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Wednesday, 8 December 1976

Mr MALCOLM FRASER -The honourable gentleman should be thanked for that question; and so I do. The Treasurer made it quite plain in his original statement that there would be an administered, controlled management of the value of the Australian dollar. Quite plainly, in a situation in which a government is looking at the method of controlling or managing the external value of its own currency a number of options are open to it. It can move to a further fixed point which leads to a situation in which at some time in the future there is likely to be perhaps a significant move either upwards or downwards. This is always accompanied by a massive debate of one kind or another. Or it is possible to have a float as many of the Organisation for Economic Co-operation and Development countries have as well as the United States, West Germany and Japan, which can be clean or dirty depending on the extent to which the country intervenes in its own markets. But that results in daily movements in the actual value of currencies. Nobody seems to find it particularly surprising that there are daily movements in those rates.

A lot of humbug has gone on about the move that was announced a short while ago by the Governor of the Reserve Bank. It would have been just as relevant to say that a country managing a floating rate would not be allowed to move that rate for one day, for one week or for a certain fixed period of time. It would have been just as much humbug to say in those circumstances that if a currency was floating, as the United States' is, it ought not to move and that people ought to be surprised if it moved. For people to be surprised at the movement that occurred on the initiative of the Governor and precisely as officials recommended is sheer and absolute humbug. I believe that under these circumstances and having regard to the totality of the situation honourable gentlemen ought to be satisfied and content that on technical grounds it was possible to make the move that was in fact made. It would have been an odd circumstance, having announced an administered and controlled float, if honourable members then felt that there would be no move for 12 months or 2 years. Just what did people expect under the circumstances? There were two or three options. We could move to a fixed point; we could have a fully market-determined float virtually on a daily basis; or we could have an administered and controlled float, as we determined. The changes in that will be taken on technical grounds. For a country in Australia's circumstance I have no doubt at all that it is the best choice that could have been made.

Mr Hurford - I rise to a point of order. The Prime Minister was reading from a document. I ask that it be tabled.

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