Both governments (through their Central Banks) and private banks (through lending) create money. When the Australian government spends, money is created. When it taxes, money is destroyed. The government does not need to issue bonds in order to finance its spending activities.

Re: inflation figures - where exactly have Australia's CPI figures been cooked? There is a lot of valid criticism re: the jobs numbers, but inflation not so much.

Competitive price pressures, an economic crisis and lack of private sector wage growth have led to persistently low inflation in most developed nations. Exception being the UK, where inflation has been picking up substantially on back of aggressive decline in the pound.

Cheers