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Tuesday, 5 November 1985
Page: 1513

Senator MESSNER —My question is addressed to the Minister for Finance. I refer the Minister first to the assumption in the Budget Papers of an exchange rate, on a trade weighted index basis, of 68. Is the Minister aware that yesterday the Australian dollar slumped to an all time low, in these terms, of 62? What implications does this have for Budget forecasts? Has any reassessment been made of the forecasts as a result of the further slide in the value of the currency?

Senator WALSH —Did the honourable senator mention yesterday's trade weighted index?

Senator Messner —Yes-62.

Senator WALSH —I did not know precisely what it was; I did not have time to check up. Certainly for the present and indeed for a good deal of the time in recent weeks both the Australia-United States dollar exchange rate and the Australian dollar against the trade weighted index have been lower than assumed in the Budget forecasts. That will have both positive and negative effects on the Budget outcome, in terms of both increasing the deficit and decreasing it. At this stage, to my knowledge, no assessment has been made within the Department of Finance or the Treasury as to what the outcome would be at today's exchange rate. I do not see a great deal of point in making such an assessment because the exchange rate, whether expressed in relation to the United States dollar or as a trade weighted index, moves around constantly and devoting a lot of bureaucratic resources to assessing the likely outcome of today's figures would be chasing a moving target, so to speak. I do not recall whether anything in the Budget Papers set out the likely effect on Budget outcomes of a variation of, say, one percentage point from one or the other. I will check to see whether there is such a calculation and whether any other information can be provided.