mr. macfarlane reviews monetary policy, growth and unemployment in australia talk by the governor of the reserve bank of australia, mr. i. j. macfarlane, to the australia - israel chamber of commerce in melbourne on 15 / 5 / 97. it is a pleasure to be here in melbourne, and to be speaking to the australia - israel chamber of commerce. i was very pleased to be invited to address this distinguished group so soon after i was appointed. if at the end of this address, you feel that i have still left some important questions unanswered, my suggestion is that your next guest be my opposite number from israel. jacob frenkel, the governor of the bank of israel, is a distinguished economist, but a very busy man. my invitations to him to visit australia have so far been unsuccessful - perhaps this chamber can swing the balance. i want to take this opportunity today to talk about the economy, monetary policy, and some aspects of unemployment. i propose to do this by looking over a longer period than normal. most economic commentary concentrates on very current events and focuses on the latest monthly or quarterly economic statistics. this is an inevitable result of the news - gathering process and the need for financial markets to reassess after each new piece of information. in this environment, the outlook for the year ahead is considered a long time. in my view, even that is too short - for monetary policy purposes, we should be looking at a period as long as an economic expansion. that may not be a lot of immediate help to most people because they would be unsure of what time span was encompassed by an economic expansion. as a point of reference, the last two expansions have lasted for about six - and - a - half years, but i think we can do a lot better on this occasion. lengthening the expansion the current expansion in australia has been going on for about 5½ years, which is similar to the united states, the united kingdom and new zealand, and a fair bit longer than for countries in continental europe or japan. table 1 shows that over that period we have grown at an annual rate of 3½ per cent and had inflation of 2½ per cent. our growth rate has been higher than nearly all oecd countries, although not as strong as for the countries of east asia. our inflation rate is also very good and close to the average for oecd countries. the results are pretty good by international standards, particularly since there

to meet this test. in short, though i do not say this as a supervisor of banks, this model seems to have worked pretty well. it shows that not only is there an important role for regional banks in the modern world, but that well run institutions can successfully fill that role. as we are constantly reminded, even in a globalised world, communities are still local in many important respects. so in conclusion, to the shareholders and managers of bendigo bank, and the broader community of bendigo : “ happy birthday ”. i wish you many more. i am sure john laker, the chairman of apra who is here this evening, would join me in exhorting you to continue your wise and prudent management so that the city of bendigo, its bank and its people will prosper for another 150 years.