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Transcript of joint press conference with Gareth Evans & Senator Peter Cook, following the shadow ministry meeting

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E & O E - P R O O F ONLY

BEAZLEY: Thanks for coming. The Shadow Cabinet had a meeting today in which we discussed a whole range of issues from small business concerns through to regional development and to the second phase or another phase of handling the Budget and I have with me Gareth and Peter Cook. Peter was the author of the

paper on small business that we considered and they will elaborate on things a bit further.

There are a couple of points that I want to make. Firstly, we have had a very good visit to Western Australia generally. All our Shadow Ministers have been out meeting with community groups, we'll continue to do so for the next day. And virtually every area, if you like, of society or government activity will have been

covered by a Shadow Ministry Meeting visit, or whatever, over the course of these 48 to 72 hours. It is the second of a series of regional meetings around Australia for the Shadow Ministry which will, by next year, have covered all States and is part of a process of listening, of understanding where we need to contemplate changes in

policy, and directions in which we ought to go. Of course, the m essages that we are receiving back now, a s opposed to the m essages that we were receiving a bit earlier on, are starting to be less related to u$ and more related to the initiatives of the Government and that, of course, from our point of view, is a very welcome change in the direction of the sort of commentary we receive.

And that relates to the second of the topics that we considered here - our response to the Budget. We have made, Gareth, in particular, and myself also, clear that we will be opposing the general thrust of the Budget and opposing specific measures. Now, of course, that's a great deal of detail in all of that that requires us to give it

due consideration as it comes through, both for the manner in which Opposition to ... inequitable and m easures, particularly those that involve breaches of solemn undertakings given to the electorate, particularly those that have no substantial impact on national savings at all, of which there are many, which appear to be being foreshadowed, or implied, in statements that the Government is making at this point

in time. We will be taking a look at the Budget when it comes down on Tuesday night and then, over the next fortnight, Shadow Ministers will review the material that is in the Budget and any foreshadowed legislation and there will be, by way of a



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preliminary review of that a fortnight later, as to what our strategy will be in handling all of that in the Senate. It will be a most important meeting.

We have made a number of other decisions today related to the m anagem ent of the economy. The first has been on the proposition that Mr Costello has put forward to amend, without reference to Parliament, in practical terms, the Charter under which

the Reserve Bank operates. Mr Costello indicated over the weekend that he intended to correspond with whoever the new Governor was and his correspondence would focus on one function of the Bank only and that is a concern for inflation, ignoring completely the task of the Reserve Bank to examine, a s well, growth and job creation, full employment in this nation. We have had a bit of

preliminary advice from some of our lawyers on this, that the proposition of Mr Costello's may well be ultra vires the Act and we will be seeking further advice on that; obviously waiting to see what it is that Mr Costello intends to correspond on. But we think that Mr Costello may well have substantial problems in his efforts to

effectively subvert the purposes that the Parliament has laid down for the operations of the Reserve Bank.

A second area of the economy which we gave consideration to is the situation of small business and I’ll get Senator Cook to talk about that in more detail. But the small business community is one of those sectors that has found, that since this Government has got to office, an unsatisfactory performance against promise. They

have found that since this Government has come to office, an economy stagnating through indecision and ill-conceived Budget strategy that impacts directly upon them. When we were in office, small business grew by a rate of about 3.3 per cent per annum - that’s over an overall growth in other areas of employment and a bit

over 1 per cent. As a result of that, of course, a very substantial number of Australians are now employed by small business and a very substantial number of Australians are manifesting a different relationship to the ownership structure of the

Australian community. No place is this more evident than here in W estern Australia and Peter Cook presented some very interesting statistics on that. The upshot of it all was that we are undertaking in the small business area a major review based on the paper that Mr Cook has presented, which will encom pass a whole range of areas

of concern for small business and those are outlined in the press release. But to detail more of our response at this stage to the Budget, I'll ask Gareth to say a word or two, and then Peter, and then we’ll be open to questions.

EVANS: The most important new development today in assessing the Budget and the illegitimacy of the Government’s Budget strategy is the document published by Access Economics, which is the favourite private analysis and forecasting outfit of the Coalition. Access Economics has published a report today, forecasting that the

underlying Budget deficit, without any cuts at all, without any policy changes, would be back to $1.5 billion by the third year of this Parliament. In other words, with a very, very moderate savings task indeed, not involving any of the manic slashing and burning that this Government is now contemplating, the Australian Budget would be back to surplus by the third year of this Parliament. This report confirms

exactly what I, the Opposition, and Kim Beazley, have been saying for weeks - $8 billion that is proposed to be taken out of the Australian economy by this Budget is


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an economically irresponsible and utterly unnecessary course to be pursuing. The primary economic problem at the moment for Australia is unemployment; what we need is the growth in this country getting back to 4% plus, that’s the only way we can reduce unemployment. There is no other problem, in relation to current account deficit or anything else, that is not easily manageable with a medium-term, moderate balanced budget strategy. And here the Coalition's own favourite private forecasting and economic analysis outfit has demonstrated just that. On the question of Reserve Bank levies, I simply add to what Kim Beazley has said. The Reserve Bank, under the relevant legislation, has a very clear statutory obligation to act in a way in setting interest rates that not only addresses inflation questions, but also maintains full employment in Australia And, if Mr Costello is proposing to make the

incoming new Governor of the Reserve Bank sign a letter which commits the Bank to a hard-line, 'fight inflation first’ strategy, inflexible and excluding, in effect, the relevance or the applicability of the jobs or full employment criteria, we believe there

is every chance that that course will prove illegal and be held to be determined to be so by the courts and we will certainly be very closely scrutinising the terms of that letter and seeking legal advice to establish that. I’m happy to answer any questions you might have later on. .

BEAZLEY: Peter first and then we will have questions.

COOK: What we decided today is, as a Labor Party, to take-up the cudgels with this Government on behalf of small business. We had a good record in Government with small business but the election is a matter of public record that this current government ran to the polls promising the earth to small business and what we now

find is that they have massively under-delivered on that promise - and small business themselves have been vocal on it. But this is a policy strategy paper for the ALP which will cause us to embark on a round of consultations with the small business community, to hone our policy for the next election, in which we will be

presenting policies that will reflect the interest of small business in an intelligent way in a broader policy canvass. There a number of key points to make about it. One of the things that the Howard Government has disappointed small business on is the promise to cut by 50 per cent the amount of red tape. At the moment, red tape has

gone up under the Howard Government and on policies that they have announced it is set to go further. So, on one hand, while they are promising to cut it in half, they are increasing dramatically. The most recent example being with the EMDG scheme and they have proposed a whole new series of tests which will cause companies to have to fill out more papers in order to access a schem e that w as an entitlement under the Labor Government. But as well as all of that, the area of franchises and franchise small business is growing at pace in this country. Its an

area of dramatic growth. The franchisers themselves estimate that by 2010, 80 per cent of small business in Australia will be franchise business. And this is a highly litigious field. There are problems about fitting the franchisers and the franchisees to understand really their obligations under their agreement. There is litigation about

that. There is concern by this branch of small business about making the playing field fair so that they are not crowded out by big business engaging in unfair trading practices. And Kim Beazley has put a private members bill though the House on that or put it to the House on that. We'll be putting it to the Senate as well but we

will be pressing the very real and very worthy claim of franchisees in our small business canvass as well.

And the other comment I make is that one of the demographic changes, started by the former Labor Government, has been the growth in private share ownership in Australia. Kim gave you some figures earlier about the growth in small business, but the growth in private share ownership from 1990 has gone from about 15% in 1994, to 20-odd per cent and in Western Australia, private share ownership is at about

28.6 per cent - they are stock exchange figures. We think it will go higher and we also think that with more and more people in superannuation funds the investing community in Australia will enlarge dramatically. That has a business outlook and our policy will be aimed at reflecting their views in an intelligent complex way.

BEAZLEY: Thanks very much, over to you.

JOURNALIST: Mr Beazley, AGB McNair poll in Sydney and Melbourne shows that most voters would like the minor parties ... block unfair m easures in the Budget in the Senate. Will you be applying any pressure on the Greens and Democrats to do

just that?

BEAZLEY: Well, the fact of the matter is that the ability to block or otherwise depends virtually entirely on us and what strategy we decide to pursue. And we have made quite clear our intention now, and will be developing this over the weeks

immediately after the Budget to block m easures which involve broken promises, which involve unfair impositions on the Australian community In an Inequitable fashion, which are bogus in terms of their contribution to national savings. W e will

be adopting to legislation of that character related to this Budget a very hard-nosed approach indeed. Now, of course, there are different types of legislation associated with it, some of which lends itself more easily to that task than others. And we do so against a background where the Liberal Party strategy, a s far a s this Budget is

concerned, is quite clearly unwise and, a s Gareth pointed out, unnecessary to any sensible fiscal management task and underpinning, as well, a whole series of unfunded promises that they put in place. So they're going to have a few choices themselves when it comes to considering these matters. But we will be adopting, on those broken promises, on those elements of betrayal in the political process to this

point, of which there are now many evident out there in public, we're going to be adopting a very hard-nosed attitude indeed. Now, what the minority parties choose to do is a matter for them. We will, of course, be talking to them because we always do on any conceivable subject you care to name, and Budget m easures are no

exception. But the initial response will be ours and we will be pursuing, under the criteria I’ve laid out, vigorous action.

JOURNALIST: What are some of the main bones of contention then?

BEAZLEY: Well, let's go through the things that have been announced, more or less, with which we do not agree. The propositions on the universities, a s well as being exceptionally unfair to working Australians in the opportunities that they hope for their children, are a massive breach of undertakings. Where they involve


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entitlements, they can be readily opposed. Where they involve outlays, there’s a great deal we can do in the Senate to draw attention to the problems that are confronted with that. Then we’ve got the ABC. Then we've got an evident intention to rip apart labour market programs, which are the only gam e in town for the long term unemployed. And we will be looking very hard at what they have to do in regard to that. We don’t know what they yet intend to do about matters of youth access to unemployment benefits and the like. A number of these things we await with bated breath to see. But we are determined that Mr Howard will be held to his promises and we are determined that nobody is going to be sacrificed on the altar of a totally misconceived fiscal strategy, a totally unnecessary set of cuts, the cynicsm

of which is only amplified by the decisions that they took to implement what they’ve virtually announced, that they will implement unfunded new election expenditure proposals; and expect us to lie down for them whilst they go down the track that they're going down with breaches to the university students and the others that I

said. Now, that's not to say that we wouldn’t p ass them, they were election undertakings after all, and if Mr Howard is worried about his bottom line, he has some choices to make.

JOURNALIST: One thing they have announced today is that they won't be scrapping the diesel fuel rebate, which has been ... miners and farmers, particularly in Western Australia, that has ...

BEAZLEY: Put a question mark over that, Simon. Put a question mark over it. No, they’re not going to scrap the diesel fuel rebate, but what do they mean by rorts? And how far do they intend to take that and are there any caps involved? We will take a very careful look - wo u what they say about the diesel fuel rebate because they’ve developed a haoit of discussing what ought to be simply matters of a normal

public policy debate about the relevant forms of assistance to business, to get a decent performance from them in export markets, to improve our current account position. They’ve developed a nasty habit of talking about business assistance a s rorts. If they mean, by rorts, the sam e sort of thing a s they mean In relation to their slashing of R & D concessions, their slashing of the DIFF program, their slashing of the export market developments grants, if they mean the sam e by that on the diesel fuel rebate, then we may well have problems with what they suggest.

JOURNALIST: Well, Mr Howard’s also expected to announce som e changes to ATSIC funding this afternoon. I don’t know what they are but there’s som e speculation that funding grants may be cut.

BEAZLEY: Well, if it is, that’s yet another betrayal, another broken promise, if that's the case in any announcement that’s made on that this afternoon and we shall take a look at that along with all the other issues that are now on our plate as a result of the betrayal of trust that is now involved in the Liberal Party's Budget developm ent

JOURNALIST: Why do you think Mr Costello's plan to ...Reserve Bank Governor ... inflation first pledge might be illegal. What’s illegal about it?

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BEAZLEY: Well, it's illegal if you sugges t, without reference to Parliament, that a set of propositions that are tasks for the Reserve Bank Board, that are not enumerated in any order of priority, if you select one pf them and say that’s the principal criteria for you only to consider. I'm no leg a l.... but our decision in this regard is a product

of a number of our people who are. Thdy've come to us to suggest that we ought to watch this very, very carefully indeed, because potentially at least, in seeking to em phasise one of these elements above all others and, perhaps to the exclusion of

the others, but to do that without a change to the Charter in legislation may well place the Governor In a position where lie’s ultra vires.


JOURNALIST: ... taken to the High Court though.

BEAZLEY: You would have to in the erfd if you’re going to challenge it. That's where you’d have to do it, yes.

JOURNALIST: How would it affect his Position a s Reserve Bank G overnor...? li

BEAZLEY. Well, we don't know. I mez In we’re just taking a look at that. But Gareth is going to say something. i


EVANS: Well, just so you understand :he point that's being made, the Section 10 of the Reserve Bank Act says - and it's th p relevant part that it’s the duty of the Board to exercise its powers in such a manne jr as we best contribute to (a) the stability of the currency of Australia - that’s the inflation objective, (b) the maintenance of full

employment in Australia, and (c) the e< bnomic prosperity and welfare of the people of Australia. It doesn’t say either one < ir the other or the third - it says all three. An obligation upon the Bank to focus entirely on currency stability or inflation object'” at the expense of the full employment objective, might well involve, obviously, a

breach of that obligation to look at all three, because those objectives can be intentioned. You might have an anxiety about a lowering of interest rates contributing to higher inflation than wcjuld be necessary to keep it within a pre­ determined band, but there might be ah excellent reason, from the point of view of a judgement about flatness in growth in the economy, the need for more jobs. There

might be an excellent reason to want jo drop interest rates in order to do that. That was the kind of judgement, on balanc ?, that Mr Fraser m ade just two weeks ago. We are concerned that if this letter is pouched In obligatory terms to the incoming Governor, it would exclude that flexibi Sty of judgement. So it’s a very real policy

point here, and a very real legal point; j.

JOURNALIST: Mr Beazley, you were!;very scathing of the Opposition when you were in Government and of the minor parties when they refused to pass certain bits of your B udget,... double standards, you know, you'll say you’ll block bits of their B udget...? ji

BEAZLEY: I wonder if they aren’t? I mean if we actually had the experience when we were coming off a high deficit of * successful resistance to our last two Budgets ... Mr Costello's, Mr Hewson's and Mr Howard's behest, the Budget bottom line in underlying terms, would be $6 billion further to the bad. That w as Mr Costello’s

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position which he argued very firmly in Parliament. Our argument is against the background where a small savings task will do the trick over the next three years as far as the underlying deficit is concerned! It is important to bring the underlying deficit down. We were working on that ourselves when we were in government. The point is the dimensions. Now, what is being created here is not dealing with the requirements of prudent fiscal management in this country. What is being built here is a poultice of money for election purposes at the end of this three year period, very cynically, and involved in that process is ja breach of solemn undertakings to the electorate when a very high hurdle indeed was raised by the Liberal Party when it talked about the need for there to be integrity and honesty in dealings between government and the people. We've got that in confidence that the underlying fis

to hold them to that. And we hold them to sal position is capable of adjustment with a

set of savings well south of the sorts of propositions that they’ve been making.

j JOURNALIST: Mr Beazley, in practical terms, what would it mean ...? BEAZLEY: Well, what it would mean is mean -at least V=% off growth. That’s what it would

EVANS: For each of the next two years:

BEAZLEY: For each of the next two years, V£% off growth and the effect of lowering growth in that way would be to exacerbate what is now a very flat employment performance. The dealing with unemployment has stalled in this country. It has now

stalled. And it would threaten the possibility of it rising and that is a matter of very grave concern to us, made even worseljby the fact that the Liberal Party's strategy for dealing with the unemployed, for gelling the long term unemployed back to work, is to remove effectively all underpinning! expenditure associated with it. So you're

going to have created very quickly, as a result of the combination of all these strategies, a substantial number of Australians largely without hope. That is not a situation we will tolerate. i i

COOK: In addition to that I might say, business confidence is low now and business expectations will become lower and a yVhole host of small businesses that Mr Howard promised to support, will go to jthe wall.

BEAZLEY: OK. Fine. Thank you for $oming