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Monday, 13 September 1971
Page: 1159

Mr UREN (REID, NEW SOUTH WALES) - Last week, I asked the Prime Minister a question in regard to the policy of the Commonwealth in April 1970 of placing greater pressure on the States, particularly in regard to housing in the public and private sector. The Prime Minister did not reply in any way to my question. I now seek that reply. Would he agree that the economy is headed for difficulties or that a downturn in the economy is likely to occur? Would he agree that a reduction in interest rates for housing loans would give a stimulus to the housing industry, the States and the economy as a whole? Will he direct the Reserve Bank of Australia to reduce interest rates on housing loans to assist the housing industry and the economy and to help young people to construct homes?

Mr McMAHON - I think it would be generally recognised that an answer to the honourable member's question would require a second reading speech. It is not a suitable type of question to be asked at question time, particularly as precision is so important. What I can repeat to the honourable gentleman and to the House is that the major economic problem we face in Australia is inflation. As the Minister for Labour and National Service has said, this is due primarily to wage inflation of the award kind and the wages drift. Interest rate policy, together with monetary policy, supplements the fiscal policy of the Government. It is one of the critically important means that we have to try to ensure that inflationary forces are checked and then turned back. Unless this happens we will have problems not only in relation to housing but also of a worse kind throughout the primary and export interests of this country.

Nonetheless housing itself is a very important sector of the economy. The honourable gentleman must know that until recently special interest rates were provided under the Commonwealth-State Housing Agreement. This policy will be changed and, as I said, the amount of funds being provided under the new scheme, which was originally devised by my colleague the Minister for Housing, has already been put to the States. They are contemplating whether certain changes can be made. My colleague is considering their proposals and has made certain recommendations to me. I hope to be able to give him an answer in the not too distant future. But if the honourable gentleman wants to know whether-

Mr Uren - What about housing in the private sector?

Mr McMAHON - If the honourable member looks at the most recent return of the Commonwealth Statistician he will see that it appears as though an upturn in housing in the private sector has now taken place. I hope that this turns out to be true, but if I find that the upturn has not taken place in the way in which the figures seem to indicate, I will again take up the matter with my colleague the Treasurer and the honourable member can rest assured that I will be prepared to do something about it.

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