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Thursday, 15 March 1973
Page: 615

Mr WHAN (Eden) (Monaro) - My grievance today is directed at the simplification of the effect of revaluation on the economy. I believe that the attempt by the Opposition to over-simplify this position has not only led the electorate into a position where it fails to see the facts but also has deceived its own members, as witnessed by the question asked today by the right honourble member for Lowe (Mr McMahon), which indicated that the right honourable member for Lowe quite clearly thinks that the Australian dollar has appreciated against the Japanese yen. The question he asked makes sense only in that context. The facts are that we have devalued against the Japanese yen, and the right honourble member for Lowe, who claims some expertise in this field, has been beguiled by his own Party's propaganda on the matter.

Despite expectations that the revaluation of the Australian dollar and the devaluation of the United States dollar would seriously affect the primary agricultural products of this country, we see that prices give the lie to this position. Figures recently collected by the Bureau of Agricultural Economics show, for example, that the average prices for clean wool sold in Australia rose by 24 per cent over the prices paid prior to the Australian revaluation on 23rd December. After the American devaluation prices paid for wool rose by 11 per cent again over those ruling just prior to the revaluation. Prices paid for light bullocks in the Brisbane market rose by SI per 100 lb just after the United States devaluation on 19th February. Lamb and mutton prices in Victoria rose by between lc and 2c per lb after the Australian revaluation, and after the American devaluation mutton prices rose again. Lamb prices suffered a slight decline from record prices that they established at that time but have since recouped this fall and have now reached record levels, as all honourable members know. Prices paid for wheat and sugar are covered by international agreements and both products are enjoying high prices on the world market. In both cases the anticipated supply for the next season suggests that Australian producers will continue to enjoy very high returns for their products.

Claims that changes in Australian currency have seriously affected returns to primary producers are not supported by the current price relationships in the market place. The factor which has been overlooked by the Opposition has been that in each of these commodities the Australian exporter has enjoyed a very strong bargaining position. In some cases the advantages of this position have been given away by previous agreement, but in the main prices reflect the fact that such countries as America have had to pay world prices if they want the supplied. If they do not pay them, they do not get the goods. This is particularly true for meat, in relation to which the American market in the past has been restricted by quotas which have placed an artificial restraint on the price established in the market for our products.

The Australian economy had reached a crisis by September of last year in which our overseas reserves had reached an unprecedented $4,500m, compared with the $l,500m normally accepted as adequate to service our import requirements. This high level of reserves attracted criticism from the US Secretary of the Treasury, Mr Schulz, in a very thinly veiled threat that the US would use its power to introduce restrictions on exports of meat, wool and products that we export to the US. Had these restrictions been imposed, our primary producers would have been far worse off today than they are now under the present Government's policy of maintaining a sound and viable currency on world markets. Internally, the capital flow from overseas had a major inflationary pressure on our economy. Increasingly, overseas funds were being used to finance high risk enterprises requiring high returns on capital. Much of this money was not going into productive activity or creating employment but was helping to fuel the inflation of land and property prices. The result was a rapid transfer of these assets into foreign ownership.

Evidence of this can be found in my electorate of Eden-Monaro. A large property near Goulburn recently has been purchased by overseas interests for Sim. The prime purpose is to subdivide this agricultural land into residential areas. Other examples of overseas money financing land speculation can be found abounding in this country. In addition a large volume of money was attracted into Australia because our currency was expected to move up. This expectation was soundly based on the fact that the previous Government, at the insistence of the Australian Country Party, had fixed the Australian exchange rate at the lowest end of the margin agreed by the International Monetary Fund. Had the Australian Government at that time fixed the exchange rate at the level agreed to, and honoured in spirit an agreement it had with the International Monetary Fund, the expectation of revaluation in Australia would have been dampened.

The facts of the matter are that the position, as inherited by the present Government, was that our journey, by international agreement, could only move in one direction and that was upwards. The important factor, as I mentioned before, influencing world prices for Australian commodities is that the demand for our commodities is expressed by a large number of buyers at the moment. The 2 factors which influenced the price paid in the market are the balance between supply and demand and the number of buyers wishing to purchase the product. If we have a single buyer wishing to purchase a certain supply of commodities from our market, the price it pays, because it has a monopoly position, will be lower than the same price paid by a group of buyers wishing to secure exactly the same level of supply.

Our primary products at present are in a very competitive position in nearly every market. Criticisms of the actions of this Government in regard to changes in currency have been directed exclusively at the view that we have only one purchaser - the United States of America. These critics have been preoccupied with the dominance that that market has played in the past. They have failed, for their own convenience, to recognise the new dominance of Japan and other markets on the world scene. They have failed to recognise that market conditions have changed for those engaged in agriculture in Australia in that we now have a range of purchasers instead of being dependent, as we were originally, on Britain and subsequently on the United States. The right honourable member for Lowe has also been beguiled by this argument, as witnessed by the question he asked this morning. Of course the Japanese silk industry would give instructions to raise the price of its commodities in Australia. Anybody who examines the relationship between Australian currency and Japanese currency at the moment will recognise that we have devalued in relation to Japan and therefore the prices of Japanese products in Australia must rise.

I believe it is absolutely essential that the electorate be properly informed on these matters. It is also absolutely essential that we get away from this very narrow-based attack on the electorate's intelligence. It is firmly believed, 1 would suggest, as the premise for the argument presented by the Country Party, in particular, to the electorate that the electorate is foolish and that its intelligence does not extend beyond the sort of statement that is directed immediately at what would appear to be its short term interests. In this case the lie is in every farmer's bank account. The lie to the Country Party's arguments is in every saleyard and wool selling centre around this land. Wherever you look now agricultural prices are at record heights. This is due in no small way to the fact that our economy is strong and our currency is highly respected throughout the world.

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