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Thursday, 5 December 1974

Mr DEPUTY SPEAKER - Is leave granted? There being no objection, leave is granted. (The statement read as follows)-

The report that has just been tabled is the third report from the present Committee and the eighth report from the prices committees. The report is the third and final report on the reference from the House of Representatives which requires the Committee to report on whether consumer or user prices of imports failed to respond to reductions in landed costs following the December 1972 upvaluation of the Australian dollar and other relevant currency changes in 1973.

The Australian dollar has now been devalued but there are important lessons to learn from the upvaluations and this report seeks, in part, to indicate them. First, it should be noted from the graph on page 60 of the report that the upvaluations had a visible impact on import prices. The graph shows that at a time of rapidly accelerating inflation in all major industrial countries and of rapid expansion of demand in Australia, import price indices showed visible, though only temporary, reductions after the upvaluations. But the graph is based on 'free on board' (f.o.b.) statistics and cannot, therefore, be used to show the reaction of consumer or user prices in Australia to changes in landed costs.

The Committee found that the only way to discharge its terms of reference was by means of commodity case studies. Thirty-five commodities were selected which, in the opinion of the Committee, covered '. . . imports having a significant effect on domestic costs and prices' (terms of reference). These commodities accounted for over 60 per cent of total commodity imports in 1972-73. This commodity coverage has involved the Committee in timeconsuming consideration of over 300 submissions.

Table 3 on page 58 shows, in summary form, the response of import prices to the upvaluations for the 35 commodities selected for investigation. This table can be further summarised as follows:


The findings in the case studies are brought together at Appendix IV of the report. These findings can be usefully re-arranged as follows:

(a)   Following the upvaluations landed costs have been reduced in respect of imports of-

Agricultural machinery

Excavating and levelling machinery

Telecommunications equipment

Non-electric machinery

Office machines

Photographic equipment

Internal combustion engines

Anti-knock preparations

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