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Monday, 17 September 1973
Page: 1046

Mr DEPUTY SPEAKER - The honourable member will withdraw the remark that it is time the Treasurer got a swastika.

Mr Katter - I do not recall saying that, but it is not a bad idea. I withdraw it.

Mr CREAN - I would have expected a bit better from the honourable member than that he would have made that remark at all. After all, surely if honourable members are concerned about the state of the economy we ought to debate the matter intelligently.

Mr King - I take a point of order, Mr Deputy Speaker. Is it correct for the Treasurer to make misstatements in referring to numbers in the House?

Mr DEPUTY SPEAKER (Mr Scholes}Order! The honourable gentleman will resume his seat. The Treasurer referred to a quorum. When the quorum was called, the required numbers were not present. That is the only reference to numbers of which I have any knowledge.

Mr CREAN - When the quorum was called there was one member of the Country Party present.

Mr King - Again I rise to my feet. More than one member of the Country Party was present.

Mr DEPUTY SPEAKER -Order! The honourable member will resume his seat.

Mr CREAN - Well, there were two. Fair enough. I have been interrupted and I do not know whether I will be given an extension of time to state my case. Again I rely on the courtesy of the House to act promptly. Each speaker has a limited time of 15 minutes in this debate, and I think something like 4 minutes of my time has been taken up in this dog fight. For the second quarter of 1972-73, that is between 1 October and 31 December 1972, the volume of money rose by 9.2 per cent. If one wants unprecedented experiences as to how certain things have increased, I would say that is probably the most rapid increase in the volume of money in any halfyear period in Australian history. By comparison, in the time since this Government came to office, as represented by the March and June quarters 1973, the rate was 4.5 per cent in the first quarter and 3.1 per cent in the second quarter. It was at least getting down to the normal level. I suggest that the previous Government could have taken all sorts of steps in the first 6 months of last year to moderate the position that we have now reached. I do not want to get into arguments as to whether inflation is imported or not. To some extent it has been. The volume of money indirectly is a contributory cause of inflation if there is too much of it.

Mr Edwards - In July the money flow was increasing at the rate of 26 per cent.

Mr CREAN - Yes, and this is the reason why we began to take some of the action that we did. I have been very disappointed in the honourable gentleman on the front bench of the Opposition who has just interjected. To my mind he has not added to his reputation, after stepping down from a chair in economics, by his performance as an Opposition spokesman on that subject in this House. I expected better of him, but it has not been very evident up to date. I thought he might have swept aside some of the abysmal ignorance that exists in the Opposition but so far he has not. What is called the credit squeeze, if you want to call it that, in essence is trying to remove the excessive liquidity. The honourable gentleman asked me a question about this today. Open market procedures were operated by the previous Government on an occasion when the bond rate was driven up from 6 per cent to 7 per cent in 1970. The only difference on that occasion was that it was done surreptitiously instead of openly. What happened in those days when the bond rate rose from 6 per cent to 7 per cent? Did the present members of the Opposition ask the same questions of their then Ministers as they are now asking of me?

Mr Whittorn - You talk about manipulation and debasing the economy.

Mr CREAN - Yes, because I believe that the initiative to control the volume of money, indirectly and its value, should lie in public hands, because the only area in which we are able to intervene directly is in that part covered by the banking system. Other areas outside the banking system, once they got outside, grew to the levels they did during the occupancy of the Treasury benches by the previous Government. Banking in terms of credit extension is a lesser part of the whole than was the case when the previous Government came into office. The measures we are proposing today have to be harsh until we get more effective means of regulating this quota, the volume of money.

We have faced an increase in the price of housing this year. The price of a house at the end of this year is likely to show an increase of 15 to 20 per cent on the price at the beginning of the year. I think at least it is a moot point whether it is better to pay 6 per cent on 120 units of currency when previously it was 6 per cent on 100 units, or to pay 7 per cent and keep the number of currency units involved to 100. This is what we are endeavouring to do by applying the drastic measures we have. Nobody does this willingly. I still go on record that in my view it would be better for a community as a whole if interest rates were lower rather than higher. But interest rates involve equity as between lenders and borrowers and you cannot just suddenly by means of a moratorium say that overnight all rates will be set at certain levels. We have not the power to do that. I am not necessarily sure that it would be a good thing to use it if we had it. But in the absence of any better' mechanism we have applied the measures we have. People talk about using fiscal control and monetary control, and when they are used everybody criticises them. I do not want to say anything more than that. I have no more time. But I do say that I think it was evident enough even before the honourable gentleman who led in the debate called for a quorum, that there was no great interest in this attack.

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