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Monday, 13 September 1971
Page: 1155

Mr CONNOR (CUNNINGHAM, NEW SOUTH WALES) - I direct my question to the Prime Minister. When can Australian exporters and commerce expect a credible policy on the exchange parity of the Australian dollar? What steps has he in mind to remedy the damage to world confidence already resulting from Australia's protracted controls over capital flows? Will he ensure that future Australian export contracts are denominated in Australian currency, replacing the present denomination in United States dollars? Is he in a position to inform the House of any loss likely to be suffered by the present disparity between the Japanese yen and the United States dollar?

Mr McMAHON (LOWE, NEW SOUTH WALES) (Prime Minister) - In my view, and in the view of my advisers, the policy now being followed by the Australian Government on the changes in parities of international currencies is without doubt the most sensible and the wisest policy that could be followed by this Government. Our monetary policy is generally accepted by the International Monetary Fund and by other authorities as being appropriate to the present situation. I think that policy is in the best interests of Australia. As to the second question asked by the honourable gentleman, obviously he has not read the statement made by my colleague, the Treasurer, last night and published in today's newspaper in which the Treasurer pointed out that we have had the movement of capital into Australia under severe restriction over recent weeks. He also pointed out that the time has come when we believe that that policy should be changed and movement of capital permitted. The Reserve Bank will keep the inward movement of funds under continuous supervision. If we believe that there is a movement of funds into Australia to exploit the Australian market and for other such purposes, we will immediately take action to try to stop it.

I remind the honourable gentleman that one of the problems, in fact the biggest economic problem, that we face is to prevent inflation getting any worse in this country. Far from stopping it getting worse, we should do everything to rein in inflationary pressures. I believe that the policies we are following are correct. One of the reasons why capital inflows of a speculative kind were prevented was to stop the liquidity problem growing too high and to stop unnecessary or undesired changes in the interest rate structure of this country.

If anyone can answer the last part of the honourable gentlemen's question, believe you me he is in the strata of genius. If anyone can anticipate the results he will be the greatest profiteer in the history of any country. I wish I knew what they would be. I would be exploiting the situation for the benefit of the Australian people and certainly not permitting private people to capitalise on it.

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