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Banana republic day anniversary

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D o f o r P o i f l i



This Tuesday (May 14th) marks the fifth anniversary of Treasurer Keating's infamous Banana Republic statem ent of 1986.

But it is an anniversary that Mr Keating wants people to forget.


B ecause all the fundam ental economic problem s that were highlighted in that B anana Republic statem ent simply haven't gone away, and Mr Keating h a s no-one else to blam e but himself.

Tragically, Australia is five years closer to becoming the third-rate econom y Mr Keating threateningly described.

W hen Mr Keating warned Australians that the country w as in danger of becoming a B anana Republic, gro ss foreign debt stood at $92 billion.

Today, Australia's gross foreign debt stan d s at $164.7 billion.

W hen Mr Keating warned Australians that the country w as in danger of becom ing a B anana Republic, 594,000 people were out of work. Unemployment stood at 7.9 per cent.

Today, there are 844,000 Australians out of work. Unemployment sta n d s at 9.9 per cent.

W hen Mr Keating w arned Australians that the country w as in d an g er of becom ing a B anana Republic, the current account deficit w as $12 billion.

Today, Mr Keating forecasts a current account deficit of $18 billion.

The Treasurer sta n d s dam ned by his own words.

In 1986, Mr Keating told u s we had an econom ic crisis. He told u s w e had to urgently take action to rem edy the situation. And today, all the econom ic indicators show that in th e five years that have p a s se d th e Australian econom y h a s continued to decline.

Indeed, Australia is now in th e grips of th e worst recession since the 1930s.

As the attached MISERY INDEX show s - Australia's living standards have plummeted.

The MISERY INDEX is a consolidation of data on unemployment, inflation, interest rates, taxation levels, and the nation's debt.

12 May 1991 Somerville

Contact: Peter Reith (059) 777212

COMMONWEALTH p a r l ia m e n t a r y LIBRARY MICAH



Index comprises: unemployment, inflation, interest rate, taxation and foreign debt statistics.


It is instructive to note in detail what Mr Keating had to say on the John Laws radio program m e that mem orable day five years ago.

In 1986 he said:

"... if we don't make it this time, we never will make it. If this Government cannot get the adjustment, get manufacturing going again and keep m oderate w age outcom es and a sensible econom ic policy, then Australia is basically done for. We will just end up being a third-rate economy."

Mr Keating went on to say:

"The prognosis is, the only way you can deal with the m assive current account imbalance, is to close the econom y down. You cut all growth to zero, you stop all the imports growing and unemployment starts rising again, and profits fall apart, and we go back to being the kind of econom y we were in 1982 ... or worse."

That sounds pretty much like the econom ic policy Mr Keating h as given us in recent years. However, the Treasurer had more to say:

"If in th e final analysis Australia is so undisciplined, so disinterested in its salvation and its econom ic well being, fall back solution is inevitable b e c au se you c a n t fund $12 billion a year in perpetuity every year and then th e interest on th e year before that, and the interest on the year before t h a t ..."

Note the current account deficit h a s now climbed from around $12 billion to around $18 billion. But Mr Keating went straight on:

"... the only thing to do is to slow the growth down to a canter. O nce you slow down the growth under 3 per cent, unemployment starts again.

"... Then, you have gone. You are a banana republic."