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Thursday, 2 December 1976

Mr LYNCH (FLINDERS, VICTORIA) (Treasurer) -When the honourable gentleman refers to the stretching of necks, I am impelled to say that I think of an honourable gentleman in this House. I am sure the honourable gentleman will take no offence at that statement, he being the sort of robust individual that he is. As far as monetary policy is concerned, I think the activities and actions of the Government since it was elected to office will reflect the fact that the monetary policy has been subject to flexible adjustment as circumstances have changed during that period. As far as the future is concerned, the Government has made it perfectly clear that monetary policy will be a measured adjustment to circumstances as they develop but that the position on monetary policy will be firm. I have said to the House previously-I repeat it-that the Government's monetary policy is such that it will provide adequate capacity to underwrite economic recovery but not at the same time to be accommodating to inflation. That is a very important point of the post-devaluation package, because the monetary policy in part, with other arms of policy, is designed to offset the inflationary effects of the decision to devalue.

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