Devaluation chorus

Press, 15 September 1976, Page 9

Devaluation chorus

NZPA Sydney A powerful employers' organisation has joined the mounting chorus for a devaluation of the Australian dollar, and the (Government has been given cause for greater concern, the Deputy Prime Minister (Mr Douglas Anthony) having openly cast doubts on the strength of the currency.

In a speech in Sydney tn the international! trade division of the Chamber of Manufactures of New South Wales. Mr Anthony said that he could see no reason for complacency about Australia’s apparently healthy balance-of-payments situation. "Although the level of Australia’s international reserves is basically sound, they have fallen by SBOOM during the last year,” he said. "The lack of capital inflow —an important factor in the

strength of the country’s balance of payments — is very largely the result of a lack of confidence in Australia as a sound place for investment because of inflation and industrial problems.” Although Mr Anthony did not advocate devaluation, Government officials have described his remarks as most unwise at a time when the Government is doing its utmost to dampen down speculation about devaluation.

The officials note that continued speculation would lead to money flowing out of Australia, thus making devaluation more likely. Tn his speech Mr Anthony said that Australia should look for a strong rise in imports as the economy recovered. "At the same time we face as always a big deficit on invisibles—last year! it was $2300M.” he said. "We need a growing trade surplus to offset this deficit, and we will find it hard to achieve if we allow our competitive position to continue to deteriorate under the influence of inflation. "Inflation is inhibiting investment. That means that our productive capacity is not growing as it should be, and that is not good when our international reserves have fallen by SBOOM over the last year.” Earlier, the president of the division, Mr D. E. Taplin, had called on the Government to restore the 25 per cent tariff cut declared by the former Labour Government, and to devalue the dollar. "The manufacturing industry is still suffering from the effects of two upward currency revaluations by the former Government, and from the cut in tariffs,” he said.