Markets 
Weather 
Government spending plans over recent months have not changed, the Treasury boss has declared, saying inflation pressures have grown because of private investment, household spending and a better global outlook.
Jenny Wilkinson, under questioning in a parliamentary committee from Liberal senator James Paterson, pushed back at suggestions that government spending had added to the lift in inflation that was behind last week’s decision of the Reserve Bank to lift interest rates.
After a $10 billion deficit last financial year, the government is forecasting a $36.8 billion deficit this year.
The Coalition has accused the government of contributing to the interest rate rise through its spending.
Paterson said the budget had been going deeper into deficit. “That is net stimulatory on the macro economy, isn’t it?” he said.
But Wilkinson said the budget bottom line had actually improved slightly from what had been expected at the time of the May election.
What had been surprising was the lift in private investment, particularly on data centres.
Household spending had been stronger, while the global economic outlook was better than had been forecast.
She said “circumstances had changed” from the middle of last year, but the change had come out of the private sector rather than through federal government spending.
“What is critical to understand is what are the underlying factors or drivers that have changed,” she said.
“And the stance of fiscal policy … that has not changed.
“If anything, if we look back at [the election budget update], the change was greater than what it turned out to be.”
Read the full article here
