Horse 827 - I wonder Mr Howard...

"If you have a strong economy, you have high world oil prices, and you have a drought, some inflation in the system is unavoidable. I think industrial relations policy has in fact contributed to downward pressure on inflation.

The Reserve Bank has actually said in an environment of a strongly growing economy wages have behaved extremely well. The Reserve Bank is independent, the Reserve Bank will do its job.

But I do know this: interest rates now are lower than they were at any time under a former Labor government, and at 8.3 per cent, they are less than half than the notorious peak of 17 per cent reached under the former Labor government.

I would say to the Australian people: there are inflationary pressures in the economy which put pressure on interest rates, is this a time to hand over economic management to a party that has an inflationary industrial relations policy?

It has a policy that will lead to a potential wages surge, not based on productivity, but simply based on a new industrial relations system, where higher wages which are affordable in one sector of the economy flowing to other sectors of the economy where they are not affordable and therefore would put upward pressure on interest rates." PM John Howard - ABC Local Radio 13/11/07

I have a few questions for the Prime Minister.

"they are less than half than the notorious peak of 17 per cent reached under the former Labor government"

Have you forgotten that you yourself as Treasurer presided over an economy which actually had inflation for 3 consecutive quarters not just peaking at 17% but staying there? Perhaps he has forgotten that for the June quarter of 1982 inflation peaked at 21.3%?

What about the comments of his own Treasurer and Deputy? Peter Costello had this to say about his leader? "The Howard treasurership was not a success in terms of interest rates and inflation,"
http://www.smh.com.au/news/national/howard-failed-as-treasurer-says-costello/2007/07/18/1184559867197.html

I refer Mr Howard to the well known case of Pot vs Kettle

"The Reserve Bank has actually said in an environment of a strongly growing economy wages have behaved extremely well. The Reserve Bank is independent, the Reserve Bank will do its job."

Is the Reserve Bank completely independent Mr Howard? If so, then why would you accuse a Labor Government of having any more control over the underlying cash rate than yourself? If not, then by inference a change of government will do precisely nothing?

"It has a policy that will lead to a potential wages surge, not based on productivity, but simply based on a new industrial relations system, where higher wages which are affordable in one sector of the economy flowing to other sectors of the economy where they are not affordable and therefore would put upward pressure on interest rates."

Wages pressure does not "flow" from one sector to another. Inflation and demand for higher wages affects all sectors of the economy simultaneously. I have another question with regards wages - why is it so wrong for employees to demand higher wages in the first place? There have been twelve cases in the past two months, of managers of publicly listed comanies (and not small ones either) having pay rises turned down by their shareholders and then the company boards veto the wishes of those shareholders. Are these affordable? Those costs are passed onto consumer through higher prices... aren't higher prices an inflation driver?

The Gini-Coefficient in 1981 was 0.59, in 1986 - 0.64 in 1996 - 0.64, in 1998 - 0.69 and now in 2007 it's 0.73. Australia has greater disparities in wealth than ever before, with the top 10% now owning 45% of the nation's wealth. Wages has flowed into "one sector" but it's certainly not people who would be represented by unions.

It all sounds good on the radio doesn't it, but is it well thought out? Come November 24, it won't matter anymore because whoever wins well be stuck with then for 3 years.