Critical economic decisions ahead for Rudd: Treasury

Australia stands at a crucial economic juncture and significant reform is required if threats to the country’s prosperity are to be avoided, newly released Treasury briefing documents have revealed.

The documents, prepared by the Treasury for the incoming Rudd Government, were released to the public after a freedom of information request by media outlets.

They paint a picture of an economy resting on a knife edge, with the growing threat of inflation and costs of dealing with climate change presenting huge challenges in the short to medium term.

“You have been elected at a pivotal economic juncture,” the document states, with a number of issues such as inflation, ageing and the rising power of emerging economic giants such as India and China presenting “challenges that are becoming increasingly acute”.

The Treasury also uses dramatic language to describe the challenge of coping with climate change, stating that it is “the single most pressing environmental, economic and social challenge this country faces”.

“If stated emissions reduction objectives are to be achieved, the energy profile of the economy will have to be fundamentally changed,” the document states.

The message on inflation has influencing thinking within the Rudd Government, with Finance Minister Lindsay Tanner yesterday ramping up his rhetoric on the need for tight spending discipline in this year’s budget.

“There will be pain,” Tanner says, “but if we allow the inflation genie out of the bottle we will have a really major economic problem in this country, and it will be very difficult to get it back in check.”

Tanner and Small Business and Assistant Deregulation Minister Craig Emerson yesterday also conducted the first meeting of a key state/federal working grouped tasked with reducing the red tape on business.

Emerson says the group will move quickly to slash red tape across a range of areas. “The timetable for implementing reform to reduce regulatory burdens in important areas is in the process of being finalised. It will set an ambitious agenda to complete reforms in a timely manner, which business groups have been calling for,” he says.