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Wednesday, 7 September 1983
Page: 478

Mr RONALD EDWARDS —My question is directed to the Treasurer and it concerns interest rates. In light of the concern over interest rates expressed by the financial community and the media, will the Treasurer please advise the House as to the outcome of the most recent Federal Government bond tender?

Mr KEATING —Honourable members will be aware that, for the second time since the Government came to office, it has let a bond tender of $1.5 billion. I think this fact alone shows the Government's resolve to get the money supply under control, particularly after five years in which we saw monetary targets overshot by the former Government. The market's response to the tender, despite the Cassandras on the other side of the Parliament, particularly the Leader of the Opposition, demonstrates its confidence in the Government's handling of monetary policy and, more generally, the Budget strategy. The result of the tender was that yields were slightly lower than the last very much smaller tender of $1, 000m, and well below those at the same time last year. The tender was covered with a record number of bids and a record value of bids which exceeded the value of the tender a couple of times over. I think that indicates that there is a general understanding that inflation will decline in the year ahead, leaving scope for interest rate falls.

There is no doubt that the market believes in the Government's medium term strategy-the bond tender result is an endorsement of that-its monetary policy and the Budget strategy. That is, of course, in marked contrast to the remarks of the Leader of the Opposition in his reply to the Budget Speech in which he forecast interest rate rises and alluded to what he saw as differences between Government policy and Budget Statement No. 2 in respect of interest rate effects . After addressing an Institute of Directors luncheon attended by 500 people in Melbourne, an Institute of Directors luncheon attended by 400 people in Brisbane and another business luncheon attended by 350 people in Sydney in the week after the Budget, I can assure the Leader of the Opposition that the general response by business was one of confidence in the Government's strategy. It underlines the fact that the Liberal Party has nowhere to go with business. The only response we have seen was the former Treasurer's National Press Club speech in which he again held out the nirvana of the free market for labour in Australia, which everyone in business regards now as practically irrelevant, particularly given the fact that there were major differences of opinion between those on the front bench of the Oppostion, including the honourable member for Balaclava and the honourable member for Bennelong. If the judgment is that the bond tender result was a barometer of the opinion of business as to the medium term economic strategy of the Government, it was very much a ringing endorsement.