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Wednesday, 4 April 1973
Page: 1038

Sir JOHN CRAMER (BENNELONG, NEW SOUTH WALES) - My question is directed to the Treasurer. Was he correctly reported from Washington on 29th March as expressing confidence in the American dollar? Did he say that he was reasonably assured that the dollar would not fall any further? Is he aware that the day before he made his statement in Washington, the Minister for Minerals and Energy stated in this place that it was common knowledge that the American dollar was on the downgrade, and that he repeated this statement only yesterday? Was the Minister for Minerals and Energy referring to the Treasurer when he said: 'There are none so blind as those who will not see'? Who is right in this conflict of opinion in the Ministry?

Mr CREAN (MELBOURNE PORTS, VICTORIA) (Treasurer) - Sometimes I think there are none so deaf as those who will not heed. I have had discussions about the future of the US dollar. I do not have to defend the US dollar. I think the wisest statement I have heard in this context was made by Mr Kearns of the Export-Import Bank. When he was asked shortly after the devaluation of the American dollar: 'What is wrong with the American dollar?' he said: 'There is nothing much wrong with the American dollar at home'. This highlights the difficulties. America isless dependent than most countries upon export and import trade. It is much less dependent, for instance, than is Australia. In Australia we get a (figure of somethinglike 25 per cent to 30 per cent when we add our exports and imports together, in a sort of curious conjunction, and relate them to our gross domestic product, whereas in the US the figure is only 5 per cent or 6 per cent.

Nevertheless, as far as the future is concerned, as Mr Schultz and others who attended the meetings that I attended suggested, unless internal discipline is applied in the US - the main internal discipline must be in relation to the flow of capital in future - I do not think there can be any certainty about the future of the parity of the United States dollar. I was assured by those who are the custodians of that currency, namely, Mr Schultz as head of the Treasury and Dr Arthur Burns as head of the Federal Reserve Bank, that they believe the dollar has reached its bottom. They adhere to that view. But I simply repeat that I do not think anybody can be categorical about the future of any currency until an attempt is made to grapple seriously with the problems of better terms of trade and some better regulation of the flows of capital. The United States is involved in all those sorts of things. It has difficulties in resolving the proper ratio between itself and Japan. I think-

Sir John Cramer - What about Mr Connor's statement? Tell us something about that.

Mr CREAN - The Minister for Minerals and Energy expressed a view which I think is consonant with what I am now saying, that nobody can be certain. But insofar as this-

Sir John Cramer - He was very certain.

Mr CREAN - I am not one who tries to be clever about a situation like this.

Mr Snedden - You cannot be.

Mr CREAN - I cannot be any cleverer than you. We both have to be as clever as we can in the face of complex circumstances, many of which are beyond our ability to control. I do not have to defend the status of the United States dollar; I have to defend the status of the Australian dollar and I believe that I have done so very successfully.

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