KEY POINTS:
Former Australian treasurer Peter Costello has lambasted prime minister Kevin Rudd's latest spending package.
Costello labelled it the biggest economic U-turn in Australia's history.
Rudd's government announced yesterday it is spending A$42 billion stimulating economic activity through cash payments, tax breaks and infrastructure projects.
The spending and plummeting tax revenue will see the Government's A$22 billion surplus slide into a A$22.5 billion deficit.
Costello told ABC Rudd has gone from trying to contain growth to desperately trying to stimulate it, in less than 12 months.
"Twelve months ago... Kevin Rudd was saying the inflation genie was out of the bottle, we needed interest rate rises and we needed larger surpluses," Costello said.
"That was 12 months ago. He was wrong - wrong throughout 2008.
"He was actually urging on a restrictive monetary and fiscal policy when what we should have been doing last year is ensuring that we had pro-growth policies.
"He's turned around, he's done a U-turn. He's done the biggest U-turn in Australian economic history."
Costello says Rudd has driven the economy into the red.
"I would not go deliberately into deficit, in fact, even Kevin Rudd says he didn't go deliberately into deficit," he said.
"He's claiming he was forced into it because revenues dropped. It's false. It wasn't the revenues, it was the policy decision."
* * *
Yesterday the Reserve Bank of Australia (RBA) cut its official cash rate by 1 percentage point to 3.25 per cent.
- RADIO AUSTRALIA
