Government piggy bank to save us?

Rudd Government vows to cut fat - National - theage.com.au

According to the new Federal government:

THE budget surplus needs to be bigger and the Rudd Government's first budget will tighten fiscal policy "significantly", Finance Minister Lindsay Tanner has warned, as he searches for fat around departments to cut.

Mr Tanner said the present inflationary pressure meant the budget situation needed to be stabilised. "Spending has accelerated too quickly," he said.

The surplus needed to increase as a proportion of GDP to put downward pressure on interest rates, he said.

"The projected surplus is a fraction over 1% of GDP. A surplus of 1% is good, but not necessarily good enough", he said. "There is a clear need for a significant tightening."

I have limited understanding of economics, but my intuition is that there is something very wrong about the very idea of using a budget surplus to control inflation.

It also places Labor in a very peculiar political position. It liked to accuse the Howard government of being "big taxing", and skimping on spending on infrastructure. Now Labor will keep the same taxes Howard would have, but just let them sit in the government piggy bank, and (presumably) still limit the spending on infrastructure and the public service. (How ironic too that I heard that there will be cuts to the Foreign Affairs department. I would have thought having more public servants posted overseas might help our economy if it meant they spent their salary in another country!)

Certainly, I have a problem with the idea, currently all the rage with many Left of Rudd, that the tax cuts should be abolished because they provide too much stimulus to the economy. As Harry Clarke points out, it's simply going to replace bracket creep anyone, which surely is only fair.

Has any other country ever been in a similar position to this and successfully used budget surplus increase to limit inflation?

Some economist comment needed, and I don't mean John Quiggan.

And: for God's sake, what does Kevin Rudd think he is doing with the length of his sideburns? Is he a secret Elvis fan?

UPDATE: I suppose that the good thing about economics is that you can hold any opinion and expect that there will be an economist somewhere who will support you. This article from The Australian indicates that there is indeed reason to be sceptical about an increased budget surplus helping significantly with inflation, but it would seem most economists think it at least won't do any harm.