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Tuesday, 7 December 1976

Mr LYNCH - It is true that, during a visit recendy to Western Europe, I emphasised that Australia needed overseas capital and that overseas capital was welcome in this country- unlike the ideologies of the honourable gentleman and his confreres. An important objective of devaluation was to encourage resumption of the inflow of long-term investment capital that will underwrite and support the process of economic recovery. As I have pointed out in a number of previous statements, much of this inflow was delayed, as I think the honourable gentleman inferred, because of uncertainty about the exchange rate. As a result of decisive action on the exchange rate, the Government expects that there will be a welcome pick up in overseas capital coming into Australia. I emphasised that it will be long-term investment capital coming into Australia for purposes which are quite proper and which are welcomed by us.

I have noted some comments about the possibility of a significant inflow of short-term speculative capital. I remind the honourable gentlman and the House that the embargo on funds with a term of 6 months or less must remain in force. Nevertheless, as I have said, the external position will be monitored closely, including developments in capital inflow. The Government has a number of arms of policy which can be brought to bear on that question as soon as action is required. Of course, the Government is concerned to ensure- I think this was the final point raised by the honourable gentleman- that the objectives of monetary policy are not compromised by developments in the external field.

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