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Thursday, 24 February 1977

Mr LYNCH -The first point to be made is that of course considerable progress was made in reducing the underlying rate of inflation during 1976. I expect that that progress will be confirmed.

Mr Willis - Stop whistling in the dark.

Mr LYNCH - The honourable member may say that I am whistling in the dark, but the figures put down in this House as a matter of record show that considerable progress has been made. If the honourable gentleman wants a recitation of them I will give it to him if he can bear with me. If one seeks an adjustment on the basis of the Medibank component to reflect the underlying rate of inflation, one finds that after adjustment for the Medibank change the consumer price index increased by 2.8 per cent in the December quarter last year compared with 6.3 per cent in the December quarter of 1975. If one seeks to put that on an annual basis, again after adjustment for the Medibank changes, the index increased by 10.8 per cent during the 12 months to the end of December 1976 compared with an increase of 16.7 per cent over the 12 months to December 1975. If one makes a similar adjustment allowing for Medibank and the impact of indirect tax charges which flowed through the system in the December quarter of 1 975, again a similar pattern is apparent. I point out to the honourable member for Adelaide that the underlying rate of inflation in the latter part of 1975 was not diminished by the decision to fund the cost of health care out of taxation. It will not be increased by the Medibank levy.

As to the future, there will of course be some increases in prices resulting from devaluation and they will be reflected in the March and June quarters. I remind the honourable gentleman that unlike his Government, which following devaluation in September 1974 took no action to offset the problems of price increases in the system, this Government nas taken very firm offsetting action against the price flow-on and the normal effects of a devaluation process. So far as the forward picture is concerned, the honourable gentleman knows very well that any forecast at this stage is so heavily and absolutely dependent upon the decision of the Conciliation and Arbitration Commission that it would be a matter of rank irresponsibility to be putting down in this House a forecast for the rate of inflation over 1977. I decline to do that. The honourable gentleman is as irresponsible in his forecasts -

Mr Young - It will be 18 per cent, with 400 000 unemployed.

Mr LYNCH - The honourable gentleman talks about 18 per cent. I suggest that that figure may well be the case if full indexation were to be granted by the Conciliation and Arbitration Commission.

Mr Hayden - You want the workers to pay for your mistakes.

Mr LYNCH - In responding to the honourable member for Oxley, I would remind him that this country is still paying for his mistakes. The honourable gentleman has been jumping up today like a gadfly to get a question. I am sorry he has not had the opportunity because his record would stand some scrutiny. I am waiting for the first question to come from him.

Mr Hayden - I am waiting for the first answer to come from you.

Mr LYNCH - When I get a sensible question from the honourable gentleman I will provide an answer. I might say to the honourable gentleman and his colleague next to him, who seems to appreciate the passing sense of mirth, that both of them know full well what is happening on the other side of the House in relation to what is called the deputy leadership. Both of them know who are opting for that position. I remind them of that.

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