ID :
132056
Thu, 07/08/2010 - 19:40
Auther :

Election campaign rate rise on the cards


Julia Gillard is facing the prospect of a rate rise in the middle of an election
campaign after almost 50,000 people were added to the workforce last month, putting
upward pressure on inflation.
But as the prime minister received good news on the strength of the economy, she was
forced to qualify her plan for a regional refugee processing centre in East Timor.
Ms Gillard on Tuesday unveiled her vision for East Timor to become a processing hub,
but has since pulled back from the announcement, instead saying no specific location
had been earmarked.
"I did outline a vision and the vision was for a regional processing centre and that
is important because it completely undercuts the people smuggling market because
they no longer have a product to sell," she told Brisbane radio 4BC.
"I'm not going to leave, undisturbed, the impression that I made an announcement
about a specific location."
The development came as strong economic figures presented a double-edged sword for
the government.
Figures from the Australian Bureau of Statistics show another 45,900 people found
work last month, far exceeding economists' expectations, taking the jobless rate to
5.1 per cent, its lowest level since January 2009.
But the result, while demonstrating the resilience of the economy, has also boosted
expectations that the Reserve Bank of Australia (RBA) will begin raising rates again
as the economy continues to pick up pace.
RBS Australia senior economist Felicity Emmett said falling unemployment would add
to inflationary pressures, raising the possibility of a rate hike in August.
The election is yet to be called but expectations are high that it will take place
next month.
"The ongoing strength in the labour market confirms our view that the RBA still has
a tightening bias, given that falling unemployment is likely to put pressure on
wages with the potential to add to inflationary pressures next year," Ms Emmett
said.
Employment Minister Simon Crean said the positive jobs result and its impact on
inflation should not necessarily prompt the RBA to move on rates in August.
"What it does in the future is up to them," Mr Crean said.
"But I think that we should welcome the fact that we've got strong jobs growth and
it is in the Reserve Bank's charter to not just be concerned about inflation but to
also be concerned about employment opportunities."
The jobs figures were released as Opposition Leader Tony Abbott announced a
coalition government would create a small business and family enterprise ombudsman
to advocate for the sector and provide dispute resolution and support services.
"Small businesses are often wedged between rules for individuals and rules for
businesses because effectively they are so often individuals in business," Mr Abbott
said.
"This new ombudsman will be a policy advocate ... and will also be able to help
small business people be able to resolve disputes with government agencies."
The idea was immediately panned by the banking sector which warned it could be
counter productive and result in less finance for the small business sector.
The Australian Bankers' Association (ABA), whose members include the big four banks,
says that will likely increase the risk that banks face when lending money.
ABA chief executive Steven Munchenberg said banks would be more reluctant to lend
money to small business.
"It could end up impacting on credit availability to the sector," he said in a
statement.
The International Monetary Fund also provided good news for the government,
releasing a report in which it stood by forecasts that Australia's economy would
grow by three per cent in 2010, accelerating to 3.5 per cent in 2011.



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