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Transcript of Mr P K Reith MP Deputy Leader of the Opposition and Shadow Treasurer doorstep interview commenting on the national accounts



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Deputy Leader of the Opposition

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TRANSCRIPT OF MR P K REITH MP DEPUTY LEADER OF THE OPPOSITION AND SHADOW TREASURER DOORSTOP INTERVIEW COMMENTING ON THE NATIONAL ACCOUNTS CANBERRA, 15 AUGUST 1991

Well obviously I'd like to say there was some good

news in these figures but obviously there isn't. The recession deliberately engineered by Mr Hawke and Mr Keating has left Australian industry a smoking ruin and the unemployment queues, already long, are going

to continue to grow.

Australia's got a massive debt. We need to

reinvigorate our investment performance if we are to cope with that debt and to provide people with jobs. If you look at the investment performance of Australia over the last three years, investment has been falling and in the last quarter that fall has actually been accelerated. So these figures have a (not just a

quiet message for Australia), these figures are

screaming at us that we must have some fundamental changes to economic policy and that really is the test for Mr Kerin in next week's budget.

We want a strategy that is going to create jobs for

Australians and to turn this economy around. The

recession continues.

It's very encouraging news on exports though,

Mr Reith.

Well, exports are up a bit. The wool performance is up and we've had a record cotton harvest but I'd also say that imports are up and there's a lot of computer and office equipment gone in there. And, that's not

so good on the other side of the ledger.

What about the survey that suggests the turn around will certainly be here after Christmas?

COMMONWEALTH

PARLIAMENTARY L IB R A R Y M1CAH

Parliament House, Canberra, A.C.T. 2600

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Well, obviously we would like to see some sort of

recovery into the new year but these figures show

particularly with that investment performance that we are just not building the infrastructure that's going to give Australians jobs in the future.

We may get, you know, a patchy turn around in various industries into next year but today's figures are not good and they've got a very clear message for the

Government. It is time for some big changes to

economic policy. They ought to be changing the tax system, the industrial relations system and further privatisation, shipping reform, waterfront reforms.

That bloke Collins ought to get the sack. He made a promise that he would resign if he didn't get decent reform on the waterfront - that is a job still undone under Mr Hawke and Mr Keating.

(inaudible)...prompt further calls for interest rate cuts so should the Treasurer hold the line or

acknowledge those calls?

There will obviously be further calls for drops in interest rates. The fact is that this country needs to see a drop in real interest rates to underpin that turn around in investment performance but we are not going to get real interest rates down unless the

Government is prepared to change economic policy. And that, again is the real test.

There is no simple lever you can pull on interest

rates or any of the other fundamentals to the

Australian economy. You've got to have some big

policy changes. That is the message screaming at us. Let's get some changes and some big changes. Let's not see scare campaigns putting us off the major

reforms that Australia needs and that's particularly obvious in respect of tax reform.

There is an opportunity for Australia to change it's tax system - provide people with jobs and to address that real problem with investment. Something like a

billion dollars or more of sales tax currently on

investment projects. Now, that is crazy at a time when we need more investment not less as we have seen in the last quarter.

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Is it very easy to ...(inaudible) are you saying that they should not reduce cash rates (inaudible)...

Well, what I am saying Tim, is that I'd like to see

interest rates come down but I dispute your

proposition. The fact is that the fundamentals of the Australian economy are such that with a massive debt and the forecasts from Murphy recently were for the

debt to go from 1994/5 up to $217 billion. Now, you can't just dismiss that, put it to one side and say

this is all easy stuff. It's obviously not. That is why we need some major changes.

Are you still saying that inflation is too high are you ..(inaudible)?

Obviously inflation is back and you can see that in these figures. Mr Keating carries the low inflation badge on his lapel but he has got the unemployment

around his neck. Obviously in a recession you will dampen inflation and inflationary expectations but the market's expectations are for a bit of a pick up in

inflation in the forthcoming year and that of course relates to some of the fundamental problems we have.

..(inaudible)..

Well, that is obviously the argument. My principal point on interest rates is a simple one. Australia has very high real interest rates. That is an

impediment to a better investment performance and you need to make those changes to fundamental economic policy if you are going to get interest rates down and keep them down.

Mr Keating..(inaudible)

Well, its point 8, I wouldn't say that was a

surprising figure, I think the private final

consumption expenditure was fairly flat. We've

certainly seen wages drop in the last quarter and

household savings ratio drop. In fact I think the

last quarters figures were, the previous quarters figures were revised and this figure is still a very low figure. That suggests that people are eating into their savings to maintain their private consumption.

Do you expect Mr Keating to be writing into the Sydney Morning Herald to point out that he was Treasurer for 9 of the 12 weeks of that quarter.

Well, he's not likely to. And he was certainly

Treasurer for the last three years and if you look at the last three years on the investment performance, investment fell in 9 of those 12 quarters. That is a major underlying structural problem.

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