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Letter to treasurer: interest rates



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MEDIA RELEASE

MR95004 EMBARGOED UNTIL 3PM

TUESDAY 28 MARCH 1995

LETTER TO TREASURER; INTEREST RATES

"Retailers remain extremely concerned about the Impact that Interest rales are having on the Industry," Retailers Council of Australia's Executive Director, Laurie Eakin has written In a letter to the Federal Treasurer, Ralph W illis.

Mr Eakin said that the Impact Is being felt broadly across the Industry, but is most severely Impacting on those parts of Australia which have also been affected by the recent and severe drought.

He has called upon the Federal Government to adopt a strategy In the forthcoming budget which removes the Government's current emphasis on Interest rates and Instead places growth as a priority.

"To forestall increases In Interest rates, It must, as a priority, substantially decrease the levels of public sector spending. It is only when these Issues are properly resolved that the country will be able to maintain the confidence to continue to move forward," he concluded.

The text of the letter to the Treasurer is attached,

FOR FURTHER INFORMATION:

LAURIE EAKIN EXECUTIVE DIRECTOR RETAILERS COUNCIL OF AUSTRALIA 03 348 6344 OFFICE 018 533 402 MOBILE

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28 March 1995

The Hon. R W illis Treasurer Parliament House CANBERRA ACT 2600

Dear Treasurer

RE; IM P A C T O F INTEREST R A T E INCREASES ON R E T A IL BUSINESSES

The Retailers Council o f Australia, on behalf o f its constituent bodies, is extremely concerned about the impact that increases in interest rates are having on the Industry.

This is being felt broadly across the Industry, but is most severely impacting on those parts o f Australia which have also been affected by the recent and severe drought, In a number o f locations, retailers are finding that they are facing a twofold problem.

The first Is that o f drought-stricken debtors who have been unable to pay-οίΤ accounts because o f their drought-induced reduced cash flow position. The second is the effect that Increasing and uncertain changes in interest rates that have been occurring over the period since October 1994 is having on the existing customers o f these retailers,

The national retail figures compiled by the Australian Bureau o f Statistics indicated that the December 1994 and January 1995 retail turnover figures showed some growth in turnover across a number o f categories. However, the announced interest rate Increases and the possibility o f further increases has led to a reduction in consume; confidence which is affecting the amount spent by consumers. In addition, choking o ff consumer demand with a high interest rate policy w ill impact most heavily on smaller retailers and their employees who have the least capacity to accommodate fluctuating incomes.

It is therefore crucial for the Federal Government to recognise the impact o f its current policy stance on the retail Industry, particularly small retailers who w ill find It difficult, i f not impossible to sustain their businesses as viable entitles over the coming months and years.

The Federal Government must therefore adopt a strategy in the forthcoming Budget which removes the Government's current emphasis on interest rates and instead places growth as a priority. To forestall increases in interest rates, it must, as a priority, substantially decrease the levels o f public sector spending. It is only when these Issues are properly resolved that the country w ill be able to maintain the confidence to continue to move forward.

Yours sincerely

L A U R IE E A K IN Executive D irector