{"id":676204,"date":"2026-05-17T06:23:43","date_gmt":"2026-05-17T06:23:43","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/676204\/"},"modified":"2026-05-17T06:23:43","modified_gmt":"2026-05-17T06:23:43","slug":"that-remark-burst-from-me-like-a-truth-fountain-keatings-kitchen-phone-call-that-changed-the-economy-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/676204\/","title":{"rendered":"\u2018That remark burst from me like a truth fountain\u2019: Keating\u2019s kitchen phone call that changed the economy"},"content":{"rendered":"

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Paul Keating has described his most important declaration about the state of the economy as a weighty truth lifted from his shoulders \u2013 but it may not have happened but for a woman washing some heavy pots.<\/p>\n

May 14 marks the 40th anniversary of Keating\u2019s famous \u201cbanana republic\u201d declaration, a turning point in Australian economic history that many analysts argue shifted the public\u2019s understanding of the financial challenges facing the country.<\/p>\n

\"PaulPaul Keating\u2019s warning of a banana republic transformed Australia\u2019s economic debate.Fairfax Media<\/p>\n

At a time when US President Donald Trump garners headlines for social media posts about the Pope being soft on crime, Keating\u2019s commentary today may seem almost quaint.<\/p>\n

But the then treasurer, in a few choice comments, upended commodity markets, the Hawke government and the economic commentariat.<\/p>\n

In Melbourne\u2019s eastern suburbs for a breakfast event, Keating did a radio interview with the Sydney-based John Laws, who at the time was one of the nation\u2019s most important broadcasters.<\/p>\n

Pushed on the state of the country, and new figures revealing the nation\u2019s current account deficit \u2013 when the value of a nation\u2019s imports of goods, services and investments exceeds its exports \u2013 was 6 per cent of GDP, Keating declared that without policy change \u201cAustralia would end up a third-rate economy, a banana republic\u201d.<\/p>\n<\/p>\n

His comments, alongside warnings about the state of the current account deficit, the speed at which the economy could grow, and interest ratings, had an immediate impact measured in a near 5\u00a2 drop in the value of the Australian dollar against the US dollar.<\/p>\n

It created political havoc for then-prime minister Bob Hawke, travelling in Japan at the time, who had to argue the pair were aligned in their views on the strengths of the economy.<\/p>\n

More importantly, it was a rallying cry used by proponents of reform \u2013 led by Keating.<\/p>\n

Related Article\"The<\/a><\/p>\n

Reflecting on that one radio interview, Keating described it as a near-religious moment.<\/p>\n

\u201cThe remark, made under inhospitable circumstances and time pressure, burst from me like a truth fountain \u2013 something I was not particularly intent on saying via a radio interview, but which, as the thread of the argument went, the logic of it compelled its delivery,\u201d he told this masthead.<\/p>\n

\u201cAnd in the saying of it, the truth of it lifted a weight off me.<\/p>\n

\u201cFrom that moment, the century-long cast of Australian economic policy changed.\u201d<\/p>\n

But it was a heavenly revelation born in a hellish situation.<\/p>\n

\u201cI took the call on a wall phone in the kitchen of [a] wedding venue which had just serviced a very large complement of people for breakfast,\u201d he said.<\/p>\n

\u201cAn older lady generating lots of noise was emptying and washing a collection of large metal pots and plates from the breakfast but was obviously annoyed by my presence on the phone at the end of her bench. She looked askance at me, daggers really, and kept up the clanging as I spoke to Laws.\u201d<\/p>\n

This week, as Treasurer Jim Chalmers delivered a budget that has spending at 26.8 per cent GDP, Keating paid tribute to several key ministers who helped slice government expenditure by tens of billions of dollars.<\/p>\n

He said people such as Peter Walsh, Brian Howe, Ralph Willis and John Dawkins, many of whom sat on the expenditure review committee, were instrumental in driving spending down to levels that no subsequent government has ever achieved.<\/p>\n

Related Article\"Treasurer<\/a><\/p>\n

According to Keating, his commentary in that interview and the actions taken by the Hawke government delivered an enviable economic outcome.<\/p>\n

\u201cThe changes set Australia up for 30 years of low inflationary growth \u2013 the income surge which has since made Australia one of the wealthiest countries in the world,\u201d he said.<\/p>\n

Independent economist Chris Richardson, who was working at Treasury at the time, said Keating\u2019s comments were aimed at a community that had effectively adopted a \u201cshe\u2019ll be right, mate\u201d approach with no agitation for reform.<\/p>\n

\u201cBusiness people didn\u2019t think we could change. People thought we couldn\u2019t change. The public service said we couldn\u2019t change,\u201d he said.<\/p>\n

Related Article\"Prime<\/a><\/p>\n

\u201cAustralians have for a long time thought things are okay, it doesn\u2019t have to change. But Keating showed the place had to change.<\/p>\n

\u201cI don\u2019t think 1778999017 is as bad as it was in the early parts of the 1980s, but it\u2019s a similar story. We\u2019ve left a lot of crap just stay in place.\u201d<\/p>\n

Productivity Commission chair Danielle Woods said while the world had changed over the past 40 years, the message at the heart of the \u201cbanana republic\u201d comment remained.<\/p>\n

\u201cWe need to boost our dynamism and productivity or risk our living standards continuing to flatline. Serious policy reforms helped do that through the 1980s and 1990s, and they can again,\u201d she said.<\/p>\n

\u201cThe challenge for government is not to lose sight of the prize and to push through to delivering and delivering well.\u201d<\/p>\n

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n

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\"ShaneShane Wright<\/a> is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Save You have reached your maximum number of saved items. Remove items from your saved list to add…\n","protected":false},"author":2,"featured_media":669250,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-676204","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/676204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=676204"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/676204\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/669250"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=676204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=676204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=676204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}