Comments on Michael Stutchbury “Treasury must reassess policy”, 21/10/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/treasury_must_reassess_policy/
The dangerous global economic meltdown is over and the Australian economy is rapidly returning to normality due to sound pre-crisis conditions and the China boom now.
There is no justification for the official interest rate to be at emergency levels for any longer. The RBA has realised that and it has returned to its traditional role of fighting inflation. Given that inflation is still above its target zone, it should and will tighten rates rapidly, though with some caution.
Equally, the justification for fiscal stimulus is no longer there and Treasury and government must be honest and acknowledge it and starts to wind down stimulus, but implement a long term strategy for productivity growth.
Failing to do that is purely irresponsible.
It will be a test for the independence of Treasury and the competence of the Treasurer and Rudd in economic management.
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