Employment Relations Minister Tony Burke says high inflation rate of 5.1 per cent due to Coalition government’s ‘neglect’

Employment and Workplace Relations Minister Tony Burke has attributed some of the burden of the high inflation rate to the previous government’s “neglect”.

Tony Burke says previous government “neglect” is partly to blame for the current inflation rate which is currently at 5.1 per cent.

Reserve Bank Governor Philip Lowe warned during the week that inflation could hit seven per cent by Christmas and it would not begin to fall until the first quarter of 2023.

“Inflation’s high, it’s too high. At the moment it’s five per cent and by the end of the year I expect inflation to get to seven per cent,” he told ABC’s 7.30.

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“That’s a very high number and we need to be able to chart a course back to two to three per cent inflation. I’m confident we can do that but it’s going to take time.”

The last time Australia’s consumer price inflation was above seven per cent was back in September 1988, according to the RBA.

But Mr Burke said domestic factors coupled with international drivers are to blame for the high figure.

“Inflation is not being driven by high wage growth,” Mr Burke told Sky News Australia’s Andrew Clennell.

“We don’t have high wage growth. The wage price index has been running at 2.4 at the same time that inflation was coming in at 5.1.

“The drivers of inflation – some of them are international and some of them are previous government neglect.

“What’s been happening in energy prices, what’s been happening with skills shortages – they’re domestic issues.”

Mr Burke also flagged enterprise bargaining as the key way to get wages moving.

“I want to get wages moving and enterprise bargaining has been the best way of doing that hand-in-hand with productivity,” he said.

“Wage stagnation happened when we were told we couldn’t have wage improvements because inflation was low.

“Now some people are arguing we can’t have wage improvements because inflation is high.”

Australians are already battling a cost of living crisis with high prices for petrol, power and groceries but Dr Lowe said the RBA needed to do “what’s necessary” to reduce inflation levels.

The RBA governor admitted it was “unclear” how high interest rates would need to rise to counter the inflation spikes but he remained confident the rate increases would work.

Interest rates were at a record low of 0.1 per cent throughout the pandemic to help ensure the resilience of the economy but at last week’s RBA Board meeting it was decided to raise the cash rate by 50 basis points to 0.85 per cent.

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