‘The inflation crisis is a complete charade’

In the blue corner, Brendan Nelson. In the red corner, economic reality.

Brendan Nelson: The reason we have been given for expenditure cuts — the inflation crisis — is a complete charade.

Reserve Bank Consumer Price Measures, 2003-08

*(Weighted median, percentage change from corresponding previous year seasonally adjusted)

Brendan Nelson: In a macroeconomic sense, we do not need to slash government spending via draconian expenditure cuts in the current fiscal environment. “The Rudd Government should simply hold the line on fiscal policy. No savage fiscal tightening is required.

Real Commonwealth expenditure (2006-07 dollars) 1997-98: $174.7b

Real Commonwealth expenditure (2006-07 dollars) 2007-08: $264.1b

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Value of Budget savings measures of total Budget measures: 1997-98: 78%

Value of Budget savings measures of total Budget measures: 2002-03 40%

Value of Budget savings measures of total Budget measures: 2007-08 0%

Real tax expenditures (2006-07 dollars) 2003-04: $33b

Real tax expenditures (2006-07 dollars) 2007-08: $48b

Government own-purpose spending (2006-07 dollars) 1997-98: $53.3b

Government own-purpose spending (2006-07 dollars) 2007-08: $72.5b

Commonwealth public servants 1997-98: 163,297

Commonwealth public servants 2007-08: 243,859

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