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Transcript of interview with Mr Peter Reith MP



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Deputy Leader of the Opposition

E&OE

TRANSCRIPT OF INTERVIEW WITH MR PETER REFTH, MR, DEPUTY LEADER OF THE OPPOSITION AND SHADOW TREASURER, ON THE "AM" PROGRAM, THURSDAY 3 0 JULY 1 9 9 2

ABRAHAM:

Peter Reith joins me now from Christchurch. Good morning.

REITH:

Good morning Matt.

ABRAHAM:

I understand from a Laurie Oakes report in the Bulletin that the New Prime Minister, Jim Bolger, has had som e comm ents about Andrew Denton's so n g about beating New Zealand. He doesn't reckon we can beat them on the econom ics paddock.

Well, I'm not surprised to hear that report. The truth is that the Australian Federal Labor Government has been bagging New Zealand a s an exam ple of the adverse co n seq u en ces of a pretty radical reform agenda and I think they've been unduly pessim istic about the circum stances in New Zealand. I dont think there is any doubt that New Zealand's econom y is recovering and there have been a lot of benefits from the reforms that they have introduced. That's relevant to Australia. We're not suggesting duplicating the New Zealand experience but you'd be m ad to turn a blind eye to what's been happening here.

Well the biggest, single issue a s you know in Australia is unemployment. What is happening on the unemployment front in New Zealand. I m ean there's been a pick-up in th e econom ic activity, what's happened to the jobless?

Well, unemployment's about the sam e rate here a s it is in Australia and I think that the prospects are that it's likely to remain high for som e time. The real questions of course flow from the introduction of the Employment Contracts Act and I think, more generally, from the fact that New Zealand is having

an export-led recovery which over time will be a sustained recovery holding out the prospects over the medium term to in fact get that unem ploym ent rate down. But there's no doubt New Zealand's got a problem with unemployment. They certainly d o n t a p p ear to have th e youth unemployment that Australia does. In fact they d o n t have a minimum w age either for young people.

That d o esn t bode well though d o e s it for a rapid return to a lot lower unemployment figure because we've seen, of course New Zealand h a s a GST and h a s had som e sw eeping econom ic returns and yet no dent m ade on a sizeable unem ploym ent figure.

REITH:

ABRAHAM:

REITH:

ABRAHAM:

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

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REITH:

Well, certainly the m anufacturing sector here, and I've just com e from a breakfast with a num ber of m anufacturers. They are very optimistic about their prospects even over the next twelve months. I think the other thing to say about New Zealand is that they've had a very difficult time for a sustained period reflecting a pretty narrow b a se economically, unlike Australia which I think d o e s have a more diverse econom ic b a se than here.

ABRAHAM:

Yes, I think the ACTU m ade the point that why should Australia reduce itself to third world standards to com pete with third world countries and they said that's what New Zealand h a s had to do.

REITH:

Well, that is part of the sc are campaign. I m ean Labor ministers are saying that the Employment Contracts Act h a s led to exploitation and we were at a meeting with Trade Unionists yesterday, they were running the sam e line when the Employment Contracts Act w as introduced here. They actually set up a "Sweat Line" for people to ring in with complaints about exploitation and after a short period they had to admit to th e fact that they really h a d n t had many complaints an d they closed the line

down. And the latest survey of the contracts entered into, which have to b e lodged with a central authority, show that in 90 per cent of those contracts w ages have either rem ained the sam e or in fact have been increased.

ABRAHAM:

Well, what, let's get from your point on to the positive. What do you like about what you s e e there, what do you think could be picked up and u sed in Australia pretty easily?

REITH:

Well, in a technical s e n se the GST w as I think very successfully introduced into New Zealand. They had a very sm ooth transition. They didnt have a s big a s package a s ours. They didn't, for example, have the need to abolish payroll tax b ecau se they didnt have it and they didnt abolish the petrol tax which is quite a heavy impost on som e sectors of the New Zealand econom y but generally speaking

New Zealanders will tell you that the GST is a fairer tax, in fact, one of our g u e sts at breakfast this morning said that it w as the fairest tax ever introduced into New Zealand. Many New Zealanders talk about the, one of the advantages being that they, it gives them a capacity to tax the black economy, that's se en a s a very big plus. And also interestingly enough on the question of com pliance cost, particularly for the small business sector, a lot of people have been saying one of its great advantages is that it's required people to keep reasonable accounting records which h as generally improved the efficiency of b usiness acro ss the board.

ABRAHAM:

Now, surely a big area of change in industrial relations in Australia com pared to New Zealand. That change would be a lot more difficult and painful to achieve b ecau se of the strength of the craft unions in Australia com pared to the set up in New Zealand?

REITH:

Well, New Zealand's experience on that is not unlike ours. In fact, the New South W ales Government at the turn of the century sent a Royal Commission to New Zealand to look at the workings of the newly introduced arbitration system in New Zealand and of course many of the features, including craft unions that we have in Australia, have been a feature in New Zealand. O ne of the interesting

things is that the New Zealanders have been saying, they're absolutely stunned one said this morning,

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at the sm ooth introduction of the Employment C ontracts Act and so I think that p erhaps b o d es well for major reform. There is one parallel I think betw een Australia and New Zealand and that is that this is not an overnight change. In New Zealand there's been a move tow ards enterprise-base bargaining now for som etim e and I su p p o se som e would argue that we've had som e shift in that direction but

not enough in Australia.

ABRAHAM:

You are looking for an overnight change though, are you not?

REITH:

Well, we've certainly talking about radical reform in term s of w here we've b een and in term s of the p ace of reform in Australia but it is a process of evolution depending a bit too on the extent and quality of industrial relations in existing enterprises.

ABRAHAM:

Have you had a look at the problem s in som e small communities that have really suffered from the privatisation of power authorities and so on? And the removal of cross subsidies and effectively leaving many of them very, very m uch out on a limb.

REITH:

We've spoken to a few people about that, but I m ust say the resp o n ses that we've had have been a bit limited b e c au se we've been focussing particularly on tax reforms and industrial relations reforms. One com m ent I picked up yesterday w as that there w asn t m uch a community service obligation benefit to rural communities in the telephone system prior to the privatisation anyway, so but really

that h a sn t been the focus Matt.

ABRAHAM:

Are they envious of our latest CPI rise or should I say, fall, the best perform ance of 28 years?

REITH:

The CPI, the latest CPI figure I think in New Zealand w as 1 per cent a s at March and they really have got them selves into a low inflation regime and I think expectations here are for that target that they've set in New Zealand of 0-2 per cent is going to be easily met, and so I think New Z ealanders s e e the low inflation figure in Australia a s being a s m uch a reflection on the recession a s anything else.

ABRAHAM:

Do you share that? I m ean do you s e e at least som e ray of hope in that low CPI rate, the fact that we may be able to lock in a low inflation rate here a s well?

REITH:

I think the question for Australia is w hether we can lock in the rate and we've had low inflation in the past a s a result of recessions or downturns in econom ic activity but that is the big issue for Australia. Can we keep it low? I think the low inflation rate we've got now is very much a result of the worst recession for 60 years. Which is why it's one of the best figures we've ever had and that is why, I think, in term s of answering that question, can we keep it low, we are proposing the industrial relations

reforms and to enhance the independence of the Reserve Bank to ensure that we have a credible anti-inflation strategy.

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ABRAHAM:

In the wake of that low rate yesterday, the Government h a s now said that it's prepared to approve a small w age rise for Australian workers. Is that likely to have m uch impact on the inflation rate or is it not a problem over-stimulating the econom y at this stage?

REITH:

I think you've got to look at that in the overall context. And th e overall context is that they're going to embark on th e greatest, or they are embarking on the g reatest spending sp re e we've p erhaps ever seen in Australia. We've had a m assive turnaround in the public sector borrowing requirement. They're loosening off on fiscal policy, spending money they d o n t have. It's no surprise that in a s e n se they're moving to loosen the policy in respect of w ages. I m ean we really ought to have a system where people can get a w age increase but w here it's b a se d on productivity.

Well, the bottom line in New Zealand is that things here are definitely starting to improve. Many New Z ealanders s e e that there's been a link betw een the reforms they've undertaken and the progress that's been m ade. They have had things pretty tough in New Zealand and things are still tough for many people with an unemployment rate equivalent to Australia's. But many people are saying that we s e e the light at the end of the tunnel. And there is, particularly in the b usiness community, a real

se n se of confidence about the future and they've got export-led growth which is sustainable growth that's going to, I think, underpin higher living standards in New Zealand in th e future.

ABRAHAM:

Peter Reith, Shadow Treasurer, Deputy Opposition Leader, thank you for talking to me from Christchurch this morning.

REITH:

Good, thanks Matt.