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Transcript of Dr John Hewson on radio 7AD

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i Leader of the Opposition


6 February 1991



SUBJECTS: environment, wool, economy, Keating,

microeconomic reform, Gulf crisis, opinion poll.


It is my pleasure to welcome to 7AD, Federal Opposition Leader, Dr John Hewaon. Thank you very much for your time this afternoon and welcome to Devonport.


I am delighted to be here Craig, it is a wonderful part of Australia.


I believe it ia your first time in an official capacity as Coalition Leader that you have been to the North West Coast?


Yea I have been here on previous occasions in earlier

manifeatations aa a banker, as a backbencher but never as Leader.


And of course your brief tour of Tasmania started off this morning at North Broken Hill Peko where you were briefed and various discussions on current Tasmanian Pulp Mill plans. What did you learn from that this morning, what came out in all those diacuasions?


Parliament House, Canberra, A.C.T. 2600 Phone 77 4022



One of the reasons we are moving around Australia now and getting out of Canberra is to get first hand knowledge of particular issues or to see the impact of Government policy on particular areas and so on. Of course, the pulp mill issue is alive and well. We are all concerned about improving the

international competitiveness of Australia and in Tasmania one of the obvious candidates for that is of course, the

development of a pulp mill. So I wanted to get fully briefed really, not so much on any particular proposals, because that is not the sort of thing a company will share with you anyway, nor should they, but just to get some idea as to how they see the economics of pulp mill, what the opportunities are for

Tasmania and you come out overwhelmingly convinced that provided tough environmental standards are met and the company is then willing to go ahead and build a pulp mill is all to the good.

It is a considerable generator of export income with

employment, of national product and in that sense it is a pity, I think, that in the past the issue of the pulp mill has been subject to so much politics. You get politicians out of the way on these things, if they hadn't played the part they

played already, I think we would see a pulp mill up and

running, I think it was scheduled for what 1991/92, so it would have been well under way at this time, it has now been pushed back several years which is to the detriment of Tasmania.


It has certainly become a hot issue in Tasmania. It seems to be on one side we have environmental nervousness verses the economic necessity of the pulp mill, as you have just stated.


Yes well people are genuinely concerned about the environment, and so they should be, and for many years the issue of the environment was a neglected issue. It wasn't taken into account correctly by the corporate sector and it wasn't an

issue of public focus and public policy debate. I am very concerned however, that in the last few years the pendulum has swung the other way, a long way, and I think the extreme green movement had far too much influence on politics and at the Federal level there was just a very cynical procedure of manipulating votes by polling seats in Sydney and Melbourne


for example, determining whether the environment waa important, whether they'd vote labor if you knocked over a pulp mill at Wealeyvale or you disallowed the development of Coronation Hill, the conclusion waa yea they probably would,

30 they knocked them over. Whatever means they used in those two cases, it hae delayed the situation dramatically.

I think we have now got something like SIB billion worth of projects that are subject to potential environment veto at a time where the country is in ita worat recession since the Second World War and ie desperately crying out for more development, more exports, more jobs.

In those circumstances I am very keen to see the pendulum come back down towards the bottom again so we get the appropriate balance between the environment, and genuine concern about that on the one hand, and of course making sure however, that

if you can meet those standards these projects are given a chance to go ahead.


You have juat brought up the issue of the Australian economy being in its worst recession since the Second World War. On last nights news Treasurer Keating expressed the point of view that Australia may be experiencing the worst of the recession

right now following a big fall in the imports and the balance of payments figure for December, however later on in a TV Interview he apparently said we still could have worse to come. Regardless of what he said, whet are your thoughts on that matter?


I think we are in a rolling recession which will prove to be the deepest and the most protracted since the Second World War, maybe since the 1936'a . To me we went into a period of very flat activity at the end of 1989. We have already been

in therefore 4 or 5 quarters and I think that process will continue through 1991 through to the middle of 1992 and this up and down. We are already very deeply in recession, you can see that on any indicator you look at. But why I say it will

roll is -that while interest rates will boost some activity, for example house building might pick up a bit, stock building may pick up, we may get some further restraint on imports.


On the other hand, the rural crieia hasn't hit yet it will hit in the last half of this year and right through next year and that is the worst rural crisis we have seen since the '30'a and a lot of rural spokes people are referring to it as a depression rather than a recession, that hasn't hit yet. And of course the world economy is now slowing down, the US economy has moved into recession, the Canadian economy, the

British economy, large parts of Eastern Europe, even our dynamic near neighbours in Asia have slowed down dramatically and so we could see the world move towards recession in this year, 1991. In those circumstances, while we might recover a bit, the rural crisis will hit, the world economy slowing down will hit, our balance of payments isn't going to get that much

better and unfortunately it is still stuck at a very large number relative to the size of our economy. So we have got the worst recession, it hasn't brought the balance of payments under control, debt is still going up and Mr Keating's reaction yesterday was one of acute sensitivity I think, because he knows the country is in a debt trap, his Treasury advisers are telling him that he has got a problem because although the trade account has started to improve, we have got a slightly better balance between exports and imports, the current account is dominated every month by interest that we pay on our external debt. It is rolling along, it is getting

bigger, the debt is still growing, the interest burden is growing and there is no evidence that any of Mr Keating's policies will allow us to trade our way out of it.

So against that background, if you come back to a pulp mill or to a Coronation Hill or a number of other development

projects, we really have to boost exports and boost them in a way more than we have done at any time since the Second World War just to stabilise our debt by the middle of the 1990'a and that is what concerns me about Mr Keating when he plays around with it might recover this week, it will look better next week, everything is wonderful, everything is in the groove,

they are beautiful numbers, but the economy just gets worse. I fear that Bob Hawke might have to move Mr Keating in order to get the job done.


One of the figures from last night that wasn't nice, if indeed any of it was all that nice. The fact that wool and wheat sales down by a billion. Now the wool industry is in a stage of mass confusion, it is a big mess. Just to quote some

figures at you, which I guess you don't need quoted, but for the people listening they may not be aware of this. The Australian Wool Corporation stock pile is currently 4.7 million bales with a $2.8 billion debt. Spokesmen have said that that debt is expected to peak out at around $3.6 billion

resulting in a suspension of sales for around 3 weeks of the wool and possibly an abandonment of the floor price scheme. Now local in Tasmania, Chairman of the Wool Council, Mr Rod Fergle Johnson has warned of ramifications of abandoning the

floor price scheme. To quote him, he says "it is no guarantee that growers will be able to sell what they produce and they could receive no bid for their wool and hence be forced to take whatever is offered". What is the Coalition's policy on

the wool situation?


We hove been very concerned for quite some time about the fact that the wool industry and the Minister, Mr Kerin, haven't been prepared to face reality. We spelt that out and you have given some of the data but in economic terms they are

producing far too much wool for what they can sell. You say the stockpile is about 4.7 million bales, I think the average sales were around 3.9 million bales over the last several

years. So it Is a huge stockpile, world demand has collapsed, the Chinese have stopped buying, the Japanese have stopped buying, the Soviet Union has stopped buying I think they are taking about 300,800 where they were taking 1.3 million, it is a significant collapse in demand and yet they continue to

produce. There is a massive oversupply problem.

What we have been saying is unless you move supply back in line with demand there will be pressure on the wool marketing arrangements. The decision by the Wool Board, the Wool Corporation last friday to suspend sales is to me an admission

that the' present marketing arrangements haven't worked, that they can't go on borrowing money, going more and more into debt, you say over S3 billion of debt, just to buy their own wool and then levy the growers, and tax the growers, just to

pay the interest on that, it is a very vicious process that has begun and I hope out of this there is a sense of reality. While we can score points on the Government over this, I put it you, that it is emerging as a national emergency and it has got to be dealt with very quickly.



There are some superfine wool sales that people would like to see go ahead around the end of this month from the point of view of Tasmania for example, and we are urging Mr Kerin to move very quickly and decisively in conjunction with the

industry to tell everybody what is going to happen and we have offered to be part of that in a constructive way and in fact 4 of our Shadow Ministers are meeting with John Kerin on Friday to urge him to take an early decision, to tell ua what he has got in mind, to take an early decision and to make some constructive comments. That is where the situation sits right now, it is an emergency, it needs an urgent solution, we are prepared to help and put the pasts behind ua. Let's get the

true situation out, let's tell everybody how bad things are, let's come up with a sensible resolution of the problem, a way of dealing with the stockpile, a way of ultimately turning the Industry around, making in more efficient, running down the debt rather than building it up, they are the main parameters

and we are keen to start those discussions as fast as



Let's hope something very very big can be achieved very very soon on that particular matter.


You rightly point out the significance of wool to Tasmania, but this is also occurring at a time where a great bulk of the agricultural sector is flat. It is very rare indeed in our history that wool and wheat have gone bad together, so you

don't have the option that you used to have of moving from wool to wheat and so on. A large part of our citrus industry, horticultural industries are flat. World gluts, dumping indeed some people are arguing in some markets, crops being

turned into the ground. So there is a sense of urgency across the whole agricultural sector and wool being a very large element of that and one of our principle export earners, we have to move as decisively as we can.


Just to bamboozle you with a couple more figures before we move on. The Tasmanian Farmers and Graziers Association has predicted that the downturn in the rural industries in the State will result in round about a 24% drop in the gross value of production, which is in real terms a drop from 8625 million down to 5513 million. So, I guess the cost to the rest of the Tasmanian economy is estimated at being S246 and S28<3 odd million. So I guess there is a lot of Tasmanians who are certainly hurting, particularly in the rural sector.


It is really going to be significant and as I say, it hasn't hit our economy yet. People are starting to feel the early stages, for example of the recent cut in wool prices, it came from 870 to 700 and the impact of the levy and the tax they are paying. Wheat growers, of course, have had some effect, but people fear that the worst is still to come there as well. So, I think the second half of this year the rural sector will hit and that is why I talk about rolling recessions and I question Mr Keating's optimism. He has always been

optimistic, he has just got it consistently wrong.


Yeah. Another issue that is affecting Tasmanians, that has affected Tasmanians for quite a while, is the transportation issue, the cost of transporting products across Bass Strait. Now, I only learnt this a couple of days ago, but apparently

it. is cheaper to transport a new car from Melbourne to Los Angeles then it is from Melbourne to Devonport and a company on King Island who exports its product to Scotland, once again the leg from King Island to Melbourne is more expensive than Melbourne to Scotland. Is this, I guess, the shipping

industry or the waterside industry can take a bit of the blame, is it the Government's fault here?


The Government won't move, we have a clear cut solution to this. A key element of the problem if of course what we refer to as the coastal shipping problem, which directly affects Tasmania. It has to do with manning practices and labour market practices on those ships, a practice that is call cabotage, is an essential element of that as well. Our

solution is to open it up to competition, that is, to allow initially, foreign ships to travel these coastal routes on single permits and then ultimately to fully open it up to competition.


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Competition is the only way you are going to reduce that coat disadvantage you talk about. It is true and in fact when I was here last time, a fellow stopped me at a public meeting and said that he sent some tee cheats hack from London when he was staying there and it coat him more on the leg from

Melbourne to Burnie than it did to get his tea chests from London to Melbourne, that is true.

We import salt in Eastern Australia from I think Mexico because it ia cheaper than bringing it around from South Australia, which in a country where you have got an excess supply of salt, you start to wonder about the economics of coastal shipping.

The other part of it is the waterfront, that is a difficult issue. We have an agreed position on that, the Government and the Opposition have similar objectives, the power of the Waterside Workers" Federation, in particular, that has got

this Government hung up and they can't take the decisions that are required to improve the waterfront either. You lose in terms of the cost of the shipping ae a Tasmanian and you lose in terms of the inefficiency of our waterfront and we are about half as efficient as European porta.

I was recently in Singapore and was a bit disturbed as an Australian because Lee Kuan Yew was boasting to me that they have got a new container terminal in Singapore, they can turn around a container ship in 5 to 6 hours completely, bring it

in, unload it, reload it and ship it out. Sydney, Melbourne waterfront for example, that is 5 to 6 days in a good week where there are no blackbana and no go slows and no atop work meeting and no smoko's and no rain and so on.


You could be going a couple of months.


That dramatic inefficiency on our waterfront adds an enormous cost. It is a major cost disadvantage to anyone in Tasmania trying to business or indeed in many cases to live to the extent that food and other things are shipped in rather than

brought in by other means.


Well there will certainly be a lot of Tasmanians looking with interest at what your Party can do on that in the future and of course, looking a bit future, should or if or when,

whichever you like, become the governing party see what can happen there.

On that particular subject of becoming government. The opinion polls last night, the last Morgan Gallup poll which wee released in today's Bulletin, figures released last night, that Bob Hawke's handling of the Gulf crisis has been

attributed to his jump of 15 points in the last approval rating from Morgen Gallup. Your Party is in basically in total agreeance with the Labor Party on this issue, aren't you?


Yes, we called on the Government to make a firm commitment, we thought it was clearly in Australia's best interests to be there and we have supported them all the way through although we have kept up the pressure, we have wanted Parliamentary debates, we have wanted the Prime Minister to inform the Australian people through the Parliament of the nature of our commitment. We are 1O0X supportive, it is not an issue you

play politics with. The national purpose there is more important, we need a sense of national interest, a sense of national unity, you need to send clear signals to Saddam Hussein and the rest of the world as to where we as a nation stand, so we have been totally supportive and the Prime Minister has handled it well. Where he has had difficulties

in his Party, we haven't exploited them, we have gone with him and stood with him because we think it is important. In recognition of that leadership role he has played it is appropriate that the polls have improved as they have for him and I Just ask him, please Bob don't devote all your time to the Gulf because the economic circumstances are pretty bad in Australia and we will back you and help you to provide the same sort of leadership on the handling of our recession and getting this country out of its mess and I would urge him to

show the. .same sort of leadership there.


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Polls come and go, I have no doubt that we will win

Government, but we will go through some periods where I am behind in the polls and then he is behind and I am in front. But there is only one poll that counts and we are working over

a 3 year period to win Government, we believe we have got to win in our right, we don't rely on them falling over in any sense. I was pleased In the polls that our Party vote is still very much in front of the Labor Party, that we would

have won an election if it was held when that poll was taken. Again, polls move around so let's be there in 1 or 2 years time to count the votes at that crucial poll and I will come back down and be interviewed as Prime Minister.


Yes, that will be good. I guess how much credence can you place on polls, I mean, for example, things are looking pretty good at this stage and have been for a while now. I believe you are the only Opposition Leader to have out polled Bob Hawke since his time in office.


I am obviously, you are always pleased when your personal popularity goes up or you seem to be doing a good Job and Bob' a went up 15 points mine went up 8 or 9 as well. That is nice but you can't run the country by polls. We started out

this interview talking about how polling marginal seats on the issue of the environment has set the country back a period of years, I am not going to call my shots between now and the next election on the basis of the polls. 1 will call the policies I think this country needs, if they are tough like

the Goode and Services Tax, or changes to industry protection or dealing with the extreme green movement or taking on the Waterside Workers' Federation, I will continue to say that is what is needed to be done. 1 won't to go into Government with a mandate to do what is required to turn the country around,

to do that I need at least a 1975 size win, that is I have got to win control of both Houses of Parliament so that we can put our legislation through and we can get on and do the job. That is our aim and it won't be easy but if you play politics today with issues, or if you go for short term electoral gain, you fail yourself and you fail the country and I think people understand that. They want politicians to get and do their

job, call it honestly the way they see it. I don't promise you no pain, I don't promise you instantaneous rises in living

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standards, I don't promise you massive and sustainable and significant falls In interest rates until we have put the policies in place that will get interest rates down and keep them down. We aren't about falsely raising expectations. We are promising really a fairly long period of hard structural adjustment to turn this country around through strong leadership and consistent leadership and that is what you will get if you vote for ua.


Dr Hewson, we are just about out of time, I can see your

people outside jumping up and down. Of course you do have a tight schedule, it is basically, meeting the people is certainly an important aspect of this tour.


Public meetings as much as possible.


I better let you go and enjoy lunch in Devonport and then of course you are off to Burnie and Penguin this afternoon and then tomorrow you head off towards the Lyons electorate. So thank you very much for your time this afternoon, I hope you enjoy your stay in Tasmania, hope you remember ua and we look

forward to speaking to you maybe as PM.


Thanks very much Craig. It is an important part of what we are about is getting out and talking to people as much as we can and we are doing a awing across Northern Tasmania and then down doing a couple of things in Hobart as well and we are

trying to cover about two thirds of the Tasmanian isle in three days, so naturally we have to keep moving, but thanks very much for the opportunity to be here.

Blair ί

Not a problem, thank you very much for spending some time with ua this afternoon. Dr John Hewson, Federal Leader of the Coalition.

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For further information contact David McLachlan on 018-627374.