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Radio 3LO, 13 February 1996 [with Peter Couchman]: transcript


COUCHMAN: Prime Minister, good morning. Have you got your breath?

KEATING: I have Peter, but that Melbourne traffic - it's unreal. Anyway, I'll stay through the news break, okay?

COUCHMAN: Okay, fine. The change of Government in Queensland. What's it going to mean to your prospects up there?

KEATING: I think more importantly is what's it going to mean for the people of Queensland. I think that Queensland has been growing faster than the rest of Australia - and this in part is driven by the fact that there's a population growth shift there - but more generally because the policies of the Federal Government, of this Labor Government, over the period has taken, if you like the tariff monkey off the back of the two big agricultural and mining states of Queensland and Western Australia. I think Queensland has now got to understand that they have to keep that growth going - and I think they want to - and this requires not just a sort of stick-in- - the-mud Conservative Government. And if they're going to have a Conservative Government - and they invariably are all stick-in-the-mud Governments - then I think they're also going to need a Federal Labor Government to look after their interests.

COUCHMAN: Well at the moment they haven't got a Government at all, they've got a caretaker Government - they're in limbo. Would you like to see Wayne Goss recall Parliament as soon as possible - certainly sooner than the date he's announced?

KEATING: Oh, I don't think that's for me to say Peter. I think that's for Wayne to make his judgement about - and he's the one best placed to make it given all the events that have taken place up there. But again, it's a substantial change in the sort of body politic of the nation, and I'm sure the event will not be lost on Queenslanders.

COUCHMAN: But just in general terms, do you think the loss of the Labor Government there is going to improve your chances or make it more difficult? Because Queensland has been one of your black holes hasn't it, in this campaign?

KEATING: Well not necessarily. I don't accept a lot of the analysis that you get from news writers - commentators tend to pick up what they think are the sort of poll-driven material but ...

COUCHMAN: ... it's not just the commentators. There's this celebrated quote from Wayne Goss that he allegedly made after the Queensland election result, saying Queensland was sitting on their verandahs with baseball bats just waiting for you to come across the border.

KEATING: Well, they said all those sort of things three years ago. People are very sensible, they make judgements about things, and they look out for their interests. That's why I think that programs like you and I are doing now, or the debate I did on Sunday does give every member of the public a chance. It's a time for the empowerment of the community - to see what the political leaders stand for, what their Parties will do in office and to sign them up for three years. I think Queenslanders, like the rest of us, will be watching and listening and trying to make a judgement juxtaposed against the fact that they may have a Coalition Government.

COUCHMAN: Okay, well let's talk about some of the campaign issues now. One of the underlying criticisms of this campaign right through so far, has been that both you and John Howard are making spending commitments that neither of you can afford to keep if you get into Government - and that these commitments are being made in the dark, because you won't let Treasury tell us what their current Budget estimates are, I mean their current Budget estimates.

KEATING: Peter, look that's a hoary old debate. For over a decade we've had debates about the starting point deficit and the rest, and people's eyes glaze over about it. The key point is, I'm the only one in this election campaign with funded promises. On Sunday I stood up and said where the money would be coming from - and that was we are spending over four years $3.5 billion, and we're raising over four years seven billion.

COUCHMAN: Yes, but you see all the economists have said if you can pick up $3 billion in savings and Government spending cuts and so on, that money should be given to the underlying problem that we've got - and we can't afford to be spending that amount of money?

KEATING: Look, some of these characters would just drive you crazy. The Budget is in surplus and I've got Mr Howard running around saying: what about the underlying surplus for next year? Now, I'll just tell you something, and I'd like you to concentrate on these points. In the Budget forecast, in the forecast we published last year for the Budget surplus for the coming year - that with $3.4 billion, John Howard and Peter Costello and their colleagues in the Senate attempted to wipe the whole $3.4 billion surplus out. In fact they wiped out $2.5 billion of the $3.4 billion surplus. In other words, in their absolute opportunism and manic determination to hurt the Government - by knocking out the airport privatisation, supposing around the phoney issue of flight paths in Mr Howard's case over his electorate, trying to relieve his electorate - he has effectively now diminished the Budget surplus next year by his own actions by $2.5 billion. I'm supposed to then say: oh, well Mr Howard, you're very concerned about the Budget surplus are you? Well let me tell you this and let me tell you that. Mr Howard's not concerned about the Budget surplus at all, Mr Howard was only concerned about punching the Budget surplus out. Now for him to be running around calling it's just a diversion - the key point is, are the promises funded? The truth is they are funded - ours are funded by twice the amount.

COUCHMAN: Okay, we'll talk about that in just a moment. There's been a lot of talk about surpluses and deficits and so on, but the essential problem is that you know and I know we've got an underlying deficit problem in Australia. We've got a real Budget problem that someone has got to fix in the next few years.

KEATING: Well, I don't think we have. I was the first Treasurer in Australian history to produce a Budget surplus, and this Government produced four in a row, four in a row. We were getting to the stage at the end of that run of surpluses, that there were not enough bonds out there to buy back - there was not enough Government debt out there to buy back. In fact by the late 80s I had a study commissioned by Nominal Securities and the Reserve Bank to see what we would buy back to fund the economy - for the Reserve Bank to fund cash in the economy when there was no government debt. That's the position. We've got the lowest Government debt amongst - we're just about at the bottom of the league table in Western world countries in terms of Government debt. So this massive underlying problem is not a massive underlying problem at all. Can I just say about spending - Mr Howard yesterday unveiling a health package which I'd like to talk to you about because I think people are very interested in health - and he went from a limit of $40,000 to $70,000, again without saying where the funding is coming from. I stood up on Sunday with Ralph Willis and said we will raise $800 million dollars from trusts and tax avoidance - and we'll put that straight off for the Budget - and we indicated where we would raise the rest of the funding. And we, as always, put it out there. The point is we're raising $7 billion and we're spending $3.5 billion - so everything that Labor's said in this election campaign on whatever issue is funded twice - twice over.

COUCHMAN: Yes but you see we've got our Budget surpluses because you've sold the Commonwealth Bank and other Government assets. John Howard described it as a phoney surplus - and that's political language - but in a sense it is a phoney surplus.

KEATING: No, it's not a phoney surplus.

COUCHMAN: We're deluding ourselves if we think we've got a real Budget surplus this time.

KEATING: No. Look, it suits him to say that. Let me just make this point. The Commonwealth are always buying assets - always buying assets - like for instance we're putting this money into Track Australia. We put the money into the standard gauge railway line between Melbourne and Adelaide. Has Mr Howard argued that shouldn't be an outlay on the Commonwealth books? If I said to him: listen John, let's take these capital items out, this funding on the Pacific Highway, the funding on the standard gauge railway, this funding for Track Australia, let's take that out. If you say that the assets sales should be out - let's take the asset purchases and put them out too. Oh no, no, he says, that's a recurrent expenditure. But if that's the recurrent expenditure then the sale of assets is a current expenditure offset. That's why the Treasury and Finance Department have always made an offset to Adelaide. You see, what's happening here is this. Because the community are not in this debate every day it suits the Coalition now to break the conventions of the accounting - which have been in place for all the Coalition years, all of our years - and now say: oh, we ought to separate out asset sales. But they never said it when they were around. And for their commitments on spending in this election campaign, I bet they're not saying: oh well, if they are capital items we won't have them on the Budget. You see, so the Commonwealth are always buying assets and it's selling some - it's selling defence land, it's selling half of the Commonwealth Bank, it's selling this, it's selling that.

COUCHMAN: So, you don't accept then that we've got an underlying Budget problem?

KEATING: No, I don't.

COUCHMAN: Couldn't you clear up all of this (inaudible)?

KEATING: Can I tell you why? I'll tell you why. Because the outlays of the Commonwealth Government's spending is around 25% of GDP. We're at the bottom of the league. This is the lowest taxed country - let me correct that - the second lowest taxed country in the Western world, and only by a quirk of the statistics in Turkey wouldn't we be as we have been for the last six years, the lowest taxed country in the developed world. And the reason we are is because we have a relatively small public sector. We are funding a very effective social wage - Medicare - care for the aged, high retention rates in schools etc. on an underlying level of spending of only 25% of GDP. That's why we don't at source have an underlying problem.

COUCHMAN: Couldn't you clear up all of this discussion with just a single phone call to Ted Evans in Treasury and say: okay Ted Evans, give John Howard or Peter Costello a briefing and let us all in on what Treasury estimates are at the moment?

KEATING: But what's running the debate? As Mr Howard's saying, he's worried about next year's surplus - this is the same John Howard who punched a $2.5 billion hole in next year's surplus for just base motives three months ago.

COUCHMAN: You argued in the debate on Sunday evening that it's not an accurate figure at the moment, because we don't have all the important numbers in there?

KEATING: We don't have the accounts, no.

COUCHMAN: But Des Moore, from the Institute of Public Affairs has got a letter in The Age this morning ...?

KEATING: But look, they're the straight Liberal Party.

COUCHMAN: Oh sure, but he's argued there is a precedent for this. He says that in figures here, February 1993, the Treasury's revised estimates for the Budget were published.

KEATING: Just so we can demystify some of this for people. We publish a Budget in August. Before August, the end of the year finishes on the 30th of June. We get the full year's revenue so the Tax Commissioner tells us in July what he's collected for the 30th of June. In other words, what the base of this year is for next year. Then we have the December Quarter National Accounts, which give us growth and employment and average weekly earnings. We have the March Quarter National Accounts, which give us the same things and we have the June Quarter National Accounts. We get the June Quarter National Accounts in the first week of August. We then have the four Quarters. We've done the four Quarters - plus the base the Tax Commissioner has given us through the National Income Forecasting Model - and we then get the starting point number. We don't have at this point the December Quarter National Accounts, the March Quarter National Accounts or the June Quarter National Accounts - so I'm not going to be crystal ball gazing for John Howard - when he in an act of villainy and Budget vandalism with Peter Costello, tried to knock the whole Budget surplus out and actually succeeded in knocking two thirds of it out.

COUCHMAN: I'm not sure if I should be raising this at this point, but you stuck your neck out in a sense on Sunday by giving us an account of how you intend to fund your commitments - and as a result, every finance writer and economist and analyst in the country has been going through them. Now, I haven't been able to find a single writer so far who's been able to accept that those figures are realistic and achievable?

KEATING: But who are they?

COUCHMAN: Well the tax crackdown for one?

KEATING: But of course they're realistic. We've got $800 million in there on advice from the Tax Commissioner. We're going to do better than $800 million. There'd be $800 million he suggested that comes from 100 hundred people - now there's more that 100 people out there using trusts for tax avoidance. I don't mean just using trusts, many people use trusts legitimately.

COUCHMAN: Yes, but it's being argued that it's very easy for you to say: oh, we'll crack down on these trusts - not quite as easy to achieve in practice. How do you crack down on the trusts of 80 wealthy individuals, when you've got thousands of people who are using trusts quite legitimately?

KEATING: Yes, but these are not legitimate - these people have hundreds of trusts and they don't have often common ownership. So we'll design a piece of legislation which will catch them very nicely.

COUCHMAN: They'll just slip their money somewhere else, as they've always done in the past?

KEATING: They used to always slip it to capital profits, but we've got a capital gains tax. The great road block I put in the system in the mid 80s, before the big tax reform of 1985 under Labor - under every tax avoidance scam there was a capital profit taken free. But once we put a capital gains tax in that shifted, they then started looking for other things. They've now found - it's taken them a few years to work all this stuff up obviously - they've now found trusts. Well, we'll nip trusts in the bud.

COUCHMAN: But they'll go to the High Court. It could take years before you can retrieve that money?

KEATING: No, they won't. The Commonwealth's got complete, adequate, complete power here to do this. And as far as I know, no commentator has said this can't be done or won't be done. It's all these sort of sharp pencil - I mean here we are, you and I have now been through a quarter of an hour on the starting point for next year - promoted by two people, Mr Howard and Mr Costello - in an act of sort of fiscal vandalism and treachery to the Budget, tried to knock out next year's surplus. And yet you and I have devoted a quarter of an hour to their phoney concerns about next year's surplus, whereas yesterday Mr Howard brought down a health package - and I think the best thing you and I can do after the news is discuss health, because I think this is something people are interested in and I can discuss health - saying without a shadow of a doubt - that our funding will cover twice the cost of our programs.

COUCHMAN: One of the things people have been saying, certainly through this program and elsewhere, is that there is so little difference in policy between the Coalition and the Government - that they think: well, the Government's been in 13 years, I might as well give my vote to the other bloke this time it's not going to make any difference to me one way or the other? It seems to me that is the single biggest thing you've probably got to confront out in the electorate in this election.

KEATING: This is the phoney campaign of duplicity which the Coalition is running. The point I made in the debate the other night - Mr Howard doesn't believe in Medicare - he would actually dismantle it. He doesn't believe in Awards ...

COUCHMAN: ... he's not saying that of course, he going to commit to it this time?

KEATING: Well, of course he's never been committed to it ever - he's been a vehement opponent of it - he'll try and slip over the line, kidding he's there. One of the things people should ask him, is he says he'll keep bulk-billing but will he have a co-payment? When I was out of the Treasurer's job for six months in 1991, the Treasury talked the Government into a co- payment - this Government into a co-payment - and when I came back I knocked it over. Now, they'd have a co-payment in there so quickly, that people will be paying - that bulk-billing in a sense would go because doctors wouldn't bother collecting the money over the counter at their surgeries, they'd just simply bill the full fee.

COUCHMAN: You see, the trouble is you're asking people to assume that he might do this when he gets in. Just looking at the two policies, and they're saying health is a very good example there. You've offered $500 million in benefits and John Howard's come up and offered $600 million?

KEATING: Yes, but the thing is what we're saying is the reason his won't work is that 70% of families are uninsured. He's offering them $450 but they've got to spend $2,300 to get the $450. They've got to actually spend $2,300 in private insurance, whereas what we're saying - if you've got two children there's $500 from Labor - you don't have to buy private insurance. You can go down to your Medicare office and get a 50% rebate on dentistry, orthodontics, physiotherapy etc, the ancillaries. John Howard says to get anything out of me for ancillaries, you've got to spend $2,300.

COUCHMAN: But surely you're in danger of just drawing even more people into the public health system?


COUCHMAN: It's hard-pressed to cope with it at the moment. People like me are going to be saying: why should I continue with my private health insurance? I'm better off just going into the public system.

KEATING: And often you are. That's why we put $800 million into the public system, and why the States have taken $700 million from it - that's why Jeff Kennett pulled money out of public health, why Dean Brown's pulled it out. The whole principle of universality spins around access to a public hospital - that's the one thing the Liberal Party won't cop. They basically want a two-tiered health system, and if Howard were to win the election you'd end up - Medicare would go, bulk-billing would go because they would have a co-payment of some kind in there - and you'd end up with a gold-plated private health system and a poorly-resourced public health system like you're seeing in Victoria. But on a more general point, you asked me about the differences between the Parties. I think the key point is this - under Labor the economy has grown at twice the rate every year on average, than it grew every year on average under the Coalition. In the last three year's we've averaged 4.75% growth. Mr Howard averaged 1.8%. You put an economy through that for ten years, and it's all the world of difference in prosperity, incomes and employment. We've had in the time that Labor's been in office, 30% employment growth - in other words the workforce has grown by a third. In western Europe it would have grown by 8% or 10% only. Had the Coalition been in office it would have grown by 8% or 10% here, because under Mr Howard when he was Treasurer in the Fraser Government employment grew at one-third the rate that it has grown under Labor in ever year. Every year on average under them and every year on average under us, we've had employment growth running at three times the pace of under the Coalition. If this Government were to be defeated, the Accord goes, the sensible wage outcomes go. So the only way you run the economy is then through higher interest rates. A Liberal Government would turn straight to the Reserve Bank. When they talk about Reserve Bank independence - you know this expression they use - that's just code for higher interest rates. Every percentage point on the inflation rate is one percentage point on interest rates, and they would run a low-growth, low-employment society. So if people think there's no difference between us, I've got to say that those who portend that, are deluding themselves. There's a very great difference, and the very great difference is that the Government's been committed to growth and can keep it going with 3% inflation, or on average 2.5% inflation, because it has an Accord with the workforce. Tho Coalition won't have that. So whether you're talking about growth, or you're talking about health - their health policy yesterday is classic Liberal Party. Mr Howard's been running around now for God knows how long saying: I'm the family man. You say: okay, John - why didn't you do something yesterday for families? You've only done something for 30% of families, because only 30% carry private insurance. Why didn't you do something for the 70% of families - as we did - who don't have private insurance? Why didn't you let them have the $500? We're letting people store it up for seven years, so they can build a $3,500 nest-egg to meet the big bill that comes along for dentistry or orthodontics. He's not really about helping families, he's about helping private health funds, he's about helping specialists in private health hospitals, he's about helping the owners of private hospitals. That's what they always do, they never change.

COUCHMAN: As you probably heard the Australian Conservation Foundation's come out this morning and said that it now believes the Coalition's environment policy is not achievable because of the disputation over the partial sale of Telstra. The Wilderness Society is still impressed and says that the link with Telstra is of no issue as far as it's concerned. Have you got anything else you intend to offer on the environment?

KEATING: I've said that I am going to consult with the group in Cape York, who put together this Accord between the Aboriginal community, the pastoralists, and other interested parties in the region. There is the prospect of turning Cape York into a declared area, a wilderness area, joining it up to the Wet Tropics Authority and the Daintree - which Labor established. Were it possible to do this, we would create the biggest wilderness area on the continent. I think that's a great opportunity, and I'm going to see whether we can agree with the group up there - and if we can I would count that as a major achievement.

COUCHMAN: This clearly would be during the course of the remainder of the election campaign.

KEATING: I will meet the Cape York group and see if we can join with them - already we've said in principle we would support it - but we want to sit down and nut out the details with them. What sort of funds we would need to buy back the pastoral properties, and where the Native Title under the Mabo Act starts and finishes. But we would run then a wilderness from the top of Cape York to the bottom of the Daintree Rainforest, virtually to Port Douglas, to Cairns - from the top of Cape York to Cairns. That would be one mighty achievement. In my opinion I don't think the Liberal Party well, put it this way, I think they'll take notice of the mining industry and they'll let the mining industry determine the policy. So that's something I think that will be very interesting on the environment.

COUCHMAN: A great deal has been made of the so-called Kennett factor down here. I had Jeff Kennett in here yesterday and he said half the Federal Labor candidates in Victoria are campaigning on State issues - and he's predicting that it will be rebound on them badly. Now, the polls are indicating that there's been no great movement in the Labor vote certainly in the marginals in Victoria. Has it been a miscalculation to play up the Kennett factor too much?

KEATING: I'm not playing up the Kennett factor, but I think one thing is clear about Victoria - look at WA and you'll see what a Federal Coalition Government will do. What Jeff Kennett, he and his Treasurer in their determination to get the Budget bottom lines - they've lost the idea of what it is to manage a civil society. Are we to start putting chains on railway station toilets, then you'll start privatising the ambulance service, then you'll start ripping money out of hospitals and closing them? You've got to say to yourself: why am I here? In this day and age with a country of 500,000 million of GDP, can we not afford to leave a toilet open on a railway station? Has it come to that? Under these people you'll see that squared, when Mr Howard and Mr Costello will be running the books. You can imagine what a beano they would have - Mr Howard, Mr Costello, Mr Kennett and Mr Stockdale - they'll charge you for walking down the footpath.

COUCHMAN: All right Prime Minister, you're already late for your next appointment. I appreciate your time this morning, and I hope there'll be an occasion for us to talk again before the campaign finishes.

KEATING: There's one thing Jeffrey can certainly do, and that's put in a set of automatic traffic systems into Melbourne, like Sydney has - at least you can get around it. This has to be the most choked up city in the country to move through. I apologise for being late, but I've stayed later.

COUCHMAN: Thank you. I hope to see you again before the end of the campaign.