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The inflation challenge remains to be met



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Peter Reith

DEPUTY LEADER of the OPPOSITION PRESS RELEASE SHADOW TREASURER

THE INFLATTOM CHAT.T.ENGE REMAINS TO BE MET

The Shadow Treasurer, Mr Peter Reith, today challenged the Government to lock in the benefits of lower inflation for

Australia.

Mr Reith welcomed the fall in inflation to 3.3 per cent, but he re-iterated that this was simply the result of the crushing recession the Hawke Government had engineered.

"We've got lower inflation, yes, but we've paid a terrible price for it at the hands of the worst recession in sixty years," Mr Reith said.

"I don't think the million Australians who have been left

unemployed by this recession will be celebrating too much about the C PI.

"The real issue now is whether the Government can lock in low inflation for the future.

"As the Deputy Governor of the Reserve Bank, Mr John Phillips, pointed out this week, expectations that inflation will bounce back remain a problem.

"If the Hawke Government is truly serious about addressing those inflationary expectations they should have no hesitation in specifically nominating a target for inflation of between zero and two per cent.

"The announcement of such a target would give the community the clearest possible signal that the Government was committed to keeping inflation down.

"They won't nominate a target because they know they simply haven't made the structural changes to the economy that will sustainably keep inflation under control.

"Indeed, the Government's own budget estimates suggest inflation will have climbed back to 3.75 per cent by June 1992."

The Shadow Treasurer said it was interesting to note that one of Treasurer, John Kerin's, own economic advisers had publicly drawn attention to the lack of structural change shortly before joining the Government payroll.

COMMONWEALTH PARLIAMENTARY LIBRARY MiCAH

2

In the Australian Left Review in July this year Professor Colm Kearney was quoted as saying that Australia has done "nothing to restructure the economy into a low inflation path."

Professor Kearney continued:

"It's poppycock to argue that, as a result of the

recession, we have managed to purchase a creed of low inflation. We haven't...."

30 October 1991

D121/91

Contact: David Turnbull 06 277 4277

Canberra