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war on inflation « Previous | |Next »
January 21, 2008

Gee now we have a war on inflation along with a war on drugs. What's happened to the war on refugees and the war on Iraq. Are they still going? The war on inflation is based on a five-point plan according to Mr Prudence and Mr Stability.

Rudd (Mr. Prudence) says that the central plank of the plan will involve setting a new budget surplus of 1.5 per cent of Australia's gross domestic product, giving the Government a surplus of about $18 billion; it will examine all options to provide real incentives to encourage private savings; unfolding federal Labor's plan for tackling the chronic skills shortages in the economy; providing national leadership to tackle infrastructure bottlenecks and providing practical ways of helping people re-enter the workforce. There is no detail as to the content of these 5 points.

Do you remember Swan/Rudd's old election rhetoric about Howard and Costello squandering the fruits of the resources boom through irresponsible vote buying and failing to invest in capacity-boosting reforms for the future? Now Swan (Mr Stability) is saying that the Australian economy is well placed to withstand the global economic turbulence. Australia being 'well placed' cannot be the work of Prudence and Stability, as they haven't done anything yet--other than announce a war on inflation, lecture the Big Banks on raising interest rates too much, and saying that the US economic slow down will only have a moderate impact on the global economy and on Australia.

Swan is repeating the views of Treasury and the RBA who say that in terms of risk management fighting inflation has a higher priority than slowing global economic growth. So maybe we all should pack our bags--leave the health and education systems, do a quick trades course (outside TAFE) and go and work in the sunshine states of WA and Queensland for $150, 000 with bonuses.

We mobile patriotic workers would be doing our bit in fighting the enemy of inflation, would we not?

| Posted by Gary Sauer-Thompson at 6:30 AM | | Comments (3)
Comments

Comments

Gary
Tax cuts equal interest rate rises. Simple.

Gary,
I gather encouraging private savings will include superannuation incentives. Is that likely to have any impact at all with personal debt so high and the lower returns people will be seeing this year?

Peter
it is coming down to a black and white situation isn't it: either the promised tax cuts have to be pruned to curb consumer spending; or other government payments and subsidies that feed directly into the continuing consumer boom have to be reduced.

I cannot see the former happening in any form because of political reasons so the emphasis is on the latter.

Inflation has become the new economic battleground.