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$A falls against the $US in response to claims by the Prime Minister and Treasurer that there will be no increase in interest rates and reassurance that economic policy will maintain the standard of living

PETER THOMPSON: It took no time at all, just a few hours after Bob Hawke and Paul Keating began their economic offensive on television last night, Australia's dollar went flop. The dollar has fallen two cents against the greenback overnight, it plunged from 81.7 American cents to 79.4 before making a recovery to around 79.9 cents. The fall comes in response to the Prime Minister and Treasurer saying there'll be no further sharp increases in interest rates and that the Government is conceding that the dollar could fall below 80 American cents. With Parliament resuming today and the Government facing a raft of economic problems, like rising inflation, the current account gap and the strength of the dollar, Kate Wall reports that the Prime Minister has taken the view that attack is the best form of defence.

EXTRACT:

BOB HAWKE: I know the man. He is a person who is committed to trying to improve the lot of your ordinary viewer and he is a Treasurer who has, with me and in Government, provided jobs. And just let me come back to this, I mean, you think of jobs, he and I have created jobs at a rate four times faster than the Conservatives and John Howard did in their seven years. We are creating jobs more than twice as fast as the rest of the world. Now I think common fairness, Jana, demands that that not be forgotten.

KATE WALL: The Prime Minister last night on the Nine Network's, A Current Affair, selling his Treasurer and more particularly, the Government's handling of the economy. The Government's been forced to revise optimistic budget forecasts on inflation and the current account deficit and while Bob Hawke told meetings yesterday of the full Ministry and Caucus that recent economic indicators were cause for concern, there was no need, he said, to panic. In fact the Prime Minister told his colleagues there were signs that the Government's tightening of monetary policy, the pushing up of interest rates to stifle demand, was working. That message will be spread on TV and radio by Bob Hawke and Paul Keating over the next six weeks. Last night Mr Hawke told the viewers that living standards would improve this year with tax cuts and higher wages, something the Treasurer has been saying, but which the viewers have had trouble with.

EXTRACT:

BOB HAWKE: And I want your viewers to understand that while the jargon may be mystifying at times and Treasurers often have to talk in the jargon of economics, that what Paul, and this Government is about, is trying to create an Australia in which under the pressures, the external pressures that exist, we will conduct policy in a way which will keep going the increase in jobs, so that they and their kids will not only stay in jobs but there'll be more jobs for them and that they'll be more rewarding jobs. Now that's what we're about.

KATE WALL: For his part, Mr Keating was spreading the word to a very different audience on the ABC's Four Corners program. Jargon was permitted as commentators, business and union representatives quizzed the Treasurer for nearly an hour. Mr Keating dismissed quick fix solutions to cutting inflation and improving the trade figures, saying they would cause a recession.

EXTRACT:

PAUL KEATING: If the Government was to substantially lift interest rates, tighten up fiscal policy, we can cut the current account quite rapidly. We can cut inflation more rapidly, but the cost is a scorched earth policy, a recession. That means unemployment goes up.

UNIDENTIFIED: Cost is also the end of your Government.

PAUL KEATING: Unemployment goes up.

UNIDENTIFIED: A minor matter.

PAUL KEATING: Yes but unemployment goes up, social misery starts to move up again, the fairness and equality which has come from employment, goes. The social programs like payments to schools, pensions, they all get cut. Now, I'm standing against that kind of policy. I'm saying we will moderate this the proper way. We won't have a scorched earth policy, we won't destroy business activity, we won't destroy employment, we will do all this gradually.

KATE WALL: And while the Government wants to push aside continued speculation of an early election, the thought of the next poll is clearly not far from the Prime Minister's mind, as he tries to woo the women's vote. Bob Hawke has told his Ministers the so-called `gender gap' is too wide and to reduce that he suggested his colleagues watch their language in Parliament and start promoting the Government's achievements to women, like this.

EXTRACT:

BOB HAWKE: The sorts of things I would like to say to you, Jana, and to all the women that are listening and I've talked about jobs and I think that should be important to them. I think the thing I'd like to say mostly to the women of Australia is this, not just the women who are adult and grown up now, but I want to say this to them. As a result of what we've done over six years, their girls, their young girls who are growing up, are going to grow up in an Australia in which those girls are going to have a greater range of opportunity of occupation, of training and education than has ever been the case before in this country.

PETER THOMPSON: The Prime Minister. And more of the `gender gap' later.