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Abare's bullish outlook welcomed but Tim Fischer cautions, any improvement will be from a low base



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Tim Fischer mp Federal Member for Farrer

Leader of the National Party of Australia

Shadow Minister for Energy and Resources

ABARE'S BULLISH OUTLOOK WELCOMED

BUT TIM FISCHER CAUTIONS. ANY IMPROVEMENT WILL BE FROM A LOW BASE

Bank managers, finance companies and Canberra bureaucrats should not take the Australian Bureau of Agricultural and Resource Economic's latest bullish prediction for the rural sector as an indication that the rural economy has returned to normalcy.

Federal Leader of the National Party, Tim Fischer was commenting on ABARE's prediction that commodity prices will rise two percent next year.

"ABARE rightly points out that the 2% rise depends on a pick up in the -orld economy. However it goes further than that in that the health of the aomestic economy still remains uncertain, effecting several major influences on market returns.

"These include the Australian dollar exchange rate, inflation and interest rates.

"Granted there has been favourable movement in these three sectors however the lower interest rates are a deliberate government move after admitting they were held too high for too long. Inflation is lower, influenced by lower interest rates as well as a stagnant productive sector and the lower exchange rate is being influenced by uncertainty about Australia's Government.

"For these three factors to become long term reality and indeed better in real terms than they currently are, there must be genuine effort to reduce government spending including the massive blow out in expenditure on welfare and pump priming.

There has to be genuine structural reform and reform in the labour and v?ages arena as well as reform of our export gateway the waterfront.

Mr Fischer said the rural sector has suffered nine years of being the punching bag for Labor's draconian policies. It seems unlikely that the rural sector's gradual recovery will get any sympathy from the government.

"Until the Australian economy is given a firm base the future will remain uncertain. It is therefore important to remain optimistic but wary, the rural economy is still extremely fragile. Any improvement will be on what is historically a very low base.

Mr Fischer said that recognising this fact should ensure that those who depend on the rural sector's recovery should keep in step with the sector's ability to pay.

ENDS F o r f u r t h e r i n f o r m a t i o n phone 06 277 4058

25 March 1992

Parliament House, Canberra, A.C.T. 2600. Telephone (06) 277 4058. Facsimile (06) 277 2052

COMMO? 4 WEALTH

PARLIAMENTARY LiBRARY IvilCAH