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Transcript of interview with Alan Jones: Radio 2UE: 28 August 1992: tariffs



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Leader of the Opposition

28 August 1992 REF: TRANSCR\NM\SO12 3

TRANSCRIPT OF DR JOHN HEWSON MP INTERVIEW WITH ALAN JONES RADIO 2UE

E & 0 E - PROOF COPY ONLY

SUBJECTS: Tariffs

Jones:

I have to say - this is the second time in a week - I've found the performance of Dr John Hews on in relation to all this, most impressive indeed.

He was on national television last night, and by gee, he couldn't have been any blunter than he was. He said it's the business of business to drag out of government, or alternative government, whatever concessions they've got, and he says "if

they think we're going to change our policy, we're not".

It was impressive stuff. He said that car manufacturers have known the Coalition's policy since 1990. They'd had the chance to restructure, to make the necessary investment decisions, and they have been investing since then. And he virtually said that business has always tried to screw

government. He said they write letters demanding exemptions or special treatment, and they try to get what they can. But he said his government would stick by its stated policy on tariffs. He said the bottom line was that under Fightback! we would all drive cheaper and newer cars, and he says that's what it's all about, adding that he didn't enter politics to

be popular..- It was a very impressive performance by Dr John Hewson. He's on the line. Good morning.

Hewson:

Good morning Alan. How are you?

Jones:

By gee, I'll tell you what, you've got the whip and the saddle and the whole box and dice. Now, you said that under the Fightback! policy you'd be driving cheaper and newer cars, and you're doing your bit for business. I presume you mean that you're guaranteeing to take away all of these taxes which most probably would be a benefit far greater than anything provided

by tariffs.

Parliament House, Canberra, A.C.T. 2600 Phone 2774022

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Hewson:

Well, I believe so. It's not just taxes. It's certainly payroll tax and petrol tax and sales tax, but also I think Alan, industry in Australia suffers very significant cost disadvantages in the cost of transport or the cost of power,

or the cost of telecommunications, waterfront charges - they're all...

Jones:

But you can't turn those around overnight, can you?

Hewson:

No, but you can move pretty quickly. I mean, a lot of them depend, of course, on industrial relations reform, and I think that's now generally conceded, and it's a question of how fast you can move. I personally don't think you can move too fast

in getting rid of those costs.

Jones:

No, but it's not just a question of... I mean, the emotional argument is that jobs are going to be lost, and indeed are being lost now. Supposing, indeed, that that argument could be neutralised, what about the argument about the current

account where, if we start importing, with tariffs down, and it's open slather, you're saying "Well, it won't matter to the Australian industry. We'll be able to compete." Just supposing, even if they were able to compete, I choose the

Toyota from Japan rather than the Holden from Geelong, what does that do to our import costs?

Hewson:

Well, we need to set aside the issue of dumping, and if we're assuming that it's a fair price competition, I don't believe that it's impossible for our industry to produce a better quality car at a better price to match the competition.

Jones:

But I just might want a Toyota rather than a Holden.

Hewson:

Well, people always have that choice. In fact, you have that choice now. ®

Jones:

But I pay more for it as a result.

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Hewson:

Yes, I think you'll...

Jones:

And under tariffs I won't.

Hewson:

Under tariffs the price of the car, domestically, will come down, and the quality, I think, will improve because you'll be driven totally by international competition. Look, I know there's a lot of focus Alan, on...

Jones:

I'll just come back to you on that, John - if I can just come back to you on that. I understand all of that. Just

supposing that the imported car is cheaper, and the Holden car is cheaper, but I just happen to think that the mag wheels and the stereo, or whatever the hell it is, entices me and all my mates to buy the Japanese vehicle. In the past I would have had to pay more, because there was a mark-up on it because it was an imported vehicle. Isn't this going to distort the balance between imports and exports, and won't we really find ourselves already in difficulties, increasing our debt?

Hewson:

I don't see any reason why that necessarily follows. I mean, competition is always there. The quality of the car is one element. The price is another. But what we're really talking about is making a cheaper, better quality car in Australia to

give people a choice.

Now, that will be in the context of a bigger car market where there might be more domestic sales and more imports, but within the context of a bigger industry. I don't see why imports should beat us. And quite frankly Alan, in any

industry if we can't beat the imports in terms of quality and price, you've got to ask...

Jones:

Should you have the industry?

Hewson:

...fundamental questions about whether you should be in business.

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Jones:

Right, should you have the industry. Now, the industry is saying - or at least it's being suggested - they're all going to write letters and protest and do all that sort of stuff. You obviously, behind the scenes, have had discussions with

industry. Do you think they understand clearly what your policy is?

Hewson:

Well, I think we're working towards an understanding. We are looking at fairly detailed cost comparisons now, and I think that's a very healthy exercise - to sit down with people like Ford, for example, and to go through the numbers, I think is a good thing - to try and demonstrate to them what we think our policy will do for them, and have them respond.

Jones:

To use the language of an economist, have you factored into that the fact - I hate that word - but the fact that jobs will be lost?

Hewson:

Well, it's not necessarily true, because the industry will actually be bigger. If you abolish petrol excise, for example, a lot of people are going to want to drive cars more often. If you lower the price of the car, it's not clear that you won't have a significantly bigger car industry which...not

just the industry, but all the ancillary services could see us expanding employment in that industry.

I'd also say Alan, I was down at Ford a few weeks ago and they were showing me that they could make fuel tanks at world competitive prices, best quality, state of the art technology. It begs the question, why aren't we exporting those fuel tanks

to all other car makers around the world, and really carving a niche out in the parts market as well as the car market.

Jones:

See, we are living with the legacy of this import substitution strategy, I suppose, going right back to MeEwen in the 50s, where they thought we would be embarrassed about riding on the sheep's back, and because Japan made washing machines and

television sets and motor cars - we'd better do it ourselves, whether or not we're cost competitive.

Now, what you're saying, I understand, is that unless you're cost competitive internationally, it's very difficult to support a rationale for keeping that outfit in business.

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Hewson: '

Yes, what you're doing is really saying to the Australian consumer, "You should be paying more", and it's not clear what they're paying for. The consumer who, after all, far outweigh in number anybody else in this debate, is significantly

disadvantaged for the sake of propping up, perhaps, an operation that hasn't made the effort to get as efficient as it should.

Jones:

But he most probably would be happy to pay a bit more if it meant that people who would otherwise lose jobs, won't lose jobs. Now, you're saying there won't be.

Hewson:

But ...inaudible... support that. Look, there's been a lot of shedding, it's clear, of labour in the car industry, I have no doubt. But if you look at what the Government's done, they have lowered tariffs and increased costs. They've increased taxes. They've doubled interest rates there a couple of years ago. We haven't made much progress on the labour market in terms of labour costs. We've got massive on-costs still in our industries compared to other industries. But the industry

hasn't been given a fair go, and I have no doubt, if you just cut tariffs, or you cut tariffs and increase costs, you'll drive these companies to reduce in size and to shed labour.

But if you are cutting tariffs after you've cut, or in the process of cutting these costs, you can actually improve the bottom line of these companies, and they can be part of a bigger and more dynamic car industry.

Jones:

Well done. Well, it's good to see a political leader not shifting ground just because he gets belted over the head a few times, and I think that was a very impressive aspect of

what you had to say last night. I thank you for your time.

Hewson:

Thanks Alan. I think the only thing that's changed in the debate in recent days is that Mr Keating's got quite desperate and has decided to try and find an issue like this, whereas in fact, he's dramatically reduced tariff protection, and it

boggles the mind why he stops at 25, having brought it down from, I think, well over 100.

Jones:

Good to talk to you.

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Hewson:

Thanks Alan.

Ends.