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Transcript of doorstop interview, Parliament House, Canberra: CPI Figures.



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BOB McMULLAN MP

SHADOW TREASURER FEDERAL MEMBER FOR FRASER

PARLIAMENT HOUSE CANBERRA ACT 2600 ! TELEPHONE: (02) 6277 4803 ! FACSIMILE: (02) 6277 8496 ELECTORATE OFFICE: GPO BOX 1947 CANBERRA ACT 2601 51 NORTHBOURNE AVENUE CANBERRA ! TELEPHONE: (02) 6247 4396, 6247 4037 ! FACSIMILE: (02) 6247 3457

TRANSCRIPT OF DOORSTOP, PARLIAMENT HOUSE, CANBERRA, WEDNESDAY, 24 APRIL 2002

E & OE - PROOF ONLY

Subjects: CPI Figures

MCMULLAN: Today’s inflation figures reflect the increasing pressure that Australian families are facing with increasing prices of health and education, in insurance and gas and fuel. It really shows that households are already under pressure. The alarming thing is that the Treasurer seems to think that this is good news. He is incredibly complacent in the face of the pressure that Australian families are facing and it just shows how out of touch he is with the problems that they are facing. There are more price rises to come. These figures don’t reflect the increases in private health insurance premiums. They don’t reflect Telstra’s proposals about increased rental charges - so families are under the pressure and the Treasurer doesn’t seem to understand and there is increasing concern amongst economists that these figures may put more pressure on interest rates which Australian households are very poorly placed to meet because the record level of household debt.

JOURNALIST: It is a good thing though that annual inflation has come back within the target zone though isn’t it? 2.9?

MCMULLAN: Well, we have this continuing pressure of the last two quarters at .9 per cent. We have a temporary move back within the band because of the drop-out of the last of the GST effect but it does appear that the rate of inflation in each of the last two quarters is outside the band that the Reserve Bank would look for and the last thing Australia needs is interest rate increases at this time because unemployment is still 6.3 per cent, households are facing a lot of debt and pressure and we are not yet seeing the investment come through that will keep the economy growing so we don’t want to see interest rate increases but the Government’s complacency about inflation puts a bit more pressure on.

JOURNALIST: Do you think it is fair for the Treasurer to describe inflation as subdued?

MCMULLAN: No. I think there is only one person who has got any association with economic management in Australia who thinks inflation is under control and that appears to be the Treasurer. No economist in Australia, I think, agrees with him and every commentator is expressing concern about the last two quarters inflationary pressure and what it means for the future for the economy and what it means for interest rates. The Treasurer is alarmingly complacent about this price pressure.

JOURNALIST: So you think interest rates should rise if you don’t think it is under control?

MCMULLAN: No, I don’t advocate. The last thing Australia needs is an interest rate increase. Unemployment is still too high and we need more investment to come through as housing slows down in the second half of this year and there is no guarantee that will happen particularly if interest rates go up. So, the last thing Australia needs is an interest rate increase and I hope it doesn’t happen.

JOURNALIST: Well, it can’t be monetary policy - does that mean it has to be a fiscal policy response?

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MCMULLAN: Well, I think there is a problem in that fiscal policy is seen by many people and the Budget may prove it, too lax because of the waste and the mismanagement - the loss of the $5 billion on the currency swaps. It is that Budget situation, together with these inflation numbers, that will put pressure on the Reserve Bank in two weeks time and it also puts pressure on the Government to deliver a good strong Budget.

JOURNALIST: The MYEFO target was what, 2.75 per cent. What difference is the extra point 4 per cent going to make in terms of the effects on the economy?

MCMULLAN: Well, I don’t think it is the 2.9 per cent number. It is the continuing quarter after quarter indication that there are growing price pressures. I think that is what causing economists to be concerned and it is causing households to be concerned because they are feeling it every day. It might come as a surprise to some people that prices are going up but it wouldn’t come as a surprise to any family out there trying to pay for school fees, trying to pay for pharmaceuticals, trying to pay for petrol, trying to pay for gas and electricity and those things the increases in which are reflected in these figures and on the price increases that have happened since - like private health insurance, the threatened increase in telephone rentals - all down to decisions made by the Government that are costing Australian families more.

END