re: costello hoses down rate rise fears
Costello hoses down rate rise fears AAP News 15:59:020 27/02/2005 CANBERRA, Feb 27 AAP - Treasurer Peter Costello today tried to hose down fears of an interest rate rise this week, saying Australia's low inflation would help keep a lid on any increases. The Reserve Bank of Australia's (RBA) board is expected to announce a 25 percentage point rise in official interest rates on Wednesday. Economists are tipping the rise despite recent figures showing inflation remaining within the RBA's 2.0-3.0 per cent target band and only moderate growth in wages. Mr Costello said while he did not want to make a call on whether rates would rise, Australia's low inflation environment would play a key factor in the RBA's decision. "Let's wait and see what happens, before we pre-judge any particular announcements," he told the Nine Network. "Keeping inflation contained is the most important thing to keep this low interest rate regime in place. "And provided that we continue to keep wages based on productivity, then the long-term prospects of a strong economy with low inflation are very good." Opposition treasury spokesman Wayne Swan said Mr Costello had broken his election promise to keep rates low and urged him to reveal details of the RBA's recent rates briefing to cabinet. "You can't go on a (pre-election) $66 billion spending spree, spending like drunken sailors and not put upward pressure on interest rates," he said. "And you can't ignore the skills crisis in the Australian workforce and expect that it won't have inflationary effects." Mr Costello also defended the government's plans for a major overhaul of Australia's industrial relations system, saying they would help drive economic growth. The changes, including changing the way minimum wages were set and introducing a national industrial relations system, would also push unemployment below five per cent, he said. Mr Costello said Australia should introduce a single minimum wage set by the commonwealth to replace different amounts currently on offer in states and territories. "In other countries, say Britain and America, they don't have industrial relations commissions," he said. "It's set by legislation. "These are options that should be looked at. It can be done in other countries, there's no reason why it couldn't be done in Australia." The government's plans have outraged the states, who last week joined forces and vowed to fight their introduction. Mr Costello said he believed it was important for the states to still have responsibilities in some key areas, so long as they were accountable. He said the states shared in $35 billion worth of GST revenue, but had failed to use the extra cash to be more responsible for their health and infrastructure systems. "My message is this: you take the money, you take responsibility," Mr Costello said. "Because if the commonwealth has to take back the responsibility, let me assure you it won't be doing it without taking back some of the (GST) revenue base." AAP
