Portfolio Media Releases

NATIONAL ACCOUNTS SHOW A RECOVERING ECONOMY RUDD GOVERNMENT CONTINUES TO SHOW RECESSION-LIKE SPENDING

3rd March 2010

NATIONAL ACCOUNTS SHOW A RECOVERING ECONOMY

RUDD GOVERNMENT CONTINUES TO SHOW RECESSION-LIKE SPENDING

3 March 2010

Today’s National Accounts figures should send yet another warning bell to the Rudd government to pull back on its reckless and wasteful spending program.

The December quarter National Accounts figures show that Australia’s GDP in the fourth quarter of last year grew by 0.9%.  This is the fourth quarter of positive growth since the single quarter of negative growth recorded in December quarter 2008.

As the Reserve Bank Governor stated last week, Australia has emerged from our smallest downturn since World War II and yet this government continues to spend at recession-like levels.

Kevin Rudd and Wayne Swan’s continued refusal to pull back on the government’s massive spending program is putting tremendous upward pressure on interest rates. 

If today’s quarterly GDP increase is annualised, this would mean a rate of GDP growth of above 3.5% - comfortably above trend. 

Finance Minister Lindsay Tanner said in the House of Representatives on 10 February that “spending will not be increased beyond two per cent in real terms once the growth rate in this economy goes beyond three per cent.”  Based on today’s figures, the government 2% spending cap must kick in now.

MYEFO projections show projected real growth in government expenditure in this financial year of 5.1%.  This means the government has much work to do to get its reckless spending down to the levels mandated by its self-declared cap.

The Reserve Bank in its Statement on Monetary Policy yesterday also forecast that growth will be “close to trend” over the coming year.

The Rudd government should heed the words of the Opposition and pull back on its massive spending program to relieve some of the upward pressure on interest rates over the year ahead.

Homeowners, small business and all Australians with a credit card will pay the price for the Rudd government’s refusal to make the tough decisions on spending.

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