Iraq; wheat; water rights; economy

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Early Release of the June Quarter 2002 National Accounts
August 9, 2002
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August 14, 2002

Iraq; wheat; water rights; economy


Interview with Tracey Grimshaw
Today Show
Tuesday, 13 August 2002
7.10 am


SUBJECTS: Iraq; Wheat; Water Rights; Economy.


First this morning, to Federal politics. And while the Government is standing

firm on its criticism of Saddam Hussein, the war of words is being felt mostly

by Australia’s wheat growers. Iraq is threatening to cancel more wheat imports

in response to the Government’s backing of a potential US military strike. With

more, we are joined from Cairns by Federal Treasurer, Peter Costello.

Treasurer, good morning.


Good morning Tracey.


Australian wheat growers are considering sending a delegation to Iraq to save

their market there. Do you expect to be defending the Government’s actions and

statements on this issue as you tour rural Queensland over the next few days?


Oh, of course. Everybody’s got to realise where the issue of Iraq begins. It

begins with a brutal dictator who has refused to allow weapons inspectors to

inspect whether or not he now has, or has the capacity to make weapons of mass

destruction – chemical and biological weapons which could be used either in

the hands of Iraq or in the hands of some third party. And as far as the world

is concerned, whilst these weapons exist in the hands of a brutal dictator there

is a danger to everybody in free societies. Now, we believe that there should

be an ending of those programs and verification of that. This is the point that

the Australian Government has consistently made and we support action which

will bring that about. Now, what would you expect a dictator to say? Would he

say, well yes that’s fine I will cease my programs or would he try to apply

pressure to break people’s resolve. Now unfortunately for Australia the pressure

that Saddam Hussein is applying in this particular case relates to wheat. But

Australian foreign policy has to look at the bigger picture and the bigger picture

here is a program, and inspections to verify whether or not that program is

continuing, of weapons of mass destruction.


Can you understand wheat grower’s resentment of the Government’s statements?


I can understand that wheat growers wonder how they get to be the “meat

in the sandwich” in a situation like this. That was the case you will recall

back when the Labor Government of Bob Hawke committed Australia to involvement

in operation Desert Storm. And you can understand how wheat growers feel that

all of the burden shouldn’t fall on wheat growers. But the other side of this

too Tracey, is these are weapons of mass destruction. This regime has used them

on their own people, it has been refusing to allow inspections. And whilst there

are weapons of mass destruction which are in the hands of people prepared to

use them or could slip in to the hands of third parties, in a world where we

have seen terrorist consequences, this is a risk to all free peoples.


I appreciate you are not the Foreign Minister, but one more question on this.

Might we have gone too hard too soon? London’s Guardian newspaper is reporting

this morning that Saddam Hussein has offered to allow UN weapons inspectors

back in to the country. If that is the case, have we talked too tough too early?


Well, look, I think there has been a bit of speculation from one Labor MP visiting

Iraq recently. The proof is there, if Saddam Hussein was not interested in weapons

of mass destruction, why has he had weapons inspectors out of the country for

the last years. Why has he been refusing to allow open inspections? Why is this

an issue? You have got to remember that this is a brutal regime. There is no

Opposition. It is a dictatorship. It has used weapons on its own people in the

past and frankly I wouldn’t put too much credence on the kinds of nice assurances

that you get from time to time, every time the international community raises

the pressure on Iraq.


Okay, we will move on, but we will stay with rural issues. The National Farmers’

Federation is going to ask Cabinet to compensate farmers if they suffer losses

due to environmental and conservation measures that they have to undertake on

their properties. Does that seem reasonable to you?


Well, I think it is important that we figure out water rights in Australia.

We have a COAG, a Council of Australian Governments Agreement in relation to

water rights. And the states allocate the water rights as you know, and those

water rights have got to be allocated so that there’s fairness to farmers upstream,

and fairness to farmers downstream, and fairness to the environment and fairness

to people who want to drink. And the primary obligation in relation to the allocation

of those water rights and compensation lies with the states. But the Commonwealth,

of course, is very interested to ensure from a national perspective that those

agreements are carried out.


So what sort of assurances are you going to make to primary producers and farmers

as they talk to you on your tour over the next few days?


Oh well, I am an Ambassador for the Outback actually. And so I have been invited

to tour some of the outback areas in that capacity, which is a great opportunity

for me. And we will be talking about all sorts of issues. I imagine drought

issues, which is affecting a large part of outback Queensland at the moment.

Obviously that leads back into water policy. Telecommunications, the general

environment for the economy, interest rates, taxes, all of those sorts of issues

reflect very much in agricultural and rural communities.


Just one final question on interest rates. The Reserve Bank has indicated it

wants to take a softly, softly approach on further interest rate rises until

it sees what effect the US economic troubles are having here. Do you endorse

that approach?


Oh look, the fallout particularly last week on American stockmarkets and other

markets, the NASDAQ market and so on was very severe. There was an enormous

loss of wealth in America last week, and not just last week really, for the

whole of this year. And that will start to affect American consumers and American

confidence, and if it feeds back in to the real economy, it could affect the

American economy, which was in recession last year. We in Australia grew during

an American recession last year which put us as one of the strongest growing

economies in the world. But if the American economy should be affected again

in 2002 and 2003 and if global growth goes down and that will affect our exports

this will be another great challenge for the Australian economy. We have stood

down the Asian financial crisis, we outlasted the American recession of 2001

and let’s hope that the American economy will come back in 2002 and 2003.


All right, thank you for your time. Enjoy your trip.


Thank you very much Tracey.