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Wednesday, 8 December 1976


Mr MALCOLM FRASER - In the debate that has gone on over the last few days I think people have tended to forget the options that were given to the Government in the week before the decision was made. Those options were, on the one hand, to borrow $ 1,000m in an effort to stave off a change in the rate or, on the other hand, to devalue. In those circumstances the Government took the course of devaluing, for reasons which I think are now clearly understood. The other course, of borrowing $l,000m, would have left a situation in which there would have been continuing doubt as to whether the moves would be successful, especially in the light of statements by former Treasurers that devaluation would be inevitable at some stage. I am well advised that those statements had been noted overseas. Therefore it was quite plain that the Government had to take a decision of a kind that would end speculation. The decision to devalue by \1Vi per cent was taken after full consultation with official advisers. It was designed to stop the drift that had continued and the views that had been expressed about the value of the Australian dollar. I think that it was infinitely preferable to take a decision of that kind rather than one that would leave continuing doubt, continuing drift and continuing speculation as to whether the rate could be held.







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