Labor has seized on documents suggesting Peter Costello ignored Treasury advice about the threat posed by inflation and a rapid rise in government spending.
Documents obtained under freedom of information laws show the former treasurer and other senior Howard government ministers were warned about the impact of rising inflation six months before last year's federal budget.
The Treasury minutes obtained by the Nine Network show Mr Costello was warned the economy was running close to capacity and that there was a real risk significant spending would add to inflationary pressures.
Treasurer Wayne Swan was quick to point to the documents as proof that the Howard government is largely to blame for the inflation problem and higher interest rates.
Labor has committed tocutting spending as part of its so-called inflation fighting budget.