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Time to rein in stimulus.



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Tue, 4th August 2009

TIME TO REIN IN STIMULUS

Senator the Hon Helen Coonan

Shadow Minister for Finance, Competition Policy and Deregulation

Shadow Finance Minister Helen Coonan today again called on the Government to wind back its stimulus

spending in light of recent economic news suggesting signs of recovery.

Data released today shows housing prices are on the rise with prices up by 4.2 per cent following four quarters of

decline. In addition, retail volume recorded a 2 per cent increase in the June quarter, the strongest quarterly

increase in since December 2007.

Following these positive economic results the Reserve Bank has moved to a neutral policy bias, from its previous

easing stance, as a signal that the need for very stimulatory monetary policy is passing.

"With signs of an economic recovery underway, it is essential that the Rudd Government consider winding back

on its borrowed money spend-a-thon. If this unprecedented borrowing is not scaled back, then there is a real risk

of putting upward pressure on inflation and interest rates as the economy recovers.

“The Rudd Government's Financial Services Minister Chris Bowen indicated this morning that there was a risk of

this occurring, with his comments in the Australian saying there were ‘signs of increased interest rates and cost of

capital around the world’.

“Prime Minister Rudd’s addiction to deficits and debt is now the major impediment to a prosperous, stable and

low inflation future for all Australians,” Senator Coonan said.