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Monday, 15 October 1973
Page: 2058

Mr LYNCH (FLINDERS, VICTORIA) - My question is addressed to the Minister for Overseas Trade. Did the honourable gentleman just say, in response to a question on tariff cuts, that excessive demand was a factor in Australia's inflation? How does the honourable gentleman rationalise this with his statement made recently on the television program 'Federal File' that 'it's not cost-push, or demand-pull inflation' and 'over 60 per cent of it' - that is to say, inflation - comes from overseas7

Mr McMahon - Nonsense!

Mr LYNCH - In response to the interjection by the right honourable member for Lowe, the answer certainly is nonsense. Will the Minister immediately make available to this Parliament the statistical basis for his statement that 60 per cent of Australia's inflationary experience is imported and thereby confirm that this estimate is quite contrary to the latest Treasury advice, which I assume is available to him?

Dr F CAIRNS (LALOR, VICTORIA) (Minister for Overseas Trade) - I think the Deputy Leader of the Opposition would be familiar with the terminology that has been used about cost or demand inflation when that terminology has been used to describe inflation caused by an increase in costs in the country concerned, generally claimed to have been caused by wage increases, as against demand-pull inflation when the demand referred to has been essentially an internally generated demand. I made the point on 'Federal File' that in that sense the current inflation was neither a costpush one nor a demand-pull one and that the significant demand that has contributed to the present inflation that we have is the demand that is generated outside Australia, such as the demand for meat, for wool and for other food commodities as well as in some cases a number of other processed and manufactured goods. It is significantly demand from outside Australia. The statistics with which I have been supplied by my Department and which

I have found elsewhere indicate that about 60 per cent of the increase in the retail price index number relates to commodities for which the demand has significantly increased from outside Australia - especially meat, followed by wool and other foodstuffs.

Mr Lynch - Will you make the figures available?

Dr J F CAIRNS - The statistics indicate that this is the significant element of the inflation in Australia at the present time. I will make those figures available to the Deputy Leader of the Opposition, because I can judge from his question that he needs to have them. I will make sure that he receives them. I also have been advised that if those figures are analysed they show that if only the internally generated part of the inflation operated the inflation in Australia today would be very little above normal. They also show that the characteristic feature of the inflation that exists in Australia today is that it is predominantly externally generated and is part of a world inflationary force from which we have not been able effectively to insulate Australia.

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