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Hawke wrong on inflation

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Senator ¬ęTim Short Shadow M inister for Finance and Shadow Minister Assisting the Leader on Commonwealth/State Relations

SMF 12/91


The December quarter Consumer Price Index figure released today is disastrous news for the Government and the Prime Minister in particular.

The Prime Minister and the Treasurer were hoping that the

inflationary cycle within Australia had been broken.

The figure'flies in the face of the Prime Minister's comments on 'Sunday' that: "I believe it (inflation) is going to fall further."

Today's CPI figure, which was substantially higher than market expectations blows any hope of 4% inflation out of the water. The year end rate is now unlikely to be lower than Budgeted at 6.5%, despite the much greater fall in demand over the period than forecast in the Budget.

Although the effects of the petrol price rise have contributed to this bad figure the underlying rise in other areas (except housing, which is trending down further due to the recession) continues to go unchecked.

These figures of 6.9% annually and 2.7% for the quarter show that the Government's attempt to con the electorate about lower inflation and their highly political tax/wage trade-off were nothing more than misleading opportunistic stunts.

In the midst of one of this country's worst recessions, this Government has been unable to deal with inflation, once stated by Paul Keating as their number one priority.

Indeed, only two days ago the Prime Minister, Mr Hawke,

reinstated this priority and said: "Nothing we can do is more important than bringing down and keeping down inflation."

Until real micro-economic reform is adopted, a new realistic Budget is formed, the labour market is deregulated and Labor stops pandering to special interest groups and its mates there will be no respite from pain for the average Australian.

The Opposition calls on Hawke and Keating to use the much touted Industry Statement to adopt these measures or the whole exercise will be just another load of opportunistic rhetoric.

Now is the time to act. If the Labor Government can not then it should resign.

Canberra 13 February 1991 Senator Short (06)277-3119