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Warning in latest trade figures



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P A R L I A M E N T O F A U S T R A L I A

H O U S E O F R E P R E S E N T A T I V E S

- Λ ' - . '·

MEDIA RELEASE . 13 JUNE 1985

OPPOSITION SPOKESMAN ON TRADE HON. TOM MCVEIGH M.P.

WARNING IN LATEST TRADE FIGURES

Commenting on the balance of payments figures just released by the Statistics Bureau, Opposition Spokesman on Trade, Mr. Tom McVeigh today said, "The figures clearly show that our international trade and balance of payments situation has gone from bad to worse. More importantly, the figures underline the need for the Government

to put its economic policies into order and tackle the fundamentals.

"The Government is kidding itself in trying to attribute the bad results simply to the "J-curve effect." The truth of the matter is that if the Government doesn't start adopting policies which will make Australia more competitive, the so-called "J-curve" will crash at the bottom of the "L."

Mr. McVeigh said, "the figures for the month of May are particularly significant in that May is the first full month in which the impact of a lower dollar has taken effect. For this reason it is very disconcerting that we haven't really realised

the positive impact on the export side of the trade account due to the devaluation." .

"A mere 5% increase in exports for the month of May, compared with the 25% increase for the month of April, is extremely worrying. Equally of concern is the strong rise in import values which is up 18% on April 1985. The increase in import values can only add to

our inflation as the higher import prices flow through to the wholesale and retail level. Furthermore, by refusing to argue for full discounting, wage costs will accelerate and we will be fully entrenched in a devaluation/inflation spiral."

Mr. McVeigh said, "the Government must also halt the policy of automatic wage indexation. Even the socialist government of Italy has seen the economic folly of such a policy and has abandoned it. "

"Unless the Government shows some willingness to tackle the fundamental problems facing our economy, be they wage discounting, monetary policy or government expenditure, our declining inter­ national competitiveness will not be reversed and the consequences will be disasterous.

CONTACT— ALEXANDRIA WOOLCOTT 72-7319