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Transcript of interview: ABC Radio Current Affairs: 26 August 1994

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Transcript of interview with Dr John Hewson on ABC Radio Current Affairs

Question: Dr Hewson Good morning.

Dr Hewson: Good morning.

Q: Now I understand there has been murmuring for some weeks now about Ford's long term base in Australia. What do you understand the situation to be.

11: Well I think you're right Elizabeth there is a pretty heavy debate going on about Ford's future in Australia and there has been now for many years. As 1 understand one of their principal problems is that The Falcon is a car That is specific to the Australian market. It is not really a car that is exportable and in that sense they are constrained by

the size of the Australian market when they look at bringing on a new Falcon. In those. terms they are quite different to Holden or other ear manufacturers in Australia. They have backed the market with a specific car and its fraught with its own problems and they seem to approach the Government on a regular basis to see if they can give them some additional assistance. Whereas the way I think we all stand now is that this is a really

important test of the government's commitment to genuine reform. We have a bipartisan position in support of lower tariffs, phasing down tariffs in the car industry to 15 per cent by the year 2000. The difference between the Government and ourselves is that we would be doing a lot more about cutting costs and other disadvantages to doing business in

Australia where the Government has been cutting tariffs but increasing cost disadvantages.

Q: So. you basically agree that the Government has done the right thing as far as tariffs are concerned in this situation.

1-I: Yes, we do. We strongly support the position the Government has taken in terms of lower tariffs. It's fundamental to Australia becoming g enuinely internationally competitive. We should recognise that tariffs are just tax - they may help a particular

company or a particular industry but they only do that at the expense of disadvantaging everybody else, so we will all pay more for ears if the car industry gets increased tariff protection. Now that's hardly going to contribute to the improved international competitiveness of Australian industry generally and it's certainly to the disadvantage of








Q: It puts Ford between a rock and a hard place though doesn't it. Doesn't make their future in Australia terribly exciting.

H: Well, they've been, as I understand it, pushing ahead pretty much with the investment. I think they're putting a bit of pressure on Government to see if they can't extract a some what better deal. And I think there is a challenge there for the Government, and that is to get on and do some genuine refonn that will lower costs and eliminate some of the cost disadvantages. Don't give them increased tariff protection but lower their costs. In recent days we've seen the Government put up petrol excises and

seen the Government adjust the FIIT yet again, we've seen them put in Industrial Relations legislation, all of which has bccn a significant disadvantage in cost terms of doing business in Australia, and so there is a real challenge for the Government. That is

not to only stay with their commitment to lowering tariffs but back it up by a genuine policy to cut costs to make it worthwhile for companies like Ford and others to operate in Australia.

Q: In your view would that be enough for Ford to keep going?

H: Well, that's a decision in the end that Ford has to make. That's not a decision for Government to make. The Government's responsibility is to build the best investment climate that it can and at the time of the last Election, for example, we were proposing a rapidly accelerated depreciation allowance which would have been to the enormous benefit of Ford but importantly to all businesses operatin g in Australia. That's the sort of assistance. If the Government is going to give any assistance I think they should look at giving assistance across the board, if it benefits Ford it benefits everybody. Not targeted

at businesses to the benefit of Ford to the detriment of everybody else. So there's a lot the Government can do and it's a real challenge for the Government right now to get on and do it and don't give ground on the tariff debate. We've had this argument for a hundred years or so, let's all stay where we are on tariffs but let's put pressure back on the Government to cut costs and accelerate reform in transport, power, waterfront shipping or whatever it is to industrial relations to make sure that the cost disadvantages to doing business in Australia are eliminated.

Q: Now, if Ford does turn into an assembly plant only, won't that have seriously rippling effects on the spare parts industry?

H: Well, it does have an effect within the industry - it's true - but the key point is to keep sense of context. Any additional assistance to a particular manufacturer like Ford is at the expense of everyone else. Increased tariffs for Ford, would be an increased tax for everybody else in industry in Australia, be they people in other industries, new manufacturing industries that we desperately want to think of (inaudible) and of course consumers, generally, will pay more for their cars. So it's to the disadvantage of everyone else if there is a benefit to Ford.


Q: Now, finally Dr Hewson, we couldn't let you go without a current issue. What do you think of your old mate Peter Reith's push on CIR. Is it as he says, a concept whose idea is coming? Or a cancer on democracy, in your view?

H: Well, I think Alexander Downer is ri g ht to tell Peter to get back in his box on this one. I think it's an inane idea. Politicians have a responsibility to perform in a particular way and I see this as an abrogation of that responsibility. And ri g ht now, it's already

hard enough in Australia to govern. It's becoming, you could reasonably argue I think, that Australia is becoming increasingly ungovernable as you have minority parties with considerable influence on our political system. Minority groups with considerable interests, minorities in the Senate dominating the parliamentary process and what the CIR

would do is institutionalise that one more stage. Other minorities that could have a particular influence on our process. I think it is pretty much a populist gimmick and not what we ought to be doing in Australia. We ought to be looking at genuine political and parliamentary reform, which I think is fundamental to achieving some of the reforms we

want in other areas.

Q: The Liberal Opposition Leader down here in Canberra, Kate Came11, has been pushing fairly heavily for CIR. Is she just putting forward a populist gimmick, do you think?

14: Look, I'm not going to comment on her arguments. I haven't seen them. You asked me about Peter Reith's position which I have seen for quite some time at the Federal level, and I say right now at the Federal level the influence of minorities through the Senate, and more broadly, in our political system, where the Labor Party basically

institutionalised minority influence, and I couldn't imagine a worse time to contemplate going one stage further and offering the possibility of CIR. There is a real question here about parliamentary and political reform. I think it's a very important one. The Parliament was expanded in the early 1980's which made it so much easier for minority parties to gain a foothold in the Senate. I think that was a fundamental mistake as far as

sensible Government was concerned in Australia. As far as sensible policy making and sensible reform are concerned, to go into the CIR area at the present time would just be a fatal mistake for Australia in my view.

Q: And just finally Dr Hew son, should Mr Downer should go to the next election with (inaudible) policy or a general overview. Now the Prime Minister is calling him a flim-flam man if he doesn't get down to detail Do you a g ree with that,

H: Well I think Alexander is going to make his own decisions on this, it's not for me to tell him but there is a reality in Australia that he wont be able to ignore. And that is with the minority parties in the Senate likely to remain dominant, that is neither the Coalition or the Labor Party are likely in the foreseeable future to have control of the Senate, it is going to be very important at each election that there is a mandate, that we seek a mandate to govern, I mean, as far as I'm concerned, this is a personal view, there is no point in being in government if you can't govern. I don't just want to be in Government.

I don't just want to be a Minister and I'm sure Alex doesn't just want to be Prime


Minister. The point is you want to be able to make change and reform and make sure that this country does achieve the potential that we know its got. And in those terms you are going to have to put a sufficient amount of detail to get a mandate, so that when you win, the Senate will be unable to block your policies and your legislation.

I think that reality and the need for a mandate is going to be an important constraint on the whole political debate at the present time and it will have big influence on how much detail both the Government and the Opposition take to the next election. I must say that as far as Mr Keating is concerned, he is always a great one for throwing out policy

challenges. Well, he has an ALP Convention coming up shortly and there are going to be some pretty important tests for him, some pretty important opportunities for him to demonstrate his policy credibility. Scrapping the three mines uranium policy would be a good one, staying firmly committed, indeed probably accelerating and expanding the

policy of privatisation in Australia is another one. There are plenty of policy challenges for the Government that we shouldn't let Mr Keating, in attacking Mr Downer, distract attention from those challenges,