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Transcript of interview with Richard Palfreyman: ABC Radio, World Today: 12 August 1992

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PALFREYMAN: Well Treasurer John Dawkins brings down his first Budget next week. A Budget that will either resuscitate the Government's fortunes or spell its end in office. Already facing an insurmountable unemployment rate, the prospects of producing a winner seem slim. Nevertheless, jobs will be the focus of the Budget and despite the pressure from financial markets the Government is preparing to ease fiscal policy, again, in a bid to force some movement into the economy. Yesterday's meeting with the ACTU to lay down the guidelines for another Accord with the unions was a pivotal step. One the Government hopes will show it can offer the electorate certainty in wages outcome for another term. To discuss some of these issues we have been joined in our Canberra studio by the Treasurer, John Dawkins, and to

speak to him John Shovelan.

SHOVELAN: Mr Dawkins thank you for your time. To wages first. Your preferred Accord agreement with the ACTU for a fiat $10 for the low paid is supposed to be only for a third of the workforce. But, given that only 170,000 workers

have enterprise agreements isn't the number of workers eligible for the $10 likely to be much higher than a third?

DAWKINS: No, John, and the important thing about this is to emphasise that this whole approach is designed to encourage more and more businesses and their workers to settle their wage issues amongst themselves. That is to have

employers and employees, through their unions, sit down and work out what is the appropriate wage increase for that business in terms of their own future, in terms of their own circumstances and in terms of the improved productivity that workers and management can achieve tozether. hut that is the key to this.

SHOVELAN: Why won't the safety net be higher? I mean we have got to go from something like 170,000 workers now who have got enterprise agreements, to what 4. 5. 6 million by March?

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DAWKINS: Well it is because the proposal that the Government has put forward involves the change to the minimum rates and it is only those who are on minimum rates who would receive this increase. Others who are on higher rates would

need to get their increases via enterprise agreements and what we want to do is accelerate the process of enterprise agreements because we think that is the most important way to go.

SHOVELAN: Well we heard Mr Hodgson express some doubts a little bit earlier on in the program. How do you think unions, some with most of their members and most of these would be the bigger and more powerful unions, will feel knowing that they are the ones that are probably earning these over-award payments.

How are they going to take being told that there is really nothing in this deal for you for the next two years?

DAWKINS: Oh but there is plenty in it for them because they are the ones who can achieve increases by enterprise agreements. I mean we are actually in favour of wage increases that are supported by enterprise agreements and productivity gains. We are not like the Opposition who want to slash minimum rates. They want to

slash wages generally and they want to put up taxes. I mean that is the great difference. You notice that the Opposition leader has a policy which is nothing short of a dog's breakfast. He doesn't understand how the process works. He doesn't understand that the ACTU and the unions have been very cooperative and, indeed, one of the reasons

why we have got low inflation is because of the success of our wages policy over the years and because of the cooperation that has come from the ACTU. The ACTU is a low inflation organisation. It is a high productivity organisation. That is what they are in favour of.

SHOVELAN: But to achieve what you set out to achieve through that meeting yesterday, you are surely proposing a revolution in wage fixing that is equal to anything the Coalition is putting forward?

DAWKINS: Well, of course, it is a big change and it is a big change

which we have been planning and gradually putting into place for some time. The trouble is that we want to do it in a sensible way. In a way that can be accommodated. The Opposition leader will only be happy when there is blood on the floor. He wants to try and destroy the unions. He wants to have fights, disputes, like at Burnie all over the

country. Now that is totally ridiculous. It would create chaos at a time when we can have this gradual change towards enterprise based wage increases of the kind which we are seeking.

SHOVELAN: By limiting wage increases to just the minimum rates awards, aren't you effectively saying that we really can t afford wage increases, the economy can't afford them?

DAWKINS: Not at all, precisely the opposite. We are saying that through enterprise agreements We can get wage increases. Wage increases which are good for the businesses which employ these workers.



SHOVELAN: The financial markets at the moment, Mr Dawkins, are very skittish. Do you think that is because interest rates have fallen below a critical point and foreign investors aren't really interested in investing in Australia at the moment?

DAWKINS: Well first of all I don't want to comment too much about the financial markets. We always have this kind of attitude before Budgets. But to the extent that it has been influenced by a couple of factors, perhaps I should make a couple

of points. As far as we are concerned there have been very considerable falls in interest rates already and the consequences of those reductions are flowing through into the economy now and on top of that we will be having a responsible and well targeted fiscal stimulus in the Budget.

SHOVELAN: Not a $16 billion deficit?

DAWICINS: Well let me come to that in a moment. And, therefore, under these circumstances with the prevailing domestic circumstances, the prevailing international circumstances, we don't see the need for any further casings in monetary policy. This is a matter which I have discussed with the Governor and he agrees with that. As far as the deficit is concerned, we frequently have this wild speculation about Budget deficits and, of course, we won't be clear about the precise size of the deficit until we get the national account numbers tomorrow. But the journalist who started this

speculation was very irresponsible in doing so. He was told that the $16 billion figure was wrong and he went away and reported it in any event. I have seen other speculation which suggests that the Budget deficit might be of something like

$14.5 billion and on the basis of the information I have now, even that would be on the high side.

SHOVELAN: You think that would still be on the high side, $14.5 billion?


SHOVELAN: Tomorrow's national account figures. Are we going to get an indication the economy is in recovery?

DAWICINS: Well we will have to wait and see what those figures reveal tomorrow. But on the partial indicators that we have seen, I think we will see revealed that the recovery is continuing more slowly than was predicted at the last

Budget time, more slowly than was predicted at the time of the One Nation statement. But those people who have suggested that on the basis of one set of numbers on retail figures that we are in for some kind of double dip. I am quite sure that they would be revealed wrong. You don't want to react to one set of figures on one month and the national account figures will, obviously, show the picture and I think they will show a picture which is far different to a double dip.


On track to that growth target of around, what,

3 3/4 per cent. It still is that isn't it?

DAWKINS: Well again these are matters which we can't firm up until we have got the figures for the fmancial year which has just ended and then we can make better projections about the year immediately ahead. But as far as the year that has just ended, you know, obviously there has been slower growth than we predicted at

the time of the last Budget, at the time of One Nation. But, I think, we will see confirmed that the recovery, a modest recovery, will continue.

SHOVELAN: Just very quickly Mr Dawkins. Last night you announced some changes to the sales tax regime that you were going to introduce. Why did you drop those changes on the eve of the Senate Select Committee looking into those changes that you have proposed?

DAWKINS: Well first of all when we tabled the Bills in the House of Representatives, I made it clear that we were prepared to listen to what industry had to say, what business had to say. There were six key points that were raised and we decided to respond to those key points and let the Committee know what our reaction

was, rather than letting them go through what might have been, otherwise, a fairly fruitless exercise.