Former Commonwealth Treasury official Gene Tunney says the federal government must cut spending to have any chance of reining in inflation.
Tunney, now-director of Adept Economics, says multiple factors contributed to Australia’s current inflation rate of 5.1 percent—likely to be higher at the next announcement—including the war in Ukraine and billions in COVID-19 era subsidies.
The decision by Australian state governments to adopt harsh lockdown policies spurred the federal government to inject billions into the economy to keep families and businesses afloat, including the $89 billion (US$60 billion) JobKeeper, a fortnightly payment to businesses and sole traders.
“That was always going to have an inflationary effect because you’re increasing the amount of money, but you’re not increasing the productive capacity of the economy by the same proportion. Hence, you have too much money chasing too few goods,” Tunney told The Epoch Times….