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The inflation dragon stirs.



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MEDIA RELEASE

 

Lindsay Tanner MP

Acting Shadow Treasurer and Shadow Minister for Finance and Consumer Affairs

 

27 October 1999

 

The inflation dragon stirs

 

“In July of this year, Peter Costello claimed that ‘there was no life in the inflation dragon’. T oday’s inflation figures should send a warning to the Prime Minister and his Treasurer that the inflation dragon still breathes”, said Mr Tanner.

 

Today’s consumer price figures show a rise in Australia’s inflation rate to its highest annual rate for 3 years. Both the headline and recalculated underlying inflation rates are trending up.

 

The official figures, however, reveal that the headline inflation rate more than doubled in the September quarter, jumping up by 0.9 per cent. The annual rate of inflation jumped from 1.1 per cent to 1.7 per cent. While the ABS has ceased publishing its Treasury underlying series, a re-calculation of the Treasury underlying series shows a rise in the annual rate to l.9percent.

 

Today’s inflation figures reveal that:

 

  • house p rices rose 5.5 per cent in the year and 2 per cent in the quarter;
  • the price of property rates and charges rose 5.2 per cent in the quarter;
  • house insurance is up 5.2 per cent in the year;
  • vehicle insurance is up 7.3 per cent in the year,
  • petrol prices rose 9.9 per cent in the year;
  • education and child care costs are up 4.3 per cent in the year; and
  • domestic holiday travel and accommodation is up 4.6 per cent in the year.

 

And this is before the Howard-Costello-Lees GST.

 

“Introducing the GST package is lik e poking the inflation dragon with a large stick”, warned Mr Tanner.

 

Shrouded by his hubris, the Treasurer has become complacent about the Australian economy despite being the Australian record holder with:

  • the lowest rate of household savings;
  • the highes t level of household debt and rising credit card indebtedness;
  • the highest current account deficit;
  • the highest trade deficit; and
  • the highest foreign debt.

 

“Growth in the Australian economy has increasingly become unbalanced with consumption dominating a nd investment waning. And more and more Australians are not sharing in the benefits of economic growth,” said Mr Tanner.

 

The hard work of the 1980s and the early 1990s has resulted in a major pay-off in the 1990s with the ‘step down’ in inflation (see graph) and the ‘step up’ in multi factor

productivity.

 

At a time when inflation is starting to stir, a. peek over the horizon reveals that in the coming year:

 

  • the government will preside over the biggest ever fiscal loosening (with its $20 billion draw down on the surplus over three years to buy its unfair (1ST) with a further threat of $3.8 billion if the government fails to implement the deferred measures on business tax as announced, including the taxation of trusts;
  • the government will introduce its unfair 10 per cent GST on nearly everything that Australians consume and still hasn’t revealed its inflationary impact;
  • the stimulus of the Olympics; and
  • there are growing expectations of a pick up in world growth and inflation.

 

“Today’s inflation result shou ld thus be a wake up call to the Treasurer.”, said

Mr Tanner.

 

 

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Further information: Lindsay Tanner (03) 9347 5000 or Pradeep Philup (02) 6277 4045 (w) or (0416) 214 760

 

 

att  1999-10-29  11:57