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

I thank the member for his question, because inflation is one of our most pressing domestic challenges. It hurts working families, it puts upward pressure on interest rates, it erodes living standards and it threatens future growth and job creation. In order to fix the problem you need to be up-front and honest about it. As the Prime Minister has indicated again today, inflation is at a 16-year high—and, of course, the member for Higgins last week accepted full responsibility for that 16-year high. These inflationary pressures have been building in our economy for some time. They are the product of a lack of investment in capacity and the product of a previous government that was engaging in reckless spending.

Last week in Canberra the Governor of the Reserve Bank of Australia gave a very important speech about inflation to Treasury officials. He made three very important points. First, he repeated the bank’s view about inflation being elevated and that it will remain elevated for a considerable period of time. That was point No. 1. Second—point No. 2—he said that inflationary pressures were broad based. Third, he made the very important point that the surest way to higher average interest rates is to accept higher inflation.

Of course, not everybody agrees with the Governor of the Reserve Bank—most notably the member for Wentworth. He is so out of touch with Australians he does not think that there is an inflation problem in this country. He does not have a clue what life is like around the kitchen table. The pretender from Point Piper does not understand that inflationary pressures are eroding the living standards of working families. Last year, he said inflation and interest rates were overdramatised—that was simultaneously with him supporting Work Choices, which was ripping away the wages and working conditions of many people in our community.

See this speech in context