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Tuesday, 31 March 1987
Page: 1751

Mr HOWARD —My question, which is addressed to the Prime Minister, relates to Australia's inflation rate. Is it a fact that Australia's annual inflation rate equalled or was lower than the Organisation for Economic Co-operation and Development average in four of the last five years of the Fraser Government? Is it also a fact that Australia's annual inflation rate has exceeded the OECD average in each and every year of the Hawke Government with the current differential the worst in over 25 years? How does the Prime Minister explain this severe deterioration in Australia's relative inflation performance under his Government?

Mr HAWKE —The Leader of the Opposition is a tiger for punishment. The facts again are quite simple. We remind the Leader of the Opposition of the performance of this Government in relation to the situation that was handed to us by him. I remind the House that his economic management, without the benefit of any adverse external economic circumstance, produced an inflation rate when he left the office of Treasurer of 11.2 per cent. We attacked that problem in the terms that I set out yesterday and reduced that to a rate of 5 per cent per annum, which brought the Australian inflation rate down to a position which was comparable with what was happening overseas. Certainly, we were entitled to expect, as a result of the policies that we brought in, that there would be a further improvement of the Australian inflation rate compared with that operating overseas.

What the Leader of the Opposition, for reasons which quite escape me, refuses to understand is that this country has had imposed upon it externally a massive decline in the terms of trade with an associated very significant depreciation in the Australian dollar. I have given the House the dimension of that impact upon Australia. I put it in aggregate terms, in terms of a $6 billion loss of income. In terms of Australian families, that is equivalent to a loss per family of about $1,500 per annum. Whether the Leader of the Opposition understands these things or not, it is interesting to see-and it is a sad commentary upon the Leader of the Opposition that one has to say this-that the Premier of Queensland has a better understanding of the operation of economic forces than does the Leader of the Opposition.

Mr Ronald Edwards —Oh, no!

Mr HAWKE —The honourable member says: `Oh, no!'. I will quote from last week's Bulletin. It is fantastic that the Premier of Queensland should be showing a better understanding of basic economic forces than does the Leader of the Opposition. The Leader of the Opposition is going on as though nothing has happened overseas. He thinks that we can just bring inflation down when we have lost the value in our Australian dollar by such a massive amount; that we can just automatically bring interest rates down. It is somewhat refreshing in this circumstance to remind the House of a passage in last week's issue of the Bulletin from a fascinating interview with the Premier of Queensland. The Premier said:

There is no short cut to putting interest rates down . . . you have to stabilise the economy--

This comment was made of him:

And despite the impression given to rallies in Canberra last year and Wagga this year, he now has this warning for the farmer:

I ask honourable members to compare this quote from the Premier of Queensland with the nonsense from opposite. He said:

You can't force interest rates down arbitrarily. You can't do that because it would be a disaster.

There is the Premier of Queensland displaying an understanding of economics which shows up the Leader of the Opposition with all these nonsensical questions about inflation rates and interest rates which ignore what has been imposed upon us from overseas. It is no wonder that some people are still talking seriously about displacing this economic illiterate with the learned gentleman from Queensland--

Mr Beale —Learned gentleman?

Mr HAWKE —That is by comparison, of course.