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Credit squeeze talk "irresponsible"

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Following ig. the text of remarks I made this morning (before delivering my prepared speech) at the Metal Trades Industry

Association seminar at the Lakeside Hotel, Canberra

I would like, with your leave, to take a couple of minutes to say something unscripted, but nonetheless very important, about

an issue which affects all of you and that is the availability „

of credit and the availability of finance;

I take the opportunity of saying this because I believe there is some dangerous and exaggerated nonsense being talked about the possibility of a credit squeeze occurring in Australia as a result

of the fact that, for the first three months of this financial year,

the current account deficit has been somewhat higher than we anticipated at the time the Budget was put together.

I want to say as strongly as possible that the Government will not

allow anything in the nature of a credit squeeze to develop.

We have come a long way since those days when policy reacted too

slowly and too stodgily to changes in liquidity flows.

We have come a long time from those days when a credit squeeze

became unavoidable when there was a significant shortfall so far as capital inflows are concerned.

The Government has available today a sufficiently flexible range of policy responses to ensure that anything in the nature of a credit

squeeze does not occur.. . 1 think it is important to bear in mind against the background of what has been said in a number of places

about the possibility of a credit squeeze that so far this financial

year, private capital inflow is running at a level about 15 per cent

higher than what it was in the September quarter in 1980 and



although the current account deficit is larger than what it

was anticipated to be. I do not believe that that sort of figure and that sort of analysis indicates that there has been a sharp turn around so far as private capital inflow into Australia

is concerned.

As I have said in another place, I regard it as faintly ridiculous

that, having been told only a few months ago that my responsibility was to bring'arbitrary and bureaucratic controls on capital flows into Australia, I am now being told from the same quarters that there is insufficient private capital flowing into this country. - I

conclude those interpolations, Mr Chairman, by saying that I believe that talk of a credit squeeze is not only irresponsible, it is

totally uninformed and it has no basis in fact so fax as the factors

are concerned that might produce that situation in our financial community. .

' ;


19 October 1981