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Mr Willis shows why he will always be the bridesmaid



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220/91 5 September 1991

MR WILLIS SHOWS WHY HE WILL ALWAYS BE THE BRIDESMAID

In an attempt to cover up the defects of a Budget strategy that was dead in the water on day one, the Prime Minister sent Mr

Willis out today with a "dorothy dixer" to try to suggest that the Coalition did not want interest rates to fall.

Mr Kerin couldn't carry the attack because he doesn't understand the issues and has been revealed as a dithering failure in his handling of the Budget.

So Mr Willis waded in with the following quote from my press release yesterday to suggest the Coalition did not want to see lower interest rates.

"getting real long-term (underlining added) interest rates down on a sustainable basis will require the settings of the other arms of policy to be radically altered .."

Pathetic, Mr Willis.

You should know after 8 years hanging around the fringes of economic policy that the Government can only influence the short term real rate. The long-term rate is determined bv the market and that rate is calculated by the Governor of the Reserve Bank at 7 percent - a whole one percent higher than short-term rates which you control.

You can lower the short-term rate all you want but if the market doesn't believe your policies are credible, then you haven't got a leg to stand on.

And that seems to be the message from the markets to date.

Indeed, the gap between short and long term rates seems to have widened a touch since the Budget and the monetary easing.

In other words, the rate that you influence, Mr Willis, is

falling but, as yet, you are not taking the market with y o u .

That could suggest that the market does not believe that the broad range of Government policies, especially including fiscal and wages policy, does not address our national problems.

The Coalition shares the concern of all Australians to get our real interest rates down on a sustainable basis.

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But the question you have to answer, Mr Willis, is what are you going to do to get the real market-determined rate down below the 7 percent rate which is killing off businesses and business investment?

FOR FURTHER INFORMATION CONTACT 06 277 4022

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