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Monday, 30 March 1987
Page: 1670

Mr HOWARD —My question is addressed to the Prime Minister. Did the Prime Minister promise the Australian people during the 1984 election campaign that he was determined to keep inflation at or below 5 per cent? Is it a fact that since he made that promise Australia's inflation rate has almost doubled from 5.1 per cent to 9.8 per cent? Is it also a fact that during the same period inflation in the major industrialised countries has almost halved from 4 per cent to only 2.2 per cent? Is it also a fact that prices in Australia have risen faster in the past three months than they have in the past year in those industrialised countries? Finally, what impact has this broken promise on inflation had on the living standards of Australian families?

Mr HAWKE —I must say that it almost passes comprehension that the Leader of the Opposition could ask a question such as this because it is based upon the assumption that the economic circumstances of post-1984 are exactly the same as in the time--

Mr Howard —Ha!

Mr HAWKE —Let me patiently-if the honourable gentleman can turn off the giggleometer and just listen-and calmly go through the factual situation. The first fact to note is that the Leader of the Opposition walked out of the Treasury office after having, in his five years of economic stewardship of this nation, no external crisis imposed upon him and no massive fall in the terms of trade. His contribution in that situation was an inflation rate of 11.2 per cent. That is fact one. I said to the people of Australia in the election campaign of 1983 and again in 1984 that we were about the job of reducing that rate of inflation. Madam Speaker, the fact is that I delivered on that promise. By the beginning of 1985 the inflation rate, under the influence of this Government, had been more than halved. We inherited 11.2 per cent and by the beginning of 1985 we had brought it down to 5 per cent. Even the distorted arithmetical incapacities of the Leader of the Opposition will understand that is more than a halving. In the last two years this country has in fact suffered a fall in its terms of trade, of the best part of 20 per cent. I think even the Leader of the Opposition can understand that that of course has brought with it an associated massive depreciation of the Australian dollar. In case the Leader of the Opposition does not understand, I inform him that a very significant proportion of what is consumed in this country is bought from overseas. If the value of the Australian dollar declines in those circumstances prices in Australia rise very considerably. But still, the fact is that in this country, in the circumstances of a decline in its terms of trade of the order of 20 per cent, with the associated massive depreciation in the Australian dollar, the inflation rate has still not yet reached the inflation figure bequeathed to this country by the Leader of the Opposition. Those are the facts and it is a measure of the hopelessness of the Leader of the Opposition that he should ask such a completely stupid question.