Jodie Campbell (Bass, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline for the House the reason why it is important that the government’s inflation-fighting surplus is left intact?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for her question, because the government is building a strong surplus of $22 billion to fight inflation and to put downward pressure on interest rates. We had the Reserve Bank minutes released earlier today and they put the position that the fight against inflation remains a very key challenge for this nation—a very important challenge. I will just quote the minutes. They said:

... over the past year, inflation had picked up to an uncomfortably high rate, against a background of limited spare capacity and earlier strong growth in demand.

As we know, there have been 20 Reserve Bank warnings over a long period of time about bottlenecks in the economy—about capacity constraints—which were ignored by those opposite. That put upward pressure on inflation and upward pressure on interest rates. Of course, it fell to us from day one to take up this fight against inflation—an inflation legacy left to us by those opposite, who sat around the cabinet table and spent like drunken sailors. It has taken us to rein in that reckless spending and to do something about putting some capacity into the economy, which is why their actions in the Senate are so absolutely reckless—because in this country we do need to tackle inflation to put downward pressure on interest rates, because it is inflation that eats away at the living standards of families and strangles growth. They are completely irresponsible.