Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

We all know who he is talking about: the member for Brand, affectionately known as ‘Skip’ around the parliament. In relation to the CPI, the two largest elements for the June quarter were in relation to fruit and vegetables and petrol. Of 1.6 per cent movement in that particular quarter about one per cent was made up of those two items. Ex of those two items, you had a CPI of about 0.6 per cent. But, under the agreement that the government has put in place with the Reserve Bank, the agreement that the Labor Party opposed and wanted to sue the government for entering, we will be looking at underlying inflation over the course of the cycle. What we will do is look through one-off factors which we believe will pass through the system such as the effects of cyclones and oil prices. We are looking for underlying inflation—that is, inflation in general goods and services. Obviously, petrol will have delivered some pressure as a second round effect in relation to those and, obviously, commodity prices will have delivered some second round pressure in relation to those. It is the key second round, underlying or general price movements that are the focus of activity under the agreement between the government and the bank. That is what we focus on. It is made clear by the governor, it is made clear by me and it is made clear by the agreement between the two of us.

See this speech in context