The Labor government is deluding itself if it believes lower interest rates are a sign they have the economy well in hand, former Liberal leader John Howard says.
In 2004 when Mr Howard was contesting an election as prime minister, he said interest rates would always be lower under a coalition government.
"The context in 2004 was who was better to deliver lower interest rates in a booming economy," Mr Howard told the Australia-Israel Chamber of Commerce on Tuesday.
Then the Reserve Bank of Australia's cash rate was 5.25 per cent compared with 2.50 per cent now.
Mr Howard said rates were lower now because the economy was slowing.
"For anybody to run around between now and election day and say that a cut in interest rates means that the government has got the economy well in hand, they're deluding themselves," Mr Howard said.
"Look at some of the nations of Europe. They have got virtually zero interest rates and their economies are not moving."
Australia boasts a triple-A rating from all three major credit rating agencies. It is one of only eight countries in the world to hold such status.
But Mr Howard pointed out it was former Liberal treasurer Peter Costello who helped Australia restore a triple-A standing.
"A triple-A was not something that came about when Kevin Rudd became prime minister," Mr Howard said.
"What he is saying is we still have a triple-A rating, and I say, despite him."
Mr Howard's government introduced the GST in 2000, an impost which many believe now should be broadened and its rate increased from 10 per cent.
Mr Howard said tax reform was something that needs to be revisited.
"If the Labor party and the Democrats had not punched a hole in the GST that the Australian people voted for in 1998, the financial position of the states that get all of the GST revenue now would be much better than it is," he said.
