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Thursday, 11 November 1976
Page: 2591

Mr UREN (REID, NEW SOUTH WALES) - I direct my question to the Treasurer. Is it a fact that Australia's overseas reserves fell by $269m during October and that there was a net outflow of capital of $258m in that month? Was this the third consecutive month in which there was a net outflow of capital? Has private capital outflow for the last 3 months been $20m in August, $238m in September and $230m in October? Are Australia's reserves now sufficient to finance only 3 months of imports? If so, what does the Government intend to do to rectify this disaster?

Mr LYNCH (FLINDERS, VICTORIA) (Treasurer) - I do not quite know why the honourable gentleman should seek to keep up a series of questions in this House on a subject which he knows to be a sensitive matter both for a question and, indeed, for an answer by a Treasurer. The .honourable gentleman is very much aware of the general policy which the Government is pursuing and which it has made abolutely clear on a number of occasions. The honourable gentleman is also very much aware of the official borrowing program that the Government has embarked upon for reasons that have been laid down in this House on a number of occasions.

The honourable gentleman says that there are only 3 months of reserves. Of course, the facts are that the reserves at the end of October were $2.36 billion. That is equal to 3 months' imports or about 3Vi months' if the gold component of reserves is valued at market prices. The reserves are at a comfortable level. The underlying external position remains sound. Exports, as the honourable gentleman knows, to the 4 months to October were up 29 per cent on the same period for the previous year. Imports in the 4 months period were up 25 per cent on the same period for the previous year.

I have mentioned before that the Government is pursuing a program of official borrowing pending a pick up in private capital flows against the background of recovery prospects and the winding down of inflation. I do not believe that I need to add to this. In fact on this general matter, questions would be better placed on the notice paper.

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