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Wednesday, 1 June 1994
Page: 1078

Senator GIBSON —I direct my question to the Minister representing the Treasurer. Yesterday the Treasurer said that interest rates would not rise `in the near future'. Are the views of the Treasurer in contradiction to those expressed by National Mutual, as reported by Max Walsh in this morning's paper, which suggest that interest rates in Australia will rise by the end of this year and that rates will ultimately increase by up to 3 1/2 per cent—I repeat, 3 1/2 per cent—before the Australian economy reaches the peak of its current cycle?

Senator COOK —I think probably the supplementary question to this question is: what will tomorrow's exchange rate be? What do those opposite want the government to do—run around speculating about interest rate movements? The comments made by the government on interest rates are responsible comments that any government would make—that is to say, that at some time in the future it is likely, given the economic cycle, that there may be an alteration in interest rates. But we are not running around Australia trying to spook the markets, like the opposition is, forecasting doom and gloom, trying to tear down the economy, suggesting a massive and imminent rise in interest rates.

  It is well worth asking the question: what does the opposition want here? The opposition is fascinated by the fact that interest rates do tend, over the long haul, to reflect the economic cycle and supply and demand factors. What do those opposite want to do—freeze the interest rate? If they do want to freeze it, where does the existence of the Reserve Bank stand in that equation?

  Alexander Downer was at the National Press Club the other day saying he supports the independence of the Reserve Bank. If those opposite want to freeze interest rates, where do they stand on that? As to the other question here, what do they want to do—keep the economy comatose so that every time there is the possibility of a long-term adjustment in interest rates they want to cut outlays, create more unemployment and put the economy into recession? They are questions that the opposition should answer. Otherwise it should get off this hobbyhorse of trying to tear down the expectations of the Australian community and rubbish the economic growth that Australia is undergoing.

  I notice that not one single question today came from the opposition about quarterly accounts because the quarterly accounts, as indicated by the Prime Minister and the Treasurer in their press conferences as question time began, show a growth rate of five per cent. From the quarterly accounts we have high growth and low inflation. We are the fastest-growing economy in the OECD. Other countries in the world would kill for the figures that came out in the quarterly accounts today. And what do those opposite do? They run around trying to pretend that there is something dangerous and awful here. There is not.

  This is a confident economy; this is an economy on line with the expectations of the budget; and this is an economy which, when we look at business confidence for the future, is growing well and in a sustainable way. This is yet another attempt by the opposition to try to dampen expectations, to try to undermine the good news and the fact that Australians can look forward to a higher growth in employment because of the figures we are returning.

Senator GIBSON —Mr President, I ask a supplementary question. My supplementary question to the minister is: what do we want? We want sustained investment in Australia so that Australia can grow and reduce unemployment. What we also want is a lower government budget deficit which the government had the opportunity of achieving just recently. Why did the government not have a lower budget deficit and hence encourage investment?

Senator COOK —This is an extraordinary question. Why did we not have a lower budget deficit? We have a medium-term deficit reduction program, and we are on track to fulfil it. The growth figures we are seeing in the economy come off the back of the knowledge that that is the government objective. I repeat, they are on line and on track for the budget. As I did not say, but it is worthwhile commenting now, the quarterly accounts that came out today surprised market expectations because they were a bit stronger in terms of the growth figures than the market apparently expected. There is a great deal of confidence in the Australian economy. Opposition senators can quibble and can talk about why not this and why not that, but the economy is on track, growing strongly, and the envy of the OECD world.

Senator Gareth Evans —Mr President, I ask that further questions be placed on the Notice Paper.