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Transcript of interview with Paul Lyneham, 7.30 report

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LYNEHAM: Prime Minister, welcome again to the program.

PM: Pleasure.

LYNEHAM: Before we go to your statement today on the economy and jobs I'd like to just start with the massacre in East Timor. _ _ - - -- - ■ —

PM: Of course.

LYNEHAM: The Chief of Indonesia's armed forces has talked of 50 dead at most with about 20 injured. Does that back up your information?

PM: Well we can't be definite about it yet. What I have done is to have one of our officials from the Embassy in Jakarta go there and as I indicated in the Parliament he'll be making inquiries from a whole range of sources including non-government sources. But I think I ought to make this point. In a sense, the number is irrelevant, 50, 100, what we've witnessed is an appalling tragedy and what has to happen is that Indonesia has to act now in a way which

indicates to the international community that it will not tolerate what has happened.

LYNEHAM: And in the end does it make that much difference whether the Indonesian military are right when they claim they were provoked by the demonstrators?

PM: No. I said in the Parliament today that according to the accounts we've been given from Indonesian sources they are saying there was provocation. We don't know whether there was or not. Other non-Indonesian sources that were there denied that there was provocation but I made the point very clearly in the Parliament, Paul, that whether there was provocation or not what happened is totally unacceptable.

LYNEHAM: The debate that's going on now in Jakarta, even in military circles I gather, about how to react to this crisis, is it too dramatic, do you think, to suggest that the outcome could have a real impact in setting Indonesia's

future place in the world community?

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PM: Well let me put it this way. I think that Indonesia has been very conscious over the last few years of the need to establish its credentials in the light of concern that had developed in regard to East Timor and they have I think to a considerable extent achieved the growing recognition which is reflected to some extent in their leadership of the non-aligned movement. But could I make this general point,

I think that what has happened must give Indonesia cause to consider and reflect where they are headed in regard to East Timor because they must be asking themselves whether despite what they may have done in terms of trying to assist in

economic and social terms for the development of the people of East Timor it must be clear that they have not succeeded in getting the acquiescence, the acceptance by the people of

East Timor, there's got to be some change if East Timor is going to be comfortably the 27th province of Indonesia.

LYNEHAM: It's not just Fretilin now is it, it's all the youngsters in the streets of the towns?

PM: Well it seems to be, it seems to be. What they have to recognise is that the people of East Timor have an obvious deep sense of their cultural identity. What is required, Paul, I think, it's not for me to attempt to be prescriptive about what they should do but essentially and I say this in a spirit of constructive contribution, it seems to me that what they have to do is to be prepared to really sit down with the people of East Timor including the resistance

forces and try and work out a process of achieving peaceable relations. That seems to me to be the lesson out of this tragedy.

LYNEHAM: Why not those sorts of talks under the auspices of the United Nations?

PM: Well the talk about the involvement of the United Nations has tended in the past to be in terms of some United Nations supervision of an act of self-determination. That clearly wouldn't be accepted by Indonesia. What they must

accept, however, and I take some degree of comfort from some of the indications that we've had, they must accept that the world has an interest in what happens in East Timor. You know that my Government consistently from 1983 while we've accepted the decision of our predecessor government in 1979 to accept the incorporation of East Timor into Indonesia we have consistently made representations in regard to the

issue of human rights. We'll continue to do so and the world will continue to be concerned. So it's really a matter of the identity of two sets of self-interest. I mean, it seems to me that it's in the interests of Indonesia

that they adopt the approach that I'm talking about of really sitting down with the people of East Timor including the resistance forces and trying to get a peaceable modus vivendi and of course overwhelmingly it's in the interests

of the people of East Timor that this happens.

LYNEHAM: But we can have such dramatic changes in the world now as the wall's coming down in Eastern Europe, we've moved

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to democracy in South Africa but the poor old East Timorese seem doomed never to get a say in their own future, that act of self-determination. You'd want that for Australians, wouldn't you?

PM: If you could make the exact analogy that if we'd been in that position, yes. I'm simply saying that if we were in a position where that's what we were saying had to happen it could be and it would be very much against the interests of the East Timorese people themselves because you understand what we would lose and what the people of East Timor would

lose. We'd lose the ability to ascend aid to East Timor and that is reasonably substantial. We are starting a five year program worth $17% million and it's going to help in areas of water supply and veterinary services and education. We would lose that opportunity.

LYNEHAM: Why would we lose that ...?

PM: Well I mean if we said we were going to take that view that it really wasn't part now of Indonesia and said we revoked the act of recognition which has now been operating since 1979 then the reaction would be well you're out, you've got no rights to be involved -

LYNEHAM: The Indonesians would bring down the shutters?

PM: They would bring down the shutters and I'm saying that the people of East Timor themselves would suffer in that respect. We wouldn't have the opportunity, as I say to send aid in there of the substantial proportions that we have been doing and we're planning over the next five year period. I think we'd lose any influence at all, any capacity to influence Jakarta's view in these matters and what I've said earlier in your program about constructively putting to Indonesia that they should sit down and try and get a peaceful modus vivendi we wouldn't have the capacity to do that. And the important thing I think is that we

should be steadfast, all of us Australia included, in unequivocal condemnation of what's happened and then say well, you know, for God's sake let's now look to the future. Please come to an understanding that you haven't got the hearts and minds of the East Timorese. Sit down with them,

including with the resistance forces, and try and reach a position where, on acceptable, mutually acceptable terms, East Timor will be really the 27th province of Indonesia. But they must understand that what they've been doing so far hasn't worked.

LYNEHAM: So we very rightly express our concern for their human rights but not one of the most basic which is the right to self-determination?

PM: Well I've addressed that question Paul.

LYNEHAM: From what you say, is it correct that you're still more inclined than not to visit Jakarta in February?

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PM: No, I don't think you can draw any conclusion from what I've said. I think I can best put it this way. I want to be in a position on behalf of Australia to have maximum influence with Indonesia in regard to this and other issues.

I would say that if there is genuine contrition on the part of the Indonesian Government authorities, if there is a dinkum, if I can use a straight Australian phrase, if there is a dinkum inquiry into what has happened, undertaken by the Indonesian authorities, and if there is an intention out of that inquiry to punish those responsible for this

tragedy, if those things happen, and it's clear that they happen, then one would have to ask whether it was against Australia's interests not to go.

LYNEHAM: But if they try and cover it over you'll stay home?

PM: I'm simply saying obviously those considerations, those three considerations to which I referred, must be relevant in our thinking.

LYNEHAM: Today's statement on the economy and jobs, you've said it's time, beyond time to stop talking down the Australian economy. Do you think negative psychology has become a serious problem for Australia?

PM: It's not endemic but let me be quite straightforward, and I've said it in the Parliament. I think it is appalling that this Opposition greets with derision every piece of good news that is emerging to show that we are gradually beginning to come out of the recession. I won't repeat here the statistics that I put which establish that, nor will I repeat the statistics of which all Australians should be proud, and that is that the official OECD statistics show that over the last few years, including pre-recession and through the recession, we've had the best record of the whole of the OECD in terms of the exports of manufactured goods. We should be proud of that. We should understand that the changes that are taking place in this country, which are not just the changes of policy which I've

initiated with my Government, but which reflect the response of the Australian people. We should be proud of the fact that we've done best in the OECD and we should recognise that we are, as I've said, on the threshold of this historic opportunity to go to a position of being effectively a restructured, low inflation, competitive international economy. Any talking down of that is just massively against our interests.

LYNEHAM: You talk of one of the vibrant growth economies of the Asia-Pacific region. If I was on the dole queue I'd say there's another politician, more pie in the sky.

PM: I think in fairness, if you read my statement, you couldn't have had a more definite and sincere acknowledgement of the concern that I deeply feel about the unemployed. I know that those people have suffered and I have introduced measures to go further in meeting their


problems. What my responsibility is is to ensure that those things that we do today to try and further address those immediate problems do not compromise or set back the massive reforms that we've undertaken.

LYNEHAM: John Hewson says there are not really any jobs in this statement at all.

PM: I don't think anyone will believe John Hewson when he talks about the economy. It was John Hewson who said before the last Accord that as a result of the Accord arrangement that we made that we would have rising inflation and rising interest rates. Of course that didn't happen. We've had

falling interest rates, we've had falling inflation because of the great responsibility that has been exercised by the working men and women of this country. I've tried to pitch my statement and my decisions to that fact, the working men

and women of Australia have been responsible. We've had to slow the economy down and in that process working men and women have suffered. The great responsibility I and my Government have got is to see that the policies which are opening up this new threshold of opportunity - we've proved

that we can be more competitive in manufactured exports than anyone else - we've got to build on that, what we're doing in the services area, the enormous growth in tourism that's going to come, the trebling of tourists towards the end of this century. We have to place ourselves to take advantage of this. We must be compassionate in regard to the unemployed. You talk about Dr Hewson. This is a mock concern that he has about the unemployed. I say that for two reasons and they are irrefutable. First, there is no economist who will deny that the inevitable result of the

application of the policies that John Hewson is talking about must result inevitably in an increase in unemployment. Two, that in respect of the unemployed he is committed to

throwing them off benefit after nine months. Take no notice of this man. He has no concern for the unemployed.

LYNEHAM: We've got the job training, the extra TAPE places, you've brought forward some roadworks in other capital projects, but overall the Premiers didn't get very far at all with their long spending lists, did they?

PM: No, on the contrary. The Premiers have made it clear, as may I say did the ACTU and my own Caucus committee, but the Premiers included, they do not expect, and did not expect, some massive new outlay program. Because they understand that if we were to do that we would set back the achievement of those conditions which are making us an internationally competitive economy. But what they have got in the area of TAPE for instance, look at that. This is their area of responsibility. We have basically a shambles there. They haven't spent enough money and I have said directly to them two things. I said we will make a significant amount of money available, as I have in the statement, to meet their immediate problems in 1992. But importantly, beyond that, secondly I've said we will start the process of giving effect to the Finn Report which asked


for a massive injection of additional money for TAPE over this decade. As John Dawkins, who's initiated this thinking, and I applaud him for it and I totally support him, we have indicated we will make, in the succeeding years, that money available. This is one of the great - while leaving the administration of TAPE with them - this is one of the tragedies of their postponement, or putting aside of the Perth conference. Because we could have then discussed how quickly we can move to put this in place.

LYNEHAM: But even if you can provide 40,000 extra places, there'll still be at least 50,000 people next year who'll be turned away, won't there? The big problem goes on.

PM: Yes. This is their area of financial responsibility. So we, within the limits of constraint that we have upon us in the conduct of macroeconomic policy, we're coming and saying alright you're ... but w e '11 do this to help you meet your immediate problem. But more importantly we'll say we'll give you the indication that we are prepared to go and meet the Finn sort of targets which is talking about an

additional $lb per annum expenditure on TAPE by the end of the decade from now. And we've indicated our preparedness to go that way and leave the administration with them. But by putting this meeting off they've denied the opportunity of talking about it.

LYNEHAM: Is there anything left really of new federalism?

PM: Yes, I think there is. There's a possibility any rate, let me put it that way. I hope that when the States meet, as they are going to now in Adelaide, they will not delude themselves that the process of reform in this country can be

other than on a national basis. I hope that anything that they look at they will understand that in the end it must involve the Commonwealth and it must be national. It can't

be a them and us sort of thing. We've had too much of that them and us sort of attitude.

LYNEHAM: With hindsight though do you accept any of the blame for the breakdown?

PM: None at all. None at all.

LYNEHAM: So it's all the States' fault?

PM: Well I'm not throwing blame around. You asked me a question whether it was my fault and my answer to that is no.

LYNEHAM: Well what of the argument that, I mean, you allowed the States to believe ever since Brisbane last October, that a State income tax would be seriously considered. You actually said if they want to say that, OK,

let it be looked at.

PM: Let it be looked at. Now what happened? We set a process in train whereby every option could be looked at.

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My officials, my Treasury officials and the officials of the Treasuryies of the States sat down and produced a 100 page document and all the options were there. I didn't then go public and say I'm going to have the public debate. As a result of their actions their proposal was publicly released and I was bound, once that was in the public arena, to make clear our position. I did. But I said let's go to Perth.

I said if you wanted to argue that case with me, I can't stop you arguing, you can. But you should know what our position is. But I said to them at least let's get to Perth and discuss the issues and it is inevitable, I said to them, that out of Perth there must be some improvement, albeit perhaps at the lowest case marginal, but there must be some improvement that will come out of these processes of discussion in regard to the financial relationship. They said no, not me. They said no. Unfortunately the whole range of issues, including ones which they put on the agenda like employment, which now we can't discuss because we're not going to have the meeting. Now let me say this, that one issue which was put on the agenda as a result of my initiative - and which they agreed, and that was on the question of violence, community violence and gun control - I do hope that at their meeting they will look at this, they'll talk about it and try and get a more uniform and stringent national standard about that.

LYNEHAM: Just finally a few quick ones to finish with, Prime Minister. What's the chance of President Bush coming to Australia after all, perhaps in the New Year?

PM: I don't know Paul. I'm not evading your question. There has been some suggestion that he would like to if he could. But I don't know whether the considerations of which you are aware which led him to say he couldn't come in December may still be operative through next year.

LYNEHAM: But you'd be as happy to see him then as now?

PM: Yes. Oh yes.

LYNEHAM: Do you genuinely believe Paul Keating when he says there'll be no further challenge during the life of this Parliament?

PM: Yes.

LYNEHAM: On the other hand just before the last challenge he said there'd be no challenge. Why do you believe him now?

PM: I think circumstances have changed. I think it is quite clear what the attitude of the clear majority of the Caucus is and of the attitude of the Party and of the community. I think he understands and accepts that.

LYNEHAM: He's not gone underground for a while?

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PM: There may be some of those who supported him who would still entertain some ideas. But I think the facts that I have referred to that, that's Caucus numbers, the clear attitude of the Party around Australia, the clear attitude of the Australian community is something that they understand and, maybe reluctantly, but accept.

LYNEHAM: Have you then put this out of your mind? Do you sleep a lot easier now?

PM: I didn't lose any sleep at all. I mean the point I have been making for a long period of time, it's evidenced again by the events of today, I have been consistently about the difficult job of government. I haven't been diverted

from undertaking the responsibility which I owe to the people of Australia to keep doing that.

LYNEHAM: Finally, we're going to hear about the GST next week.

PM: At last.

LYNEHAM: If Dr Hewson really does drop petrol prices dramatically, overcompensates the aged, including superannuants as well as pensioners, and doubles family allowances for low income families, it's going to be very much harder for you to attack isn't it?

PM: There will be a total package, and let's - you've raised it. It will be a package which involves the imposition of a massive tax on all goods and services, including the necessities of life. That will be associated with a reduction in tax upon luxuries. The simple fact will be that as part of this package he '11 make luxury cars

cheaper and milk and bread and meat more expensive. Secondly, he will say dear Australians, I'm whacking this great tax around your ears on everything including the necessities of life but I'll offset that with a reduction in your income tax. But I've also said dear Australians, that

it is my position that the States should be free to whack on an income tax of their own. In addition to that he's also going to have a package of massive expenditure reductions which are going to be aimed, expenditure cuts, you're

talking about the things he'll do, but he's also going to have a lot of expenditure cuts. I have no doubt whatsoever that when the package is finally unveiled we are going to have a very interesting time. We'll make our initial

reaction to it then I '11 take time to ensure that I and my people can analyse it in detail and we will expose not only its inadequacies but its grave dangers for this country to the people of Australia.

LYNEHAM: Prime Minister, thanks for your time.