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Address to National Press Club, Canberra [and] Questions and answers

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It is a pleasure as usual to be here, even for the nineteenth time.

I thought I should come along and be re-assured that I exist. I was a pretty sure I did; my colleagues assured me, the numerous people with whom I have been consulting, the people on talkback, the people on committees, the Chinese, the Koreans, various Heads of State. They all

seemed happy with the degree of my visibility.

But I should have remembered the old maxim -. I speak at the National Press Club therefore I am.

Let me begin with a quotation from a very familiar source.

When King George VI died Robert Gordon Menzies made the following observation:

The death of the King has once more reminded us that our great Commonwealth is united, not by legal bonds, not by the Crown as an abstract notion, not by fine-spun constitutional theories, but by a common and all-powerful human emotion which discards form and penetrates instantly to the substantial truth.

It is not very often that I quote the words of Bob Menzies.

My opponents do it enough for all of us.

The Liberal Party is like a hound which cannot be induced to leave its master's grave. It is always scratching around in the dust for a•hint, an indication, some sign which will tell them who they are, and what they stand

for, and what they should do next.

But I agree with what Bob Menzies said in this instance.

I agree that what unites a nation - or a Commonwealth -has less to do with the law than with feelings held in common.

Menzies developed a very similar philosophy about the Queen. He took her extraordinarily popular visit in 1954 to be evidence that Australians' affection for her - "was one of the most powerful elements converting them from a mass of individuals to a great cohesive nation."

I agree with him there too.

I agree that there is such a thing as national sentiment and that it is a powerful force in the shaping of a nation, in the cohesion of a nation, in the success of a nation.

I agree that in the 1950s and for a surprisingly long time afterwards Australia's unity with Britain was built on something more than friendship - it was built on an implicit sense of unity, on an instinct.

And I agree that in 1954 the Throne of England, and in particular the new Queen, constituted a considerable element of Australia's national sentiment.

I agree with all this. I think more national sentiment is what we need now, and more unity, and cohesion.

We need it because the old affections are not there in the same way.

Even though there is widespread affection for the monarch, there is simply not the same affection for the monarchy.

Our relationship with Britain has changed irreversibly -as irreversibly as our culture and the composition of our people has changed.

We are a very different country in a very different world, faced with entirely new challenges which will have to be met in entirely new ways.

In Asia and the Pacific we have opportunities of a kind we have never been offered before.

To grasp them I believe we need a new sense of unity - a new kind of national sentiment. And in 1993 it can only come from one place. From Australia - from the democracy, from shared values, shared aspirations, from the necessities we face.

I have been saying it for some time now: we need a sense of common purpose, of fellow feeling - the things which will both inspire Australians and bind them together.


And if you could transport Bob Menzies from the era in which he lived, and put him down in this one with all the necessities it imposes on us, and all the opportunities, I am pretty sure he would say the same.

We cannot expect to change the direction of our trade and commerce, adapt to the revolutionary changes in the processes of production and the nature of work and to the equally radical changes in the global economy without cultural change.

We cannot expect to live in this new era with the institutions, symbols and attitudes of an old one.

We cannot find our place in this new world without finding and cementing the common ground among ourselves.

These are not radical ideas. They are common-sense ideas - pragmatic ideas.

Let me say it again, if only for John Howard's sake: many of the things which bound together the Australians of Menzies' era are either irrelevant or no longer on offer.

In fact there is something much better on offer: there is the chance to make good in our region, which is the fastest growing in the world; and to do it on our own, by our own collective initiative and genius.

In the last decade of the twentieth century the chance exists for this generation of Australians to set Australia up for the next century.

That is why last year I made a deliberate decision to depart from the usual overseas travel priorities of Prime Ministers by concentrating first on Australia's main regional relationships.

So, as you know, I went to Indonesia, Papua New Guinea, Japan, Singapore, Cambodia.

And this year to New Zealand, Korea and China.

To our regional partners I wanted to underline Australia's credentials as an economic and political player in the Asia-Pacific; to emphasise our commitment to economic engagement in the region; and to strengthen

our voice in regional affairs.

To the Australian public, I wanted to underline the enormous benefits that will accrue to our country through closer economic integration with the region.

During the 1980s the countries of North-East and South-. East Asia grew twice as fast as the rest of the world.

During the 1990s they seem likely to easily repeat that performance.


But one of the main messages I wanted to impress in Korea and elsewhere in Asia, is that Australia is very well placed to expand our exports of technology-based goods and services.

And in both Korea and China there was concrete evidence that the expansion and diversification of our trade is already gathering pace.

The radical reform and continuing growth of the Chinese economy are providing numerous opportunities for Australian companies and, as you know, I was able to witness a number of joint venture signings between Australia and Chinese enterprises.

The Chinese leaders made it clear that they were interested in a long-term strategic relationship with Australia in the development of the Chinese steel and woollen textile industries.

At my discussions in Korea and China there was agreement to strengthen the government-based mechanisms which support these important economic relationships for Australia. And our Trade Minister, Peter Cook, will

follow with visits to both countries in September.

I went to Indonesia last year with great enthusiasm.

In the course of that trip and my subsequent ones to other East Asian countries the enthusiasm has become conviction.

I came away from Korea and China last month more than ever convinced of the enormous potential the East Asian economies provide for Australian business - and therefore the potential for Australia's future our integration with

the region holds.

I came away more convinced of this, and more convinced of the potential of APEC.

The Korean and Chinese leaders very much agree with our view about the importance of ensuring that the economies of North America and the Western Pacific be locked together in one great and dynamic market.

Since my return, of course, President Clinton has issued his invitation to host an APEC leaders meeting in Seattle this November.

President Clinton's announcement is very good news for Australia. It opens up an historic opportunity to promote the economic integration of the Asia-Pacific region in a way that serves the interest of all members.


It is important that the process of Asia-Pacific economic, cooperation provides genuine benefits not only to the advanced economies of the United States and Japan, but also to the rapidly developing economies of South East Asia.

If the Seattle APEC leaders meeting goes ahead as proposed - and I am fairly confident that it will - it will put Australia at a table which really matters:

the APEC economies account for half the world's output and forty per cent of world exports

three quarters of Australia's exports now go to the APEC region

Establishing a process of periodic leaders' meetings will greatly increase the status and authority of APEC - a forum which, of course, Australia was instrumental in creating and has helped define and promote ever since.

The process is necessarily long-term. But this is the best evidence of progress towards that goal, and the best possible spur for further progress.

There is, then, this extraordinary opportunity for Australia.

We should not overestimate the speed with which the process will occur. But it is even more essential not to underestimate the chance it gives us.

It is essential that we are positive in our approach to it. And essential that we find the common purpose and collective will to grasp it.

It is essential that we find the national unit y our

effort will require.

Most of you will know that famous story about Menzies which got him into a bit of trouble at the time: how he came back from Britain in 1941 and said to the waiting press how despondent he felt upon returning to all the

local petty politicking.

I love politicking - I think it is how the democracy advances - but when I came back from China last month I think I had an inkling of what he experienced.

I thought - here is this fantastic opportunity for Australia, an historic opportunity to which the whole national effort really should be turned.

But what do we hear?


Apart from the usual healthy and not-so-healthy cynicism we always hear, we hear in the debate over the Mabo judgement a mad retreat to parochialism and petty self interest.

We hear politicians playing to the lowest denominator of public opinion.

We hear deliberate misinformation and the encouragement of outright bigotry.

All this on an issue of fundamental importance, not only to the Australian economy, but to the values on which Australian democracy, the Australian ethos, and Australia's reputation abroad are built.

There has been an element of mischievous and ill-informed journalism in the Mabo debate. But the primary debilitating role has been played by the Opposition.

Tim Fischer goes to Hong Kong and assures his audience that there is nothing to fear. In Hong Kong he tells the truth. But in Australia he tells the people that they will lose their backyards. In Australia he tries to whip

up fear and panders to the worst feelings in the community. .

Yet, we expect this from the National Party. Paranoia and parochialism is to the National Party what grass is to sheep and goats.

But the party which has most failed Australia on the Mabo debate is the Liberal Party. Confronted with a great national issue which needed, above all others in recent times, a great deal of good will and good feeling and a concerted search for consensus, the Liberal Party chose to foster ill-will and ill-feeling. They chose the role

of spoiler.

And the chief spoiler has been Dr Hewson. Not only has he refused to distance himself or take issue with outrageous comments from people like Tim Fischer and Hugh Morgan, he has actually joined the little company who claim that people's homes are at risk. Dr Hewson knows that they are not.

Last month we saw him on national television talking about what he called "massive uncertainty" - "are titles secure, is your home secure, your mine secure, your farm secure?", he asked.

Dr Hewson knows the answer to these questions is unequivocally "Yes".

Mabo calls for something much better than this. It calls for nothing more or less than a mature national response.


The High Court judgement entailed recognition that the fiction of terra nullius was indeed a fiction; that native title, where it had not been extinguished, continued to exist; and that the appalling treatment of Aboriginal Australians did in fact occur.

It is hardly revelatory. In essence it recognises what we have long known to be true.

The Mabo judgement places great responsibilities upon us, but it seems to me these responsibilities create the opportunity to set right some aspects of Australian life which have long been wrong. It offers a chance to raise the level of dignity on both sides.

And these responsibilities are no greater than the responsibilities which the United States, New Zealand and Canada all confronted last century. These countries faced up to their responsibilities while they were still

in their infancy.

I am one of those who believes that in our maturity we too can meet our responsibilities - that we can make a mature national judgement.

It must be a national response: the entire continent was declared terra nullius; native title was denied everywhere; the abuses occurred in all the states.

The need to find solutions is a national need. If the word "Australia" still means, as I believe it does, a belief in democracy and social justice, if that remains the national sentiment, then a just national solution must be found.

From the first Cabinet discussion a year ago, the Government has seen as the nub of the matter finding a rational reconciliation of two imperatives: the certainty about land tenure which a resource-based economy requires and the discharge of our deep obligations to Aboriginal and Torres Strait Islander people whose legal rights have been granted them by the highest court in the land.

We have been determined that it must be a reconciliation managed by Governments rather than left to the fate of protracted conflict and unpredictable litigation.

We have moved as quickly as possible. Mabo amounts to the biggest.change in Australian land law since we became a nation. That is why I announced last October that we

would be taking a year to consult on the issues, consider them carefully and formulate our policy.

I remind you that during the election campaign the Leader of the Opposition supported the process and the timetable.


I will not attend now to any of the shrill and irrational charges that have been made in the course of the debate.

As for the charge that the States have been browbeaten, I won't go back over the twists and turns of discussion and drafting that went on at the COAG meeting in June.

But if it is browbeating the States to ask them to accept one of the most important and positive decisions the High Court has ever taken - if it is browbeating the States to ask them to do more than simply pocket a Commonwealth offer to validate their grants and pick up the entire compensation bill - if it is browbeating the States to ask that effective mechanisms be established to determine native title claims, and that laws be updated to recognise and protect native title - and if it is

browbeating the States to get them to understand that Mabo has a significance well beyond the nitty gritty of land management - then the States have been browbeaten.

And the Government will not waver from its view of Mabo as a national issue requiring a national response.

At our initiative, consultations have been held with the States since last year, in every State capital and in multilateral meetings the work has continued since COAG.

I reiterate what I have said to the Premiers and Chief Ministers: in dealing with the land management challenges posed by Mabo, our preferred course is complementary legislation, cooperatively achieved.

That does not mean we will accept the lowest common denominator, or will fail to establish appropriate national standards and mechanisms for dealing with native title.

If Aboriginal and Torres Strait Islander people have one overriding request of the Government it is that the Commonwealth set the benchmarks. And this we will do.

As we work on legislation, we are going to keep the lines of communication open to Aboriginal and Torres Strait Islander representatives, to representatives of industry and to others. The political heat of the issue will not deflect us from that sound, deliberative, consultative course on which we embarked last October.

The legislation we will introduce in the Budget sittings will make Mabo work. It will demonstrate that native title is not incompatible with efficient land management or with the national economic interest.

Dr Hewson made another contribution to the Mabo debate yesterday. He said that Mabo threatened to lead to recession.


Dr Hewson appears unable to live without recessions. When he doesn't have one, he conjures one up. Late last year, you will remember, he said that the recession was deepening. Double dipping. Then he said that we were on

the verge of a depression.

Dr Hewson has also been talking about how the Government must not "go beyond" Mabo, as if it is possible to deliver a complete response without paying regard to the wider implications of the judgement.

Let me say that it is not "going beyond" Mabo:

• to see how the decision, by sweeping aside the doctrine of terra nullius, also sweeps aside the foundation of the dispossession of the indigenous Australians

• or to note that the decision itself talks of Aboriginal dispossession as having underwritten the development of Australia

• or to consider then what might be done for those who have been dispossessed

• or to consider also how the apprehensions of land-based industries and the hopes of Aboriginal people for economic improvement might both be addressed by giving the latter a greater sense of involvement in


• or to recognise, as the High Court has now done, Aboriginal customary law and traditions as a source of Australian common law

• or to recognise why, therefore, the Mabo decision can be seen as a major contribution to the social, cultural and economic standing of Aboriginal and Torres Strait Islander people with the potential to establish a new basis for the relationship between

indigenous and other Australians

None of these aims exceed our capacities as a community and a nation: none of them exceeds our democratic or social aspiration. They are, I believe, consistent with our values and beliefs.

The spoilers, no less than the bigots, should know that. And they should know that no amount of sophistry, or denial, or lies will deliver us from the truth. None of it will help Australia escape judgement in the eyes of the world. And none of it is needed.

What we do need and what we will have is a workable solution that will actually improve the quality of our national life, which will build up the values we hold in common, and nourish the reconciliation process.


And there is no doubt that we would be considerably closer to this solution if the Liberal Party had not decided that it was in their interest to subvert the national interest.

But, in fact, as Judith Brett wrote the other day, the Liberal Party is "philosophically bankrupt". They no longer have any idea how to address those things which their founder understood instinctively - the need for

unity, the importance of social values, the essential role of a responsible political party to find the means by which a society can cohere around common principles and aspirations.

The Liberal Party, the alternative government, has comprehensively lost its way. This is a fact which in some circumstances might give the Labor Party comfort, but there is no comfort for any Australian in their

present behaviour.

And there is little prospect of their improving. Having just lost an election, they number among their leadership aspirants the man who contributed more than any other to the loss.

And having lost it on a Thatcherite program, they allow to be a contender a politician who, in an embarrassingly transparent imitation of Mrs Thatcher before she mellowed, said the other day that government should be

"poor", and "the laws of the free market are as immutable as the laws of gravity".

Among their youth two of their brighter sparks are avowed monarchists. The former Hewson adviser, now Hewson-hater, Abbott; and the Melbourne lawyer, Costello.

Abbott and Costello lead the youthful wing of the Liberal Party, along with the likes of the Member for Menzies who, to judge from an article in The Age the other day', makes the man after whom his seat is named look like an

Irish rebel.

But no one is more culpable in the present fiasco which is the Liberal Party than the bloke who only six months ago was still believed to be their hope for the future.

In what appears to be a sort of penance for his sins, he now tramps around the country saying things he doesn't believe or he knows to be untrue.

It is well known, for instance, that privately John Hewson will tell you Australia must move on to be a republic. But unlike the-Greiners and the Faheys and Sir

Rupert Hamer and many other leading Liberals, he will not say so. He will not lead. He does not have the courage of his convictions.


The man who just last year was touted as a visionary now is so reduced he will not engage with the debate on the republic and discourages the goal of reconciliation

between Aboriginal and white Australia on the quite extraordinary grounds that he will not cater to Paul Keating's ambitions.

The nation's ambitions apparently no longer enter into Dr Hewson's political equation.

Nothing will persuade Dr Hewson that economics cannot be divorced from social policy, that our economic performance depends in considerable part on the strength of our social bonds and on the development of a uniting


That our success in Asia will depend on these things as well.

I think it is safe to say that Australian business understands what the political Opposition fails to.

Business knows that in the end it will not be the Australian Government which carries the day in the Asia-Pacific. It will be business.

It will not be Government which ultimately carries the day in Australia. It will be business. Business, unions, the workforce: public and private institutions, schools and universities, communities, individuals.

In the end it will be, as I said, the quality of our national effort which determines our success.

That is what increasingly impresses me in Asia - the number of Australian initiatives which are succeeding. It is what increasingly impresses me here. It's what impressed McKinsey in the survey of 700 new exporters.

We will help business up wherever we can. We won't be shutting down the economy as some people are saying we should. We'll do what we can to sustain demand.

But once it gets going we'll get out of the way.

Right now it is particularly important that governments get the broad parameters of economic policy right.

To generate investment and jobs Commonwealth and State Governments must get their budgets right: they must support the economy in the short run by providing a stimulus to spending; but they have to able to show that

in the medium term deficits will be scaled back to allow private saving to be used to fund business investment.

We cannot allow our private savings to be used solely to fund big budget deficits.


We have to have more business investment and we have to • free up our private savings to pay for it.

This is what we did in the 1980s when we built up those big budget surpluses.

More recently, the Treasurer, the National Fiscal Outlook and the Fitzgerald Report have reinforced this simple point.

In the medium term, big budget deficits are not consistent with a strong economy.

That is why the Government is committed to reducing the budget deficit to 1 per cent of GDP by 1996-97; and why we are aiming for a budget deficit of around $16 billion this year.

The economy has been recovering for seven consecutive quarters - but, while the medium term looks good, the process has been stubbornly slow.

We can be thankful that with more and more of our trade in the Asia-Pacific we are not so dependent on the OECD economies to sustain our export growth.

But sluggish. growth in the OECD area has inevitably made it difficult for us in Australia.

There are some forecasters suggesting that the GDP growth in 1993-94 might be little different from 92-93.

Private consumption conceivably could weaken.

The economy could therefore do with the stimulus this financial year that the One Nation tax cuts are scheduled to bring next year.

On the other hand, because inflation is much lower, the One Nation tax cuts are now more generous than they were intended to be when they were announced in February 1992.

It is for these two reasons that the Government is considering how the One Nation tax cuts can be best put into place - best for the economy and best for taxpayers.

The tax cuts now legislated are to be paid in two parts -one in July 1994 and the second in January 1996.

We are now in the process of considering the extent to which the first leg can be brought forward to boost the economy, and the second put back to secure the savings task in the interim.


As I said earlier, when the tax cuts were announced in February 1992, they were intended to encompass fiscal drag. The subsequent better performance on inflation now implies that they are substantially more than fiscal drag - substantially more than was intended.

Delaying the introduction of the second leg will bring the tax cuts backs into line with what was intended and announced in February 1992 - while still seeing the tax cuts paid.

In this way the incidence of income tax will not rise, savings will be boosted, and the economy will receive a fillip at a time when it's still needed.

These tax cuts will be delivered in full this financial year. They will be L A W - law.

And what is more, they are R E S P 0 N S I B L E -

responsible law.

I began by talking about Australia's national values; or, if you like, this system of belief which unites us.

I have said before that this a country which has got its basic values right.

Those values remain, by and large, democratic, egalitarian, tolerant and - far more than before - open.

But I do think we need to be more generally aware of them, and they should be reflected more obviously in our national symbols and institutions.

I think as Australia changes and old affections inevitably fade it is essential that we get these things right for future generations.

It seems to me that there is no better recent evidence of the need for this than the Mabo debate - particularly where it has been led by our conservative opponents.

In the end, however, I am supremely confident that the better instincts of the vast majority of Australians will prevail.

I recognise, just the same, that none of this can be divorced from our economic performance - our ability to provide long term security and prosperity.

That, despite the slow recovery, is now on offer as never before. It is what the government, and a great many Australians, have been seeking for some time.

There are profound reasons to believe we will succeed -and in the end nothing will be more important than belief itself.





Q: Fia Cumming, from the Sunday Herald Sun. Mr Keating you have confirmed today that the tax cuts have been modified, given that the last election was largely fought on taxation issues, can you also confirm that the Government is reviewing its policies in relation to other forms of taxation? And if so what do you see as the Government's

mandate in relation to tax policy, or is the concept of mandate now passe?

PM: Well it is not a matter of being passe, it never was passe. It is a matter as a Government one's fiscal responsibilities, and I wouldn't think our responsibilities are a jot different than the responsibilities we had in any other budgetary year, and that is to make sure that fiscal policy plays its proper role in the economy. Therefore, as the Treasurer indicated yesterday the Government is looking at revenue options for the budget, and is doing so because there has been a very large structural change in the revenue of the Commonwealth. We have provided tax cuts to business to give business a tax rate comparable with the nations of the region, 33 per cent corporate rate. We have

introduced two quite expensive investment allowances to encourage private investment and employment, we have introduced a system of rapid acceleration depreciation which cost upwards of $1.5 to $2 billion a year when it is running, just to name a few. Beyond that we have got just some structural declines on our hands. Bass Strait is running

down and no longer producing the revenue it used to produce. So, the Commonwealth, the Government will always have a responsibility to make sure that its tax base, its base, its long run base is ok, and this link you are trying to make between mandates and tax changes is a tabloid link, it is not about the proper long run management of fiscal policy. That's why we make that clear, that we are examining these things, but you will have to wait till the budget to see what we do.



Q: Dennis Grant, Prime Minister, from the Seven Network. Tax cuts again, perhaps unsurprisingly, and in an effort to get to C L E A R, are you saying now that the tax cuts ...

PM: Well you can R E A D and maybe it will C O M E TO YOU.

Q: One of the things we have learnt about you is reading between the lines is nearly as important.. Will the tax cuts be exactly the same as promised in One Nation but in a more compressed time scale? Will any Australian tax payers be disadvantaged under this second scheme of things?

PM: We are now looking at growth which has been at about 2.5 per cent across the year, pretty much averaging that sort of rate over the four quarters. You have seen private forecasters now talking about diminished private consumption, flat private consumption through the coming financial year. So, it seems that as this was not expected a year or two ago it would seem that the fiscal boost that we would be providing under the tax cuts as legislated would be better brought forward so that it fulfils that economic benefit of, well the two, of

boosting activity and giving a fairer tax rate to people on middle incomes. That is the principal point. Can I just say, let me repeat what I said at the Premiers conference, from the November 1991 estimates of growth the OECD revised down 1992 and 93 by 4 per centage points in both years, just on 4 per centage points in both years. The OECD area is flat, we have got Japan in a recession, we have got Germany in a recession, we have got Britain barely out of one and the

United States slowly pulling out of one. So, as a consequence growth has been marked down, our national income has suffered, and therefore the buoyancy with which these tax cuts would have found themselves in the dates that they were set up for has not materialised

and they can serve a useful purpose coming forward. But we have a problem in the medium term, in the middle '90s, and the second cuts were to be paid in 1996 and we now will put those back and in putting those back it will mean that that amount above fiscal drag, that amount above that which we intended to pay in 1992 in February in the One Nation Statement when they were announced will again be corrected by a change to the timing. The key point is, I think, that there is an economic imperative being fulfilled and we are getting away from this untenable position where somebody on two thirds of average weekly earnings, $20,000 and up, starts paying a 38 per cent marginal rate.

Q: Paul Bongiomo, Network Ten, Prime Minister. Do you believe what you have announced today will need some form of amendment of the legislation you have already introduced and has been passed, regarding the tax cuts and given that from now you need nine out of the ten non-coalition Senators to support any laws you want to pass through the parliament, have you discussed this with the Democrats, and given that they are calling for the total abolition of the tax cut



promise, do you believe you will be able to do what you have announced today, and if not won't that leave your Government with an awful economic problem? PM: I have never anticipated, and never will, that the Senate won't deal with the Government's financial and budgetary legislation

appropriately, and what point are they trying to make, that people on two thirds of average weekly earnings should bear a 38 per cent rate forever? I mean what kind of view is that from a party which believes that they're, amongst other people, protecting those sort of people. And one doesn't have to assume, these are legislated so they would

need to be changed ... amending legislation, but there needs to be amending legislation on all manner of tax legislation perpetually. Let me just make one point about the budget balance and the tax cuts. In the One Nation Statement document at page 41, you will find the budget balance which existed in 1991-92, that's to June 30 1992, and that forecast for June 1992, July 1992 onwards through '93. Now One

Nation was announced in February 1992, none of the One Nation forecasts of growth effect any of the then parameter numbers for the budget. The budget balance as estimated for by the Treasury for

1991-92 was $6.3 billion in deficit and for 1992-93 $6.2 billion in deficit. By June of '92 that had deteriorated with the One Nation outlays in it was $8 billion, we changed a $6 billion deficit and forecast to $8 billion that $8 billion had deteriorated to $14 billion in four months. In other words the economy was slower than the Treasury estimated and the revenue fell away by $6 billion. Now that's simply a fact of life, so that reflects those two OECD changes of 4 per centage points through both years. The same influence occurring on 'Australia. So, these cuts were built on that kind of outcome and now the outcome has changed, we are changing the timing. But can I just say the idea, have seen in some of the comments, that they were cycnically provided on the basis that they could never be paid is completely wrong, completely without foundation.

Q: Stephen Spencer, Macquarie News, Prime Minister. Four months ago during the election campaign you insisted all of these tax cuts could and would be paid in full, what do you now know that you didn't know during the election campaign that has made you scrap at least part of the tax cuts?

PM: Well we have made clear where we want to see the budget balance in the middle of the decade, and that is to get the budget to around 1 per cent in deficit, 1 per cent of GDP by 1996, and therefore given the slowness we are now seeing in some of the forecasts for consumption it just makes simply sense to try and bring the tax cuts forward and therefore because leaving the second round where they were is much more than the Government ever intended to be paid we can put them back and pay that which we intended.

Q: Tony Vermeer from AAP, Prime Minister. I would like to ask you about Mabo, Victorian Premier, Jeff Kennett, has been the first Premier to introduce go it alone legislation today. I am wondering whether you are satisfied that it accords with the Commonwealth view of the issue and if not will you override it, and if so on what grounds?

PM: Well look I don't know much about it, I got a briefing note just as I left, and I will try and decipher that for you. He says, Premier Kennett says, payment of compensation to native title holders will be sufficient to ensure that the validation of grants complies with the racial discrimination act. That is the first point he made. Well that is far from clear, which is why other States want the Commonwealth to remove doubt on that score, which we are willing to do as part of a reasonable approach agreed with the States. So, he is saying that the payment of compensation by Victoria to native title holders for claims made between the titles issued between 1975 and 1993 will validate grants and comply with the racial discrimination act. Well that may be true, but I would only say this, it is far from clear. But I think the most important thing I would say to you about it, as far as I know, the bill does not contemplate in any legislative sense any future arrangements relating to possible claims. In other words the bill does not encompass any scheme of arrangement to hear and award native title. Which

leads one to the conclusion that Premier Kennett has indicated that he recognises the need for a national approach in the future. So, I think what we are seeing from Victoria is probably a limited effort but not one which deals with Mabo in the broad. Also there is no evidence in. the Bill of any effort, any decent effort, to protect native title from extinguishment, which means I don't think we can at first look regard the bill as a competent piece of legislation to deal with the Mabo issue

in Victoria.

Q: Ross Peake from the Canberra Times. Prime Minister, you have talked about this slowness of the economy today and the fact that it makes sense to bring forward the tax cuts, I would like to have a go on interest rates.

PM: Well everyone else does, Ross, you may as well go for your life too.

Q: The Treasurer yesterday indicated that he agreed with the assessment of the Reserve Bank on the economy. What do you say?

PM: Well I think in all these things it is always about the ambience. It is what the other nations are doing with their interest rates. Its about whether markets feel comfortable with the prevailing economic climate. It is about taking the temperature at the time. It has always been about that, and with very low inflation and we have by our standards

exceptionally low inflation. In terms of real rates a point the Treasurer has made and the Governor has made, it would be good in economic terms to reduce that real rate, reducing nominal rates and therefore


reduce the real rate. And no doubt with real rates where they are there may be scope to do that. But again, we have to fund a substantial current account deficit and these are always value judgements, but f am sure the Governor and the Treasurer continue to keep the political and economic thermometer in the market water. And if they think it reaches a certain point where they can move with confidence then so be it, certainly our fundamentals in terms of inflation would permit it.

Q: Lyndal Curtis, Radio 2UE, Mr Keating. You talked before the election about wanting to lift people up, not push them down. You also talked during the election about wanting to lift the spirits of Australians, how do you have any hope of lifting the spirits of Australians when on the day to . day issues they are still being weighed down? When older Australians face the prospect of never working again, when younger Australians face the prospect at best of 6 per cent unemployment, and when the economy is essentially relying on a boost from the rest of the world to pick it up from its sluggish growth.

PM: So life is complex and difficult, I mean we all know that. But we are not simply relying on the rest of the world. The One Nation package of measures and the general shift in the budget balance from surplus to deficit is one of the reasons why 40 per cent of the growth that was evident in last quarters national accounts came from the public sector. We are doing the right thing, in fact we had our policy endorsed by the OECD who has encouraged member countries to go for an expansionary fiscal policy. So, we have moved growth along, the thing is to date it has been productivity laden, companies have been getting more growth out of fewer people. But you can only mine the productivity mine so much, and if growth continues to accelerate then companies will have to start re-engaging, and that's when we will start to see employment moving. But in the meantime we are conscious of the long term unemployed and the problem of the long term unemployed and that is why we are now looking, we have set up a special group to give a, what I hope will be, a very significant report about how the labour market, how the Government should relate to the labour market, and what measures we should adopt to deal with what is a new element in our social and economic life. That is, higher levels of longer term unemployment and that group will report by later in the year, in the meantime of course we are continuing to hold up with strength, our labour market programs which are effective I think in getting people out of the pool of unemployment, long term unemployment and back to work. So, I very much remain totally committed to the notion of keeping people up with the economy, with society, of not letting an underclass develop and never taking the view that if they are unemployed they are marginalised and forgotten. They will never, while this Government can stand on its feet, be

marginalised and forgotten.


Q: Tom Burton from the Australian Financial Review, Prime Minister. You said today in your speech that you remained committed to a budget deficit of $16 billion, which was the figure which had been in the market place prior to this announcement. You also said you will now bring forward the tax cuts, does not that mean that the tax cuts will have to be fully funded if you are going to continue to meet that target, and that there will be no fiscal loosening? Therefore how can you say that this will be stimulatory to the economy?

PM: Well to the extent that tax cuts are paid earlier than later, is stimulatory, and the fact of the matter is that you will have to wait till budget night for all that to be revealed. I mean, I don't think the gallery, need I say the Financial Review, is entitled to a daily or weekly score sheet on the budgets preparation. Now I understand the sense of the question but on these things, I mean, as a group of journalists, as a media, you are told more about fiscal policy in this country than any country in the world. With estimates of receipts out for years, estimates of outlays out for years, reconciliation tables between budgets. What you are not entitled to have is score sheets in the preparation of the budget......

Q: No, no, no. The fiscal deficit was going to be $16 billion before you announced these tax cuts, or bringing forward tax cuts.

PM: No, no. But you assume therefore that what we say, we say that all the things which the Government says and does are done in a way where you interpret the timing to mean that they have certain sequential fiscal effects. These things have been thought about in globo over the course of the period since the election.

Q: No, it is simply an attempt to reconcile $16 billion which in fact you are saying is stimulatory.

PM: The thing is the whole stance of policy is stimulatory, that's the point. The notions that what the Treasurer told you yesterday and I have told you today, the Treasurer and I discussed within days, a week or so of the election.

Q: Alan Sunderland, SBS TV. Mr Keating isn't it a bit disingenuous to talk about achieving your aim of 1 per cent of GDP for a budget deficit in 1996-97 when you then blow it out again shortly afterwards with billions of dollars worth of delayed tax cuts.

PM: No, you have got to understand a little bit about fiscal policy and the operation of growth on the economy, that is the game doesn't stand still, the economy continues to grow and hopefully by that stage we will be growing much faster. The point was that we did better on inflation, therefore the cost of the tax cuts was greater than fiscal drag. Therefore the costs of maintaining them in the time table they were to


be maintained in meant we were bearing a greater cost than that which was originally intended. I don't think the Government can be lampooned for producing a better inflation outcome than thought originally or that the fiscal deterioration of $6 billion in the first half of

1992 came from basically the Treasury's own estimates which were predicated on faster growth and stronger activity, but they had reasonable belief in this because the OECD had indicated certain things in its November-December 1991 review. They were marked down by 4 percentage points so basically all of the parameters shifted and the starting point shifted.

Q: Tony O'Leary, Herald-Sun. Prime Minister, can you tell us when tax payers are likely to get the second round of tax cuts since they made their decisions in the election based on that promise? And also can you tell us, you have been urging employers to change their minds about taking people on, taking on more workers and at the same time we've got a review of ANSTO and a review of Australia Post. Could

you give us an undertaking that there won't be any job losses in these and other areas while we've got the current recession?

PM: No, I couldn't give you that assurance at all. One hopes that managers do sensible things about attrition rates and the rest, but again these bodies must go through a transition. On the first question that is a matter to be decided by the Government, it will probably be 1998, probably.

Q: John Hewitt, MMM Radio. Mr Keating a question on employment and specifically youth unemployment. Today is the anniversary of the much vaunted youth summit, the jobs summit and since then a lot of groups have marked today actually by lamenting the inaction they have seen in that area. They have placed flowers at Parliaments around the country. Are you personally satisfied with everything that has happened since the youth summit twelve months ago and what can you say to convince young people that they can have a job next week let alone next year or next decade?

PM: We had a very successful take up of the positions which we created as a result of those discussions and while I don't have the numbers exactly on the top of my mind, I thought the major participants were pleased with the outcome and we have seen the programs taken up ever since. So, to my mind dealing with that 16-19 age group we had effectively, in as ambitious a way as was practicably possible, got into that core group and provided training and employment opportunities for them.

Q: Glenn Milne, The Australian. Prime Minister, the starting point deficit is $18 billion, you have recommitted to a deficit of $16 billion today, yet in announcing the bring forward of the tax cuts you surely added several billion dollars to that deficit. Can you tell us what that number

is, what it adds to the deficit and whether it will be fully funded through spending cuts or as Tom (Burton) suggests it's going to be stimulatory?

PM: But again, you want me to disentangle the thing before Budget night and you will have to wait until Budget night, simple as that.

GM: Prime Minister, the first tranche of tax cuts was worth $3.5 billion. I am simply asking what addition to the deficit?

PM: That will be a matter for decision between the Treasurer and myself and the Revenue Committee of the Cabinet as to when and how far forward they are brought. Can I deal with one point which occurs to me. We have had the Opposition running around saying, we had a

mechanism in place to deal with these problems. Let me just put that lie to rest. The consumption tax - let me demonstrate this with two glasses, only full of water - but Fightback had two elements. One was the consumption tax which raised $24 billion, originally $27 billion but modified to $24 billion. It was all given away in the abolition of the wholesale sales tax, the abolition of petrol and payroll tax, the whole of the $24 billion was spent, there was not a cent left over. On the other

hand there were $12 billion of tax cuts and that was to be paid not by any proceeds from the consumption tax, by cuts in government spending - unbelievable, incredible, unlikely cuts in government spending. It was all wrapped up under Fightback and so the pea and thimble trick was to believe that this paid for that, that the consumption tax paid for the tax cuts and Dr Hewson is now trotting around the

place saying if you would have had my policies; this morning on 'AM' my policy which he has already abandoned mind you, if you had my policy these things would not be a problem. The truth is that the tax cuts were not paid for by the consumption tax at all, the consumption tax merely pays the payroll tax, petrol and the abolition of the wholesale sales tax. There was no nett contribution or addition to the

national savings task from a consumption tax, so let me nail that mistruth, that exaggeration, that total lie now. That left $12 billion of tax cuts, what have they proposed to fund that? Throwing people of the dole after nine months, massive attacks on the social wage, huge incursions into outlays that could never have stuck and, of course, the most unbelievably soft, spongy, washy numbers on asset sales like Telecom and the rest which, I might say, went until very late in the piece without any scrutiny. That is what they propose. He still has the gall to say on 'AM' this morning our mechanism, our policies would have provided for a boost to national savings when he has abandoned the consumption tax, not only did it not provide a boost to national savings because it was all spent, but he has actually abandoned the thing he now points to. No wonder he is in trouble inside his own Party. Is it any wonder he is in trouble saying that the policy that was right was the one I have just abandoned, the one I couldn't win an election on.



Q: Amanda Buckley, Sunday Age. Just getting away from the glasses of water and the tax cuts, you express the wish that better instincts will prevail in the community on Mabo, but in fact there is daily evidence of fear and ignorance in the community particularly Victoria and Western . Australia and confusion amongst the Aborigines. In fact Dr Hewson in

the north of Australia travelling around there a week or so ago was continually asked questions by the Aborigines about the Mabo legislation as if he was a member of the government. I wonder whether you are planning any sort of travel engagements to better explain to Australians what the Mabo decision is all about?

PM: It is not a matter of travelling around to explain it, he has not been doing that. He has been travelling through the Aboriginal communities to seek an alibi to say that he understands their problem and their plight, that he has talked to them to then apologise for the very harsh stand he has taken. What is his policy on Mabo? What do we know of his Mabo policy? One fact. That he will validate all the titles between

1975 and 1993. That is in a sense an anomaly arising from Mabo, that is not the central core of Mabo. The central core of Mabo is to set up mechanism to hear and award native title on which he is mute. So, he is in there,, he has got the gall to talk to these communities and look these people in the eye knowing he will down them on the core

proposition of the High Court and that is to recognise that there is a native title in the common law and set up mechanisms to dispense it. You will never catch me engaging in a campaign of humbug like that. don't need to find the truth of this by scheduling a series of visits

anywhere. It is staring you in the face and it is staring the Liberal Party in the face and that is part of their problem as I said, they are philosophically bankrupt, they will not even face the truth of the High Court decision that this was never the land of no one, that Aboriginals were dispossessed and Islander people were dispossessed and there

is .a chance to right a wrong here and a big party gets on with it.

Q: Malcolm Farr, Telegraph-Mirror. On to industrial relations, the flexibility that Laurie Brereton wants to put into the legislation he is going to introduce to allow for non-unionists to negotiate enterprise agreements. Will this legislation give these non-unionists genuine

equal opportunity comparable to that given to trade union members in negotiating agreements or will there still be some form of bias against them?

PM: Malcolm, the key point is that most of the workforce is not unionised and can't be therefore disenfranchised in the capacity they have to secure a higher level of income albeit from better productivity and enterprise bargaining. That is the principle the Government is working on and naturally in the establishment of that principle in legislation we will talk to the trade unions and other people to try and get the cast of that legislation right and that is what Laurie Brereton is doing at the


moment. The key point is the principle, we would like to see a change away from a centralised structure where those who are not members of unions have the benefit of those changes, but when we are moving away from the centralised structure they lack the mechanisms therefore for any improvement in real wages or any improvements by way of productivity change. This presents a challenge for us, but

again it is part of the transition from the centralised structure we have always had and that is why the consultations which Laurie Brereton is now undertaking with all the interested parties will be important in framing the legislation.

Q: Geoffrey . Barker, The Age. As I understood it you told my colleague Tom Burton that you and the Treasurer had discussed the timing of the tax cuts in the week after the election. Does that imply that you would in fact have been considering changing the timing of the tax cuts during the election? If not at what stage and when and why did you come to the view that changing outcomes required a changing timetable?

PM: Some time after the election we discussed in the broad some of these issues and also the fact that we are now seeing in the family of Treasury forecasters out there in the community in particular, relatively bearish assumptions about consumption and activity. Therefore what would one do? I think the thing to do is to try and get the best result one can by not only seeing that that 38 rate comes down and the other

rate, the 46 rate, but at the same time to guarantee that they have a bigger bang for the buck in the economy in terms of activity.

Q: Geoff Kitney, Sydney Morning Herald. Mr Keating, you have conceded today that you knew, it was obvious before the election that the economy was much slower, that the OECD forecasts had already shaved a very large amount off the prospective growth, you have conceded that the budget deficit was already blowing out, that there was a big hole in the revenue you .announced before the election the

1 per cent budget deficit target in 1996-97. Therefore can't you be accused of a great deception of the election campaign in not telling the people that you were likely to have to change the tax cuts and that you were likely to have to look at other forms of revenue and spending cuts as well?

PM: But we are paying the tax cuts in full. Just get the words right. I mean in terms of changing the tax cuts. Yes we are bringing some forward and we are putting the others back, but again to suit the needs of a slower economy and fiscal policy and whatever we might do on the receipt side of the ledger in terms of a structural change in the Budget. What you are saying to me is if the Government thinks that there is structural changes in the pattern of receipts in the Budget one has to make instant decisions and declaratory statements about what one may do to remedy them. We have never said that. Never at any stage


have we for instance other than made clear that if we thought the re was a need to change some of the rates and bases in the wholesale sales tax, we have done it. We have done other discretiona ry things

over the pe riods to make sure that in some way that the Commonwealth tax base is maintained. This notion that because the Opposition campaigned on a consumption tax that therefore the Government had to then go through with a retinue of tax changes and think and decide, not just think, but decide what it might to for some structural change on the receipt side is of course, a notion which has

no parallels in Australian politics . whatsoever.

GK: You did say during the campaign that budget was going to whirr back into surplus. I mean the impression you gave ...

PM: It will come and of course it will when the revenues, as the economy picks up and the revenues strengthen, of course it will have a profound effect on the budget balance - it always has and for any of you that have been here long enough you have seen just what an impact it has had whenever the economy has picked up. But the notion that we should be looking at not just a stand still budget, but one that deteriorates with the OECD and then remain mute because any anticipation of any shifts in the changes in the tax base or timing should then be screened out, to be talked in detail, to legitimise oneself in an election. We were not the people running on the proposal of a consumption tax - it was the Opposition. They were the people who said. a consumption tax is the key to our national savings, they are the ones who said that we can fund $12 billion of tax cuts with

no contribution from the consumption tax, they are the ones that had the rubbe ry figures out there on $20 billion of assets sales for Telecom, they were the ones who were running on that policy, we

cautioned them against it, they still did it, but that doesn't mean to say the Government has got to match their stupidity in.-terms of t rying to sell that kind of a tax .change which^had=i1e basis in the real economy.

Q: Peter Charlton, Courier Mail. Prime Minister, does the Labor Pa rty still have full employment as a policy goal and if so what is your definition of full employment?

PM: The answer is yes. We would like to see in this count ry, I don't think we should ever abandon the objective of full employment, but again in an economy in transition you will always have structural unemployment from an economy which was a protected, tariff walled economy with old

industries. In transition you will always have structural unemployment and given the fact that we are now going through a ve ry large pick up in productivity, a huge pick up in productivity, one can not assume therefore and one could never assume that that would not have had an

impact on employment - of course it has. But this trend has happened right around the world and therefore we will just have to work on long-term unemployment and get it down, but the main thing is get. the

• 12

economy back into growth and that is what principally. one has to do in terms of dealing with unemployment. But again, for those long term • unemployed people, it will be the labour market programs which matter • most.

ends •