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Tuesday, 29 August 1972
Page: 468

Senator DRURY (SOUTH AUSTRALIA) - My question is directed to the Minister representing the Treasurer. Is it a fact that the Australian Wool Board has joined the Reserve Bank of Australia in advocating a revaluation of the Australian dollar? Is it also a fact that the Board's conclusion that the value of the Australian dollar is in fundamental disequilibrium coincides with the view stated in the annual report of the Reserve Bank? Did the Reserve Bank strongly advocate a revaluation of the dollar as the best measure to convert Australia's unusually high reserves of foreign currency into imports which could benefit the nation? Is the Minister aware that the Wool Board follows the Bank's analysis in stating that a revaluation would be anti-inflationary? Is it not a fact that many rural commodities have substantial local markets which would not be affected by a revaluation of the dollar?

Senator COTTON - I have not seen any reference to that matter by the Australian Wool Board, any member of it or its Chairman. I shall look for this article after question time. The report of the Reserve Bank of Australia does not come down firmly for this proposal. It says that this is one of the ways which could be looked at. I was interested in the observation made by the honourable senator that a revaluation would overcome the problem of huge capital build-up in Australia because this could be overcome by tremendous imports which would help the situation. Surely this would lead to tremendous unemployment for Australian manufacturers. Is that not something to be thought about? For my part, I just say that 1 do not believe that revaluation is necessarily a wise and sensible solution. I referred to some figures last week. They are to be found in the 'Sydney Morning Herald' financial page of last Tuesday. They point out that the capital inflow into this country is substantially for solid re-investment in manufacturing and for the growth of this country. A lot of this represents borrowing abroad on an expanded scale by Australian industry. Above all other things it reflects the opinion of overseas people of the economic strength, security and growth potential of this country, of which we should all be proud.

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