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Transcript of press conference: Conrad Jupiters Casino, Gold Coast: 31 August 1992: Balance of payments; Australian dollar; industrial relations; Jeff Kennett; Qld election

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Leader of the Opposition

31 August 1992



SUBJECTS: Balance of Payments, Australian Dollar, Industrial Relations, Jeff Kennett, Qld Election


Dr Hewson, what are your reactions to the balance of payments figures released today?


Well, it again proves just how irresponsible the Government was in bringing down the Budget that they brought down. That Budget did not address our problems. The trend has been all the wrong way on the balance of payments now for quite some

time, and the Government's chosen to pay no attention to that trend, and figured that it could fool financial markets and get away with it, and of course, they can't.

They're going to pay a real price because debt's going to go up. Interest rates are going to go up, and average Australian living standards are going to be cut.


What's going to happen to the dollar? Will there be a

currency crisis?


Well, in the light of the comments that Senator Button made, that the dollar was weak and could fall further, people will start thinking he knew what he was talking about, and he knew these numbers were coming.

My own view is that financial markets have been shaken by this. They have taken some time, as I've said, to look at the reality of what's happening in our economy and the sort of budget the Government should have brought down, and their

confidence has now been broken in this Government.

Parliament House, Canberra, A.C.T. 2600 Phone 277 4022 COMMONWEALTH PARLIAMENTARY LIBRARY M iCAH


Every statistic that comes along, financial markets are going to look at it from the negative - how bad is this - and they won't change that attitude until the Government actually acts decisively and puts the right policies in place. There's a

real challenge to the Government - for once in your life, listen to the warnings of financial markets and do something about it, otherwise you'll blow us out of the water.


What should he do?


Well, we put down the full detail of what should be done. He could have brought in a much tighter budget - a $6-$7 billion deficit - by cutting expenditure. That would have given you lower interest rates, not higher interest rates. And of course, there's tax reform, there's industrial relations reform, there's the whole infrastructure area. All of that has been left untouched.

All they're interested in is buying their way back into Government. They have absolutely no interest in solving problems or creating jobs. And in fact what they do is

service problems, make them worse, and cost jobs.


But you think these figures are unrealistic? I mean, there are a lot of imports there that won't come back in the next figures.


I think it's fair to say that the trend has been all the wrong way since about January in both exports and imports. The export markets are getting tougher. The world economy is still slowing down. World commodity prices have dropped

dramatically, so the export side has been all the wrong way.

On the import side, the trend has been to increase. If you put those two things together, it's just dynamite. As we said once, the balance of payments is a bushfire waiting to be ignited, and any pick-up in activity or any further decline in the world economic circumstances, and our balance of payments numbers blow out.

I think what surprised most people is that in the worst recession in 60 years, we didn't get a much bigger improvement in the balance of payments, so we're now precariously poised. A massive risk Is being run by the Government, and if they

don't do something about it, as I say, they'll blow this country out of the water. The balance of payments will rocket away, and there's always the danger of an exchange rate crisis.



Just briefly, 1.9 or 1.4 - which is the more believable figure, realistically?


Well, we look at them both. We've tended to use the raw data fairly consistently for our own work. But you've got to look at the trend. The trend is what's been all in the wrong way. The seasonal factors have, I think, been all over the place in

the last couple of years, so we put it aside and we focus on the trend.

But the trend is there, and the trend is in the wrong way. It's about time they recognised it.


The Prime Minister has labelled your industrial relations policy as a disaster in a speech today. What's your reaction to that?


In the context of a fall in dollar and a disastrous balance of payments result and a disastrous budget, he has the hide to say our industrial relations policy is a disaster. He can't see what's got to be done in this country because he's part of

the problem. The link between the Government - which is basically just the unions dressed up as politicians - and the union movement - that link has been what's caused our problem. It's given us uncompetitive wage outcomes. It's been to the detriment of the workers. It's delayed microreform. He's an essential part of the problem. He can't see the solution.


What do you say about the accusation that you're talking the dollar down?


I think it’s ridiculous. I mean, all I've done over the last several months is to describe the situation as we saw it and to predict what would happen if they didn't pay attention to trends that were underway in the system.

And it's not just in the balance of payments. If you go back over the last 6 to 9 months you’ve seen growing evidence that there would be pressure on our balance of payments - that if activity picked up at all, imports would pick up. Exports

were weakening. Export prices were falling. Wages increased in real terms for the first time in this recession - they've gone up by about 5%. There's been no significant reform, and the Government has been spending money it doesn't have.


Now, if it's irresponsible to talk about all those sorts of trends, I'm staggered. Quite frankly, we have a

responsibility to focus people on the magnitude of the problem and try to, from Opposition, get the Government to do

something about it, and they are not prepared to listen.


How would you cut back the $150 billion balance of payments?


There's only one way you can do that, and that is to actually become internationally competitive. You've got to cut business costs and make business internationally competitive.

We've put down a very detailed package of measures that will take $20 billion of tax off business - payroll tax, sales tax, petrol tax, training levies, freeze the superannuation guarantee levy, eliminated 20-50% cost disadvantages in power, waterfront, shipping, transport, and of course, take a

pro-development attitude. The Government's been blocking development in this country for years. What was the last major development project that got off the ground? I think it was probably the Northwest Shelf in about 1983 or 1984. Ever

since then they've blocked development, cost Jobs, cost exports - billions of dollars worth of exports.

They've been pushing the whole system precisely the wrong way. They should become unashamedly pro-business, cut business costs, get a more flexible industrial relations framework, a more flexible workplace structure for workers and employers. You can turn the system around, but it won't be easy and as every day goes on, and they come out making inane statements

about our industrial relations policy instead of recognising that theirs is precisely wrong and a part of the problem, they're never going to solve the problem. The only way you'll solve the problem now is change government.


Dr Hewson, our friends in Victoria tell us that today

Mr Kennett1s announced a $160 million sell-off plan - selling off the farm and utilities which he says will create 40,000 Jobs in Victoria. They'd like to know your reaction to that kind of philosophy.


Well, I'd have to look at the detail. I don't tell Jeff

Kennett - as I've said many times - what to do, and he doesn't tell me what to do. He's calling his economic situation in the State context, and we leave him to do that.


But he's got some massive problems to address. No doubt, I think, if I recall the figure correctly, the total debt and contingent liabilities of the State of Victoria now is about $60-odd billion. And in that context you've got to really get the private sector involved in a lot of business activity because that makes a lot of sense. The whole thrust ought to be to create jobs.


So, when you've got problems as deep as theirs, would you say, in many respects there's no alternative but to sell off some institutions?


What I'm really saying is I don't think you sell them for the money - you sell them for the efficiency. Look at the

railways. Look at the railways currently in Australia - losing billions of dollars a year. Government can't run railways. They can't run airlines. They can't run banks. You've seen plenty of examples of that all around Australia.

They should get out of all those business enterprises and that's why we support privatising not only the rest of the Commonwealth Bank, but Telecom, the rest of the AIDC, Australian Airlines and Qantas - all in the context of a more

competitive economy.


Is it fair to compare, as Mrs Sheldon's doing, Cain, Bannon and Burke, with Mr Goss?


Look, they're all Labor. The one thing you're finding in Queensland is that Wayne Goss is now owning up to being part of the Labor Party.

Secondly, if you go back over the years, Burke started out and had a lot of gloss - went bad. Bannon started out with an enormous amount of gloss - went oad. Cain started out with an enormous amount of gloss - went bad. Labor goes all the same way. In the end, Labor Governments just can't manage money. You just can't trust them with the till.


...inaudible... here in Queensland. Do you think it'll go the same way as Victoria?


Look, Wayne Goss is as much Labor as John Cain or John Bannon or Joan Kirner or anybody else. it's the way they do

business. It's the way they try and run Government. They try

to set up a corporate estate. Goss has had a lucky break

because he inherited a very well run financial position in this State from many years of conservative government. There's no doubt, and this is not just my assessment,

everybody looks at the State of Queensland and says it was well run financially. He's had the benefit of that. He's got by in his first term without having to do anything, without having to solve any problems, so he sits up there as Mr 70­ 75%.

But Bannon was up there, and Cain was up there, and where are they now?


Is there a chance, in your opinion, that Mr Goss might lose?


There's always a chance. Always a chance.


Strong chance?


The way I look at every election is that it's there to be won, even if you're in front or behind...


What are your odds...


I don't make odds. I just work hard.