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Tuesday, 17 September 1985
Page: 620

Senator PETER RAE —My question, which is addressed to the Minister for Finance, is quite serious and, I think, sufficiently simple to enable a straightforward answer. Does the Minister accept that the maintenance of high interest rates is, in the foreseeable future, central to the Government's current economic policy? I ask that question following the Minister's non-answer of a similar question asked yesterday by Senator Collard.

Senator WALSH —The Government does not have a high interest rate policy. With the limited exception of housing loan interest rates, the Government does not have a policy of controlling interest rates at all. The financial system has been almost entirely deregulated over the previous 18 months or so and the Government does not attempt to set interest rates. The Government has a general economic policy which does have an effect on interest rates. It has other important effects. The incomes accord, which, as we all know, the Liberal Party of Australia would blow up the moment it came into government, should it ever do so, is the lynch pin of the Government's economic policy. It has produced the highest year-on-year growth rates that Australia has seen since the 1950s. It has already generated 430,000 additional jobs in less than 2 1/2 years. It has halved the rate of inflation and so on.

It is true that recently interest rates have increased compared with what they were in the immediate past. However, they are still very substantially lower than the record interest rates which prevailed in April 1982 when Mr Howard was the Treasurer. At the end of 4 1/2 years of Mr Howard's reign as Treasurer, 90-day commercial bills hit an all-time record interest rate of 22 1/2 per cent. Interest on Commonwealth Government short term and long term loans was at 16 1/2 per cent in June of that year. Interest rates are higher now than they have been throughout most of Australia's history, including the last 10 years. However, they are appreciably lower now than they were during the 4 1/2 years Mr Howard was Treasurer and primarily responsible for economic policy.

Senator PETER RAE —Mr President, I ask a supplementary question. I ask the Minister: Will he answer the question instead of giving us the lecture he has given us day in and day out which is erroneous in so many parts it does not matter? Will he answer the simple question: Is it central to the Government's policy, as claimed by the Prime Minister, Mr Hawke, that high interest rates are necessary for the forseeable future?

Senator WALSH —I am not aware of the Prime Minister having said that high interest rates were essential or a central part of the Government's economic policy, or something like that. If the Prime Minister said something like that, I would be obliged if Senator Rae would show me the evidence.