Australian credit squeeze denied

Press, 20 October 1981, Page 25

Australian credit squeeze denied

PA Canberra The Australian Treasure/(Mr Howard) yesterday rejected claims that Australia was facing a huge credit squeeze. Mr Howard said there was no basis for . the claims, which he described as scare talk and irresponsible. Mr Howard, speaking on -a radio programme, said that the Government would be able to prevent anything .like a credit squeeze occurring. Mr Howard was responding to claims by the Opposition Leader (Mr Hayden) and the Victorian Chamber of Manufacturers (VCM) that Australia was heading for a tightening of the money supply. Mr Hayden said that the Federal Government was pushing Australia to the worst credit squeeze in 20 years and had to take firm action soon.

The VCM released a survey which showed the economy had taken a sharp downturn in the past month; and predicted a fall in growth and continued high

unemployment and increased inflation.

Mr Howard said Mr Hayden’s statement showed a lack of balance in his approach to managing, the economy. , “There’s no basis in fact or ih the management of our monetary policy at the present time to suggest for one moment there’s going to be a credit squeeze.” Mr Howard said.

“It’s, scare talk and I don’t think it’s responsible for it to be made.” Mr Howard said it was “alarmist” and showed a. “lack of ■ intelligence” about the economy to suggest that, because money coming from overseas was “a little bit' less” than anticipated that economic strategy should be reversed. - : ’

“Mr Hayden seems to make the claim that there’s going to be a credit squeeze about this time every year;” Mr- Howard said.

“If, because of less money coming in from overseas, it is .necessary for domestic credit creation to be ex-

panded in order to keep an adequate volume of money available for business, that will be done. “Our inflation calculations and our economic calculations have all taken into account the price effects of increases in sales taxes,” he said.

“The responses available to the Government are sufficiently flexible to prevent anything. like a credit squeeze occurring in the event there’s a sustained shortfall of money coming in from overseas.

“I think it’s an odd circumstance that a Leader ,of the Opposition, who a bare three to four months ago was telling me regularly . that I had to. bring in capital controls to stop money coming into Australia, is now shouting from the roof tops that there isn’t enough coming in and that there’s a credit squeeze around the .corner. “I think it shows a lack of a balanced approach to the management of our economy.” -