Embargoed until 7.00 p. m. F7/ 7
FOR PRESS 27 NOVEMBER 1977
ELECTORATE TALK
Interest rates are important to all Australians. The level of
interest rates can have an immediate and direct impact on our
quality of life.
They particularly affect young men and women wanting to buy homes,
and to families and others wanting to borrow money to make
improvements to their homes. They are also of special concern
to small businesses and farmers, who rely on borrowed money to
keep operating and to expand.
They affect the capacity for large companies to raise money to
expand their polants and factories and thus produce more jobs.
In other words, the level of interest rates in a community has
dir~ ct-imtvact on lifestyles and on employment levels.
For these reasons, a key part in this Government's economic
policy, has been to reduce interest rates substantially and in
every area. We have started that process.
The reduction in market prices for Government Bonds since the
beginning of September amounts to the first consistent downward
movement in more than four years. We have also seen this downward
movement spread to other rates for some building societies and
credit unions. major industrial companies have been able to
raise money at lower interest rates.
I am confident wi: my Government's policies continuing that
falls in important interest rates could add up to a total of 2
per cent wirnClin 12 months.
The reductilcn in interest rates will also be reflected in building
societies ! I=: dirig rates and bank overdraft rates, which of course
affect thousands of Australians. This will offer new hope and
give new ccnfiidence to young Australians seeking to buy or build
their first home. It will offer new incentives for families and
to add to or improve their own homes.
What would happen to interest rates under the announced policies
of Labor-? / Their
F 77/ 274
2
Their policies would clearly mean higher interest rates. They
want to add greatly to government spending and to increase the
Government deficit to finance their expensive schemes. That can
only mean one thing higher inflation and increased Government
borrowing, which in turn will force interest rates up.
So, inevitably, under Mr. Whitlam, interest rates will again
become a burden. Australians will pay directly for a return to
higher and higher interest rates. The cost of owning a home
will go up, and job opportunities will be lost.
It is for that reason, because of that price, that Mr. Whitlam
does not discuss the question. He knows the consequences of his
large spending plans on interest rates. He knows the price we
will all pay.
In this election there is a clear choice. It has rarely been
clearer. Labor stand for big spending which will lead to
increased inflationary expectations and to increased inflation.
This in turn will push interest rates way up.
The Government will continue with prudent economic policies.
We utterly reject the big spending appr That is why under
my Government inflation will keep fall:' and interest rates
will follow. It is only by this course . hat investment and
eco:-omic recovery will continue and more jobs will open up.