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Transcript of Ian McLachlan MP 7.30 Report

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Lyneham - Ian McLachlan welcome again to the program. Do you concede that the Government has got the Opposition very firmly on the back foot over your zero tariff policy.

McLachlan - 1 think they've taken a political opportunity, a bit like George Bush did with the wheat deal, and they've said we want to look soft on tariffs, having said for nine years that the reduction of protection was the only way to get Australia internationally competitive.

Lyneham - So now you're on the defensive, it's your policy that's the contentious issue not the policies and alleged failures of the Government.

McLachlan - Our policy and their policy will give the same effect.

Lyneham - Yours is zero on cars, theirs is 15, are they the same?

McLachlan - Our policy is 5 per cent by the year 2000. What we do after that, we will go to zero one day, there's no doubt about that, we haven't decided on the timing.

Lyneham - Well how is 5 the same as 15?

McLachlan - Because there are a whole lot of taxes that we're going to take off as part of the Fightback! package - wholesale sales tax, payroll tax at something like $350 to $400 a car, wholesale sales tax $250 a car, fuel tax $50 to $80 a car. I mean these are the car companies' figures not mine. And they say that the differential between the 15 per cent of Keating and our 5 per cent will cost them $1,000 and I've just outlined how you can pick up about $600 or $700 without thinking about

industrial relations and the volume effects of cheaper cars for all Australians

Lyneham - But the bottom line is they end up with a different result when they do the sums, they're different results?

McLachlan - Well what would you expect the car companies to finish up with. I mean in every coming election for the last 20 or 30 or 40 years the car companies had a position. Now that position has been one of giving Governments, and this time potential governments a big problem. Now they're giving us a big problem, I

wouldn't expect them to take any other position.





Lyneham - Do you accept that your troops are getting a bit nervous though? I mean did you notice how the Joint Party Meeting yesterday was so extensively leaked to the media, that's a sign of some unhappiness isn't it?

McLachlan - Well that, I have to say to you Paul, has happened before, I'm sure the sources are about the same.

Lyneham - The leaks detailed some pretty tough questioning about the zero tariff policy didn't they, not least from Steele Hall, your South Australian colleague.

McLachlan - Well most of the reports of those leaks were wrong.

Lyneham - Several sources have told me you might as well have been there if you read some of the reports in the papers this morning.

McLachlan - Well I can just tell you that most of those reports were wrong.

Lyneham - So Steele Hall didn't say that the policy was politically untenable? Costing votes in marginal seats?

McLachlan - I'm not going to tell you what anybody said in the Party Room. I think that what is said in the Party Room is sacrosanct, and I am violently critical of anybody who leaks or comments on things said in those Party Rooms.

Lyneham - Well let me tell you what was said in the Parliament, in public, by Ken Aldred, the Liberal Member for Deakin. He spoke of Australia's 'rambo' like obsession with reducing industry assistance. Are you one of the 'rambos' he's got in


McLachlan - Perhaps. But perhaps he also has Mr Keating in mind because Mr Keating has said on any number of occasions that protection is something that we shouldn't be living with because it makes soft industry and it's something we should get rid of. Now of course he's done a double take, and he's done a political double­ take.

Lyneham - Do you think it's as simply as suggesting that the car makers are in collusion with the Government as Dr Hewson suggested yesterday?

McLachlan - I don't know whether they're in collusion with the Government. But look what we're about is trying to make an internationally competitive car industry and whilst they don't particularly favour this particular move, on the other hand, there are plenty of people, even the automotive parts industry who agree with us, including I might say, not in the parts industry, including the Automobile Association of Australia who have five and a half million members.

Lyneham - We've got Robert Bosch Australia, they're thinking of shelving their plans to make anti-locking brakes and air bag control computers here, they don't seem to agree with you, Mike Quinn at Mitsubishi doesn't seem to agree with you.


f . -


McLachlan - Well we know what Mr Quinn said. He said it yesterday. He's said it to me before.

Lyneham - $600 million of investment in your State.

McLachlan - But he hasn't made that decision. He hasn't made that decision to stay under the Keating Government.

Lyneham - He says it's highly unlikely under your policies.

McLachlan - That's right and he hasn't made the decision .. he told us that. No but he hasn't made that decision to go away. Nobody's made those decisions. I mean this has been done before every election for years.

Lyneham - Just politicking is it?

McLachlan - Well I think it's just taking a particular line and the line is that we don't like any reduction of protection.

Lyneham - And you said on Adelaide radio today if you're wrong then it will be a tragedy.

McLachlan - Oh yes. Well I mean there's no doubt that it will be a tragedy if the car companies leave. But as I say to you, there is no difference between our policy, when you work out the numbers, and the Labor Party, so we're both in the same


Lyneham - Do you dispute the fact that the industry's exports have shot up from about $380 million in 1983 to about $1.2 billion now, and that sounds like a success story?

McLachlan - It does. And then if you look at the imports that import credit allows to come back in you can bet your boots that the imports have gone up as well. I mean that's what happens, you create an import credit by facilitation and that allows an import credit to be used by somebody who wants to import something and they don't have to pay the tariff.

Lyneham - So let's assume you're a car maker in Detroit or Tokyo, you see us going to zero, or close to zero tariffs, you can ship cars here freely, why would you bother to make them here then?

McLachlan - But I'm saying to you Paul that there is no difference in effect between 15 per cent and 5. Now we have said to the car makers why don't you commission an independent study. We're quite happy for that. Why don't you commission an independent study to look at our two positions - Keating on 15, which you've signed up to, and us on 5 with all these tax savings for you. We're quite happy. Up until now they've so far refused. Now if they were so confident, why not?




Lyneham - How do you think John Hewson has been performing lately?

McLachlan - Very well.

Lyneham - His approval rating seems to have taken quite a dive.

McLachlan - Look I'm surprised that we haven't got into this tariff thing in a big way. The reason we didn't of course was that we agreed in a bi-partisan sense with the Government. They've chosen to play politics with it, and we'll have some aberrations over that.

Lyneham - Do you think his leadership is as secure as it was six months ago?

McLachlan - Absolutely.

Lyneham - Are you hearing any unusual rumblings?

McLachlan - Not a word.

Lyneham - Is there any prospect he might have to think again about the tariff policy?

McLachlan - No. We're not going to change the tariff policy. What we've got to do is try and explain, as I did this afternoon to a very good parts maker in Adelaide, both sides of the coin - the savings that he can make. And it's very difficult when people are concentrating on their business for them to absorb both sides. They just see a 15 per cent versus 5 per cent tariff, but they do not pick up that there are all these savings on the other side.

Lyneham - Any chance of any significant changes in Fightback! do you think?

McLachlan - No, I mean why would we, we're saving half of all industry's business tax, $20 billion of business taxes coming off the back of business. I think in the main they rather like it.