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Transcript of the Treasruer, the Hon John Dawkins MP, with Rick Paterson ABC radio Hobart



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TRANSCRIPT OF TH E TREASURER. T H E HO N JOHN DAWKTNS \IP , W IT H R IC K PATERSON 7ZR ABC RADIO H O B A R T - THURSDAY 3 SEPTEMBER 1992

PATERSON: Good morning M r Dawkins, and wflcome back to Ilobart

DAW KINS: Good morning Rick, it's a great pleasure to be here.

PATERSON: We’re going to open up our pbones for talk back, so if you have a question to pul to the Federal Treasurer, 353 100. 1 suppose most the military strategists would agree that the cold war is over, but with recent events with what’s happened in America, particularly overnight with George Bush and his decisions

about the wheat farmers, also the huge subsidies from the EEC. Are we now perhaps putting the world into trade blocks and we could actually start a trade war.

DAW KINS: Well this has always been a suggestion around the place, I think actually that you could see what happening in Europe and what's now happening in America, in terms of the America/Canadian/ Mexico arrangmeents. As maybe being steps along the way to broader free trade, I mean if you take what's happening in the ASEAN group of countries, to our north. Those economies have been heavily

protected because they're developing economies, but even they have now decided in the context of freeing up trade between each other, that they will actually pursue a policy of lowering tariffs. So i think lowering tariffs in groups of countries may well be a step along the way to lowering protection generally. So 1 don't see it necessarily

ns being threatening to Australia. And the Important thing for us is that we need to keep a foot in all camps. Asia has become a very much more important trading partner, i f you take those ASEAN countries, you know, Indonesia, Singapore, Malaysia, Philippines and Thailand. We now export more to those countries than

we do to the United States. They have become our second largest trading or export market. A huge change which means it’s so important for Australia to be alert to changes and take the opportunities as they emerge.

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PATF.RSON: D r Hewson, 1 think, is on the front page of today's Australian, has attacked both the US and Japan and has accused them of protectionism,

DAW KINS: Yes, well I find this pretty extraordinary, I think it reveals that Dr Hewson isn't as knowledgeable as he might like to be in matters of international trade. This first point is that Japan is our largest trading partner. We export much more to Japan than we import from Japan. Although, of course that balance has

been shrinking, or that gap has been shrinking over the years. But Japan has been a very important trading partner to us and I just think it's a bit odd that you would make your major attack on our most important trading partner. Particularly when your own policies, in the case of D r Hewson, involve scrapping the Industries where we are doing best as far as access to the Japanese market. We are now selling a lot

of motor cars and more importantly motor car components to the Japanese market and that is just the industry which Dr Hewson wants to close down in Australia.

PATERSON: But has Dr Hewson got a point when he says that we've had an alliance with the IJS for many years and a lot of people would say, what have we got in return for that alliance? Some were saying today, you know George Bush has slabbed us in the back.

DAW KINS: Well, of course it's easy to say that, on the other hand the United Stales has been, and look I think we’re entitled to be extremely snarly about w hat the Americans are now doing, probably for electoral reasons, in terms of having a go at some of our markets.

PATERSON: Pork barrelling

DAW KINS: Well, 1 think it's a very sensitive issue, it's a lead up to a difficult Presidential Election, and I think we're entitled to be very angry about it and to express that anger. But on the other hand you have to remember that the Americans and us have been pretty much united in attacking the real source of this problem and that is the Europeans. I mean the Europeans set about the task of corrupting agricultural markets all around the world, couldn't care less about us, couldn't care less about the Americans, couldn't care less about anyone really, all they wanted to do, was dump these hugely subsidised products on foreign markets and lmcompetltively produced, uncompeiitively marketed and we and the

Americans have been leading the charge on trying to get the Europeans to reduce the levels and hopefully eliminate those subsidies. So again, we're entitled to be very critical of America, but America is still a very important friend for us, both in strategic terms and in trade terms and 1 think it might be a good idea if Dr Hewson trained his guns on some of our real enemies, particularly the Europeans.

PATERSON: Who are our real enemies? Who would you pick out?

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DAW KINS: In this urea» in the area of trade, without any doubt at all. the Europeans, as far as agricultural trade is concerned. T hey have been hugely' arrogant in their approach to dealing with these...

PATERSON: Is France, Germany, Britain?

DAW KINS: Oh well, France is a major culprit of course, but I'm actually pretty critical of the Germans, because they can certainly afford to do much more In terms of liberalisation, they can afford to apply more pressure to the French than they have. The British have actually been fairly good. The Irish are hopeless, the Irish

have of course a very weak economy, and they rely very much on the common agricultural policy. But T think we're going to make progress there, l think the level of support will come down and we just have to maintain our pressure there and don't for a moment deflect the pressure, which is what th e.... 1 mean the Europeans would be dapping with glee at Ihe thought of Australia having a brawl with America, over something which the Europeans started in the first plate.

PATERSON: So we arc in a very uncomfortable position?

DAWKINS: Well, we are always going to be ίο a difficult position. But with changing alliances around the world. With the... you know, you mentioned the cold war being over, the most important thing about that, is that the old trade relationships between the Soviet Union and its sort of satellite or dependent countries, are now all up for grabs, and we arc seeing changing alliances all around

the world. With impacts into our region as far as Vietnam, Cambodia and so on arc concerned. And 1 think what wc in Australia have to do, is make sure that we are there, taking the opportunities as they arise and we have done.... you know, this is one thing w hieh people don't always recognise, that our export growth, particularly our exports of manufactured goods has been better than any developed country over the last ten years, and as good as, or better, than most of the Asian Tigers. So we

have actually been doing quite well and...

PATERSON: Bui the Aussie dollar hns dropped, i believe. 12 per cent in value, over the last two years.

DAWKINS: Without going into n great commentary on that. 1 mean that, in a sense is providing ail additional boost to our exporters, because a devaluation of the Australian dollar can of course make our goods even more competitive.

PATERSON: So was it the devaluation, was the ( layton's devaluation then, we haven't really stood out there and said right, we're devaluing the dollar, it's just happened very quietly.

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DAW KINS: Yes, well we don't devalue these days, l mean it’s the effect of wltai happens in the market, and our dollar is very much dependent on the prices of our commodities, agricultural and raining commodities and the world makes its views about that. But just to make one additional point. The best way we can sustain the competitiveness of our currency is to maintain low inflation. Because every year our

inflation rate is below that of our trading partners, that's another step forward we make in terms of improving our competitive position.

PATERSON: Final point from me and then we must go to our callers, it's said that the money markets are jittery because of the uncertainty of a Federal Election. Would it be a good idea for the nation to go sooner rather than later to dear up this whole mess?

DAW KINS: Well I wouldn't describe it as being a mess, the jittering on the money markets has got much more to do with international events, than it has to do with domestic events. We are a very widely traded currency, much larger than our trade would reflect, that's for a variety of reasons, it's a safe currency for many people

because of the backing that it has from commodities, but it's got much more to do with what's happening in Europe, high interest rates in Germany, and the sluggish IIS economy as well having an influence. So, we shouldn't lake what D r Hcwson and others say, when they.... 1 mean they go on with this, 1 think quite un-

Australian behaviour, of talking dow n the currency, undermining the currency, trying to encourage speculation about increasing interest rates or a double dip recession, all these kinds of things, for which there is no justification. It's just they think in their interest, to maintain a certain nervousness at a time when our

economy could be improving, that's the last thing they want, to see an Improvement in our economy, but I think they are going to be disappointed.

PATERSON: Definitely no election this year?

DAW KINS: Oh well, that's up to the Prime Minister, but I wouldn't have thought so.

PATERSON: Right, if you could put those earphones on, M r Dawkins, we'll start taking our callers, our guest in the Studio this morning, the Federal Treasurer, John Dawkins. Our first caller George, good morning to you George.

GEORGE: Good morning Rick, and M r Dawkins, one question M r Dawkins, why do you differentiate between the farmers with the assets test to small farms non viable, people living in (inaudible) as against people living In cities? An example, a small farmer un-viable, not getting one farthing income, have a farm worth

$250,000, the house worth nothing. The person in the city can have a house worth $250,000 the land worth nothing he gets the full pension, the small farmer gets none, why? .

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DAW KINS: Well, 1 would want to look at the particular circumstances, because the policy as you describe it, I mean your description doesn't accurately reflect the policy,

GEORGE; It certainly does. I'm sorry Sir

PATERSON: George you asked the question, could we please get a reply.

DAW KINS: 1 certainly will give you nothing but the truth as far as I can, on the basis of what 1 know about it, but sometimes these cases are put up to you which have kind of individual characteristics, but it is the case that everyone in the context of the pensioner assets test has their home excluded from that consideration. Now of course land which is outside of the so called curtilage, of the home is of course,

Included as part of the assets, just as someone in the city has their share holdings or has a flat that they might own, additional to their home, those things are included, or a block of vacant land that a city dweller might have in the country is also included. So it's not a question of unfair treatment, it's a question of whether or not

the circumstances of farmers should be given special consideration, and they are. There are special arrangements for farmers in relation to access to the pension, and if you would like further details about that, if ycu could leave your name and address, I'd be happy to ensure that you'll receive that information.

PATERSON: George, thanks for your call and we'll put you on hold and we'll take your name and address. Our next caller is June, good morning June.

JUNE:Good morning, M r Dawkins, I'd like to comment on a deal that your Government made w ith the Canadians. 1 think it’s time that your Government reversed the decision to allow the dumping of Canadian subsidised pork in Australia. Because this has just about destroyed our pig industry, and has left many efficient producers broke and owing the banks.

PATERSON: Right, M r Dawkins, allowing other nations to dump not only pork, but cheeses and a whole other range of other things.

JHNE:This is pork in particular.

PATERSON: Right, well then, let's get a response.

DAW KINS: Yes I have been aware of this issue. We need to distinguish between dumping on the one band, which is about putting into the Australian market products at less than the cost of production, or alternatively less than they sett those products within their own domestic market.

JUNE: But they're subsidised 34 per cent.

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DAWKINS: O K . and we have procedures to deal with these dumping issues, as far as the particular issue with pork is concerned, it has been raised with me before, I have handed it on to the appropriate Minister and again, if you would like to leave your name and address, I ’d be happy to let you know what’s happening on that

front.

JUNE: Thank you M r Dawkins.

PATERSON: Right, thank you very much indeed June. So there are still fairly classic examples of dumping on the Australian domestic market. 1 mean pork, other produce, cheeses, orange juice?

DAW KINS: W ell again, dumping is a quite clear breach of international trade law.

PATERSON: But it’s happening, isn't it?

DAWKINS: When it happens, we actually have some of the tightest anti-dumping laws in the world. And we have streamlined them to ensure that we can respond quickly. But we don’t w ant to use dumping or anti-dumping laws as simply a new

form of protection. O f course in the agricultural area, it’s far more complicated, because of the basic corruption of agricultural markets, and wc have to make sure that we’re constantly looking at these instances where there is subsidised product being put into the Australian market and seeing what we can do about It.

PATERSON: Here's Bill, good morning to you Bill.

BILL: Good morning. M y question M r Dawkins, relates to your super simplification statement of the 30th of June, in which most changes did not occur until July 1994. But there was only 10 hours notice given to employees of the loss of their tax deduction for their own personal super that they may be voluntarily be

making. That in no way is replaced by the value to them of the new Guarantee Charge, wouldn’t it not be fairer to allow the system that applied until June 1992 to continue until 1994, with the Guarantee Charge being viewed in the same light as award support?

DAW KINS: Thank you for your question, I think it’s an important one because superannuation now is a major issue for Australia, not only in terms of providing better security lor people in their retirement, but also Increasing the savings in Australia necessary to support our industrial development in the Future, Now I gave

an undertaking that 1 wouldn't announce anything with less than a l l months notice period in respect of those people who had pre-1983 and post-1983 service. Now some people interpreted that as that I would give 12 months notice for every thing. I didn't ever say that, and in fact, in relation to tax changes, you can

never really give that much notice because you just massively distort peoples'

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behaviour during the intervening period. So I appreciate the fact that some people were disadvantaged, as a result of that change. 1 mean we did reduce the generosity of the taxation treatment of those concessions, but I will Just make two points in reply. The first is that as far as self employed people are concerned, those people

who get tio support, or who are self employed and are providing themselves for their superannuation, there was no diminution, there was no reduction in the taxation treatment of their contributions. Secondly, we had to look at this change which has now occurred as between a situation where most employers, a few years ago at least,

were not making any contribution to their employee's superannuation, now they are all required to make a contribution and that contribution will grow over the. years to about 9 per cent of wages and salaries. I mean yon can easily make a point that OK the SCC is going to improve things in the future, but for many employees they’re only getting 3 or 4 per cent now, and that's a fair enough point. But we were trying

to lay down a plan, a long term plan which had to lake into account that from now on all employers were required to pul aside 3 or 4 per cent, rising to 9 per cent over the years ahead as a contribution for their employees and therefore we didn’t think there was a need to maintain such a generous form of assistance for individual

contributions. I just make this additional point, that of course the Opposition's proposals have greater concession in this area, but they also massively increase the tax on the funds. They would tax the funds at 20 per cent rather than is per cent and that tax on the earnings of the funds has a terrible effect on the eventual

benefits to individuals in retirement regardless of whether the contributions into the funds come from employers or employees.

PATERSON: Bill thanks, I'm sorry, we're running terribly short of time, we're trying to give one question per person.

BILL: Thanks.

PATERSON: Thank you. Now if unemployment remains high and if there's not real pick in business, has the Federal Government got any hope of winning the next Federal Election?

DAWKINS: Oh, Rick, 1 mean that precedes from an assumption which 1 don’t think is valid. W e have an economy which is growing now and O K there are very- great regional disparities and at the moment Tasmania hasn't picked up to the point that other parts of Australia have.

PATERSON: But don't we nearly have a million people out of work?

DAWKINS: Yes 1 know. I'm aware of that, it's 900,000 a bit over 900,000 people out of work but the economy is growing again and we have to remember that all these things are a bit relative and we are actually growing, a mean a lot of countries would love to be in our position in terms of our growth prospects now and for the years ahead we'll grow at about 3 per cent this year. There is general agreement

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About that. That will see 150,000 jobs created between now and 12 nionilis from now and that job growth will continue in the years ahead. No it does mean that unemployment is going to come down only slowly, blit it is going to come down and we are going to find jobs for more of those people who are looking for work and

there are no instant solutions to this problem. Australia has been through a very dramatic period of restructuring, a process which isn’t over y et. Some Tasmanian industries have been through that process but that's all designed to ensure that our iudustries can compete on world markets, can compete more effectivet}· in the Australian market and that’s all good new in terms of long term growth and long

term employment prospects.

PATERSON: Why have the financial forecasters got it so wrong? 1 was looking at Kerry O'Brien's Lateiine Program on Monday night. And there were the forecasts by those in Treasury, by those in private enterprise and so many of them were nut out a little, they were out a hell of a lot, there was going to be a soft landing, we got a

hard landing, there was going to be no rise in unemployment, interest, every person who called himself an economist was so terribly wrong.

DAW KINS: Well, it’s a bit like forecasting the weather, 1 mean you can

PATERSON: You can be fairly accurate, however?

DAW KINS: Yes, but if you're looking at the weather 12 months ahead, it's not always that accurate. I think economic forecasting is a bit better than that, and >ve lend to be hugely critical of those who get it wrong, but particularly when they get it wrong on the wrong side If you like, if they...

PATERSON: W rong over many years.

DAW KINS: Yes, 1 mean, we tend to ignore it, when they under-estimate the strength of a recovery, where we are critical is when they get wrong the depth of a recession or if they over-estimate the recovery. I think on this occasion, in the Budget, we have made the most realistic forecasts, conscious of the fact that people are a bit sceptical about the accuracy of these things- And of course they must be, l

mean nobody has a crystal ball that is that accurate. We have to base our forecasts on history , what's happened in earlier circumstances and what we understand to be happening in the private sector of the economy. Our information isn't always accurate, we are trying to improve that information, but basically 1 want to say that, that 3 per cent growth target that we have got in the Budget, is quite conservative

when you consider the other private forecasters in Australia, all hut one of which have us growing more rapidly than that.

PATERSON: Here's Angus, good morning to you Angus.

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ANGUS: Morning Treasurer, look 1 just want to check a couple of things with you, two related Issues as they apply to people with disabilities, and I'm a member of the Disability Advisory Council of Australia. Last year, the DSS prepared a detailed report on the cost of disability, obvious and hidden, as they relate to disabled people

in the workforce. Now firstly, is there any work being done to update that report as the GST that the Opposition is proposing will impact on it. And secondly, there are now certain exemptions on Wholesale Sales Tax particularly as they apply to disabled people, has any research being done on the impact of generally extending all those present exemptions to an exemption to the GST that the Opposition is

proposing?

PATERSON: M r Dawkins.

DAW KINS: Thank you Angus. In relation to your first question, I'm not sure whether that DSS work has been updated, for the possible impact of the GST, bill let me check on that and if you leave your name and address VII let you know. Now secondly, there is great distinction to be made between the current Wholesale Sales Tax and the GST, in this sense. That the current Wholesale Sales Tax does involve a

considerable, a very long list of exemptions which involve goods which we don't think should be taxed. And just to give you some examples, protective head gear for spoilsmen and women, safety goggles, bike helmets for kids, for instance are now' not subject to the Wholesale Sales Tax and there's a very long list of other things as well. Under the Opposition's proposals, they would basically exempt nothing. They

believe that you should tax everything, everything that people buy, not only the goods they buy but the services as well, and 1 think people with disabilities, when you think that they tend to make particular use of say, public transport, they are going to have their public transport taxed from now on, because the bus fare, is

going to be subject to a 15 per cent GST. The electricity which they use at home and many people with disabilities are house bound, particularly in colder climates, do depend on electricity to heat their homes and so on. That electricity Is going to be taxed as well. Then again telephones, which are so important to people with

disabilities, they are going to be taxed at 15 per cent as well. Not to mention postage. So all of these services, and all of these goods which at the moment are not taxed lor very good reasons, are now going to be, are proposed to be taxed If the Liberals ever get a go. Now, 1 think people w ith disabilities, when they become

conscious of this are going to see this as a very heavy penalty that they are going to have to pay. Many people with disabilities are on low incomes, they are going to asked to pay more in the form of taxation, in order to fund tax cuts for the richest

people, in the community. And I think that's basically very* unfair.

PATERSON: Angus hold the line, and w e ll take your name and address for those other details and finally M r Dawkins I was reading Laurie Oakes last week, and he says your off the grog and you could receive, the nod if heaven forbid, you didn't get In at next election as Government, that you could be the next Leader of the Labor Opposition?

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DAW KINS: Well, there's no chimce of that. I'm not a candidate. In fact when 1 saw Laurie’s article when he said that the reason for which I might be considered as a candidate would be because I've gone off the grog, it was almost enough to put me back on it.

PA TERSON: You've done a Bob Hawke, have you?

DAW KINS: Well I've now been off it for two years, I've never felt better actually, I've felt a lot happier. I ’ve fell it's a lot easier to work hard as a result, 1 don't really intend to go back on the grog, but 1 certainly have no intention of standing for Leader of the Party in any circumstances.

PATERSON: Never, ever?

DAW KINS: Never, ever.

PATERSON: Why?

DAW KINS: Oh well, it's just something i don't want to do. I mean we all have our views about these things, we haw our views about how we want to spend our lives and what contribution that we can make and being Leader of the Labor Party is not one, as far as I'm concerned.

PATERSON: M r Dawkins, thank you for joining us on the program.

DAW KINS: Thank you very much Rick.

Ends.