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Thursday, 24 August 1972
Page: 642

Mr DRURY (RYAN, QUEENSLAND) - My question is supplementary to others already asked this morning and it is for the purpose of clarification. I ask the Prime Minister whether there has been any change in the Government's policy on revaluation.

Mr McMAHON - I think it is appropriate that I should state a Government view on the problem of revaluation, or devaluation. Last year this matter was considered in depth by the Government. Initially I took the view that there should be a revaluation of 6.32 per cent of the Australian dollar against the United States dollar. I adhered to that view. This was the decision that was made by the Government.

We took that view for various reasons which I have already announced on television on at least 2 occasions. While I concede that there are reasons why in pure monetary theory there might be some revaluation - that is an appreciation - pure monetary theory does not alone determine what the Government shall do. We also had to take into consideration the position of the primary industries that had to compete with countries with currencies that are devalued. We had to take into consideration the interests of mining companies for which every 1 per cent of appreciation meant a loss of $8m in foreign exchange and earnings. We had to take into consideration the position of manufacturers who had to compete with imports and manufacturers who had to export overseas. We had to ask ourselves the question of what in fact would further revaluation do to confidence in this country at a time when we faced the problem of unemployment.

Above all. confidence was important to us. I certainly had the very strong opinion, shared by my colleagues, that the proper limit was 6.32 per cent. I believe that the decision we made then was right, and I adhered to that decision. T see no reason why it should be changed today. Tn recent days 1 have had discussions, of course, with my colleague the Treasurer, who has functional control of problems of this kind, and also with the Deputy Prime Minister. They share my view that the decision we made then was right and will be adhered to.

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