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Parliament House, Canberra, Tuesday 10 March 1998, 9.00am: transcript of doorstop interview [Indonesia; Waterfront; Medicare agreement]

EOE

JOURNALIST: Good morning.

TREASURER: Good morning.

JOURNALIST: Treasurer, President Suharto is going to be returning for another for a seventh term as I understand it in Indonesia today. Does that concern you at all given the pleas from within Indonesia for him to stand down because of the currency crisis?

TREASURER: The economic situation in Indonesia is a very serious one and I think not only for the economy as a whole but for many of the people of Indonesia where there are currently some problems with the food supply. The Australian Government s position is quite clear on this that we believe that the best chance for Indonesia to stabilise its economy is to start implementing the program of the IMF. We've also made it clear that the IMF has to stay engaged in Indonesia and the program has to be implemented with a view to the situation of the public and the population at large. So we would certainly urge Indonesia to continue with the program and ensure that the program develops a kind of international confidence which is required.

JOURNALIST: It appears, though, that despite assurances from within Indonesia they will not adhere to the IMF.

TREASURER: Well there are a number of parts of the IMF program. Reforming the financial system is a given, it must be done, it has to be done. Making sure that the overall economic situation, the Budget, is put into position, must be done as well. But together with that there are a number of reform elements that I think have to be applied judiciously and progressively over a period of time. I think that Indonesia's best chance is to do that but it must be done in a careful and considered way and that is certainly the view that the Australian Government takes and the view that we have urged on the international authorities.

JOURNALIST: What are those reforms?

TREASURER: Well the reforms in relation to the financial sector mean putting the banks and the financial institutions on a proper basis with transparent regulation and open accounting. They mean ensuring proper capitalisation, they mean ensuring a clean administration which is open for all to see and which develops security and prudence in financial arrangements. The other part of all of this too, of course, is that as we look into the region, as we see real challenges coming out of the Asian region, challenges that we haven't faced in Australia before, we've never had an Asia in a down turn situation before, at least in the last couple of decades, it also reinforces the importance for Australia of gaining the momentum on economic reform. If we are going to face this challenge, we've got to face it by ensuring that we make every post a winning post in terms of our own economy. We've got to drive on for a balanced budget, we've to keep low inflation and low interest rates in place, we've got to fix our waterfront. We can't look at a situation in Asia where we have economies down turning and say that we can live with complacent waterfront arrangements any more and we need a new tax system. The great challenge for Australia now is to build on the progress of the last couple of years but to take it forward, to take it up a notch. We need a new tax system, we need a waterfront that is world class, we need to drive our budgets into surplus, we need to keep our interest rates low, because they will be the things that will give us the momentum to carry us through this external challenge.

JOURNALIST: Mr Costello on the issue of the water front do you think that the Government has more of a case to answer with new claims that the Government waived that Reith may well have known about the case in bringing in the troops 12 months ago'?

TREASURER: I don't think so. Look, at the end of the day the question is this 'do we won't a world class waterfront or don't we?' Here we are, we are an island nation where our goods go out through wharves and it is sclerotic, it's choking our exports. Now the only people that we are damaging with a sclerotic waterfront is ourselves. And those measures that can be done to make the waterfront more productive ought to have...but they should have been done decades ago. And the fact that they are being done now is part of the economic reform that I'm talking about to give our exporters a fair break in the world markets. Look, the other part about this is our tax system. Why Australia, of all the countries in the developed world, do we not give credits on our exports. Our exports are out there floating on world markets with Australian tax costs embedded in them. Everybody else is taking them out, that's why we need a new tax system to get exports moving as well.

JOURNALIST: (inaudible)

TREASURER: Well look, our Government has said time and time again that if anyone wants to be trained to work on a waterfront, provided there is no conflict with their other engagements, I understand there was no conflict, they have got the right to do so. They have got the right to be trained to be wharfies if they want to be, you don't have to be born into a wharfie family to become a wharfie. You can become a wharfie if you've been a farmer or a soldier or anything else, nothing wrong with that. Even journalists could be wharfies if they wanted to retrain.

JOURNALIST: Are reports that Treasury officials are revising forecasts in view of Asia accurate?

TREASURER: Well, we revised our forecasts in the mid year review and we put that out just before Christmas. Our next set of forecasts will come out in the Budget which is in May, two months away. So we always look at our forecasts in this period because we'll be putting them down in the Budget. But as I point out to you in relation to Asia in our mid year review we already took account of the situation in Asia in the forecast that we put out before December. But look it is a rolling feast, in relation to Asia the position today is better in Korea than we expected at Christmas time. The position in Indonesia is worse. And you are going to see a lot more movement, I think, in Asia. Nobody can tell when this crisis will finish. The only thing you can say about Australia is that the extent to which we strengthen our domestic economy is the extent to which we'll ride it out.

JOURNALIST: So will your growth forecast then be revised down?

TREASURER: Well as I said earlier we have already revised them down in December, and we published them in December on the basis of revision down. We're now looking at them for the forthcoming year and they could be revised either way, or they could be revised not at all.

JOURNALIST: Are you confident that the Government can reach an agreement with the States over Medicare today?

TREASURER: Oh gee, I hope so. Look, the Commonwealth Government operating within the restraints of a tight budget has offered a historic increase to the States for Medicare funding and I think that it would be good if the States could sign up, I hope they do. Thank you.