The pain of higher interest rates denotes an even greater focus on the fight against inflation. Rightly so. As the Reserve Bank pulls harder on the monetary policy lever to reduce aggregate demand, a proper focus also falls on the role of all governments to do likewise through spending restraint.
However, it’s critical that Australia doesn’t allow debate about reining in spending to come at the expense of efforts to enable the economy to have sustainably faster growth – namely, how to lift productivity.
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