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February balance of payments

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"The continued current account deficit in February emphasises yet again the need for- the Government to-change the direction of its economic policy," the Leader of the Opposition said today.

"Despite the major impetus given to the export figures by depreciation of the Australian dollar, and despite a large drop in the volume of imports, Australia.was still not able, to achieve a trade surplus in February. k' -

"This is a stark reminder of the decline in our competitiveness because of the Government's economic policies. These problems can only be corrected if the Government has the courage to change its policies of high deficits, high real interest rates,

full wage indexation and rigid labour market strategies.

"As I said yesterday, there is a real danger that the Government will look to depreciation of the dollar as the solution to '

Australia's underlying uncompetitiveness. To justify this ' argument the Government may point to the February 1985 deficit being lower than a month earlier. ·

"But the fact is that with a sharp increase in over-award payments and with automatic wage indexation, the competitive be'nefits of a declining dollar will be lost.

"It is no use the Government clutching at straws and closing its eyes and just hoping the problem will go away. It must face up to the underlying weaknesses in its economic policies and adjust them in Australia's interest.

"Yet again the Government is focussing more on ensuring a quiet life with union leaders, rather than acting in Australia's interests."

Mr Peacock also pointed to the almost total drying up of capital, inflow in February.

"This highlights the problems raised when there is an erosion of confidence in a Government's capacity to manage an economy.

"The drying up is only partly due to the 12.4 per cent depreciation against the U.S. dollar in February - the fact is that the Australian dollar also declined 9.1 per cent against the Pound, 8 per cent against the Mark and 11 per cent agains

t h e ·Yen."


12 March 1985

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