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Mr Hayden's weekend statement on the economy



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• M? J,, AUSTRALIA ,>

TREASURER

NO. I L f .

EMBARGO

STATEMENT BY THE TREASURER THE HON..JOHN HOWARD, MP

MR HAYDEN'S WEEKEND STATEMENT ON THE ECONOMY *

Mr Hayden's analysis of the Australian economy is wrong.

The available evidence does not support his gloomy predictions

for this year. .

In his statement yesterday, Mr Hayden, conveniently ignored

most of the indicators pointing towards growth and strength

in the economy. . .

If anything, the economy is performing more strongly now

than predicted at the time of the last Budget.

In common with the rest of the world, Australia's rate

of inflation has gone up over the past 12 months. However,

we have faired better than most in responding to this world­

wide resurgence of inflation. .

Our rate of inflation is now below the average of industrialised

countries. .

This has improved Australia's competitive situation which in

turn has been translated into a strengthened external position.

Exports rose by 42 per cent in the first six months of this financial year compared to the same period last year. This

included a sharp lift in exports of manufactured goods.

As I pointed out at the weekend, the strengthening of the .

Australian economy has continued to attract large amounts of

foreign investment. .

2 .

Private capital investment continues at high levels, notwith­

standing .the phasing , down in the investment ..allowance.

Whilst there is inevitable uneveness, production statistics

indicate a fairly widespread growth in activity. For example,

the ANZ Index of Factory Production in November last was eight

per cent higher than its level a year earlier.

As a result of this increased.activity, total civilian employment increased by two per cent over 1979. ’This is .

a stronger trend than has been evident over past years.

Total unemployment in December was 14,300 less than in December 1978. .

There remain flatter areas in the economy including private

consumption expenditure which, as thought likely at Budget time, has remained at subdued levels during the

first half of this financial year.

Overall, however, there are solid grounds for confidence

in the Australian economy throughout this year.

Not only is Mr Hayden's analysis wrong, but his alternative

proposals are.the same.Labor recipe of greater Government _

spending and lax monetary policy with insufficient regard to the inflationary consequences of those policies.

11 FEBRUARY 1980

CANBERRA