I rule your ass, don't you forget it.

Keating made Julia Gillard look very slow witted on Lateline last night. He can come up with an economic justification for Labor IR policy off the top of his head, whereas she can't mount the economic argument effectively at all.

How could the Labor Party cut lose such an effective communicator?

Arrogant- maybe.

But he tells it straight, unlike Howard and Costello who don't understand the economy and can't lie straight in bed.

TONY JONES: But, of course, since you've mentioned industrial relations what the Government is clearly saying is that their industrial relations reforms now are one of the key underpinning new economic reforms, and that that's being put at risk by the possibility of a Labor Government coming to power?

PAUL KEATING: Well, they're not economic reforms at all they're actually anti productive. I've made this point before, but I'll make it again.

If you go to 200 or 300 people in a factory or 200 or 300 people in a workplace and come to a three or four year bargain to the improve productivity and share it between wages and profits you've got a good chance of getting productivity from the whole enterprise. But if you just take one person at a time, bring them into the boss' office and cut their wages there's no chance of getting any productivity. That's why trend productivity is now rapidly on the way down. It was 3 per cent under me. It's now under 1 per cent. So how are we going to keep inflation low with, at the moment wages are running at about 4 per cent, productivity is under 1. This is consistent with an inflation rate of 3 per cent, or higher. The Reserve Bank knows that. That's why they've got the rates on hold.

The great lie of the Howard Government in respect of workplace changes, they are simply a set of arrangements to keep unions out of workplaces. They've got nothing to do with productivity and the quicker we move away from that kind of discriminatory structure to a truly trust based co operative sharing of work and workloads, then we get back to reasonable levels of productivity and again, reasonable rates of growth in real wages. It's no accident as you saw in today's front page of The Sydney Morning Herald and other places that the wage share in the economy has gone down, and the profit share in the last four years has gone up because wages are now in real terms, are declining.

TONY JONES: I just make this point. You and Bob Hawke are barely mentioned by the current Labor leadership, why is that?PAUL KEATING: Well, they don't like the fact that we had, the Liberals attacked us about interest rates in 1988/89 in the last election. They, in my view, foolishly failed to counter it. All they had to say was John Howard had the highest cash rate since the Second World War 21.4 per cent in 1982 and that whole campaign would have gone. But they wouldn't say it. So they now not only used the K-word they don't use the H-word.

Hawke and I have been put out to grass because we had interest rates up in 1989. That's 20 years ago in two years from now. Bear in mind this Tony, Bob and I won the '90 election with interest rates, cash rates at around 16 per cent, housing rates about 16 per cent. I won in '93 when interest rates were not an issue. They were not an issue in 1996. So how come they became an issue in 2004, or in any way an issue now? The answer is because the Labor Party's inability to get across the argument and put it...

TONY JONES: The other key reform that we've talked about is the Government's industrial relations reforms. It's been countered immediately by a new set of industrial relations reforms from Julia Gillard. How do you think she's gone?

PAUL KEATING: Not very well. Not very well. This was a very simple change. She had to put a simple thing across. Basically what she should have said was this, "We'll register all agreements with two provisos…

TONY JONES: You mean AWAs included?

PAUL KEATING: Whatever you want to call them. Single enterprise workplace agreements. We'll register them all with two provisos.We will introduce a national minimum wage with conditions for annual leave, sick leave et cetera, no agreement will be registered which denigrates from that award. And the second condition is there'll be no positive discrimination against collective bargaining or the ability of a union to represent people. There might not be either positive discrimination for a union, but there won't be one against a union. Now once you've said that you've said the lot...

PAUL KEATING: I tell you one thing Tony, the Labor Party will do no good running away from the great structural reforms of the '80s and '90s under Bob Hawke and me.

Our model is a model Tony Blair tried to pinch and run calling it the third way. I noticed Wayne Swan talking on the television tonight saying he'll form a Labor Government. As if there were 30 of them. There's only two main ones, in the recent period, that's Hawke and mine and we're the ones who did the changes. Everything in those national accounts yesterday, everything, that is the growth in the economy and the low unemployment, the reason the system is not blowing, the tinder box has not taken off is because of the float, because of the tariff changes and because of the IR changes, structural changes. That's why they're there. Not because of any superior management by Mr Costello. You know this pat line tonight about you wouldn't put an L plater. God, he's the greatest L plater of all time.