Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance and Administration (Senator Minchin) to questions without notice asked by Senators Sherry, Wong and Stephens today relating to inflation and interest rates.

Today the Labor opposition put a number of questions to Senator Minchin, Minister representing the Prime Minister, Mr Howard, concerning Prime Minister Howard’s recent comments about the increase in inflation rates and his subsequent comments about the need to increase interest rates in Australia. As our questions referred to, inflation in this country in the year ending September has increased to 3.9 per cent.

That increasing inflation rate has two serious implications. One is the obvious impact on Australian households, and no better place can this be illustrated than in the area of food. It is not the usual banana excuse that we get from the government. If the Prime Minister took a few more trips to the supermarket, he might understand the impact the increase in food prices is having on Australian families. The price of food in the year to September increased by almost 10 per cent in this country. Perhaps the Prime Minister should take a few more trips to the supermarket to understand why Australian families are hurting. Vegetables are up by 9.3 per cent, bread is up by eight per cent, soft drinks are up by 6.8 per cent, eggs are up by 6.5 per cent, pet food is up by 6.2 per cent, tea and coffee are up by 6.2 per cent and the list goes on. The government in this country has lost control of inflation.

What is remarkable about the Prime Minister’s head-in-the-sand, out-of-touch attitude is that he referred to the inflation rate—an increase of 10 per cent in the price of food—as extremely low historically. Go to the average family that is facing a massive increase in the price of food across the board, not just bananas, and argue that the price of food increasing by 10 per cent is extremely low by historical standards. That is no great compensation. Go and talk to the average family when they are shopping and say that the price of food going up by 10 per cent is extremely low—that is no great consolation to them, as the Prime Minister would suggest. They still have to pay for it.

Even more concerning is the head-in-the-sand approach of the Prime Minister when it comes to the impact on interest rates. We will know all about that on Wednesday. At the last election the Prime Minister ran around the country saying, ‘We’ll keep interest rates low.’ What has happened since the election? Three increases in interest rates. It was truly amazing when the Prime Minister said, in response to this increasing inflation figure that has happened on his watch:

What you have to consider is that if you don’t have an interest rate rise then it is possible there will be a further boost in inflation because of the strength of the economy and a bigger rise might be needed further down the track …

Here you have the Prime Minister of Australia, in response to the escalating inflation figures, not only abrogating and reversing his promise from the last election that interest rates should be kept low. The Prime Minister, Mr Howard, is urging the Reserve Bank to increase interest rates.