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ANZUS, labour contracts, industrial relations, social welfare, CER, airline privatisation, waterfront reform, winning both houses, strike breaking

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Leader of the Opposition 26 April 1991




SUBJECTS! ANZUS, Labour Contracts, Industrial Relations, Social Welfare, Ch'R, Airline Privatisation, Waterfront Reform, winning Both Houses, Strike Breaking.

Reporters Dr Hewson your speech was very flattering about New Zealand but one thing that you did not talk about was anything to do with New Zealand's re-admittance to the ANZUS alliance or the Western alliance generally. How do you see things shaping up there?

Hewson: Well we've basically said that's a matter for New Zealand policy. As far as we are concerned as an Opposition we see merit in a tri-partite relationship. We've always thought it was the way to go but its a particular New Zealand problem and its a decision that New Zealand has to take. As far as the US position is concerned - neither confirming or denying is the key description of that policy - we think that's

appropriate. In fact that's a bipartisan view in Australia.

Reporter: Would you encourage the New Zealand government in the track that it now appears to be on?

Hewson: Well I'm not going to coach the New Zealand

government. I've stated our view but its up to them to make their own decisions.

Reporter: Sure. They've been out in the cold for so long though even a few comments from you either way perhaps...

Hewson: I don't see myself as a football coach.

Reporter: Mr McKinnon made noises though over Anzac Day saying that he would like to see New Zealand re-admitted. Can you see any way New Zealand could be re-admitted and at the same time maintain its non-nuclear stance?

Hewson: Look its not for me to debate the detail. I think its for New Zealand to talk to the United States about that and determine its own position but I don't want to get drawn on the detail of potential negotiations. I don't think its

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Reporteri Does this mean the New Zealand government can't rely on any moral support from its sister party in Australia?

Hewson: Well I've said what our position is as clearly as I can and they'll have to read that from what I said I guess. They'll have to read what I said to understand our position but our position has been consistent right through and the

ball is in New Zealand's court if you like.

Reporter: But would you at least be encouraging in some way...

Hewson: I don't really want...

Reporter: ...have to pay for the Labour government's ban?

Hewson: I don't really want to comment any more than I already have.

Reporter: (Question inaudible but it dealt with the new system of labour contracts in NZ)

Hewson: It would be wrong to try and make too much of the statement. In terms of principles there are a lot of

similarities, that is individual workplace negotiations is a central element of what they're doing and what we are on about. Choice i s ·an essential element of what is happening. Our process has been detailed now for quite some time and it does relate to something we call voluntary agreements which

allows individual employers and their employees to opt out of the centralised system and to negotiate at the workplace level under certain terms and conditions. The basic structure of that policy has been put in the past in the form of three, if

I remember correctly, separate Private Members Bills in our Parliament to give you some idea of the legislative framework. Some key elements of that in relation to the legal position of employers and employees, simply to ensure that they are on the

same common law footing if you like, as a basis for those negotiations so that they have pretty immediate rights of action against the other side. For example wrongful dismissal or whatever might bring an action from the employee against the employer or vice versa for an unjustified strike or whatever. The detail of all that is specified in the policy

and in the legislation but the principle is the same, that is workplace negotiation with the parties at that level being in the best position to determine the nature and viability of the enterprise and the industry in which they operate. They've got

the best hope of linking capacity to pay with wage

determination , they've got the best hope of linking

productivity and performance with wage determination, we have suffered particularly in Australia because of the centralised wage determination process which has given across the board wage increases of six or seven per cent almost every year unrelated to productivity - and indeed in that situation why



would you bother improving the productivity because you are getting the six or seven per cent anyway - and so our unit labour costs in nominal terms have been roughly double those of our trading partners right through the 1980s so we've been

increasingly cost uncompetitive and from the point of view of the worker the government has failed to control inflation so their real wages have fallen for about five or six years in a row. Its been a lousy system from the point of view of

competitiveness, a lousy system from the point of view of the individual worker and it has in effect elevated some of the union leaders to de facto Cabinet status which has meant that they can block a lot of reform which is otherwise needed as well. So we have to move away from the centralised system and

the process of voluntary agreements is the principle way we've identified that. So that in terms of what I've just said there are a lot of differences between the programme proposed by Jim Bolger and his government and what we are advocating although the essential principles are the same. In Australia of course our government is trying to link us with the public reaction,

link our policy with the public reaction here in New Zealand and I see, have seen, evidence of some considerable public reaction and concern about the employment contracts. I doubt whether that will be sustained because I think down the track

this will prove to be one of the most significant changes in your environment that has ever been made and does offer the hope of a really effective and flexible and internationally competitive process of wage determination for New Zealand. So

I congratulate the government on the courage they're showing although as I say, very carefully, you can't graft what is happening here, or the way it is has happened or the form it has taken, to Australia because it just doesn't fit the model but clearly there is a lot we can learn by observing the New

Zealand experience.

Reportert How about the process here of reducing benefits and trying to make the actual wage a greater incentive, is that something you would...

Hewson* We went to the last election with some changes in relation to benefits and again you can't translate anything that's been done here to our proposals but we had one, for example, which was a fairly hard line on unemployment benefits, the argument being that in Australia you had no

incentive really to get off unemployment benefits, you can go on them as you leave school and stay on them until you are old enough to qualify for the aged pension and the system

therefore has brought a situation which sees the average length of unemployment at about 52 weeks whereas on the latest data that I saw from the United States for example it is about twelve weeks. So what we thought we should do is change the

incentive and give people, where they can, an incentive to get back into the workforce and that has to be a financial

incentive. In our case our proposal was to cut unemployment benefits off altogether after nine months, unless you were

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genuinely unemployable or in some particular difficulties in which circumstances you could apply for a special benefit or access to a training arrangement or whatever to tide you through. But the key point was the structural change to give a

financial incentive to get back into the workforce where you could and that's a structural change that should be made irrespective of particular circumstances of the economy and now of course our unemployment rate is an awful lot higher than it was when we advocated that policy. The policy change

is still worth making, the pace at which you make it and some of the consequences for special benefits will be different because you are in a recession. Now in that particular sense obviously the desire to have financial incentives in relation

to benefits I think is a crucial principle but I can't really comment on the specific changes that have been made in New Zealand in relation to some of those benefits. But across the board in Australia our approach is to ensure that those in

genuine need get appropriate assistance and I've expressed the view that in some cases they don't get enough, and the reason they don't get enough is because it hadn't been effectively targeted. Some people get it that shouldn't get it or get it

to an extent that is over and above what they are entitled to. Those benefit delivery services therefore need to be reformed to ensure that the money goes to those in need and that those who shouldn't get it or who are in some way sponging on the

system or taking advantage of the system or whatever, get excluded. The essential part of our policy in relation to that is the financial incentive to get people to make the decisions they've got to make (for) themselves, recognising that there

are some who are genuinely unemployable or become genuine invalids or genuinely qualify for sickness benefits and therefore society has a responsibility to look after them.

Reporter» On the question of CER, How much closer do you think New Zealand and Australia can get perhaps in terms of

political alignment and also questions like a common currency?

Hewsont I'm not mounting a campaign for either of those two things to be frank and I don't think it is appropriate that leaders do. I don't think they are essential to achieving what we want to achieve in terms of a full-blooded CER relationship

on the trade and investment front, broadened to include telecommunications, aviation and so on. I have a very simple personal view about that, I think if there is grassroots support for some of those changes that pressure emerges in due course and then the governments appropriately at that point will respond to it but its not something that I want to push

or that I have in the back of my mind as an objective or

whatever. I think a lot of the European experience is very relevant in relation to that so from my point of view CER can be expanded and it should be expanded and we should make sure it doesn't get sidetracked but putting some quite specific objectives in due course as to...well, identifying the areas

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that need to be completed and putting a firm timetable on the completion of those. That's one of the thing that I want to do in relation to our Shadow Cabinet processes, I'm here to learn. A lot of our Shadow Ministers have either been here or

are coming for extended exposure. I think we've got seven or eight people coming next week, the Senator who was at lunch today - Bronwyn Bishop - is here for a couple of weeks getting detailed knowledge. Now we hope to be able to formulate a

fairly firm CER policy as part of our overall policy platform for the Opposition parties in Australia.

Reporter: Have you got a policy in regard to shipping and aviation?

Hewson: We have a domestic policy in relation to those. All I haven't done yet is put a timetable on. I believe in the direction that I put though - that is we ought to put a finite date on the termination of the trans-Tasman agreement and ensure that it isn't the massive detriment that it has been to

the development of trade between our two countries and the same for the integration of the aviation markets. Now...what I have to do is go though my own processes to give you some specific timetables.

Reporter: What are the most important factors in aviation policy? .

Hewsont Well we · need to identify those as part of our

decision. At this stage I'm just hearing your side if you like.

Reporter; Would you rather see Air New Zealand pick up part of Qantas (inaudible) than Asian airlines?

Hewson; Its a very big issue in relation to Qantas. Our view on Qantas is that the government has got the policy wrong. 49% isn't worth doing. Sure its a step in the right direction as far as privatisation is concerned but it ought to be 100%.

Qantas will need to be fully privatised, to get it out from under the problem that exists in relation to government interference and direction in Australia. And we're are looking at Qantas now in very difficult circumstances, I admit,

they've lost a large amount of money in the current financial year and there are forecasts around that they'll lose a substantial amount more and they've struggled under a significant lack of injection of necessary capital in recent days under the government. Secondly, there's a decision by the government, the Australian government, to restrict access to the Australian Airlines privatisation. A priori, I don't see why you should restrict Qantas from buying a share in

Australian Airlines and you know its a funny way to start the process when you start limiting the field of the contenders. Beyond that I don't...and some appropriate foreign investment limits which would need to be assessed in the

circumstances ... I don't ·

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take a view about who ought to buy what. A lot of those are commercial judgements which ought to be made by the

institutions concerned and, you know, there may be interest by some of the foreign airlines in buying a substantial share of Qantas if it was fully privatised. There's an international limit of about 35% (which is) the generally accepted maximum. Beyond that you've got to look at it on a case by case basis. Some will bring better benefits than others in terms of the

nature of the sale. But the key point is not a question of maximising money, that is not maximising the dollar benefit of the privatisation, but it is efficiency. And you've got to look at Qantas and Australian Airlines in the context of your

domestic aviation policy in order to determine whether you are doing it in the right way and that's got to be an

important consideration, the nature of the domestic competition, or the extent to which you want to open up your economy to further international access. So they are the principles upon which in government I would address the issue or who should buy what.

Reportert So efficiency is more important than the amount of money...

Hewson: Definitely. Do it for are privatising for efficiency reasons, not for money. Sure you go after the maximise the dollar benefit if you like. You obviously won't sell it cheaply but what I'm saying is you

ought to be driven in your whole approach, to designing your whole process, by the issue of efficiency, not the issue of how much you should get. For example, there's an argument floating around right now in Australia that you shouldn't

privatise Qantas at the present time because it is in

difficult circumstances and you won't get so much for it. That tends just to delay the decision perhaps for ever and the problem goes on and Qantas continues to struggle under increasing government direction and concern and meddling. And

in fact the essential thing is to get it out of the public sector into the private sector, get some private market discipline, get some private management and move its control and management out of the public sector. Now that is an efficiency consideration, it's not a money consideration.

Reporter: If so as a politician you might well promote Air New Zealand having a stake in Australian Airlines because it has gone through-the privatisation process, because it can prove that its an efficient operator?

Hewson: No I'm not judging the contenders for shares on the basis of efficiency in the sense that you've used it. I'm saying what are...the issue in privatisation is in relation to efficiency. In a domestic sense in privatising Australian Airlines you've got to be sure you are getting an effective competitive base. That's the real issue, not the issue of

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privatieation per se. Privatisation can play a part in expanding the nature of that competition, you know the bottom line for the electorate is cheaper air fares domestically, more reliable services domestically and they are efficiency

considerations. Now that's the sense in which I have used it and not the sense in which you've used it, although clearly you do judge the contributions that some airlines can make on the basis of where they are coming from and what they've done

and what their links are internationally and how they're run and so on and so forth.

Reporters So you wouldn't rule out Air New Zealand or other New Zealand interest in the foreseeable future being able to take some type of share in the Australian domestic airlines.

Hewson; Well a priori, I don't rule it out. I don't start with a predisposition to block it. I'm prepared to look at the proposals as they come forward in government.

Reporter; The central price fixing formula that you talked about has essentially broken down in Australia?

Hewsont This is the wage determination process?

Reporter; Yes. Given past history it would suggest that's a recipe for some sort of industrial turmoil. Would you see coming from that an election looming sooner rather than later as a result of that?

Hewson; Look, I've no doubt that our Prime Minister will grab any straw that he can to create a set of circumstances in which he thinks he can beat us. The trouble is that right now he hasn't had any hope of doing that and his situation is

getting worse rather than better. And the reason is that he is not providing the leadership that is required in order to turn our circumstances around. Now in relation to wage

determination specifically, you have a unique opportunity now to move to genuine enterprise bargaining of the type I described before. Genuine workplace bargaining structures and negotiation. And they are not grabbing that. They are posturing around the issue and talking about enterprise bargaining in some other form, some sort of collectivist

industry bargaining or whatever or he is running up and down trying to exaggerate or manufacture circumstances in relation to the waterfront to show how hairy chested he is. In neither of those cases is he really doing what is required which is genuine reform, either of the wage determination process or,

if you want to look at the waterfront, let's see his proposals to match best international practice on the waterfront within a reasonable period of time. In neither case is he providing the leadership that is required. And that is the essence of the issue right now. The positions he has taken in recent days, or the ACTU

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has taken in recent days, there is a lot of posturing in all that and you've got to cut through all of that and look at the issues and it is the issues that he is not addressing.

Reporter: Can your Party learn anything from the huge success of the National Party here in the last election? What have you learned?

Hewson: Well I haven't focussed on the political circumstances in New Zealand in the sense that we've got our own job to do in our own circumstances and it is difficult to graft one set of experiences across to another. The circumstances are really quite different and the nature of the political process is quite different. You only have one House of Parliament rather than two and no States. Sure they may be some particular things I could learn from their campaigning techniques and their approaches to issues but 1 haven't spent time on that because we've formulated a three-year strategy to win the next election and we've set our agenda and we're hopefully setting the government's agenda.

Reporter t That particular issue of the Upper House. Sounds like maybe you are not a total fan of having an Upper House.

Ilewson: Oh no, I just say its an important difference between our two political systems and we need...the point I was making very simply was that we need to have a strategy to win both Houses. That's what we are really about. In simple terms we want a 1975 style Australian win where we win control of both Houses and our strategy is based on that. And the polls

suggest right now that we would do it.

Reporter: And what you've said is that if you don't do that you'll go back to the people?

Hewson: Well, yes, we are genuine about reform and if we can't get our package of measures through, we'll put them back through again. By package I mean I'm hopeful of having the

major pieces of legislation in relation to each of our key policy initiatives as a package, available before the election so people can have a look at it, just as we've done in the past in industrial relations and the labour market, I'd do the

same with tax changes, or coastal shipping and the Navigation Act, or whatever it is, there would be a package. Some

benefits, some costs if you like in electoral terms, but the package of reforms for which we get the mandate at the

election. We'd then put that package in the Parliament and argue our case and push it through the Lower House and then in the Senate. If its rejected, let's say, by the Upper House, it comes back to the Lower House, goes through again, we would

then call an election and go to the people.

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Reporter: You are really saying to the electorate give us both Houses or don't bother?

liewsont Well I wouldn't put it bluntly like that but there's an element of that in the sense that we need to have control of both Houses because we have to make the changes. We want the electorate to do a couple of things. We want them to accept the need for change, accept that our policies will bring about the right sort of change, even though there will be some difficulties for them as individuals or industries or whatever, as well as there being some benefits for them in the

near or medium or long term, depending on what they are, but on that basis we need a mandate to do it. And if you want us to govern properly, you have to give us control of both Houses. That's how I put the case. One last question.

Reporter; Will a Liberal government Under your leadership use the armed forces to break a strike?

Hewson: Well I've been asked this question in the past and the particular example was in relation to the waterfront. In an extreme circumstance where negotiations... I mean you start with negotiations and discussions and searching for an

appropriate resolution on that basis, but in the extreme circumstances, if all that .fails and they are imposing massive costs and disruption on the rest of the economy as a result of quite unjustified- behaviour on their part, for example by a particular type of strike, then you've got to be prepared to

take alternative measures. And if in those extreme

circumstances, one of those options is putting the troops on the waterfront, you'd look at it. And if you had to do it, you'd do it.