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Recession is big and will be prolonged

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ACTING SHADOW TREASURER FAX 02.476.6462 PH. 02.476.3675


The deepening of the recession - the recession *we had to have*! - is starkly underlined by figures out today.

Car registrations in Decem ber fell 7.1 per cent (seasonally adjusted) in November and 10.6 per cent in the year to December. That continues a sharp downward trend in motor vehicles in the past 6 months.

The value of building approvals in D ecem ber saw a re-em ergence of a marked downward trend. There w as a 21.3 per cent (seasonally adjusted) fall in the value of dwelling units approved for construction in the month to D ecem ber 1990.

The number of private sector dwelling units approved for construction fell by 11.5 per cent (seasonally adjusted) in December.

Housing activity is recognised a s a leading indicator, being usually one of the first industries to em erge from recessions. Today's figures not only underline th e depth of the recession but point to it probably being prolonged throughout 1991.

There is not too much that the Government can do by way of short term resuscitation of the economy. Certainly proposals for selective export incentives and such like would be nothing more than tinkering at the edges.

W hat is needed is to get the fundam entals' right so that there can be sustainable gain from the recession pain.

To ensure such a sustainable recovery and to contain th e growth in debt it is necessary, in shorthand, to get inflation down and productivity up.

According to Reserve Bank Governor Bernie Fraser there is a welcome possibility of a fall in inflation. However, it is difficult to s e e the conditions being in place so that this can be sustainable.

W hat is essential, a s th e Opposition h a s repeatedly stressed, is a mini-budget to give effect to a structural tightening of fiscal policy, th e encouragem ent of enterprise bargaining for deals to increase productivity, a real effort at urgent micro economic reform, and tax reform particularly the implementation of a goo d s and services tax.

31 January 1991 Sydney


P A R L IA M E N T A R Y l i b r a r y MiCAH