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Tuesday, 7 December 1976
Page: 3379

Mr KEATING (Blaxland) -The matter of public importance the Opposition raises today concerns 'the ad hoc economic policies of the Prime Minister and the Treasurer.' Frankly, the Opposition resents the presence of the Minister for Productivity (Mr Macphee) and the honourable member for Berowra (Dr Edwards) to defend the actions of the Treasurer (Mr Lynch) and the Prime Minister (Mr Malcolm Fraser). Two shadow Ministers concerned with economics raise a matter in the House- an attack upon the Prime Minister and the Treasurer- yet we get a junior Minister, one who has been in the Cabinet for 4 weeks, in here to defend the Government on 2 consecutive days while the Prime Minister and the Treasurer hide in their offices downstairs. It is not good enough. It is not good enough particularly for a government which has absolutely distinguished itself by a total lack of consistency in economic policy.

We raise the question of ad hockery because that is the very essence of this Government's present policy. When it came to power it smashed the Labor Government's Budget. It rejected the concept of a consumer led recovery. Now we are in this position: We have no consumer led recovery and savings banks deposits are climbing. We have no investment led recovery and investment in Australian manufacturing industry is dropping all the time, as the Minister for Productivity well knows. The investment allowance has had no effect whatsoever and now the anti-inflation policy has failed.

Just a day or so ago I asked the Treasurer in this House a question about import prices affecting domestic prices and he had to admit that there would be an increase in domestic prices. In other words, there will be an increase in inflation. So the Government has nothing running for it in terms of a coherent economic policy. Yet when we raise this matter in the House we get the Minister for Productivity and the honourable member for Berowra here to defend the Government. I say that is not good enough from a Government which is very much under attack and under a cloud in this country. Look at the kind of headlines it is getting. The editorial in today's Australian Financial Review is headed 'Down Mexico Way'. That is the way the Press regards the manner in which this Government is governing Australia. Let me quote the last 2 sentences:

Mr Fraserstated in the 1975 election that it could take a full 3 years to restore the economy after the Whitlam years. A year later the scenario for recovery is even worse.

It is even worse after a year. Yet the Prime Minister and the Treasurer cannot come into the House to defend their policies. All this is the doing of the Prime Minister and the Treasurer- a demented idealogue and his subservient deputy; the great economic managers, we were told; these great men of business! What now is the fall-back strategy for the economic recovery of Australia? Bash the unions, pressure organised labour and hold down wages, in desperation, to save themselves at the next election.

Let us examine their latest atrocity, the 1716 per cent devaluation, because that is the rock on which their economic policy perishes. When introducing the Budget last August the Treasurer said that the Australian dollar was over-valued. If that is not trailing your coat, I do not know what is. At the Cabinet meeting which discussed devaluation, only Senator Cotton, the Minister for Industry and Commerce, and the Treasurer were in favour of holding the line on the dollar. Even the Prime Minister was not in favour of it. And who would believe the assurances of the Treasurer to the House and to the nation when everybody knows that the Prime Minister and two-thirds of the Cabinet were in favour of a devaluation? If we get down to the nitty-gritty, Mr Fraser was probably Davidson's leak because Mr Fraser wanted the devaluation. Let us look at today's Inside Canberra. On the last page this passage appears:

One of the Prime Minister's senior advisers told Inside Canberra this week the Government had no plans for tariff reductions. He said tariff reductions would not be practical at this stage because of the possibility of a significant upward revaluation of the dollar in the near future.

That revaluation of the Australian dollar was announced today. It was revalued by 2 per cent. That story is in Inside Canberra, which would have been printed a couple of days ago. The information came from the Prime Minister's office. So the blame can be laid on the Prime Minister who always was a leak and who always will be a leak in any government in which he serves, even if it is his own.

Let us look at the situation in respect of the reality of devaluation. Look at the reserves in 1 973. They were $4.2 billion- excessive. What were they on 26 November? They were $2.1 billionnot dangerously low. In fact there was a strong and improving balance of payments, showing a $629m surplus in the first 4 months of this financial year. So if one talks about the basic strength of the currency or about it being over-valued, as the Treasurer did, there is the answer. Obviously it was not over-valued. There was a trade surplus. That meant that there was a responsibility on the Government to manage the invisibles- to manage the deficit. It could have done so in a number of ways. It failed to do so. It allowed speculative outflow and did not check it. As the honourable member for Gellibrand (Mr Willis) pointed out not long ago, one of the reasons we had the speculative outflow was that the Government, in its stupidity, allowed companies to hold what would otherwise have been the quarterly income tax collections. Companies were awash with money. They had money to burn. They put it out in speculation. It was the money which left Australia which finally forced this situation.

We ask: Why were there not prohibitions on the export of money? Why was there not more scrutiny by the Reserve Bank under the Foreign Exchange Regulations of the reasons why companies wanted to take out money? Why were there not prohibitions on the repatriation of profit, or the variable deposit scheme in reverse? The reason was that the Prime Minister was in favour of devaluation and was prepared to do anything to get it. These companies have been rewarded with a 1714 per cent devaluation and a huge capital gain. Where is the consistency? The issue is the Treasurer's role. What is the Treasurer's role? He said that he would go to Cabinet and fight for the Treasury line against devaluation. He walks in, leaving Sir Frederick Wheeler and Mr Knight outside the meeting. The Secretary of the Treasury and the Governor of the Reserve Bank were not even invited. The Treasurer presents the figures to the Prime Minister; the Prime Minister says: 'Yes. We must have a devaluation', and the Treasurer, cops it sweet. There was no argument. Who set the figure of 17V4 per cent? The Treasury would not have a bar of it because Sir Frederick was locked out of the discussions. Mr Knight would not have a bar of it. So the Government foolishly set its own figure of 17 1/2 per cent. Now it has had to climb down today by 2 per cent because it had made the figure so high. All of this happened because of the pigheadedness of the Prime Minister and because of the lack of any coherent economic strategy.

I get back to the Treasurer's role. At this moment he is totally discredited. Everything he said in the House has been discredited. He has no coherent economic policy. I quote what he said in December last year.

Businessmen, consumers and members of the community generally can now look forward to stable, responsible and honest government under the coalition parties. In doing so, they can take heart also from the fact that the incoming Government has a clear and positive economic strategy to carry through.

That was said by Mr Lynch last December. Nonsenseabsolute, arrant nonsense, because there is now no policy. The Treasurer is discredited. The only honourable course available to him is to resign. That must be being put to him by his back bench. We on this side of the House demand his resignation. We call for his resignation. He has misled not only the Parliament but also the nation.

These 2 Ministers, the Prime Minister and the Treasurer, are obsessed with big projects. They think foreign investment will save the day for them. It will take four or five years to get big projects off the line. They will mean nothing in terms of Australian economic recovery. All the tripping around the world that the Treasurer did, inviting foreign capital here, has to be squeezed off by the mechanisms, to which he referred at question time, of the Reserve Bank, because if foreign inflow comes into this country and if the Government believes it has to manage the money supply rigorously it will have to close down all lending available to the Australian community for housing and for all other things such as general manufacturing and all the areas where there is employment. If the Government accepts and does not regulate the inflow of foreign capital there can be no recovery. There will be no consumer confidence and therefore there will be no long term recovery.

The whole issue is this: The Government has practised absolute ad hockery. It is now talking about cushioning primary industry against the excesses of interest rates. It is now talking about cushioning the export sector, manufacturing, the mining industry and the rest. What about all the other people who do not get cushioned?

Mr Uren - The housing sector.

Mr KEATING - The housing sector, as the Deputy Leader of the Opposition said. What about the small people who cannot afford another Ite per cent increase in interest rates? Already a budding society charges 1 LS per cent. What does the Government want to charge the people? Does it want to charge them 13 per cent on a housing loan in Australia? The Utah Development Co. pegged up $ 135m today. It got let off the coal export levy earlier this year. It has been given the increment of a devaluation. Now it wants to be protected from interest rates, for God's sake! It is absolute ad hockery. The 2 guilty men are the Treasurer and the Prime Minister. They should have been here today to answer the charge against them. They failed to appear. They sent in a junior Minister, who is not even a member of the Cabinet, and the honourable member for Berowra who cannot answer the charge.

Mr DEPUTY SPEAKER (Mr Lucock)Order!The honourable member's time has expired.

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