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Tuesday, 9 November 1971
Page: 3127

Mr BARNARD - Has the Treasurer noted the cut backs in steel production by Broken Hill Pty Co. Ltd following what Sir Ian McLennan has described as a 'considerable downturn' in secondary industry activity in Australia? In the face of this evidence does the Treasurer still claim that demand is growing at a reasonable rate? Has the campaign to 'talk-up' the economy by the Prime Minister and himself been a complete failure? Does the Treasurer now agree that there has been a marked deterioration in key areas of demand? What further evidence does he need to show that the Government's budgetary strategies were wrong and that there is an urgent need to stimulate economic activity?

Mr SNEDDEN (BRUCE, VICTORIA) (Treasurer) - I saw newspaper reports referring to a cut back by BHP. I made certain inquiries and I understand that a statement was made by the general manager of the Newcastle works, and that in the statement it was said that these steps had been taken as a consequence of a demand shortfall in both the domestic and export markets. I understand that BHP sees this as something that is periodic and, contrary to one report, it does not see 'worse to come'. The company was experiencing bouyant conditions domestically, and looking ahead, hoped that export would sustain a slow down. Unfortunately, the export opportunities are not there. There is a gross world over-capacity in the steel industry, whereas a short time ago there was a shortage. For example pig iron, which about 18 months ago was priced at $84 a ton, is now selling at less than one-half of that amount. This periodic situation caused by over (capacity has affected other countries. I understand that there has been a cut down of about 20 per cent in the steel industry in Japan, and I have seen reports of trading losses made in the United Kingdom and the United States of America.

On the domestic side the slow down in orders is quite significant as part of the decision, and the sharp downturn in orders has, to some extent - a considerable extent, very likely - been caused by the cancellation of over ordering and double ordering in times of shortage in Australia, as there was in the past, when conditions were extremely buoyant. There has been a downturn in the requirements of the mining industry. So far as the general aspects of the question are concerned, I think that the honourable gentleman would like the situation to be worse than it is. I have said that there is every reason for confidence in our economy. I have also said that the Government will continue to pay close attention to the economy and stands ready, when the occasion requires it, to take appropriate action.

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