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Tuesday, 26 February 1980
Page: 333

Mr HAYDEN (OXLEY, QUEENSLAND) - The Prime Minister will recall quite vividly that he said at Chadstone on 2 December, during the 1977 election campaign, that interest rates would fall by 2 per cent in the next 12 months. He will recall that he said further- I quote him exactly:

It is a target that can and will be achieved.

He was, he went on to say, talking about- I quote directly again:

.   . rates that directly affected people, such as bank lending and home lending rates.

Is the Prime Minister aware that, with the rate of 1 1.2 per cent struck last week on six-year Commonwealth bonds, official interest rates are now 1 .7 per cent higher than they were when he made his pledge in 1977? Is he also aware that the Treasurer has proposed a further increase of 0.5 per cent in semi-government borrowing rates, that the rates on some small, and most large, trading bank overdrafts have also risen by at least half a per cent and that commercial debenture rates have risen? In view of the substantially higher interest rate structure that is now emerging, how does the Prime Minister intend to honour his 1977 election pledge to reduce interest rates by 2 per cent? Or is it the case, as we strongly suspect, that he never meant to honour that pledge?


Mr Cohen - You are a big coward.

Mr Hayden - Mr Speaker,I raise a point of order. I directed the question to the organ grinder, not the monkey. The Treasurer is in no position -

Mr SPEAKER -Order! The Leader of the Opposition will resume his seat. I call upon the honourable member for Robertson to withdraw his reflection.

Mr Cohen - I withdraw.

Mr SPEAKER -I call upon the Leader of the Opposition to withdraw.

Mr Hayden - I withdraw, and say 'the butcher rather than the block'.

Mr SPEAKER -The Leader of the Opposition -

Mr Hayden - I withdraw unreservedly, Mr Speaker.

Mr SPEAKER -I cannot understand why the honourable gentleman did not do so graciously to start with. I call the Treasurer.

Mr Hayden - Mr Speaker,I rise on a point of order. The question was directed to the Prime Minister because it concerns a direct quote, a solemn pledge, made by the Prime Minister. We want to establish whether, as was the case with so many other solemn pledges made by him -

Mr SPEAKER -Order! The honourable gentleman is now arguing the matter. He is not making a point of order.

Mr Hayden - He intended that this should be disposable from the start.

Mr SPEAKER - There is no point of order. The honourable gentleman well knows that when a question is asked it is within the capacity of one Minister to have a different Minister answer the question.

Mr HOWARD (BENNELONG, NEW SOUTH WALES) (Treasurer) -The statements that were made during the course of the 1 977 election campaign by the Prime Minister, the Deputy Prime Minister and me about interest rates have already been the subject of much debate in this House. As has been pointed out from this side of the House on a number of occasions, the statements then made by the Prime Minister were properly based on reasonable expectations deriving from advice which the Government had available to it at that time. As the Leader of the Opposition well knows, the circumstances of the Australian economy and, indeed, of the world economy have altered over the past two years. This has had an effect on a large number of economic indicators. The real question to which we should be addressing our minds is how Australia is faring in a difficult world economic environment. We ought to be looking at comparisons about how this country is doing with inflation and interest rates rather than the sorts of comparisons about which the Leader of the Opposition has spoken. Let me give the Leader of the Opposition some idea of how Australia has fared in the interest rate area over the past eight or nine months- during the course of this financial year. I am advised that, for example, bank lending rates for prime borrowers in Canada went up by 3 per cent.

Mr Innes - Canada!

Mr HOWARD - Honourable members opposite do not like these comparisons, Mr Speaker. They do not like any of these international comparisons. In Germany, the rate went up by 2.5 per cent. In the United Kingdom it went up by 3 per cent. In the United States it went up by no less than 5 per cent. That gives some idea -

Opposition members interjecting-

Mr SPEAKER -Order! The Treasurer will resume his seat.

Mr Holding - What about inflation?

Mr HOWARD -What about inflation? I will come to that in a minute.

Mr SPEAKER -The question asked by the Leader of the Opposition was a lengthy one which contained a good deal of factual information in its introduction.

Mr Hayden - It shows our competence as distinct from theirs.

Mr SPEAKER -The Minister is entitled to answer it in silence. I ask honourable members on my left, including the Leader of the Opposition, to remain silent. I call the Treasurer.

Mr HOWARD - Before I sat down a moment ago the honourable member for Melbourne Ports, I think, asked: 'What about inflation?' I am more than happy to answer his interjection. The average rate of inflation over the past 12 months in Organisation for Economic Cooperation and Development countries has been, according to the consumer price index, 12 per cent. During that period the rate of inflation, according to that same measure, has been 10 per cent. Our rate of inflation is now significantly below the average of the industrialised world. That is in sharp contrast to what it was four or five years ago. It is doing even better, in a comparative sense, than it was in late 1 977. Over and above that, our rate of inflation is also a touch below the trade weighted average of our principal trading partners. The fact is that this country, in the face of very difficult international economic circumstances, is out-performing most of the industrialised world. That is something about which we should be extremely pleased.

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