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Thursday, 23 August 1973
Page: 276

Dr GUN (KINGSTON, SOUTH AUSTRALIA) - Has the Treasurer's attention been drawn to statement No. 3 attached to the Budget Speech which indicates that the increase in money supply was 16.7 per cent during the first half of the year 1972-73, but only 9 per cent in the second half? Can the Treasurer say whether the Government took any action early after taking office to reduce the rate of increase in the money supply? Can the Treasurer say whether that same antiinflationary action would have been carried out by the previous Government?

Mr CREAN (MELBOURNE PORTS, VICTORIA) (Treasurer) - I thank the honourable member for the question. It gives me the opportunity to draw to the attention of all honourable members not what I said the other evening but some of the very comprehensive statements that are attached to the Budget. I always found statements Nos 2 and 3 much more informative than the Budget Speech itself. Perhaps somebody will suggest that about this Budget Speech also. At least the tabulation contained in the Budget papers under the heading 'Financial Year 1972-73' draws attention to the many sorts of factors that are influential so far as inflation is concerned. That table indicates that something that is called the volume of money becomes what it is by reason of action or inaction in other spheres.

Mr McMahon - And by the Government.

Mr CREAN - Yes, and by the Government. This table has the very fortunate advantage that it divides 1972-73 into 2 halves. The first half of the year was a period when the now Opposition was in government. The second half of the year, from 1 January 1973, largely coincides with the Labor Government's period of office. I suggest that a clear and critical examination should be made of the 2 halves of the year. A critical examination is important. I am not trying to carp on this matter, but I think the more informed debate there is about inflation the sooner we will reach cohesion about its solution. Insofar as we try to think it is a political game that can be made better or worse according to changes of government, I think we are far from getting a solution. But insofar as actions which government can take are important, I think that those who read the periods critically would suggest that more definite action has been taken by the Labor Government in the second half of that financial year than was taken by the previous Government in the first half. To a great extent the situation that is upon us now had its seeds not only in the first half of the financial year but also going back earlier.

Regarding the influences of such things as expansion of bank credit and other extensions that are generally called liquidity in the finish, we have acted more decisively in that area than the previous Government did. I simply pinpoint that that influence is not reflected yet in either of the 2 halves of the financial year. I am talking about the table in the Budget. At question time I do not venture to try to cover everything. If I am asked a question I try to confine myself to the perspective of that question. 1 merely suggest that on 23 December we took the action of revaluing the currency. We did not follow the United States down when it devalued later. We acted for the first time for some years on the statutory deposits and so on. We took the recent action on tariffs also. I suggest that all of these actions will have more effect in reducing inflation in the future period and had the previous Govern ment taken some of those actions the situation that we now have would not be as aggravated as it is.

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