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Tuesday, 28 April 1987
Page: 2063

Mr MAHER —My question is directed to the Prime Minister. Are significant economic indicators demonstrating the wisdom of the Government's policies for Australia's current account and, in the long term, for interest rates?

Mr HAWKE —I thank the honourable member for his question. A number of indicators would lead the Government and, indeed, the community generally to have an increasing amount of confidence in the outlook for the Australian economy. I do not, however, wish to leave either the House or the community with the impression that the basic economic difficulties that have been imposed upon this country have been overcome. It is quite clear that the policies that this country must follow have to be for the long haul.

Let me refer to some of the signs that are now pointing to why we in this House and in the community should have a cautious optimism about the economic events of 1987 and beyond. First of all, the December quarter national accounts showed a contribution of 1.9 percentage points to gross domestic product growth from net exports. The Westpac-Institute of Applied Economic Social Research leading index of economic activity for January indicates that that was up 9 per cent from its trough in March 1986. Very importantly-I know that the area of employment is of particular concern to the honourable member-even within the circumstances of the continuing adverse impact of the decline in the terms of trade and the constraints that that imposes upon economic policy we still have a situation where in this financial year already just under 150,000-147,500-additional jobs have been created.

I think the whole community, not just the Government, in those circumstances, is entitled to take a considerable amount of credit for what is occurring. Within the balance of payments figures also I think it is a matter of very considerable credit to the community that we see in this period of the financial year an increase of some 30 per cent in manufactured exports, excluding gold. We also see a situation where, for the fifth consecutive month, there has been a further fall in the imports of consumer goods. If we look at the composition of what is happening within the balance of payments, if we look at what is happening to economic growth and if we look at what is happening to employment we see that there are very considerable reasons for optimism.

I noticed in the last session that honourable members on the other side of the House were hopping up and down about interest rates. I have not heard anything from them about interest rates today. That may be because honourable members on the Opposition side of this House were disappointed about what is happening to them. On that side of the House they are disappointed that we are now seeing significant signs of falls in interest rates. I remind the House of what is happening. Ninety-day bills are now down more than 2 1/2 points; the 10-year Treasury bond rates are now down 1 1/4 points, and honourable members will be aware of the fact that most major banks have now reduced their prime rates by one-half of a per cent.

I say to my friend the honourable member for Lowe that if we look at all these elements in aggregate, if we look at what is happening to growth, if we look at what is happening to the composition of our balance of payments movements-not just at the fact that they are coming down but, importantly and compositionally, at the increase in manufactured exports and the decline in the imports of consumer goods-and if we look at what is happening to interest rates we see that the combined impact of the Government's macroeconomic policies in regard to monetary, wages and fiscal policy is having the desired effect.

Madam SPEAKER —Order! I ask the Prime Minister to speak into the microphone in making future answers. It is hard for us to hear him.

Mr Hawke —Yes, Madam Speaker.