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Australian balance of payments 1964-65



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FOR PRESS No. 754

STATEMENT BY THE TREASURER

THE RIGHT HONORABLE HAROLD HOLT, M .P .

AUSTRALIAN BALANCE OF PAYMENTS,

. 1964-65

The T re a s u r e r , Mr. H o lt, commented to d a y on th e

b a la n c e of paym ents e s tim a te s f o r .1964-65 which have now been

r e le a s e d by th e Commonwealth S t a t i s t i c i a n . He s a id t h a t

im p o rts were a t a re c o rd h ig h le v e l i n th e p a s t y e a r b u t t h i s

should be viewed i n r e l a t i o n to th e b a la n c e of paym ents

r e s u l t s as a w hole. ' '

Mr. H o lt s a id t h a t A u s t r a l i a 's e x p o rt perform ance,

f o r exam ple, sh o u ld n o t go unrem arked. E xport r e c e i p t s reac h ed

£1296 m illio n i n 1964-65. T h is , i t was t r u e , r e p r e s e n te d a

f a l l of £74 m illio n from th e q u ite e x c e p tio n a l y e a r of

1963-64, but was f a r i n excess of any o th e r y e a r on re c o r d .

I n th e b e s t y e a rs p r io r to 1963-64 e x p o rts had n o t exceeded

£1,070 m illio n . ·

Mr. H olt observed t h a t th r e e com m odities had been

c h i e f ly r e s p o n s ib le f o r th e f a l l i n e x p o rts betw een 1963-64

and 1964-65. These com m odities were wool, wheat and su g a r.

Wool p r ic e s were on av e ra g e about 15 p e r cent low er i n 1964-65

th a n i n 1963-64, and su g a r p r ic e s had f a l l e n by alm o st 50 p e r

cent- from th e ab n o rm ally h ig h l e v e l s of 1963-64. The volume

of wool and wheat shipped had been somewhat l e s s th a n th e

re c o rd q u a n t i t i e s of th e p re v io u s y e a r, b u t th e q u a n tity of

of su g a r ex p o rte d had r i s e n . However, th e v a lu e of most o th e r

e x p o rts of p rim a ry produce had in c re a s e d , and i t was p le a s in g

to n o te th a t e x p o rts of m an u factu red goods and m in e ra ls were

c o n tin u in g to make headway.

- 2 -

Mr. H olt p o in te d out t h a t th e r e had been a number

of f a c t o r s c o n tr ib u tin g to l a s t y e a r 's re c o rd im p o rts of

£1375 m illio n w hich should not be p re s e n t to th e same d eg ree

i n th e coming m onths. I n c r e a s e s in l o c a l s u p p lie s should

en su re t h a t l a s t y e a rn s grow th i n im p o rts of copper and ir o n

and s t e e l would not be r e p e a te d . The v a lu e of im p o rts of c i v i l

a i r c r a f t i n 1964-65 had been v i r t u a l l y tw ic e a s g r e a t a s i n

1963-64, a s a r e s u l t of th e a r r i v a l of Boeing 727S, ■

N e v e rth e le s s , Mr. H olt s a id , th e in c r e a s e of 22 p e r cen t i n

■ im p o rts l a s t y e a r had r e f l e c t e d th e veiy h ig h and r i s i n g le v e l

of d o m estic demand which lo c a l s o u rc e s of sup p ly had proved

i n s u f f i c i e n t to m eet. I t was n o tew o rth y t h a t im p o rts of

c a p i t a l equipm ent and p ro d u c e rs ' m a te r ia l s had r i s e n a t a

f a s t e r r a t e th a n f in is h e d consumer goods. T h is was an

in d ic a t io n t h a t im p o rts had b een u se d to s u s t a in and supplem ent

A u s tr a lia n p ro d u c tio n .

Mr. H olt s a id t h a t a lth o u g h n e t a p p a re n t c a p i t a l

in flo w i n 1964-65 was, i n t o t a l , some £26 m il lio n l e s s th a n

in 1963-64, t h i s d e c re a se was more th a n acco u n ted f o r by th e

change i n m a rk e tin g a u t h o r i t i e s ' t r a n s a c ti o n s from a n e t

in flo w of £15 m illio n i n 1963-64 to a n e t outflo w of £30

m illio n i n 1964-65. The d h ie f re a s o n f o r t h i s change was

t h a t i n 1963-64 M ainland China had made e a r ly repaym ents of

c r e d i t s extended f o r p u rc h a se s of A u s tr a lia n w heat.

Government c a p i t a l t r a n s a c ti o n s had r e s u l t e d i n a

s l i g h t l y s m a lle r o utflow l a s t y e a r th a n i n 1963-64. Government

r e c e i p t s from lo a n r a i s i n g s had been l e s s th a n th e amount of

red em p tio n s and o th e r o v e rse a s lo a n o b lig a tio n s l a s t y e a r,

w hereas th e o p p o s ite had been tr u e i n 1963-64; on th e o th e r

hand prepaym ents o v e rse a s f o r d efen c e equipment were

s u b s t a n t i a l l y l e s s th a n in 1963-64.

A pparent p r iv a te c a p i t a l in flo w ( ex c lu d in g m a rk e tin g

a u t h o r i t i e s ) amounted to £273 m illio n i n 1964-65, some £15

m illio n g r e a t e r th a n i n 1963-64. I t was to o e a r ly to say

how much of t h i s amount r e p r e s e n te d p r iv a te c a p i t a l in v estm en t

i n th e s t r i c t se n se ; th e r e were o th e r ite m s in c lu d e d u n d e r

t h i s head i n th e p r e lim in a r y s t a t i s t i c s , such a s movements i n

s h o r t- te r m c r e d i t s and th e n e t e r r o r s and o m issio n s i n a l l th e

o th e r ite m s i n th e b a la n c e of paym ents.

The f a l l of £158 m illio n in A u s tr a lia n gold and

f o r e ig n exchange h o ld in g s d u rin g 1964-65 should be k e p t in

p e r s p e c tiv e , Mr. H olt s a id . As our f i r s t - l i n e r e s e r v e s had

r i s e n by no l e s s th a n £228 m illio n in th e p re v io u s tw elve

m onths, th e y were s t i l l some £70 m illio n h ig h e r th a n two y e a rs

ago. M oreover i t sho u ld not be overlooked t h a t we had a ls o .

improved our I.M .F . p o s it io n by £11 m illio n in 1964-65. At

th e th r e s h o ld of 1965-66 our r e s e r v e s p o s it io n was th e r e f o r e

s t i l l one of c o n s id e r a b le s tr e n g th , w ith f i r s t - l i n e r e s e r v e s

s ta n d in g a t £696 m illio n and w ith la r g e u n tap p ed s e c o n d -lin e

r e s e r v e s in th e form of I.M .F . draw ing r i g h t s .

- 3 - .

C a n b e r r a , A . C . T .

30th J u ly , 1965.