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Thursday, 12 September 1985
Page: 502

Senator Dame MARGARET GUILFOYLE —My question is directed to Senator Button, who today is representing the Treasurer. I refer the Minister to the survey conducted by the National Institute of Economic and Industry Research, published today, which differs markedly from the Government's economic forecasts, most notably perhaps in its expectation of a growth rate of only 2.3 per cent this financial year compared with the Budget prediction of 4.5 per cent. Does the Minister agree with the Institute's assumption of a continuing tight monetary policy as a counter to inflation and in support of the exchange rate? If so, does he further agree with the conclusion of the survey that in year average terms a substantial rise in interest rates is in prospect? Will the Minister now concede that both the Prime Minister and the Treasurer misled the Australian people with their pre-election and post-election predictions of a drop in interest rates?

Senator BUTTON —Dealing with the last part of the question first, it is, of course, true that the Prime Minister and the Treasurer indicated certain anticipations about interest rates. In the 10 or 12 years in which I have been in this place I have seen that happen on a number of occasions. I do not want to remind the honourable senator of that because it would become a very long answer if I did so. The launching pad of Senator Dame Margaret Guilfoyle's question concerned, of course, the forecasts of the National Institute of Economic and Industry Research. Let me say with regard to that body that it has a history of extreme pessimism in terms of forecasting. To illustrate that point, at this time last year the forecasts of that body were for only 3.1 per cent growth in gross domestic product and 4.2 per cent growth in non-farm GDP. The outcomes respectively were 4.6 per cent growth in GDP and 5 per cent growth in non-farm GDP. Its forecast of only 2.5 per cent growth in non-farm product in 1985-86 implies a fall during the year from the June 1985 seasonally adjusted level.

In terms of the forecasts of that body, I have seen a summary of forecasts-I do not have them available to me now-by various organisations. None of those forecasts, as I recall, was nearly as pessimistic as the forecasts of this organisation. Of course, I remind Senator Dame Margaret Guilfoyle that since this Government was elected the Budget forecasts in terms of growth have been on target each year. The Budget forecast, again, is for a 5 per cent non-farm growth rate and the Government believes that it will be sustained. A number of other things follow from that point which I do not think I have to answer, because the whole question was predicated on the assumption that the National Institute of Economic and Industry Research forecasts were accurate.