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Tuesday, 26 November 1985
Page: 2228

Senator TEAGUE —My question is directed to the Leader of the Government in the Senate. Does the Minister acknowledge that the current credit squeeze is the intended outcome of direct decisions of the Hawke Labor Government? Does the Minister also acknowledge that the Prime Minister, knowing that his Government has brought about the highest ever real interest rates in this country, has still insisted that all Australians will just have to get used to these high interest rates? In the light of these expressed views of the Government, is it correct that the Government has no policies in place that would lead to a reduction in interest rates? Is it correct that the Government is waiting until after the South Australian election before responding to these pressures by raising the ceiling on housing interest rates?

Senator BUTTON —I was asked, firstly, whether the current squeeze is an intended outcome of direct government decisions. I suppose if I answer that it is an unintended outcome of direct government decisions that will be seen as a most unfortunate answer for a Government Minister to give. If the implication of the honourable senator's question is that the Government deliberately set about a strategy of producing this result, of course the answer is no. Even Senator Teague is aware of the consequences of the devaluation and its effects in a wide range of areas of economic activity.

Senator Michael Baume —You have chosen to use monetary policy.

Senator BUTTON —I understand that. Even Senator Baume might understand that that is a consequence of the answer I just gave. I was then asked whether the Australian people will have to get used to higher interest rates. I do not think there is much point in recycling things in this chamber which have already been said by the Prime Minister, but the burden of the Prime Minister's remarks was simply that he did not anticipate an early and dramatic reduction in interest rates. That has been a view consistently expressed by the Government.

Senator Chaney —Not by the Prime Minister. He promised lower interest rates.

Senator BUTTON —I understand that. We have already debated that issue in Question Time here at great length too.

Senator Durack —He is just plain wrong.

Senator BUTTON —That is what I said, yes. I said that he was wrong about that. There is no doubt that he was. Even Senator Chaney and Senator Durack can comprehend that set of facts. The Prime Minister said that interest rates would fall and they did not and that was the wrong prediction-something which did not commend itself to previous leaders of Australian governments, who totally failed to undertake their promises arising from predictions about interest rates. I was asked finally by Senator Teague whether there will be any change in housing interest rate policies following the South Australian election. As Senator Teague may be well aware, the Treasurer made a statement about that matter, I think yesterday, and the answer is no.