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Transcript: pm program, ABC radio with Fran Kelly



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Leader of the Opposition 26 June 1995

TRANSCRIPT OF THE LEADER OF THE OPPOSITION THE HON JOHN HOWARD MP PM PROGRAM, ABC RADIO WITH FRAN KELLY

Topics: Budget

E& OE........................................................................................................................................................

KELLY:

Mr Howard the Prime Minister says today that your economic position now is hypocritical and duplicit, and that if interest rates don't fall, it's your fault. Can you live with that?

H O W A RD :

Well, that's nonsense. O f course I can live with anything the Prime Minister says. It's usually wrong, and I must really be getting under the Prime Minister's skin, under his guard. He really is resorting to very very desperate language. I'll just say one very simple thing to you Fran, and to those listening, that we have high interest rates in Australia now for one reason

overwhelmingly, and that is our trade deficit is now worse than Mexico's, and the reason interest rates are high is that we owe the rest o f the world eight times more than we owed the rest o f the world when the Fraser Government went out o f office, and because o f that enormous debt, the foreign lenders charge us premiums for lending money to this country and that is why our interest rates are high. That is the overwhelming reason that huge trade deficit - the worst in the industrialised world - 1 mean, Paul Keating's legacy to Australia will be that he has delivered us a foreign debt and trade deficit that is worse than Mexico, worse than Mexico. I mean it's hard to conceive o f a more humiliating comparison.

KELLY:

Well, your Shadow Treasurer Peter Costello made the same point last week. In saying that he said that the Government's fiscal policy to attack the whole problem was too loose, and yet the Opposition is opposing the Government's attempts at fiscal tightening. Why isn't that at least contradictory if not hypocritical?

H O W A RD :

Well, we are opposing tax increases.

KELLY:

You've also opposed....(inaudible)...

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HOWARD:

Well, hang on, you are talking here about a very small amount. We are opposing tax increases because in the run up to the last election the Prime Minister said that he was going to reduce tax not increase it. All o f those tax measures are damaging to the economy, they are damaging to industry, and this phoney attempt by the Prime Minister to blame us... I mean, he's been there for 12 years. I mean, you cannot have it both ways. You can't enjoy the white cars and the smell o f leather for 12 years and then when something goes wrong, try and lay the blame off on your political opponent. I mean, after 12 years, the buck without any doubt has got to stop with him. This man has run down the international credit worthiness o f this country; he's presided over a huge explosion in foreign debt; he's run our trade account lower than Mexico - worse than Mexico, and now he's attempting to blame us. I mean, I think he is behaving like a man who is under pressure. He is behaving like a man who didn't want to split between himself and Senator Evans over French nuclear tests to occupy Parliament's Question Time today, so he makes this absurd charge against us. I mean how ridiculous it is that it's the Opposition who has such great power. I mean, we are supposed to be irrelevant...

KELLY:

But the Government ...(inaudible)...

HOWARD:

...(inaudible)...allegedly we've got this great power to bring it about. Look, Fran can I tell you, looking at this thing economically, the overwhelming influence on the level head o f interest rates at the present time is the size o f our current account deficit and the strength o f our currency.

KELLY:

Isn't it true though that if the markets play a role in this and the markets, if the Budget doesn't deliver its surplus...

HOWARD:

...(inaudible)...any economist worth...

KELLY:

.... will increase pressure, will put pressure for increased interest rates and ...(inaudible)...

HOWARD:

Fran, you are absolutely right in saying the markets play a part in this, and the two things that the markets react to and look at constantly in a revolving way are the size o f our current account deficit and the strength or otherwise o f our currency, and the level o f interest rates is far more heavily influenced by those two things than a few hundred million dollars either way

on the Budget deficit. I mean, even Kim Beazley himself acknowledged that last year, and Peter Costello pointed it out in the House today, that the link between the size o f the Budget

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deficit or the surplus and the level o f interest rates can be greatly exaggerated. That interest rate level, Fran, is currency driven and current account deficit driven far more than anything else and any economist worth his or her salt out there listening to me would nod their head in agreement.

KELLY:

Isn't it true though that the Government's entire imperative when they crafted the Budget and brought in that deficit was to take some pressure off before the interest rate rises. So if the Opposition and Democrats wipe out that deficit, what in fact the upshot o f that could be fiirther pressure on interest rates. Therefore, whatever you say ....(inaudible)...

HOWARD:

I know you ... I mean that's the line the Prime Minister wants journalists to mouth, but it's not true. The real truth is that interest rates are influenced by the currency and by the current account deficit and ...

KELLY:

But isn't....

HOWARD:

No, no, now I've not finished, you asked me the question... and the Government has clearly failed after 12 years to fix our current account deficit and there is obviously a nervous view about the value o f our currency and I won't go any further then to simply say that, and as far as the Budget deficit is concerned, well, there is a bogus component to that deficit because it included assets sales, and we are simply not going to give this Government having lied about

tax increases before the last election, we are not going to reward that dishonesty by allowing them to impose taxes on new home buyers, on new cars, yanking up the Medicare levy and making other taxation changes that are going to effect Australian families. We're not alone in saying that. The Democrats are joining us in relation to at least one o f the tax measures and I

would hope to think that they might join us in relation to the others.

But look, the Government's been there for 12 years, and they and they alone, have to wear the responsibility for the mess that the current account is in, and the fact that Australian borrowers pay the highest real interest rates in the western world.

KELLY:

All right, well Paul Keating said today that money bills are being obstructed. Are there revenue measures in the spending cuts that you're looking at blocking, the sort o f things, are they money bills?

HOWARD:

Well, what Paul Keating's done here today is to suggest that what we are doing is similar to what was done in 1975. Now for heaven's sake, I mean, he really should hang his head in

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shame and not turn up by way o f detention for the next month having said that. I mean he knows damned well that that is just a straight out lie. I mean, what happened in 1975 was that the Opposition delayed the passage o f supply bills which deal with the appropriation, in other words, the legal authority to spend money. What we are doing here is to vote against some tax measures. We are not blocking supply. The Labor Party itself in 1982 voted against tax measures in the Fraser Government's 1981 Budget and it was on the strength o f those tax measures that the 1983 double dissolution was obtained. I've got quote after quote o f Willis and Keating and Hayden and Hawke saying it's perfectly all right to vote against tax measures. We voted against tax measures in 1993. This reference to 1975 is just designed to rally the

sinking hearts o f the true believers. They think every time they get into trouble they say 1975 and everybody comes racing back to the colours. Now it's wearing a bit thin. It's dishonest. It's deceitful. He knows it's dishonest and deceitful. I mean, nobody in that Parliament on his side knows more about the events o f 1975 and what was involved than he does and I certainly know a lot about it as well and both o f us know darned well that we're not dealing here with a

1975 situation. I'm the only one o f the two though that is honest enough to say that he's lying to the Australian people, linking what we are now doing with 1975. He knows he's lying and he should stop lying to the Australian people in saying that.

KELLY:

Is what's going on here then just simply that the heat has been turned up on both sides this week in preparation for an election? I mean Parliament goes off for six weeks, seven weeks - does this indicate to you that an election ....

HOWARD:

Fran I don't know what it indicates in relation to the mind o f the Prime Minister but can I just say to you that we have no intention, no intention at all o f changing our stance on these four tax measures. The Prime M inister....

KELLY:

And what about the spending cuts ... you've also commented ....

HOWARD:

No, you asked me a question, I start, then you interrupt me. Please let me finish. Those four tax measures will continue to be opposed by the Coalition and if he thinks the bluster o f today has in any way weakened the resolve o f the Opposition to do what it's announced its intention o f doing, can I say to him in reply, if anything it has strengthened our resolve. His refusal to debate with me in the Parliament today, the dishonest attempt by him to link what we are now doing with 1975 has only strengthened our resolve. We will continue to oppose those four tax measures without modification because all o f those tax increases are bad for Australia and bad for individuals in the Australian community.

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KELLY:

All right, just briefly before we move onto another point. Will you also, if you continue to oppose tax increases, will you also stick to your promise, not to oppose spending cuts when in fact already last week you have opposed spending cuts .. (inaudible)

HOWARD:

I think what I can say to you Fran, is that when you see the totality o f our response to the legislative measures flowing out o f the Budget on both the tax and spending side you will see that we have behaved utterly consistently.

KELLY:

But you did concede that you had ...

HOWARD:

I'm not conceding anything. I'm stating to you what our end position will be compared with what we said before the Budget was brought down and what I'm telling you very clearly is that it will be utter consistency.

KELLY:

But you're also telling me that you will oppose some spending cuts as you'll look at them one by one?

HOWARD:

I'm inviting you to look at what I said and not at what Paul Keating said I said.

KELLY:

N o but the Opposition did oppose it last week.

HOWARD:

No, you're not listening to my reply. I mean, if you go back and have a look at what I said, I did not say that I was going to give a blank cheque to each and every spending cut. I said that we would let go through appropriate, responsible and reasonable spending cuts and you will find at the end o f the day there will be no inconsistency with what I said about taxation and

spending and what we end up doing.

KELLY:

M r Howard, I know nobody knows but the Prime Minister, but given all the positioning we're seeing in the last couple o f weeks, what's your prediction now in terms o f the election. Is it as Kim Beazley has said in recent days that an election is not in the near future, it's likely to be even next year?

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HOWARD:

Well I haven't the faintest idea. I mean, I would be very happy anytime but I daresay the Prime Minister himself has decided that that's entirely a matter for him. I accept that. He will obviously want to have the election when he thinks he's got the best chance o f winning. It's about the one thing that I would agree with him. If I was in his shoes, I'd behave in exactly the same way but when it will be I don't know, but can I say to your listeners that when we do have that election campaign we will certainly be campaigning very heavily on the fact that after twelve years o f Labor we've got a trade deficit that is worse than Mexico's and I can't think o f a more humiliating comparison for a proud nation as Australia, than to be told that our current account deficit is worse than that o f a country that, with great respect to the wonderful people who live there, is regarded, in economic terms is certainly not one that we normally compare ourselves with.

K E L LY :

Thank you.

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