Embargoed until 7.00 p.m. F77/288

Jj. A U S T R A L I A  /LÂ« -

PRIME MINISTER

FOR PRESS 4 DECEMBER 1977

ELECTORATE TALK

As a principal part of our economic policy the Government is  creating conditions for a fall in interest rates. We believe  it is essential that interest rates fall so that Australia's  economic recovery continues.

It is vital for many reasons. It is vital for the build up of  business investment - for the re-equipment of our factories  and for the building of new plant. That will create jobs.

A fall in interest rates would also be reflected in a stronger  stock exchange which will help in the raising of new share  .  capital. -  -  .  -  '

It will lower the cost of new fixed interest capital borrowings '   and thus encourage businesses to borrow more so that their  operations can be expanded. That will create new jobs.

As lower interest rates help to improve the investment outlook  there will be a greater willingness.for overseas investors to .   provide capital toÂ·Australian- industry. This will lead to a  further strengthening of our dollar. .

For hundreds of thousands of Australians, a fall in interest rates  will have immediate, and direct, impact. Lower interest rates will  reduce the cost of buying or building a new home - the cost of  mortgage finance will be lower - up to $10 a week on an average  building society loan for a new home.

The effect of lower interest rates on existing mortgages will be  even more widely felt. Lower interest rates will mean even more .   young people will be able to buy or build. That will quickly lead  to increased demand for furniture and household goods and

appliances. .  .  ,  .

As a consequence - factories will run at a higher level of  capacity - that will create jobs.

Lower interest rates improve standards of living in many direct  and indirect ways. It will mean low cost of bank finance,  personal loans and consumer credit; thus assisting families  to buy consumer goods from retailers.

Lower interest rates help to raise share prices - that benefits  Australians whose savings, particularly for retirement, are  invested directly and indirectly through the stock exchangeÃ¢ÂÂ

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All these rewards can begin to be realised over the next twelve  months, only if current economic policies are maintained.

Now compare Labor's stated economic plans. Its commitment to  increase Government spending and a much larger Government  deficit does not mean lower interest rates - nor does it mean  a continuation of existing levels of interest rates.

A Labor Government would mean higher and rising interest rates. Their spending and wage policies will increase inflationary  expectations and, inevitably, lead to higher interest rates. Clearly that would damage business.investment and consumer confidence

It is notable that Mr. Whitlam, Mr. Hurford, Mr. Willis, Mr. Hayden  and Mr. Hawke - the men who make economic policy pronouncements for  Labor - haven't told us their interest rate policy.

Mr. Hayden challenges the Government's expectations of a 2%  reduction in interest rates over the next twelve months. He  fails to grasp, or does not want to grasp, that interest rates  will come down because inflation is coming down.

Again, over the last few weeks, major companies in Australia,  together with their underwriters, have expressed their confidence  in this outlook by continuing to lower the interest rates on  medium and long term debentures.

When a Government pursues economic policies that get inflation  down and strengthen the economy, interest rates will fall.

In the United States, in the twelve months from December 1974, the  bank lending rates for top industrial companies fell by 3%.

In Britain, in the nine months to September this year, the  equivalent rate fell from 15% to 8%. .  ;

Mr. Hayden says it cannot be done. What he means is that under * his policies it could not be done.

Our policies are putting Australians in jobs. -

We have stopped the massive rate of increase in unemployment,  because we are encouraging"industry to increase employment  opportunities. Lower interest rates will give even more  incentive.

We are protecting industry and saying jobs.

Labor has refused to' guarantee to protect tens of thousands of  jobs in the apparel industry. Labor wants to pursue free trade  policies. They know this will throw workers out of their jobs.

We are reducing inflation, encouraging development that will  make new jobs.

Labor will again stifle development - increase inflation at the  expense of jobs.

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We are reducing interest rates - that will encourage  activity throughout the community and provide more jobs.

Labor's big spending policies will increase interest rates  and add to unemployment.

Sadly, Mr. Whitlam's Labor Party no longer represents the  working men and women of Australia - and he knows it.

His economic policies will not reduce unemployment - they  will add to it. .

His tariff policies will again create another pool of  jobless. His wage policies regrettably mean prolonged  unemployment. His tax policies will penalise hundreds  of thousands of trade unionists.

Mr. Whitlam's Labor Party - the Party that increased  unemployment by 192,000 intone year alone, precisely because  of these policies - is a sad and sorry shadow of the Party  of Chifley, of Curtin and of Calwell.

It is out of touch with today's realities.

It is out of touch with Australia's working men and women.

