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One big fight in this budget is going to be whether the government’s policies to reduce inflation are legitimate.
They’ve “mechanically” reduced consumer price inflation via two policies: the $300 energy bill relief and increases to Commonwealth rent assistance. Together these spending measures “directly reduce headline inflation by ½ of a percentage point in 2024–25,” the budget papers say.
Normally we fight inflation economy-wide and do so indirectly, via monetary policy and Keynesian policies that reduce spending overall. But in this case, the government is sticking its spanner right into what the Bureau of Statistics measures when it measures inflation.
ABOUT THE AUTHOR
Jason is an economist and freelance journalist. He has worked at The Australian Financial Review and for the Republic of Nauru and the Australian Treasury. He blogs at Thomas the Think Engine.
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