Paul Keating to maintain lobby with Asian leaders (2)

This is the second of two articles based on an exclusive interview with former Australian prime minister Paul Keating by Ratih Hardjono, the Sydney-based correspondent of the Kompas daily.

Question: Do you think the current government can continue what you have built up?

Answer: I hope I have been able to create a climate that makes this an imperative and that the country is advanced in this way. I welcome what the new government is saying and doing about relations with Asia since it came to office. Downer was right to make Asia his first port of call and is seen to establish good relations with Asia leaders he talked to. This is good for Australia, because Australia has a national interest which transcends political differences in these areas.

Q: Do you think a republic for Australia is impossible this century?

A: No, it's completely inevitable. It is just a matter of when. When I talk of national progress and the Coalition's adoption of the region, in the same way now they have been obliged to consider the republic. Maybe with less enthusiasm than we have for it, but nevertheless it's on the agenda. This again underlies my point about national advancement.

In democracies it's a case of ratcheting things up so it is such that no one can pull its pin and wind itself back down. Some governments may ratchet it up more rapidly, as long as the direction is maintained. The whole national trend of an understanding of what we have become, who we are, the pride and culture we have created and it is only being able to be fully expressed when one of us is the head of state, can not be reversed by conservative views in Australia.

Q: Do you regret the international debt during your period of prime ministership, causing interest rates to stay up. How important was this issue?

A: In part it's a failure to understand one or two things. One, this country has the same population as the Netherlands. Obviously the capital requirements to develop the Netherlands can never be the capital requirements to develop a continent. The Netherlands you can drive across in three hours. In Australia this gets you to Canberra from Sydney.

With that massive hinterland and other capital cities to be developed. We will always need more capital because we have a continent. This capital will come from overseas savings, the flip side of overseas debt. If on the other hand, our continental size, which is the same as the United States, had two hundred and sixty million people, we would have the savings as a developed society that would not require us to rely on overseas savings.

But this is not the case. This is a continent of the same geographical size of the U.S. but inhabited by 18 million only. Therefore the savings of 18 million people will never be adequate for its development. As well as that we have seen a decline in household savings in the last 15 years mainly because of a very bad culture of high inflation, it did not encourage people to save.

The labor government broke the back of Australian inflation and the savings culture will return. As well as that we had a savings policy having the budget in surplus and in national super annuation where we would actually augment those savings anyway.

But, the point remains, can a nation of 18 million develop a continent the same size as the U.S. in area from its savings?

If the answer is in the negative it means companies will borrow abroad, but they will borrow wisely to grow the national assets. The key point is that one has to serve the debt. The happy point about Australia is in the last 10 years the debt service component of our debt, that is the proportion of our export we devote to interest payment has fallen from 21 percent in 1986 to 11 percent in 1996.

So only 11 percent of our exports goes to servicing our debt. We have a net debt now of A$170 or $180 billion (US$ 143 billion), but we also have grown out assets abroad by $90 billion. Every dollar of that $90 billion put offshore was borrowed by the current account. Had we not placed $90 billion of our assets offshore our debt would probably be $90 billion not $180 billion. In other words it will be more manageable, but are we better having businesses in Asia, in Indonesia, China, U.S. and Europe? The answer is we are.

Q: You are really too young to retire. In Indonesia men at your age have just begun their political life. For a "true believer" are you opting out? Shouldn't you go in there and give them another push?

A: (Laughs) I have been pushing all my life and I think that this is the point about democracy. The community decided to have a change of office. Now I certainly have the option of remaining a member of parliament and taking a responsibility with the Labor Party either in opposition or in government.

Yes, I am 52 but you only get one life and it is the natural point to go and do other things and to also enjoy other things including my family,

One of the things I want to do is I want to stay involved in the East Asian debate. To look at some of the broader issues, for instance, the relationship between the U.S. and Japan, Japan's relationship with China.

The way Japan will evolve -- its assertiveness or otherwise, what will Japan's policy be, what will China's attitude be, how will China grow -- in which way will it develop, what will its general policy be, questions like resource interdependence and how do we resource the East Asian growth phase.

How the countries of Southeast Asia get a share of the action and what will their role be in the bigger security questions. These sorts of issues I intend to remain current in.

While I am not the prime minister of Australia anymore, I will take the opportunity of continuing to talk with the leadership of the region. I think I am in a position to be able to do that.

In the end leaders respond to ideas and to interesting conversation. The conversation is not innately more interesting because the interlocutor is a prime minister, it is a matter of what the issues are and what one has to say about them.

I don't believe having changed my status from a prime minister to a private person, I still believe I can have those conversations and make a contribution to the wider debate.

Because none us is ever going to garner real truths and wisdom from Time magazine or The Asian Wall Street Journal or something else.

It is going to come from personal conversation and, as you know, this is even more true in Asia than any other part of the world. Personal relationships matter. Having developed them over a long period of time I want to participate in that debate by maintaining a contemporary focus.