Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Thursday, 12 September 1985
Page: 514

(Question No. 346)


Senator Chaney asked the Minister for Industry, Technology and Commerce, upon notice, on 31 May 1985:

(1) What is the effect on a given rate of protection over a 12-month period of:

(a) a 5 per cent devaluation of the Australian dollar;

(b) a 10 per cent devaluation of the Australian dollar;

(c) a 15 per cent devaluation of the Australian dollar;

(d) a 20 per cent devaluation of the Australian dollar.

(2) What is the likely effect on the average effective rate of protection for manufacturing with the Australian dollar remaining at $US0.70.


Senator Button —The answer to the honour- able senator's question is as follows:

(1) While it is true that any devaluation is statistically equivalent to an increase in the average tariff rate for import competing industries, the actual ``effect'' of any particular percentage devaluation on a given level of protection over a 12 month period is extremely difficult to estimate and will depend on a number of factors, many of which act to offset the effect of increased protection. For example:

the protection afforded Australian industries would be reduced as the cost of imported inputs would also increase following the devaluation;

overseas suppliers may adjust their prices downwards in terms of foreign currency following a devaluation as a means of maintaining market share in which case the effect on protection would be less than would otherwise be the case;

there is a time dimension which is difficult to incorporate into the assessment, since a floating exchange rate will result in daily variations in the value of the $A and hence the effect on import-competing industries will continue to change; in this context, the extent to which labour costs are discounted for price increases following a devaluation will also influence the overall effect on protection.

(2) The likely effect on the average effective rate of protection for manufacturing with an Australian dollar rate of $US0.70 will depend on the factors noted in (1) above as well as the period over which the change is calculated and the dollar value at the start of the period chosen.