Fed: Rate hike not the states' fault: Allison

AAP General News (Australia)
08-08-2007
Fed: Rate hike not the states' fault: Allison

CANBERRA, Aug 8 AAP - The latest interest rate rise has nothing to do with state government
borrowings, the Australian Democrats say.

Prime Minister John Howard has tried to partly blame the states' debt for today's 0.25
percentage-point rate increase - the fifth since he was re-elected on a platform of promising
to keep interest rates low.

But Democrats leader Lyn Allison today rejected the prime minister's assertions and
accused the federal government of misrepresenting the commonwealth's debt.

"The prime minister's contention that the states are to blame for this rate rise is
deceitful propaganda," she said.

"States' spending on infrastructure is not inflationary and, in any case, the Howard
government is not ... debt-free as it claims."

The commonwealth had large debts in bond markets and superannuation, Senator Allison said.

"Today's interest rate rise is primarily a reaction to a buoyant economy, the strength
of the private sector and consumption spending," she said.

"The reality is that neither commonwealth nor state debt is adding substantially to
interest rate pressures and another tricky sleight-of-hand explanation won't alter that
fact."

AAP dcr/sb/jm/jlw

KEYWORD: RATES DEMS

2007 AAP Information Services Pty Limited (AAP) or its Licensors.