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

I thank the honourable member for McPherson for her question. I would assume that the point that the honourable member is making in her question is that there is an inflation problem in Australia today that is affecting pensioners, carers and working families across the country. One of the things I would ask the honourable member to reflect on in asking that question is what is it that drives inflation a lot? What drives inflation a lot is where you have government expenditure out of control. What we had with the previous government, as of when this government took over, was annual expenditure growth running at some 5.3 per cent.

If you have government expenditure out of control, it adds to the fuels of inflation, which in turn affects the cost of living and which in turn has the effect of putting upwards pressure on interest rates—which affects all working families, including small businesses. That is why the government have a clear-cut strategy for dealing with the inflation challenge, anchored in the budget surplus that we brought down in May. The government’s objective is to make as much room as possible for the Reserve Bank to put downward pressure on interest rates. We appreciate the fact that we have had one small decrease in interest rates—the first decrease in interest rates in seven years and after 10 interest rate rises in a row on the part of those opposite.

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