The economy is running red hot. These inflationary pressures is what the ALP has inherited along with a housing affordability crisis, a global credit crunch, a large current account deficit, surging consumer spending fueled by tax cuts and the effects of climate change. Oh, I forgot the slowing productivity and rising wages and prices. Some call it the challenges of ‘managing prosperity’.

But it is more than a red hot economy requiring a couple of increases in interest rates and conservative fiscal management:

Bruce Petty

Some say that the international cost of credit that is forcing local financial institutions to raise interest rates on their mortgages and loans may do the squeeze that is required to take the heat out of the red-hot economy. Others, such as the OECD, advise that the RBA will need to lift interest rates early next year. And it looks as if there will be need for budget restraint from the Rudd Government—Tanner’s razor gang—given the commitment to deliver on the promised tax cuts.

The longer term is dominated by climate change. The right wing biased Coalition under Brendon Nelson is already playing around with a fear campaign about the costs to business and households over greenhouse emission cuts before 2020. They are highlighting—nay exploiting the gap between the rhetoric and the real politick of what cutting emissions actually means---increased electricity costs. Plus lots of nuclear power plants scattered around the country?