Prime Minister
This is one of the longest overseas tours—twelve days—that I have undertaken and I think it is also the most intensive in travel terms—27,000 miles, visiting twelve cities in some seven countries but, of course, my main purpose with you in Australia is your Bicentenary celebrations.
I will be visiting Perth, Alice Springs, Canberra, Melbourne, Sydney and Brisbane, where I am honoured to be opening the “British Day” at EXPO '88, and in addition to talks with Mr. Hawke, I shall also be meeting the State Premiers of Western Australia, Victoria, New South Wales and Queensland and the Speaker of the Northern Territory Legislative Assembly. [end p1]
The tour comes at the end of one of the heaviest legislative sessions we have had in the British Parliament since the War, and one of the longest—190 days so far—so I am looking forward tremendously to my fifth tour to Australia and my third as Prime Minister.
I very much want to deepen and extend the already close Anglo-Australian relationship, but the main thing is for you to ask questions, so who goes first? [end p2]
Question
Mrs. Thatcher, could I perhaps kick off just by asking how you would choose to deepen and extend those relations?
Prime Minister
Perhaps by more contacts—I think by more ministerial visits. We have not had quite enough and although I indicated I had visited Australia twice as Prime Minister, one was on the way from the first Tokyo Economic Summit in 1979 and the other was for the Commonwealth Conference in Melbourne in 1981, so it is a kind of first official visit as Prime Minister and I understand it has not been done as an official visit as Prime Minister since Harold Macmillan and I think we need more groups of ministers visiting each other. That is actually the best way of keeping contact.
You see, we keep a lot of contact in Europe for obvious reasons, but when people are going from one country to another, it does help if, on the way—assuming they are coming in the right direction—they can call into London, but I do think you cement relations, really, through more personal contact. Then you work together better. [end p3]
Question
Our Prime Minister's words, if they are to be taken at face value, as broadcast here on the BBC last night on the eve of your visit, (mean that) Australians seem to be quite concerned about 1992 and given comments this week by Mr. Jacques Delors and yourself on the matter, you too seem to be quite concerned about 1992.
Prime Minister
Quite an interesting triangle, wasn't it?
I did not see the interview last night—I was busy packing—but 1992: one of the reasons we joined Europe was one of the reasons in the Treaty: you should have a single market for all countries which belong to the European Community. That is, free movement of capital, goods and services, without barriers.
You need, of course, some barriers. We are not going to abolish national boundaries, and you must have boundaries and barriers to stop crime and to stop movement of people from third countries who might otherwise wish to avoid the immigration barriers, but that was one of the reasons we joined—a single, free market inside a market of 340 million.
But the whole point of the European Economic Community is not to put up boundaries between the Community and the outside world and just because we are freeing them up within does not mean we are putting up boundaries round the outside. [end p4]
The original philosophy was that by taking down some of the trading boundaries within, we might be an example to the rest of the world and accelerate taking down the trading boundaries there, because we all do better when there is more world trade. So I do not think that those outside the European Economic Community need fear 1992. On the contrary, as I have sometimes said to them, it gives us a chance to sell to a big market; it also gives exporting nations outside—Australia, the United States—the chance to sell to a single market, so your chances are also increased.
Question
If you talk to some of our farmers in Australia, you are going to get a very different response on that, particularly over the Common Agricultural Policy, and I realise Britain has worries about that.
Prime Minister
I quite agree, because the Common Agricultural Policy is dealt with totally separately and I quite agree that we have produced far too many surpluses and then sold them on markets with subsidies at world price and that, in fact, has indeed interfered with the countries which rely very much indeed on agriculture for their exports, and we have been foremost first in getting down those [end p5] surpluses and because we are very practical in our approach, we have persisted in our argument and said it is no earthly good talking about it. We have in fact to bring down the prices which these people are offered, because otherwise if they have a guaranteed price and can produce as much as they wish regardless of whether there is a market for it, it does not make sense.
So, right! We are getting prices down and we went to milk quotas. Therefore, we have got the surplus of milk very substantially down, and now on cereals, which affects you, and rape seed oil, if we get a surplus production, then the price comes down by an amount related to the surplus—and it takes effect very quickly indeed—and we have limited the amount of money which can be spent on the agricultural budget.
So it is limitation of money, quotas for milk, reduced guaranteed prices and the prices reduced further regularly according to the surpluses which are produced, so I think that that will get everything very much more into balance.
And also, we began at the Economic Summit to talk about these things, because three of us have been subsiding heavily agricultural produce—the United States, the European Economic Community and Japan. [end p6]
Japan pays eight times world price for agricultural produce produced in Japan. It does not make sense. We have very heavy subsidies, the United States has very heavy subsidies, so we all want to get them down together and we are very conscious not only of the problems of Australia and New Zealand, but the problems we give to the Third World—their only exports sometimes are agriculture—so we are now tackling it.
I entirely take your point. The Common Agricultural Policy is being dealt with before the single market and quite separately.
Question
Do you think that you can get that protection down in a reasonable time frame?
Prime Minister
Yes, because we are getting the surpluses down by 1992. There are tremendous surpluses. The surpluses of butter and milk powder are already considerably down, but we are doing it.
You have to act on two fronts: you have to get the surpluses down and stop more surpluses being produced. You must have a strategic surplus, of course, obviously, because you could have a bad year, but where we produce a surplus in any one year and [end p7] therefore it has to be stored, the whole thing is being written down straightaway so that we shall not have such big subsidies exported, so there is less being produced, no surpluses being produced, but if we happen to have a bumper crop we start to write it down quickly and we have allocated money to get rid of those surpluses—certainly, it does mean selling them to people who need the food—over the course of the next five years, so by 1992 you should be very much better, not only with having a single market to export to, but which will help you with reducing the barriers, but also having far fewer surpluses. Indeed, we should have got most of the surpluses down by that year, and we will be negotiating in GATT, so again, it is something good for Australia to look forward to as well.
Question
Prime Minister, drawing on your experience with Australia and your conversations with Mr. John HowardMr. Howard this week, do you think Australia could be ripe for a Thatcherite revolution? [end p8]
Prime Minister
I seem to have noticed that some of the policies which I have followed which people call “Thatcherite” are much older than I am. They are really policies enunciated by Adam Smith many many years ago. I think they are policies which, increasingly, all the economic Summit Seven countries have had to pursue because they are the only ones which lead both to sound finances and the spirit of enterprise and growth which is necessary for the higher standard of living.
We have had to tackle our unions. How you tackle your unions is a matter for you to say.
Question
Could I … . for a moment on to the moral underpinning of your political programme?
While you have been in Government, you have engineered (not very clear) certain economic advances and you gave a big speech to the Church in Scotland.
What is the moral essence of your programme?
Prime Minister
If you would like to have that speech to the Church of Scotland, you will see in it how I see Christianity as affecting politics and I made it perfectly clear that I do not claim any special linkage between Christianity and politics for my own party—it is for each person to interpret it—but the doctrine, as I see [end p9] it, in both the Old Testament and New Testament, is that every person has to work and earn his own living, is responsible for looking after his family and, of course, has the responsibility for looking after his neighbour insofar as his neighbour is unfortunate and unable to look after himself. He is responsible for building and improving his own character by what he does for other people and that, of course, can only be exercised in relation to your neighbours and therefore it is very important to have a thriving community with standards, but you can only get that when you have responsible individuals, and so you have to create the wealth.
Wealth is not an end in itself, but there is nothing wrong with creating it and wanting to do better for your family and, indeed, unless people create the wealth, there is nothing there to distribute to people who are unfortunate; nothing there perhaps to purchase the marvellous works of craftsmen and skilled people and works of art—also done to the glory of God—and so, yes, the creation of wealth to me is right at the heart of things, but it is what you do with that wealth that counts.
That, broadly speaking, I think you will find is spelled out, but I do not claim that it is only the things that we believe in that are acceptable. Far from it! Each person has to decide how [end p10] the Old Testament and New Testament apply to them. The Old Testament and New Testament do not set out a rigid economic policy, nor could they, because the life in those days was very different from life now, but it sets out a set of principles which is for each generation and each person to interpret as they see relevant to what they try to do.
Question
Prime Minister, talking about Christianity as affecting politics, you are held up as an example of someone who been a remarkable success despite her sex. How do you feel about women in the priesthood, which is a major issue in this country at the moment?
Prime Minister
I am not going to get involved in what the Lambeth Conference decides. I personally think that there will be women in the priesthood and I do not myself find it at odds with the Christian doctrine, although I accept that some people do. [end p11]
Question
Prime Minister, the economic turn-around that had occurred in Britain previously seems at the moment perhaps to be under some threat with their growing balance of payments deficit and their economic … . inflation.
Could you comment on the present economic situation of Britain and your concern about the … .
Prime Minister
Britain has been growing very fast, faster than our European neighbours and faster than some other countries.
Yes that fast growth, faster than our neighbours, has given us some problems and those problems are showing in a slight rise in inflation, but we have acted very quickly by putting up the interest rates quite sharply to bring the inflation down. It will take a little time, but it will bring the inflation down again because that is absolutely vital. And that action will also have an effect on the current balance of payments.
Two things have happened: first, we have been growing faster than others, and that means that our people have more to spend. It also means that our industrialists have great confidence that they can invest more in manufacturing and in service industries and because we are for many people the springboard to Europe, many [end p12] companies are coming here to invest. Part, therefore, of the current balance of payments deficit is due to unusually high investment in industry this year. That will pay off in the future and, of course, will not last at that level.
We have also had an unusually high investment in construction, which is part of the investment in industry—ten-and-a-half percent above last year—so the steps we have taken, together with the fact that part of the problem is very high investment—investment tends not to stay up at that level—will in fact gradually mean that the Current Account deficit will, I believe, be corrected.
The deficit is in no way due to our handling of the public sector, because we still in fact have a surplus in the public sector. That is to say, we are redeeming debt and not incurring it. So it is a deficit in the private sector and that deficit is being met by people who are willing, from the outside, to come and invest in Britain.
Question
(Inaudible) [end p13]
Prime Minister
Yes, but it does not mean that the deficit will go on. It just means that we have a surge of investment at the moment and also, we have too much in consumer goods because our growth—and therefore our propensity to import—has been greater than the growth of other countries and therefore we have not had quite so much possibility to export to them as we have given for them to export to others and that is what we mean when you have to correct the imbalances.
Question
Prime Minister, going back to your remarks about morality and the creation of wealth, one of the major criticisms of your Government's policies is that it has created more wealth for the rich and more poverty for the poor. Would you like to comment on that?
Prime Minister
Your facts are not correct. It is an allegation that is made, but the allegation depends upon defining poverty at 140 percent of what you can get on supplementary benefit. That would define poverty for a man and wife with two children at £160 a week and because, of course, we have put up the threshold of income at which you can still get help, it means that the more you in fact raise the threshold for people to be able to get help because you are able to do so because you are richer, then the more people in poverty. [end p14]
On that definition, all I have got to do is go back to say: “You cannot get help if your standard of living is at a lower level!” and then your poverty would go down.
What the actual figures show is that people at the lowest levels of income have in fact gained on average more in the standard of living than the average in the United Kingdom.
Now, you first have to create the wealth before you can do that, but let me say this:
There are some people—and I find it a very twisted mind—who would rather the poor were poorer, so long as those who were richer were also poorer too. In other words, they would rather bring the whole thing down, even if it meant that the bottom people were poorer, so long as the top people were poorer too.
We say: you can only in fact find enough to give to those unfortunate people in society and also to the people who are disabled provided you first create the wealth and by creating it, yes, the people who have created it have done better, why shouldn't they? So have the middle groups done better; so have those in the lowest income groups of all done better; so have those who work in the Health Service and so have those who work in the other great services as well. [end p15]
But so many politicians assume that someone will create the wealth and they can distribute it and then, when they find that their policies mean that wealth is not being created, they understand that they will have to change the policies.
Question
You have talked about increasing high level contacts with Australia. Why has it taken until now to achieve that, do you think?
Prime Minister
We meet at the Commonwealth Conferences and therefore we know we always have certain contacts. We always fight the corner when it comes to, certainly for New Zealand, negotiating the butter quotas, etc., so we know that there are certain contacts, but I just think that we have not in fact had enough.
During my first and second term of office, we had to start to negotiate with Europe, first on the budget, then on the Common Agricultural Policy and now on a single market. We also had to do big East-West negotiations through NATO and defence, and yes, certainly, we were not perhaps giving quite enough attention to this great nation in the Southern Pacific and you have become an Australian nation and I think the Bicentennial brought it very sharply into focus. [end p16]
But we are very much aware that the contacts at personal level go on and a lot of your people come here, a lot of our people come to Australia, usually on short visits or three-year tours, but we have not done enough at the political level and we will try to remedy that.
Question
Can I also ask you—you have a really big schedule and you said it was one of the longest—do you have a sort of secret formula for pacing yourself, keeping up with it?
Prime Minister
No, only years of training and a good constitution!
Question
Mrs. Thatcher, despite the fact that you come from different ends of the political spectrum, you and Bob Hawke have a lot in common. Do you find him a kindred spirit?
Prime Minister
We get on very well together. We argue the toss, of course, but we argue the toss on the basis of mutual respect and on the basis of a background of friendship. [end p17]
Question
How do you find his policies?
Prime Minister
Well, Bob Hawkehe is responsible for his policies and I am responsible for mine and we argue them.
As I say, really, there is only one way to run an economy soundly.
Question
But is he doing that?
Prime Minister
You are the judge of that! He has got his top rate of tax down. I expect he is getting his expenditure down, his inflation down. You all have, basically, to live within your means. You must keep inflation down it is a perennial battle. You must expose your own industries to competition, because if you do not, you will finish up with inefficient industries behind a barrier of protectionism and that means your consumers will pay more and you will not get the exports.
It is not a magic formula—it is well known!