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Thursday, 19 February 1987
Page: 428

Mr McARTHUR(10.38) —On 9 December 1986 Mr Ian McLachlan, President of the National Farmers Federation, failed to have a meeting with the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating). Instead, the Prime Minister berated and attacked the President of the National Farmers Federation and that organisation for questioning the Government's economic policy and raising issues of national importance. This is a far cry from the approach used by Mr Hawke as President of the Australian Council of Trade Unions in using the media on any occasion to put a point of view or, in public perception terms, to solve one of the many strikes which he helped to create. This outburst drew the attention of the Australian people to the fact that Mr Hawke, as leader of the trade union movement, has been one of the major factors in creating the industrial and economic climate that has brought about Australia's present economic crisis. High wage rates, industrial disputes and an attitude towards restrictive work practices make Australia the laughing stock of the industrialised world.

Much of what was contained in the National Farmers Federation submission which had been prepared for discussion is in line with what the Opposition has been saying consistently and forcefully-the Government has got the policy mix wrong. Large public sector demands on the economy combined with an inflexible and centralised wage fixing system and an unwillingness on the part of the Hawke Government to take the hard policy decisions have led to excessively high interest rates to manage the dollar.

The very good submission put forward by the NFF identifies interest rates as being one of the major problems facing the farmers of Australia and both small and big businessmen attempting to make profits and create jobs. The percentage of farms with negative farm incomes has increased from the period 1979-80 to 1986-87 from only 13 per cent at the beginning of the period to nearly 33 per cent at present. At the National Agricultural Outlook Conference which I attended in January this year Onko Kingma, the Deputy Director of the Bureau of Agricultural Economics, described this alarming situation, saying:

There are many factors that contribute to particular farms having negative incomes. One of the contributing factors in recent years has been the rising level of debt in the rural sector and the high cost of servicing that debt when real interest rates are high.

What makes it difficult for those adversely affected by high interest rates to accept the situation is that the Hawke Government has been directly responsible for pushing interest rates to record levels. The Government can take no comfort from the international comparison of interest rates, which supports the case of the National Farmers Federation that interest rates are too high.

A comparison of movements in prime interest rates in Australia with our major trading partners between November 1984 and February 1987 clearly illustrates the dimension of the damage done to Australia's international competitiveness. Japan has a prime interest rate of 3.8 per cent, a fall of 1.7 per cent; West Germany's prime interest rate of 7.5 per cent represents a fall of 0.5 per cent; France, with 9.5 per cent, has undergone a fall of 2.5 per cent; Canada, on 9.3 per cent, has had a 3.2 per cent fall; and the United States of America prime interest rate has fallen by 4.3 per cent to 7.5 per cent. How does Australia's interest rate compare? Disastrously can be the only answer, with the prime interest rate under the Hawke Government having increased 5 per cent to 18.3 per cent, virtually double the closest overseas comparison.

The prime interest rate is not the only interest rate to have risen since the Prime Minister made his fraudulent promise in November 1984 to reduce interest rates. Damage has been done to every section of the community because of the Government's high interest rate policy. The small overdraft rate was 14.5 per cent. Now, two years later and 6 per cent higher, that interest rate stands at 20.5 per cent. The Bankcard rate stood at 18 per cent in 1984, and it too has risen dramatically to stand now at 22.5 per cent.

Farmers around Australia, like those in my electorate of Corangamite, find that the present interest rates are a crushing burden on their day to day activities. The National Farmers Federation indicated in its submission to the Prime Minister that high interest rates make it very difficult for farmers to service their current debt requirements, let alone make capital repayments. The NFF has correctly identified high interest rates as the major problem facing businesses in Australia in 1987. High interest rates will strangle farmers, shopkeepers, businessmen and the wealth creators of Australia. And what is more, interest rates will strangle the Hawke Government in 1987.