Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

The question goes to the coordination and coherence of government and budget policy. In January this year we made it very plain what our approach to the fight against inflation was—five points. First, we have got to deliver a substantial budget surplus so that we can draw down public demand so as not to fuel the fires of inflation, because fighting inflation is a critical part of the economic challenge. Second, we said that we would be in the business of investigating necessary measures to increase private savings in the economy, again to draw down overall total demand in the economy, which again fuels overall demand in the economy and then fuels inflation.

Third, you then go to the question of the supply side constraints—firstly, on skills policies and, secondly, on infrastructure policy—and act decisively in those areas to boost the supply side measures, because if you fail to do so then you are failing to act on the 20 sets of advice which the previous government received from the Reserve Bank and failed to act on. And through all these measures you need to make sure that you have a coordinated approach to fighting the fight against inflation. That is what we have said since January. We have taken it as the right way through.

By contrast, what we have from those opposite is this: an argument which says that there is no—repeat no—inflation crisis, that inflation is a charade, that inflation is a fairytale. I say to those opposite: say that to the mums and dads in Australia tonight who are confronted with the inflationary impact they face, the consequences of which flow through to their mortgages, to their rents, to the prices they have to pay, to childcare costs and the rest. Secondly, they not only say that inflation is a charade; they further advance this argument—this is the economic credibility of those opposite: there is no economic case to reduce government spending.

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