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Tuesday, 17 February 1987
Page: 75

(Question No. 4280)


Mr Carlton asked the Treasurer, upon notice, on 5 June 1986:

(1) What is the March 1986 quarterly index for (a) relative exchange rate movements (b) relative CPI (c) relative GDP deflators (d) relative unit wage costs and (e) unit wage costs in Australia from the June quarter 1970 to the March quarter 1986 as defined in Panel B of Chart II on page 35 of the 1985-86 Budget Paper No. 1.

(2) Is he able to say what the corresponding index is in each of Australia's 4 major OECD trading partners.


Mr Keating —The answer to the honourable member's question is as follows:

The changes in Australia's exchange rate, consumer prices, gross domestic product deflator, and unit wage costs relative to its four major import sources (as defined in Panel B of Chart II on page 35 of the 1985-86 Budget Paper No. 1), are shown in the following table for the period from the June quarter 1970 to the September quarter 1986. Similar information is also shown for Australia's four major OECD import sources (1) (2). Unit wage cost indices for Australia and the other countries are given in Table 2. A number of qualifications attach to the various indices, which should therefore be interpreted with care.

Table 1

RELATIVE MOVEMENTS IN EXCHANGE RATES, PRICES AND WAGE COSTS

Country

Relative

Exchange

Rate

Relative

CPI

Relative

GDP

Deflator

Relative

Unit Wage

Costs (3)

Percentage Change June Qtr 1970 to Sept Qtr 1986

Australia...

-58.9

52.5

68.1

119.2

United States (4)...

-4.9

-5.7

(6)-10.0

(6)-18.4

Japan (4)...

166.7

-10.6

(6)-23.5

(6)-33.4

Federal Republic of Germany (4)...

114.3

-46.0

(5) (6)-52.6

(6)-29.2

United Kingdom (4)...

-56.9

101.2

(5) (6) 94.7

(6) 141.9

(1) A positive/negative number for the `Relative Exchange Rate' indicates an appreciation/depreciation of the relevant currency. For the `Relative CPI', `Relative GDP Deflator' and `Relative Unit Wage Costs', a positive/negative number indicates that costs or prices in the specified country have been rising at a faster/slower rate than its four major OECD import sources.

(2) Major import sources determined from import statistics 1979-84 inclusive.

(3) Relative unit labour costs in the non-farm sector for Australia and in the manufacturing sector for other countries. It should be noted that the rate of growth of unit labour costs in the manufacturing sector is lower than in the non-farm sector as a whole.

(4) The import weights that were used are as follows:

United States

Trading partner...Weight

Canada...18.8

Japan...14.8

Federal Republic of Germany...5.0

United Kingdom...4.6

total of four major OECD import sources 43.2

Japan

Trading partner...Weight

Federal Republic of Germany...1.9

Canada...3.5

Australia...5.3

United States...18.5

total of four major OECD import sources 29.2

West Germany

Trading partner...Weight

France...11.2

United States...7.3

Italy...8.0

Netherlands...12.2

total of four major OECD import sources 38.7

United Kingdom

Trading partner...Weight

France...7.7

Netherlands...7.5

Federal Republic of Germany...12.7

United States...11.5

total of four major OECD import suppliers 39.4

(5) Quarterly GDP Implicit Price Deflators for Netherlands estimated from annual data.

(6) Latest available data to June Quarter 1986.

Table 2

UNIT WAGE COST INDICES (1979-80=100)

June

Quarter

1970

June

Quarter

1986

Australia (1)...

36.5

165.4

United States...

58.4

118.2

Japan...

52.1

100.2

Federal Republic of Germany...

57.8

115.5

United Kingdom...

27.4

143.3

(1) See footnote (3) above.

SOURCES: International Monetary Fund, OECD Monthly Statistics of Foreign Trade, OECD Main Economic Indicators and OECD Quarterly National Accounts.