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Tuesday, 12 November 1985
Page: 1954

Senator CHANEY —Is the Leader of the Government in the Senate aware that there is further pressure on the Australian dollar following the October balance of payments result, which is the worst monthly deficit on record? Given this further evidence of Australia's lack of competitiveness and in the interests of business and market confidence, will the Minister give an undertaking that if the devaluation continues the Government will review the accord with the Australian Council of Trade Unions, which permits discounting of only 2 per cent at the next national wage case?

Senator BUTTON —I am aware of the trade figures announced at 11 o'clock this morning. I regard them as in some respects an indication of Australia's lack of international competitiveness in some areas. I do not necessarily see them as a factor leading to further pressure on the dollar, but it is quite possible that they will be so construed. With regard to the trade figures themselves, I make the point that, although total imports remained high in October, on a seasonally adjusted basis they were at the lowest level since last April. A 10 per cent fall in imports on this basis suggests that the depreciation may be causing some slackening in import demand; however, the performance on the export side was not as one might have wished. It is thought that reflects the beginning of the expected fall-off in rural volumes following strong stock run-downs in the June and September quarters. The October current account deficit was large, but seasonal factors were clearly a significant influence and too much weight should not be placed on one month's figures. An improvement throughout the year continues to be expected and the Government will certainly be looking to that.

Senator Peter Baume —Whistling in the dark, Senator?

Senator BUTTON —No, not whistling in the dark.

Senator Peter Baume —It sounds very much like it.

Senator BUTTON —It might sound like it to Senator Baume, but that is something he is probably expert at. It leads to one or two other considerations which may be regarded as important. First, I make the point, as was drawn attention to in this morning's Australian Financial Review, for example, by Sir Roderick Carnegie, that the problem of Australian lack of competitiveness goes back at least 15 years. It is in the current situation exacerbated by the practice of former governments in talking up mineral booms and concentrating exclusively on the rural and mineral sector-talking up Rundle shares, all those kinds of things-which happened in the period of the Fraser Government. It cannot be expected to be quickly reversed. It is wrong to see the solutions to the problems in terms of single issues. For example, Senator Chaney asks me about the effects on the accord and what undertakings I will give. The answer is that I will give none. The wage case is to take place in March next year and there will then be an agreed discounting of 2 per cent, and that is the basis of the present arrangements with the unions. It is not correct to see any one issue as appropriate for correcting what is an ad hoc and knee-jerk response to a particular month's figures in the trade balance in the context of a deregulated dollar and as being the solution to all the problems, and the Government does not.