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Tuesday, 11 September 1973
Page: 730

Mr SNEDDEN (BRUCE, VICTORIA) - My question is directed to the Treasurer. Did the Treasurer on Sunday, 31 January 1971, use these words:

Interest rates raised by Mr Gorton and Mr Bury to the highest level in our history-

They were then at 7 per cent - have acted adversely on important groups in the community, particularly young wage earners seeking to buy a home.

Does the Treasurer agree that the interest rate increases, wherever they may finish, will lift the cost of living to families by $5 to $10 a week by increased mortgage repayments, increased hire purchase repayments and increased prices because of the increased cost of borrowing money incurred by the manufacturers of goods or the builders of homes? Does this not mean that the decision is making inflation worse instead of attacking inflation?

Mr CREAN (MELBOURNE PORTS, VICTORIA) (Treasurer) - It is very easy to rake up quotations, but I suggest that there are times when, in the face of critical circumstance, one has to take decisions which one does not like to take.

Mr McVeigh - Why not make the decisions before the Budget?

Mr CREAN - I would suggest that many decisions could not be made until after the Budget was brought down; some decisions were made well before the Budget. That simply highlights the fact that the Budget is not the be-all and end-all of financial management in Australia. The steps taken recently and announced oh Sunday, and the matter of varying the rates of exchange and even the matter of open market operations, are not ones that can be bruited around the countryside for weeks in advance. They are matters in relation to which decisions have to be taken with a certain amount of precision. The most critical situation that has faced Australia does not go back only to 2 December; it goes back much earlier. In the period ended 30 June 1973 that rather curious index known as the volume of money increased by 26 per cent, which is unprecedented in Australia. The major part of that increase took place in- the period from July 1972 to December 1972, which was within the jurisdiction of the previous Government.

Mr McMahon - For well known reasons, though.

Mr CREAN - 'For well known reasons but also because of bad management. This Government took the steps to try to correct the situation. I heard your earlier reference to the length of answers, Mr Speaker, but when one is asked a series of questions it is pretty difficult to give a brief answer.

Mr Snedden - Get on with it and answer the question.

Mr CREAN - One of the hardest things to do is to din into the head of the Leader of the Opposition any economic common sense. If honourable members opposite ask such questions they must expect to receive detailed answers. I am appreciative of the fact that what has been done with regard to the instruction about open market operations will force up interest rates in the foreseeable future. But something must be done about inflation. The right honourable gentleman says, when the Government takes one action: 'Is this the only action you are going to take?' When the Government takes another set of actions he says: Is this the only action?' This action has been taken carefully and deliberately with a view to acting upon the long term bond rate for government securities. It will have some impact on other areas; one cannot deny that. All I suggest is that the right honourable gentleman ought to display a little co-operation in this exercise rather than just trying to score cheap political points all the time.

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