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Wednesday, 16 August 1972
Page: 298

Mr McMahon - On 31st May the hon ourable member for Cunningham (Mr Connor) asked me a question without notice in several parts about monetary and credit control. I answered some parts of the question, but said I would treat that part of the question which asked what action the Government proposed in respect of the inflow of overseas funds and Australian exchange reserve levels as being on the notice paper.

Australia's holdings of international reserves are at a very high level by past standards. While the Government does not believe that the level can properly be described as 'dangerously high', we are not complacent about the situation.

The rapid build-up in reserves over the past few years has been importantly due to the high rate of capital inflow, although more recently the substantial reduction in the deficit on current account has been the predominant factor.

The Government has been concerned for some time at certain aspects of the high rates of capital inflow over the past 18 months and the degree of overseas participation in the economy, and the Treasury recently undertook a comprehensive study of the economic effects of overseas investment in Australia.

As the honourable member will know, the results of this study were published in the form of a Treasury Economic Paper which was tabled in Parliament by the Treasurer on 16th May 1972. The policy issues raised by the high level of capital inflow are under examination.

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