Opposition Leader Kevin Rudd says he cannot guarantee interest rates will not rise under a Labor Government.
But he has promised to maintain budget surpluses and tackle capacity constraints in the economy to help the central bank keep rates down.
His comments came as Mr Rudd prepared to host a summit on housing affordability in Canberra today, amid predictions interest rates could rise following yesterday's inflation data.
Economists said the Reserve Bank of Australia is now highly likely to lift rates by a quarter percentage point as early as next month, after inflation rose to 1.2 per cent for the June quarter, well above expectations.
It would be the fifth increase since Prime Minister John Howard was re-elected, although the Government said rates are still at historically low levels.
"No government can make any promise in relation to interest rates, what you can do is make sure ... the budget policy takes as much pressure off the Reserve Bank as possible," Mr Rudd told Channel 9.
"The Reserve Bank sets rates. Governments don't set rates.
"My job is to make sure, as the alternative prime minister, that through the budget policy we pursue - which is to produce budget surpluses over the economic cycle - that we take as much pressure off the Reserve Bank as possible in order to keep interest rates as low as possible."
He said people were disappointed in Mr Howard because the prime minister had pledged before the last election to keep interest rates low, yet they had risen four times since.
Mr Rudd said he had no silver bullet solutions to the housing affordability crisis, but would consider tax breaks for first-home buyers to help them get into the market.
He warned political leaders had "a real challenge on our hands" to ensure Australians had access to affordable housing.
"If you go back 10 years, the average cost of a house was something like four times that of the average annual wage; today, 10 years later, it is seven times the value of an average annual wage," Mr Rudd said.
"People are particularly concerned about first home buyers.
"One of the proposals we've got on the table today is 'how do we help first-home buyers get into the market' in terms of encouraging them with first-home buyer deposit schemes which could be treated in a concessional way by the taxation system."
State housing ministers will join Mr Rudd and housing industry stakeholders today in nutting out the issues.
Opposition treasury spokesman Wayne Swan said the Federal Government's failure to invest in education and tackle skills shortages in the economy were partly to blame for the rise in inflation.
"This government has been complacent when it comes to the main drivers of productivity in the economy, and there's no doubt in the longer term that's put upward pressure on inflation and upward pressure on interest rates," said ABC Radio.
"We should have invested more in the training and the education of our people - that is one significant factor here."
Mr Swan said the housing affordability crisis was rapidly becoming an economic problem as some workers could not afford to live near job opportunities.
But he rejected suggestions buyers were being too picky.
"Some people may have unrealistic expectations or be aiming too high, but I think the great bulk of people are now struggling just to put a very basic roof over their heads," he said.
Source: AAP
