Howard policy to blame for rate rise factors: Swan

AAP General News (Australia)
04-05-2005
Howard policy to blame for rate rise factors: Swan

SYDNEY, April 5 AAP - Howard government policies, not external economic pressures,
had backed the Reserve Bank into a corner on interest rates, the federal opposition said
today.

Opposition treasury spokesman Wayne Swan said Australian families should blame the
government if the Reserve Bank raised interest rates tomorrow.

"The Reserve Bank has been forced into a corner by the Howard government's policies,"

Mr Swan told reporters today.

"Its $66 billion spending spree during the election has put upward pressure on interest
rates. The oil price is also a factor but it's the Reserve Bank governor and the OECD
that points to Howard government policy as being the primary cause of upward pressure
on interest rates."

The Reserve Bank met today to discuss whether it will raise rates by another quarter
of a per cent tomorrow.

Last month, the bank lifted interest rates by a quarter of a per cent - the first rate
rise since December 2003.

Mr Swan said the backlash from the rates rise was "certainly a factor" behind Labor's
rallying Newspoll result today.

The poll, published in The Australian newspaper, shows Labor leading the coalition
on a two-party preferred basis, 51 to 49 per cent.

Mr Swan said today's trade deficit figures were evidence of the need for more widespread
economic reform to ease inflationary pressures.

"There's a need for tremendous improvements of our export performance if we are going
to have a long-term sustainable reduction of the trade deficit," Mr Swan said.

"The only way we're going to do that is to get some incentive into the tax system to
investment in the skills of our workforce and to solve these infrastructure bottlenecks."

Mr Swan said there was still a very big challenge for the government to maintain economic
growth whether or not rates rose tomorrow.

The Reserve Bank will announce its decision at 9.30am (AEST) tomorrow.

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KEYWORD: RATES SWAN LEAD

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