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Thursday, 14 May 1987
Page: 3212

Dr THEOPHANOUS —I direct my question to the Treasurer. Given the big reduction in fiscal outlays outlined in the mini-Budget, what consequences does the Government envisage in terms of increased investment, especially in the export sector?

Mr KEATING —The very essence of what the Government is doing, the very essence of the structure of the policy changes, has been to restore the profitability of the traded goods sector of the Australian economy. Those sectors which in the past have languished, which have been forgotten and which have been expendable by a succession of coalition governments-the manufacturing and traded goods sectors-are, with a major depreciation of the exchange rate, rewarded with higher levels of profitability and, hopefully, higher levels of investment.

With the floating of the dollar, the large depreciation of the exchange rate and the increase in the profitability of this sector, the measures which the Government brought down last night diminish the call upon Australian savings so that more of those savings are free to be attracted to this more profitable sector, to replace imports and to lift exports, to change the balance of our current account and our resort to overseas savings and overseas debt. That is the very essence of the policy change. Of course, that policy change is the change which Australia was denied for all of those years when the Liberal Party and the National Party sought to maintain the Australian economy as an agrarian economy, essentially producing unprocessed minerals and agricultural products.

In the course of this exercise not only have we lifted earnings, in Australian dollar terms, for farmers who were denied that by the National Party for years, but also, in doing so, we have lifted Australia's capacity in the traded goods sector to become a sophisticated, developed, modern economy once more, an economy which can face the world, which can trade profitably in the world as a truly industrialised state selling high value products with a lot of intellectual content and with a higher level of research and development, products of innovation which will find their own niches in the trading markets of the world. That is the future for Australia under Labor. That is the future which we are guaranteeing by changes such as we have seen, and of the magnitude which we have seen, both last night and in the Budget.

The import of my colleague's question is entirely sound. These measures will, no doubt, lift confidence and lift investment in the traded goods sector of the economy. Returning confidence and investment in this sector is the only way Australia can trade out of its difficulties, it is the only way we can redress the imbalance of the current account and it is the only way our trade account can overcome the problems of the capital account with the higher debt servicing costs of the valuation effect of a higher stock of Australian denominated debt. Therefore, the task of policy, of which last night's statement is just another solid step, is to modernise the Australian economy into the great industrial country it once was and to restore its faith in itself and its pride of place in the world trading community of which it was robbed by sterile Liberal and National party governments.