i can't believe the stupidity and arrogance of howard, and close behind rudd. what kind of pro-growth crack are they on? surely the writing is on the wall with climate change, interest rates, inflation, etc. that we need INVESTMENT by gov't in infrastructure and GOODS (not bads) to help australian communities (and families) through the next two or three decades. fueling private debt at the expense of public assets is mindless addiction to an out of date paradigm. god. i feel like stan on southpark last night - why vote when the choices are both so effing ridiculous!?!?!?!

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And now the $64b question: The cost?
http://www.smh.com.au/news/economy/bpeter-hartcherb/2007/11/12/1194766588764.html

Peter Hartcher
November 13, 2007

WHEN the Reserve Bank announced yesterday that it was worried about a dangerous outbreak of inflation, it must have been fervently hoping that John Howard would take the microphone and declare "me too".

Instead, the Prime Minister stood on stage in Brisbane and gave the central bank a whole new reason to fret about inflation.

He formally launched the Coalition's campaign with a record blast of new spending.

Just 2 hours after the Reserve Bank put up a giant sign saying "slow the growth", Howard appeared on a set framed by his election slogan "Go for Growth".

And go for it he did.

Howard's 2004 campaign launch is famous for his promise of $6 billion in new spending in a half-hour speech, committing taxpayers' funds at a rate of $200 million a minute.

Now Howard has set the new record, however, at $9.5 billion in 40 minutes, a rate of $237.5 million a minute. "Clearly the words from the Reserve Bank have had no impact whatsoever," observed the chief economist of the ANZ Bank, Saul Eslake.

It was a performance reminiscent of the comedian Drew Carey's line: "I may not be a very good lover, but at least I'm quick."

Howard knew he shouldn't

have - whereas last time he proudly announced the cost from the stage, yesterday he discreetly left most of the dollar amounts out of his speech.

Times have changed. Australia is in the midst of an inflationary outbreak and approaching an inflation emergency. Yet, like an addict, trying to conceal his habit yet compelled to act on it, he went ahead and promised the spending anyway.

At 11.30am, when the Reserve issued its statement that "both headline and underlying inflation are likely to exceed 3 per cent", the legal speed limit, Coalition election spending promises already stood at $55 billion for the next four years.

By the time Howard finished speaking, he had added a further $9.5 billion. So now the $64 billion question is: How high will rates have to go to tamp down the inflationary overheating that Howard is stoking in his frenetic effort to get himself re-elected?

An economist at the investment bank UBS, Scott Haslem, has calculated that three rate rises in this financial year - the last two plus the one expected in February - will depress demand in the economy by $9.1 billion.

At the same time, the tax cuts taking effect next year are expected to add about $9.7 billion. In other words, all else being equal, the Reserve Bank is effectively putting up rates to negate the effect of the tax cuts.

Howard, trusting that we are too stupid to get it, just keeps feeding this circular loop of money into the system, hoping we swoon with gratitude, not noticing that the Reserve Bank is obliged to take it all out again.

Ever-rising interest rates mean more than that, however. They attract huge sums of foreign capital chasing higher yields. That helps push up the dollar, and that, in turn, punishes exporters.

Rising rates also ratchet up the risk that the entire economy will be brought to a standstill.

Still, you have to give Howard credit for sheer chutzpah, a hide thicker than Jessie the elephant's. He interspersed his recklessness with stony-faced warnings that Labor would pose a threat to economic growth.

Labor is no better. It will spend a tad less and pronounce itself to be "more responsible". But it's unlikely to be any worse.

As Eslake says, "even if Labor only matched half the Government's numbers, they are so big that while both sides profess to be worried about interest rates, neither side is prepared to do anything meaningful about them."