There is one factor that neither labor nor the libs will be able to control in the future.

That factor is the cashed baby boomers who retire, interest rates will not affect their spending habits, in fact higher interest rates means more money they will earn on some of their investments, thus more money for them to spend.

It will not matter which party wins the next election, interest rates will continue to spiral upwards. Until the next big crash.

Excellent article. I totally agree. Howard is always in to the negative blame game and as the leaked poll said, he was going to attack the states as his latest ploy to con the electorate, since none of his other ploys have worked so far.

In Howard's Australia we have become materialistic and addictive consumers. His monetary bribes have resulted in people spending and spending and continually spending beyond their means. The piper is being paid.

Of course the interest rate rises are NOT the states fault. This is just another of Howard's many furphies.

Well argued. I don't think Howard was really convinced himself that the states were to blame for the interest rate hike. He had to put out some sort of statement sheeting the blame home elsewhere, and as the states have been his latest bugbear, they got it.

A small digression but now you mention it Fred, weren't those 12 technical colleges meant to be up and running now? They were meant to help address our hard skills shortage. As far as I know only three have been established and two of those are struggling for enrolments.

So much for the Governments commitment to skilling Australia.

The Howard government is criticising the States for borrowing to invest in infrastructure. But they should be applauded for doing just that.

The Howard government had the perfect opportunity to do some big things for Australia, but instead they frittered away the years catering for the wants of Mr Bush and the big end of town. Mr Howard's ego is his Achilles Heel and the US State Department plays him like a trout.

Interest rate adjustment is just fine tuning economy...the effect, assuming all the other factors remain as is, is small stepped changes in overall flow of cash through the economy...

but if there are bigger factors at play affecting that cash flow...then focusing on interest rate is a waste of effort...

the biggest money spinner, ie where bulk of money flows(besides total wages flow)...is common people and paying interest on home loan...an accountant said on loan of $300,000(the average loan) over 30 years and payment per agreement....the person pays $900,000 over term ie $600,000 interest to pay for $300,000 loan...30 years later when close to retirement...see the problem...effectively 'loan-work-desparation'-slavery to pay loan off otherwise fail to meet repayments and end up financially much worse...yep bankcruptcy...which forces a common Australian into a desperate state to work to pay for a place to live...and more likely to accept exploitive working conditions...while sacrificing quality of life...not the most proxductive of situations...

solution...a change is needed...which will naturally happen...like those gas guzzling monster american cars built upto 70's that now rarely seen....people will find a better balance to work and life...and its better if parliament recognizes this and with good laws forces the goverment to act now for lesser return but better future outcome...eg smaller and cheaper homes on smaller land...and larger parks with facilities in each suburbs...so home is for eating and sleeping...and outside for activities...And this has added benefit of cheaper energy bills particularly when 'cheap energy' appears at an end and costs set to sky rocket... as an example...

Sam

A good article and an equally good set of replies. Howard should also have used the surplus to provide more infrastructure instead of giving back to the spendthrift public to squander and push up inflation. We still desperately need more tradespeople and on a completely different track we still need public housing and care for the mentally ill who the states have put out onto the streets. No votes there however.

David