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Transcript of news conference, Hilton Hotel, Sydney



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C O M i/G NY TALT: I PARLIAMENTARY LIBRARY MICAH

PRIME MINISTER

TRANSCRIPT OF NEWS CONFERENCE, HILTON HOTEL, SYDNEY - 18 MARCH 1991

E & OE - PROOF ONLY

JOURNALIST: To start with Mr Hawke, this morning it reads that you wanted Inflation down to four per cent. How do you expect to get It down there?

PM: By continuation of what's happening at the moment. We're on a downward inflation path now. As I said, we actually have a rate of inflation which is lower than the OECD average, 6.9 which of course is overstated but

that's against the OECD average of 7.2 the underlying ratio of inflation calculated by the Treasury is 5.4. We have to continue doing the things that we are now, exercising wage restraint and the Government meeting some of the aspirations of working men and women in this country by improvements in the social wage. If we do these things and also we can look with confidence now to

a much more stable oil price in the aftermath of the Gulf war. All these things taken into account means that I think we'll have some very good hope of seeing that magical figure of four appearing in the life of this

Parliament.

JOURNALIST: When do you hope to get four per cent inflation?

PM: I said within the life of this Parliament. We're heading down. One of the important things that I've said and I said it again here this morning; it must be remembered that under the process of the Accord every year we've come in at or under target in terms of the

projected national aggregate wages outcome. That's an important ground for confidence. I will have, with my ministerial colleagues, to go into the next round of discussions with the ACTU in the not too distant future

and I believe that they share with us a commitment to getting a lowered level of inflation. Because after all low inflation is important for workers and their dependents. They don't have the opportunity of benefiting from inflation as some other sectors of the community do.

JOURNALIST: Prime Minister will we need more spending cuts to build the surplus up to increase your wage tax options . ..

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PM: That's a good question Glen. I mean, there are two points basically I think to be made about that. As you know, in eight years we've never walked away from looking to see if there are more savings that can be made. We've done it every year. We'll look at it again but it is

also true that of course each year it gets a bit harder by definition because you've done all the relatively easier things. But we'll be looking at it again to see if there's further savings that can be made. The second

obvious point that needs to be made is that because of the range of decisions that we've made over the years the structural shape of the budget is good. We're now suffering of course the impact of the recession where both outlays increase in regard to unemployment benefits and revenue's declined from lowered levels of activity. But as we emerge from the recession as we will this year

- and as I think you'll agree there are increasing signs emerging that we will - then of course with a lift in activity then that good structure in the budget will produce better outcomes in terms of surplus. So taking

all those things into account I think we'll be able to contemplate some further activity in that area.

JOURNALIST: inaudible

PM: I beg your pardon.

JOURNALIST: The states can't accept much more pressure can they?

PM: You'll remember that at the last Premiers' Conference we gave them a real terms guarantee about their FAGs and that was a guarantee that we'll keep.

JOURNALIST: On another matter do you think political advertising should continue ...

PM: That is a vexed question. Like many issues in politics I don't think there's an absolutely black and white answer but I think on balance the case for abolishing that in the electronic media is persuasive.

But you know we'll hear the discussions in Cabinet. See, the real problem is the enormous cost involved now in Federal election campaign of electronic advertising. It runs into millions and millions of dollars. I can tell you now, I know it's true for the Liberal Party, the National Party, it's certainly true for the Labor Party,

that you just haven't got that sort of money available. I mean, we haven't got large membership bases, any of us. We haven't got business operations of our own which generate cash flow and of course the big danger that

emerges in those circumstances is that people come along and say; well yes, here's money but there's a bloody great string attached to it. Now I think the Fitzgerald Inquiry shows in pretty graphic and dramatic form those

sorts of dangers. The final point I'd make is that it is nothing less than ludicrous for Dr Hewson and others to

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be saying that this is a denial of democracy because if it is the united Kingdom isn't a democracy, the Scandinavian countries aren't a democracy, Germany's not a democracy - bloody nonsense.

JOURNALIST: Can I Just go back to the surplus?

PM: Sure.

JOURNALIST: Do you have a starting point for next financial year at all?

p m : Of expectation?

JOURNALIST: Yes,

PM: No. We have a rough idea as to what the outcome may be for this financial year but because, you know, there's a fair bit of volatility in unemployment and business activity I'm not putting a figure on that. Fortunately we had a very substantial cushion there resulting from

the discipline that we'd exercised over a long period of time.

JOURNALIST: So do you think there's any possibility of a lowering of official interest rates any time soon?

PM: The question was do I think there's a possibility of a lowering of official interest rates at any time.

JOURNALIST: Any time soon.

PM: Well there must be - any time soon. I make this position quite clear that the level of interest rates is very much a function of the level and expectations of inflation. Now we are on a lower inflationary path but whether and when there'll be a further official lowering

of interest rates will depend upon that lowered expectation of inflation being further transferred into reality. That's the first part of the answer, whether official interest rates will come down further depends upon what happens with inflation. The second point, of course is that within the existing stance of official policy as we've said in the last two or three weeks, Paul Keating and myself, there's room for a further lowering of housing mortgage rates and I'm glad to see that that process started with quite a bang here in NSW at the end of last week.

ends