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Transcript of the Prime Minister the Hon P J Keating, MP and SA premier John Bannon



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PRIME MINISTER

TRANSCRIPT OF THE PRIME MINISTER THE HON P J KEATING, MP AND SA PREMIER JOHN HANNON, DOORSTOP, JANUARY 30 1992

EfcOE PROOF ONLY

PM: Well the Premier and I have had a meeting this

morning about the forthcoming economic

statement of the Federal Government. We have also had a chance to speak to the business

community and one of the Social Security

organisations in SA - we'd like to do things

which would encourage a faster recovery in

Australia, but at the same time are good for

the structure of the place. We listen to views put to us by the business community about a

range of things, about how they see the

economy, about what things the Government might do and also we discussed some of the

infrastructure questions. And we've decided to come and just look at the interface between

water, road and rail which exists here and

that's the main point of the visit.

J: What do you think of Mr Hannon's shopping list

Mr Keating?

PM: Well it's extensive, I would think ill of him

if it wasn't, but I think we will have to sift

our way through those things. But the common theme, I think, the Premier and I are on common theme about strengthening the infrastructure of Australia. We do have real problems now - in

the micro-economy that is. There is a limt to how much Budgetary and monetary policy can

change Australia. If there are physical

problems they have to be overcome, and that's why we are considering some of these subjects.

J : Mr Keating, a lot of the Premier's suggestions

are those things based on micro-economic

COMMONWEALTH PARLIAMENTARY LIBRARY MiCAH

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reform, things like the transport . .. how well do you receive them?

Well I think in this sense that this is the

period when we need the states concentrating on the things which they do mostly and that is

transport and a lot of the infrastructure

questions which are not directly Commonwealth issues but because of the national economy and because of our financial arrangements with the States they've become a matter of co-operative

issues between us. So I welcome the fact that the Premier is focussing on these problems.

So a good chance of some money coming that way?

Well, we like to treat all of the States fairly and equitably and do things which have a theme to them, which improve the productive focus of the country and therefore, obviously, some of these things will fit into that picture.

Dr Hewson says a real increase in wages will

cost more jobs.

Well I thought that was a very shabby comment from Dr Hewson. He has oppossed every wage increase in the last ten years and when this

Government has got inflation down to 1.6%, our lowest level in a quarter of a century, and he is walking around with a consumption tax which is going to add 15% to prices, you've got to

have a lot of front and a lot of hide to be

talking about inflation when you are walking around with the inflation detonator in your hands. A consumption tax, and if Dr Hewson's consumption tax were to go into place

Australia's inflation would go back to double digits and we would be back where we started

twenty years ago and not where we are now. Yet he has got the hide to address the Government about low inflation and, worse than that, the hide to say to Australians who actually made

the sacrifice and now, because inflation is low, have higher real wages, to say that he

should take it off them.

He also says that an increase in real wages

means an increase in unemployment .. . and

you're buying votes

Yes, I mean that is the sort of inane comment

he makes that a real wage increase which comes by way of the fact that the underlying level of inflation is low, therefore making any nominal wage increase of more real value, of greater

real value, that that success is described by him as the Government buying votes or creating

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unemployment when he is walking around with something which is going to add five or six

percentage points to the price system from a 15 per cent tax on all goods and services. I mean it is an amazinag comment from somebody who

must have a hide as thick as an elephant.

Isn't George Campbell right from the a c t u and the metal workers saying the jobs are the

priority, you really ought'nt to be offering a real wage rise in the current circumstances should you?

You have got to understand some technical

competence in this debate is required, even by the a b c . We are not offering a real wage rise.

But if wages come out this year at 4%, where

the Government expected earlier inflation to be but inflations coming out at 1.4%, obviously there is a real wage increase in there. So

what do we say to people, well you've made the sacrifice, we're wearing the recession, we're wearing unemployment but the good side for you, the up side, Dr Hewson wants to take it away,

its like the comment he made about business, the Premier and I have been keen to meet the

business community to speak to them and to pick up their views. Not all our views, of course, are views which we accept or that we can

contemplate, but some are he said we shouldn't be meeting them. He said that's business

looking for a handout, that I shouldn't be down here talking to them, that's his view. I mean its this sort of strident view that the only

thing that you do is inflict people with some pain, stick a new tax on them, don't meet with them or talk to them, oppose any increase for workers while at the same time saying that

their bread, their milk, their clothing, their housing, their dry cleaning, their taxi fares all carry a 15% tax.

Has Bob Hawke told you that he will be leaving Parliament sooner rather than later, not going to the end of the term?

n o he hasn't but we're not here for ....

Mr Bannon, now you keep .... this

infrastructure project for almost a year now, have you finally got through to Mr Keating?

I think that there is a general acceptance that providing projects deliver long-term value to our economy, now is a good time to look

seriously at doing them. I guess anyone can

say well perhaps we could have started earlier or the conditions might have been better a

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while back I really don't think that is the

point. The point is that there are projects

which have been identified, they have been

refined, they are ready to go and providing

they can deliver that long-term value, and they are not just making work, they have got a fair chance of acceptance I think.

Mr Keating, what has happened to make you

change you mind on these infrastructure

projects, they didn't get a very warm reception when they were officially floated?

in the 1980s we were cutting Government

spending because we had a hugh current account problem and one of the things which suffered was public investment, but if private

investment is down in a recession it does

follow that this is the appropriate time to

lift public investment somewhat. So, you know, it's not a matter of any religious conversion on my part, its simply a matter of being, you

know, wise to the current circumstances but it is, I repeat, the point is it was true that

when we needed to lift public savings and cut the size of the public sector a lot of

Government capital work suffered.

Mr Bannon have you won any commitments from the Federal Government today?

Well only in so far as I think we have had a

very good hearing following our submission and the business people and others who have been able to speak to the Prime Minister, I think, have had in turn a very good reception. The

fact that the Prime Minister is personally

inspecting some of the areas where we propose things to happen is also very positive but I

wouldn't expect him to be announcing here and now that, yes, he agrees. So obviously he's

got to then consider it in the national context and as part of the statement. But this is as

much as I think would be reasonable for any of us to ask at this stage of consideration.

Mr Bannon you say that South Australia is a

special case, how has the Prime Minister

responded to some of the special considerations that you have outlined?

Well you can ask him. But the fact that we

have been able to put before him, the

submissions are there in detail, they obviously don't get considered in a d a y . They need to be taken back, assessed. He may have further

questions or queries. We'll respond to those in the course of the preparation of the

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statement.

... long term commitment from the Federal

Government?

Well it's one of the issues the Premier

addressed us on. I think it has had the

character of a national project to this time and I think it will keep that character.

Arrangements between us, as the Premier said eloquently a moment ago, has got to be

considered in the context of the statement in our financial capacity and across the States.

Do you think SA is a special case?

We s a has got some unique difficulties that the more populist States don't have. I've always recognised that and as we drove over here we

came past the submarine project which the

Premier pointed out some pertinent features about. That is here by virtue of the fact that this Labor Government in Canberra recognises the fact that SA does have particular

circumstances and difficulties which in part the submarine project itself, in its time, was designed to address. Now of course

difficulties remain and that's why we are now examining other things.

What sort ยท of long-term inflation rate is the Government looking for?

Well we're not here to give you long-term

inflation rates ....

ends