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Tuesday, 9 November 1976


Mr LYNCH (Flinders) (Treasurer) - Let me say at the outset that the Government rejects die charge of economic incompetence contained in the matter of public importance brought before the House today by the honourable member for Adelaide (Mr Hurford), particularly the claims that the monetary measures announced on Sunday night will retard activity or that the Government is deliberately retarding economic activity at the present time. What magnificent irony it is that today's matter of public importance should be brought forward by a Party which proved in Government to be the most incompetent economic managers in Australian history. The reference to selective stimulatory programs, together with the Opposition's support for virtual full wage indexation, are in fact no more than a plan for yesteryear. They are a reflection of the policies rejected by the people of this country at the last election, as they continue to be rejected today. What an irony it is, too, that this debate should take place in the light of recent evidence that the Government is achieving significant success in its antiinflationary strategy.

I remind the House that the increase in the consumer price index in the September quarter was the lowest since March 1973, apart from the Medibank-affected September quarter of 1975. Figures published today show that Australia's rate of inflation is now broadly in line with the average of the Organisation for Economic Cooperation and Development. In fact, the consumer price index expressed as a compound monthly rate of 0.7 per cent is actually marginally better than the 0.8 per cent for the OECD countries as a whole. As the Government has consistently emphasised, the downward trend in inflation will establish the basis for sustained recovery in economic activity and growth in employment. As I said in a statement issued last Friday, a reasoned assessment of economic trends shows that momentum has been building up in the economy even though there has been some slowing in growth in the September quarter. Taking the most recent indicators at face value, there is no basis for suggesting anything other than that this recovery is continuing. Industrial production did flatten out in the June quarter but is again on a slow upward trend.

So far as consumption is concerned, retail sales have not grown as much in recent months as earlier, but allowing for improved price performance, some real growth in retail sales has continued. Demand for motor vehicles moved ahead satisfactorily during September, following the sharp fall experienced in July and August as a result of the introduction of more stringent emission control regulations. The weakening in the labour market that appears to have taken place since the March quarter- although almost exclusively in the State of New South Wales- has been largely arrested over the course of the September quarter. Activity in the housing industry remains buoyant. There are also some fundamental differences in the economy compared with a year ago which, taken together, point clearly in the direction of continued growth.

Because this matter of public importance has obviously been inspired by Sunday night's monetary announcement, I intend to deal specifically with monetary management in my response today to the honourable member for Adelaide. In a major speech on 3 August this year the opposition shadow Treasurer, the honourable member for Adelaide, set down the Australian Labor Party's approach to monetary management in the following terms:

The rate of inflation would be reduced by a combination of policies including . . . allowing the money supply to grow at a rate sufficient to accommodate a recovery of economic growth and a declining rate of price increases.

That statement points to the political opportunismthe hypocrisy- of the matter now before the House. In August the Labor Party's spokesman on economic matters presented a mirror image of the Government's monetary policy. In November he claims that measures taken in line with that policy will lead to a credit squeeze.

This is, of course, not the first time the honourable member for Adelaide has attempted to pursue this line. I refer specifically to the introduction in January this year of Australian savings bonds as part of a monetary package to drain off the excess liquidity that then existed. I remind the House that the honourable member for Oxley (Mr Hayden), the second shadow Treasurer in the Australian Labor Party- the combination of Bib and Bub- my predecessor as Treasurer, had himself in his understanding of those matters welcomed that package in the following terms:

The Federal Government's new economic package is an appropriate measure at this point. In the last election campaign I said several times that the Labor Government was considering a package that was very similar.

In spite of that statement by the former treasurer, the honourable member for Adelaide- the first or second shadow Treasurer on the other sideissued a Press statement on 1 1 February commenting on the package:

It constituted the start of a vicious credit squeeze.

It is a matter of record as the honourable gentleman ought to be the first to admit, that no credit squeeze came about as a result of the 'January package', and in fact the Government's monetary management during the seasonal downswing in liquidity towards the end of the last financial year was a major success. I must say that the Opposition is today indulging in the same kind of exercise which characterised it in earlier months.


Mr Baillieu - They are wrong again.


Mr LYNCH - Of course they are wrong again. The Government rejects this matter as irresponsible and a further element of the Opposition's campaign that is designed to talk the economy down.


Mr Cohen - You were masters at that in 1972. That is all you ever did.


Mr LYNCH - The measures that I announced on Sunday night are in strict conformity with the monetary objectives that I announced in the Budget Speech.


Mr Cohen - You are a disgrace to the country.


Mr LYNCH - The honourable gentleman is an old political lag -

Mr DEPUTY SPEAKER (Mr Giles)Order!The Treasurer will resume his seat. The honourable member for Robertson must not continue to be disorderly. I ask him to retain his peace.


Mr LYNCH - I was about to say that the honourable gentleman is obviously an old political lag whose earlier delinquencies have now become habitual.







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