Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

I withdraw. But the point that I make is that they have been running around deceiving the Australian people on the issue of inflation. They have no consistency because they do not have any fundamental understanding of running an international economy, and this is a real problem into the future for this country. We have had people like Wayne Swan, the Treasurer of this country, at a time when there are international pressures on our economy, when there are domestic pressures on our economy, out there saying:

... I say it to everyone; we’ve got a difficult fight on our hands as a nation. The inflation genie is out of the bottle, it’s been on the march for a couple of years.

That was a message that was sent to the Reserve Bank Governor and to the Australian business community—that, in the Treasurer’s opinion, inflation was out of control. That is what the Treasurer was out there saying to the markets in this country and then he wondered why inflation tracked up afterwards. The markets hang off every word that that man has to say. The markets depend on every word that that man has to say. He is an irresponsible person and he is incapable of managing the Australian economy. The Reserve Bank Governor has dismissed basically as rubbish the contribution of the Treasurer in relation to that statement, when he said that the genie was out of the bottle in terms of inflation. He has been slapped down, in essence, by not just the Reserve Bank Governor but many business leaders in this country.

The fact is that, in relation to inflation, the Reserve Bank had provided advice to the last government. The PEFO—which is the most recent document of the last government that I can point to—offered advice in October 2007 to the Howard government in relation to inflation along these lines, and I will quote from the document. This is PEFO—not signed off by Peter Costello, John Howard, Nick Minchin or anybody else but signed off by Ken Henry, the Secretary of the Treasury, and Ian Watt, the Secretary of Finance. Their independent advice in October 2007 to the government was that their forecast for inflation in 2007-08 was 2¾ per cent. In 2008-09 it would be 2¾ per cent. Their projection for 2009-10 was that it would be at 2½ per cent, and their projection for 2010-11 was that it would remain at 2.5 per cent. That is the advice that the government had from Treasury and Finance in October last year.

Nobody doubts that inflation is an issue which, for any developed economy, is a constant that has to be dealt with. The previous coalition government was able to deal with the issue of inflation. We were able to deal with inflation at the same time that we continued to have significant economic growth. We were able to deal with and contain inflation at the same time that we cut spending, we cut taxes and we lifted the workforce participation rate—we had record lows in unemployment. We were able to manage all of those economic outcomes while at the same time keeping inflation within the bandwidth set by the Reserve Bank governor.

This debate goes to not just inflationary pressures but specifically the issue of cost pressures on Australian families. As I said in my opening remarks, at the last election the government promised that they would bring down grocery prices and petrol prices and make homes more affordable. This budget, as has been clearly demonstrated, does none of that. In relation to petrol, there is $20 million provided in this budget to prop up the failed FuelWatch scheme, a scheme which has operated in Western Australia, which is a market that has incredibly high petrol prices. The reality is—

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