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Dawkins cannot understand basic economics



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John Hewson Leader of the Opposition M e d i a R e l e a s e

105/92 8 April 1992

DAWKINS CANNOT UNDERSTAND BASIC ECONOMICS

In Tokyo yesterday the Treasurer, Mr Dawkins, displayed his economic illiteracy to an audience of Japanese investors.

When asked about the government's reliance on foreign debt he said that the government's borrowing needs would be met entirely from domestic borrowings. He then went on to claim that as a result of this "the government sector is not adding to the

current account deficit in terms of the budget deficits we have in prospect over the next couple of years."

Wrong. Government borrowing in domestic markets does increase the current account deficit.

If Mr Dawkins had bothered to read his government's own "One Nation - One Job" statement, he may have noticed from the graph on page 12 7 that the size of the public sector borrowing

requirement is a direct determinant of the current account deficit. It does not matter whether the government borrows from domestic sources or overseas, it still adds just as much to the current account deficit. Mr Dawkins' plan for domestic borrowing means that there will be less funds available for private sector borrowers in Australia, so they will have to borrow more from

overseas. Borrowing from overseas is equivalent to the current account deficit.

Can this man be trusted to run the economy? Judging from his previous efforts at messing up the tertiary education system and importing illegal immigrants with the ELICOS scheme, the Australian economy is in for a rough time.

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