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Wednesday, 31 August 1960


Mr HAROLD HOLT - Naturally the Treasury, the Department of Trade and other relevant government departments, including of course the Department of Primary Industry, have kept a very close watch on movements in Australian commodity prices and the prices obtaining in other countries from which our imports are largely obtained. A recent study which was made of this matter with the latest material, and which has come to me, has revealed a quite extraordinary state of affairs in respect of

Australia. Let us take the base year, 1953, which is taken as the base year by the publications of the International Monetary Fund. That is a year, I might add, which was not an abnormal year in Australia. It was not the boom year of 1951, nor the recession year of 1952. If that year is taken, with a base figure of 100, the terms of trade have moved to a point where, for Australia's exports, the figure has fallen to 70, whereas our imports from most of the industrialized countries of Europe, and from the United Kingdom and the United States of America, are round about the 109, 110, 111 mark or upwards of that.

Now, Sir, the remarkable thing to me is that Australia has been able to weather so successfully this movement which, by the standards of earlier years, can only be described as a violent movement. I believe that that emphasizes the underlying strength of the Australian economy at present. It also gives point to the argument so cogently produced from time to time by my colleague, the Minister for Trade, that in the world to-day the primary producing countries have suffered in respect of their terms of trade compared with the industrialized countries. Indeed, a survey made a few years ago by the organization of the General Agreement on Tariffs and Trade indicated that, with all the aid these days going to underdeveloped countries from the United States, and being provided under such schemes as the Colombo Plan, a 5 per cent, drop in the average prices of the primary commodities sold by those countries would more than offset all the aid given to them from the sources I have mentioned. So, first, there has been this extraordinary movement, and we have done well to sustain the economy as we have in the face of it. Secondly, I believe that the terms of trade do tend over the years to even out, and in that process Australia should be a beneficiary. Thirdly, there is a very real problem, I believe, ahead of the financial authorities of the world to ensure that, in the process of industrial development, the primary producing countries do not suffer in comparison. I can assure the honorable gentleman that we shall continue to watch this position very closely and do what we can to see that Australia's interests are safeguarded.







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