Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

It would appear that the member for Wentworth does not understand the reason why there is a need to crack down on government spending. On top of the figures he has quoted, I will add another one: government spending is currently running at a 4½ per cent real increase in the current financial year, well ahead of the growth projections—either of the growth projections that he quoted—in the economy. That is what we inherited from the previous government. We inherited a situation where inflation is beyond the Reserve Bank’s target band. It is at 3.6 per cent underlying. We inherited a situation where we had five interest rate increases in the previous six months, and we inherited a situation where government spending is running out of control. The primary commitment of this government is to ensure that government spending gets into an area that will ensure that we put downward pressure on inflation and interest rates.

Let me remind the member for Wentworth that, if he talks to business, the one thing they will tell him they do not want is inflation to take off in this country. The one thing that business in the mineral sector and in other sectors of the economy that are so crucial to the future of this nation do not want is inflation to take off, because that erodes savings, it erodes productivity and, most importantly of all, contrary to the commentary from the Leader of the Opposition a couple of weeks ago, higher inflation means higher interest rates. It means higher interest rates for homebuyers and it means higher interest rates for businesses. So that is why the government is committed to getting government spending under control.

See this speech in context