity; that is getting more
output from fewer people is that there are fewer people
in work. So the answer has to be that we've got to grow
the economy even faster to take those people up.
JLi Yes, wouldn't another answer be to stop bringing people
to this country if the can't get a job when they get
here? if we've got 12.5 per cent migrants unemployed,
12.5 per cent as opposed to 9.9 per cent of people who
were bqrn in Australia, isn't that a nonsense? That
we're simply briniging people from other parts of the
world in order to pay them money?

'* TEL: 30. Sep. 92 18: 00 No. 008 P. 14/ 19
PM: The qi~ jl atlon progromIs a long term program and we have
changed it over time.
JL: Not enough thoughe
PM: We'vQ cut it in half. It was 140,000 two years ago,
it's now at 801000.
JL: But it's still not enough is it if we've got 12.5 per
cent of them unemployed? Why would you employ a maid
who couldn't work? Why would you bring people to your
house who weren't going to benefit it?
PM: A part of it of course to family reunion, you have
people here then they can bring they're mothers and
fathers, brothers and sisters.
3L: And we tax payers pay for them.
PM: The thing to the level of unemployment amongst migrants
is admittedly higher than the general community, but not
that much higher. A part of that reason is basically
because they're disadvantaged one way or another and the
anlswer is to do two things. Deal with the disadvantage,
be it English or what have you or the teaching of
JL; Why do we let people come here who can't speak English?
Pm; 60me vQmol, those who speak English
JL: If they've got a million dollars
PM; ThQose who speak English obviously do better in the tests
in comning in, but what you find with family reunion
programs a lot of thern can't speak English fluently and
if you go to a lot of technical colleges around Sydney
or Melbourne you'll find clauses full of people learning
JL: Isn't that wonderful except we're paying for it all.
Why do we bring to Australia who can't speak English,
can't get a job and are going to be disadvantaged? It
doesn't seem to make much sense to me.
Pm; in 1987-88 we brought them so the labour market wouldn't
blow to bits. In 1987-88 when there was such an
* fsnious ahortage of labour 0
JL: Sure, but now we've got a million people unemployed,
PM: No, but you can't turn this tap on and off over night.
J L: Why.
PM It juat doesn't work.

TEL 30. Sep. 92 18: 00 No. 008 P. 15/ 19
JL: But why, if 12.5 per cent of the people who Come here
from other parts of the world are receiving unemployment
benefits, there's a million of us unemployed, 9.0 per
cent of Australian born peopie unemployed and those who
are fortunate enough to have a job of paying for the
12.5 per Cent of the migrants who came here and can't
get one.
PM; You've goL tv say to yourself, from 1949 onwards would
Australia be better off because of the migration
program. Is it a stronger better country?
JL: Yes, oE vvvrse it Is.
PM: The answer is yes.
JL: But not now?
PM: Yes it L9.
3L: of course it's a better country because of It, but fancy
saying we're thinking about making English a second
PM; No, English as a second language, in other words people
who have as a primary language, the language of their
country of birth, English becomes a second language.
But in this country it isn't.
JLI wriy Isn't it their first language?
PM: Because they are from some othebr country,
JL: Why didn't they how to speak English in th'at other
country then come here speaking it?
PM: Because you'll find most other are not about teaching
English to those who migrate to Australia,
3L: That's up to the people who want to migrate to
PM: It works, by and large it works and we've got a better
country and a more interesting country, a bigger
country, a richer country and what do is take the peaks
and troughs out of it by as needs be.
JL: Ok, but why don't you cuVt the intake now? Why don't you
just stop it?
PM: We have, we've cvt it from 140,000 to 80,000; we've cut
it nearly in half.
JL: aut it's not enough.
PM: I think it is.
JL: Now can it be enough?

TEL: 30Se. 2 8e0uIN. O~
PM YOV'lJ. fin~ d that when the economy starts to grow again
and we have skills Shortages and the rest You can't wind
the damn thing up.
JL: Open the doors again. Everybody wants to Come here.
PM; lt'a got years of lead times on it, onoe it drops away
it falls away to nothing. It takes YOU yrears to build
it back.
JL; Something is very wrong with It when 12.5 per cent of
the people who come here can't get a job, it's apparent
that many of them can't even speak English when theY do
arrive here and we've got a million people out of work
and 9.9 per cent are Australians.
PM; Yq. u've got to think of all the ones who can speak
English, who do come from here.
JL: Well bring them if they've got plenty of money,
PM; who can make a contribution immediately, whose skills
ase in demand.
JL:. Why aren't we more selective?
PM: We are very.
3Ls How can you say we are selective when people come here
and can't speak English?
PM; Decouse in the Family Reu~ nioni Component the insistence
on English end all these other things, they get points
under the system for having a relative in Australia,
that is having a sister or a brother or a mother or
JL: Why do we let that happen?
PM: Because it's part of the general regime of mnigration
around the world. Family reunion is a part of migration
programs world wide,
JL: You come to Australia, the land of opportunity, the land
of milk and honey, learn to speak English, get a job,
work very hard, save your money and then you can bring
your mum out. Seems to make. a lot of sense to me.
Pm: You take 1988 when the economy was booming and we would
have had wages blowing at 15 and 16 per Cent instead of
6, but for fact that we had trades persons and other
professions coming in to complement our labour market so
it was very good for us then, but you can't say well
it's terrific for us then, but it's no good for us now.
JL: But you can fine tulle it. ki noo C> 1r,/ iQ

TEL: 30. Sep. 92 18: 00 No. 008 P. 17/ 19
PM: What I BOY is we have,
JL: flow have we when we'vQ got people here who Can't even
spook the language.
PM; I know, but look they're not a majority and those who
are many of them are women who were formerly at homne
and are nlow looking for work and they've gone to train
themselves and good on them. But of the reason that
unemployment iv In Australia over 10 per Gent is because
of the very high number of people looking for work. If
we had the same participation rate, that is the number
of people looking for work as say the United States has
got, we'd have an unemployment rate of about 5.5 per
cent or 6 per cent. In fact we had the same
participation rate today that John Howard had in 1982,
we'd have an unemployment rate of 6.5 per Cent. The
reason it's 10.5 is because the ' 80a were so full of
employment that people, not unreasonably, have raised
their expectations about getting a job and are looking
f or work and good on them.
JLs That's fine, but then we had that thing that was called
the recession we had to have which was announced by you.
Pm: it was certainly the slow down we had to have, we
couldn't go on importing.
JL: it wao your word -recession..
PM: I know, we couldn't go on spending twice our rate of
production and that's what we were doing. We had
spending running at 9 per cent end production at
john let's make this point and it's the point I made in
Asia Auritralia has made the great economic
transition, in 1982 14 per cent of Australia's
pcJuwtion went to exports, today it's 23 per cent.
That is nearly a quarter of everything the country
produces goes to exports, the difference in that is 9
per centage points of the total economy, 9 per cent of
GDP. That today is worth $ 36,000 million; $ 36 billion.
Could you imagine where Australia would be now had we
left with the old Liberal policies of the ' 809 with $ 36
billion out of our trade accounts? Yesterday we had the
Balance of Payment figure out, $ 900 million for the
month, about $ 14 billion for the year, imagine where
we'd be if there was a $ 36 billion gap in our exports
that now exists which didn't. exist a decade ago? I'll
tell you where'd we'd be, we'd be prostrate. We'd be
like South America, we would have been one of those
banana republics you and I talked about in the middle
180s. We saved ourselves in the 809; nlow sure we've had
a recession on the way through and we're now growing,
but now the place is much more fully employed, we had
phenomenal rates of growth In employment in the
when I become Treasurer the total production of
Australia was worth $ 200 billion, that woo in 1983,
todaiy it is worth $ 400 billion. And then we had six

TEL: 30. Sep. 92 18: 00 No. 008 P. 18/ 1':-
milli on in employment, today even with unemployment
we've got 7,6 million In employment. We've mode the
huge switch to export, we've actually made the great
leap that we didn't think out of the tariff well, we
bounded over it right into Asia, right Into those
exports markets,
JL: All Qf that is fantastic and I'm quite Sure the job you
did when you were in Asia is going to make it even
Pm: it just means you got more access.
JL: out It doesn't make life easier for those people who are
listening to us all over Australia now who haven't got a
dollar to go out and buy a loaf of bread.
PM; Look Johno we've got a decent sQoial security system.
We're not going to say what Dr Hewson's ay-Tfyoure
unemployed after nine months, you're out, you're down to
the voluntary agencies, down to St Vincent do Paul or
the Salvos, we're saying you still have a decent social
security system, we pick you up and carry you along if
you happen to be unemployed.
JL: I know you' re adying that, but there are still a lot of
people who are hungry and all the talk about overseas
trade might be tremendously important from a univeraial
point of view, but from a national point of view for
thos people who are hungry, the place doesn't look to
good. And look at the attitude of the place at the
moment, look at the attitude of Australia, a third of
the people like you, a third of the people like John
Kewson and a third of the people don't know who they
like so that means that both of have virtually got two
thirds against you.
PM: That's pretty well always been the case.
JL: No$ it's never been th'at clearly defined, one third of
the people.
PM: Have a look at Britain, here they are, they can't get
out of their technological troubles, they haven't made
the great leap, they tried to tie their exchange rate to
the German Deutschmark and French Franc, in the end they
couldn't got the productivity in their country out so
its busted out of the link, they've been in a chaotic
financial position. Look at us last week Britain
dropped its interest rates by one per centage point and
it was news all around the world. we've had 13 one per
centage points changes since 1990 accomplished with
total smoothness, we' vo had a 12 or 13 per cant decline
in the deprecation of the Australian dolla~ r, again a few
hea~ l~ neu, but basically total smoothneoss. Whot's
happened over there? They're growing minus 1.6 they are
actually contracting, they haven't made the

technological leap, they can't jump into Europe; compare
with them say to us, we've made the great change.
JL: That's right, but we're here that's the point. it's ll
very interesting
PM: I'll make the point thot we're oioIg much better.
JL: You try end tell that lot out there that we're doing
much better. We might be doing much better on a world
* 0810,
PM: We are, on a world scale we are.
PM: But that doesn't help them buy a loaf of bread.
PM: There's still 90 per cent of people in employment,
there's 90 per cent of people in employment, they've got
lower interest rates by 8, 9 10 per centage points than
tWo years ago, the economy is now growing somewhere in
the order Of1.5, 2 per cent heading towards 3,
employment growth means Lhe country in much more
productive, we're exporting a quartor of everything we
proCuce, we're exporting our heads off, we're now making
techiologically innovative products which we weren't,
we're producing ships for the navy better than the
AmeriodnS can produce demonstrated yesterday.
JL: All of that is wonderful, but we're not seeing
unemployment drop ore we?
PM: you're seeing employment growth, you're seeing Job
growth, but the number of people joining the workforce
is bigger than the job growth therefore unemployment
Uteyed up.
JL: When is unumployment going to dvrop?
PM: As soon as we qeL back to stronger rates of economic
JL: I've got to go and I know you've got to go, thank you
for your time, it was good to see you and let's hope we
have the opportunity to talk to you again.
PM; Thanks for the nag John.
ENDS TFI An CPn 1q: An Nn Nnn P lq/ 1c

Transcript 8682