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Wednesday, 8 May 1985
Page: 1523

Senator HAMER —My question is to the Minister for Resources and Energy. Is it true that the recent rise in petrol prices was not caused by an increase in the world price of oil but solely by the devaluation of the Australian dollar? Does the Government feel that the present value of the Australian dollar is lower, perhaps by as much as 10c, than it would be if its value were based solely on Australia's international trading performance? If so, is this lower value of the Australian dollar a reflection of the recent performance of the Government in matters such as the MX fiasco, the faction fighting over economic direction and the probability that wage rises will reduce our new international competitive edge? Finally, what part of the increased price that motorists are paying for their petrol is the result of the world's unfavourable assessment of the economic performance of this Government?

Senator GARETH EVANS —It is the case that the recent increase in the parity price was a function of the depreciation of the Australian dollar rather than any movement in world crude prices. It is also the case that the Australian dollar is presently being valued on world financial markets at less than the trade weighted index value of the dollar and, as such, does suggest that there is still some undervaluation on world markets. The factors to which that undervaluation is attributable are something which we can cheerfully debate, and which many people have been debating in recent weeks. I simply make the point that many factors contribute to the psychology of financial markets when it comes to exchange rates. I think it is widely acknowledged that very few of them have a closely rational relationship to the real world phenomena to which they are responding.

I assure the honourable senator that there is no justification objectively whatsoever for any suggestion that this Government is not in total command of the economy and not looking forward with total confidence to the prospects of further improvement in the economy in the months ahead. I am sure that the recent response of the Australian dollar to the announcement of the $1,000m worth of prospective cuts in Forward Estimates, plus the decision we made on the import parity pricing issue, plus the kind of confidence that Mr Keating has been able to engender by his personal appearances in various parts of the world in recent weeks, all demonstrate that there is complete confidence in the Australian economy and its present management.