Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I draw the honourable member’s attention to one core fact, and that is the cumulative impact of 12 interest rate rises in a row. Twelve interest rate rises in a row have an impact on the real economy and real perceptions—obviously, a legacy which the member for Higgins is enormously proud of, given it caused him great mirth when I mentioned 12 interest rate rises in a row. For those out there struggling in small business and doing it tough, for those out there who are trying to balance the family budget, let me say that 12 interest rate rises in row add up to a real effect on the economy, which is why this government has a clear-cut plan for dealing with the challenge of inflation.

Let me go through it again for the benefit of the member for Cowper. If you allow public spending to rise without constraint, as those opposite now recommend, it flows through to public demand. If that happens, you add fuel to the fires of inflation. And when that happens, you put upward pressure on interest rates. And when that happens, it flows through to the overall growth of the economy, including to the small business sector as well as to economic confidence, through to the ultimate impact on employment. That is the core economic logic here.

In January this year, a month after taking office, we on this side of the House articulated a five-point strategy for dealing with inflation. We have implemented that strategy, including through the budget process. Those opposite have a one-point strategy for dealing with inflation: pull out a huge bucket of kerosene and throw it on the inflation fires. It is called the $22 billion raid on the surplus. I challenge those opposite for the first time in the six months that they have been in opposition to advocate a coherent alternative economic strategy aimed at fighting inflation, and that means yielding in this debate your alternative to the $22 billion raid on the surplus that you are contemplating. My challenge to the Leader of the Opposition is to stand at the dispatch box and give us the list of where the offsetting savings are. If he fails to do that it is clear cut: it is a $22 billion raid not just on the surplus but also on a core economic responsibility and therefore an assault on the interests of small business and the general economy.

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