CANBERRA SPLIT FORECAST

Press, Volume CVII, Issue 31551, 13 December 1967, Page 21

CANBERRA SPLIT FORECAST

(N.Z. Press Assn.—Copyright) CANBERRA, Dec. 12. ’ The latent bitterness ■ between Australia’s governing coalition parties may erupt : soon, political observers at Canberra believe. 1

The two parties—the dominant, city-oriented Liberal Party and the rural-based Country Party—have dampened down their differences in the past, in the cause of unity. However, Britain’s devaluation, with its likely effect on Australia’s primary-pro-ducing industry, has brought the trouble to the surface.

The Liberals, through the Prime Minister, Mr Holt, and the Treasurer, Mr William McMahon, decided against Australia’s devaluing the dollar, and both men made public statements implying that primary producers were crying before they were hurt In any case, they said, the Government would ensure that primary producers would not be hurt too much by the decision not to follow Britain.

There have been rumblings from the coalition for some time, and persistent rumours have spread that the Country Party and its leader, Mr John McEwen, have become more and more disillusioned about the partnership.

But nothing yet said publicly has given rise to the apparent alarm In Liberal circles after Mr McEwen’s statement last night on devaluation.

He appeared to make little attempt to disguise his fears about the effect devaluation would have on primary and secondary industries. He said Australia had avoided devaluation only by the vast inflow of overseas capital. It was commonly believed that the Australian Government had done nothing, but on the contrary it had revalued the Australian dollar.

“This, in fact, is one of the deflationary acts open to a Government,” Mr McEwen said in his carefully-prepared statement. The Australian decision was taken when such export earners as wool, sugar and butter were already in serious trouble with low prices, and when other exports faced the double problem of early reduction in British preferences and efforts to join the Common Market, he said. Observers said that this was the most open attack yet on the Australian decision not to devalue.

Little was inferred, they said. The carefully-chosen words observed the niceties, but there was no possibility of anyone mistaking how Mr McEwen and his party felt.

Mr McEwen was overseas when the Australian decision not to devalue was announced. It was suggested at the time that Liberal Ministers had convinced the Country Party not to “rock the boat” at the time, in view of the Senate elections.

Any suggestion of a split in the coalition, they are said to have argued, would have given the Opposition—the Labour Party—a big advantage. However, as one commenta-

tor said today: "Mr McEwen is no respecter of smooth talk, and in effect he is dose to capsizing the boat"