Is the independence of the Reserve Bank of Australia (RBA) about to face an unprecedented challenge from the Coalition and its media supporters?
The government is desperate to avoid a rate rise at Tuesday’s RBA board meeting, which will confirm that millions of Australian families face the nightmare scenario of plunging real wages and higher mortgage repayments as a result of the Coalition’s economic management.
Treasurer Josh Frydenberg, in a subtle but explicit (and unprecedented) attempt to sway the RBA board — all of whom have been appointed by the government — is now arguing that the RBA has previously said it wouldn’t lift rates until wages growth rises significantly.
That is, Frydenberg is saying, there’s no case for a rate rise now, given wages growth — as a consequence partly of the government’s own policies — remains mired in pre-pandemic stagnation.
But Frydenberg is being disingenuous. The RBA has made clear that it has moved away from its “wages first” strategy months ago, instead stating that it was prepared to be “patient” in relation to inflation and the timetable for rate rises, even as financial markets brought forward its expectations of rate rises from 2023 to mid-2022.
But the rapid rise in energy costs globally, supply constraints and then Russia’s invasion of Ukraine further changed the RBA’s thinking. In April it ditched “patient”. Consider the last two paragraphs of the April board minutes:
These developments have brought forward the likely timing of the first increase in interest rates. Over coming months, important additional evidence will be available on both inflation and the evolution of labour costs.
Consistent with its announced framework, the Board agreed that it would be appropriate to assess this evidence and other incoming information as it sets policy to support full employment in Australia and inflation outcomes consistent with the target.
That additional evidence arrived on Wednesday, and it clinched the case — whether the rise is in May or June isn’t important.
But from Morrison and Frydenberg’s point of view, it is absolutely crucial that it be June. For all the talk of how rising interest rates will somehow magically encourage people to vote for the government that is presiding over them, a rate rise on Tuesday will be a body blow to the Coalition’s campaign — even if only because the mainstream media think it will be and will portray it as such.
With Frydenberg going further than any recent treasurer in appearing to dictate what the RBA should do, Morrison might be tempted to go further. Not perhaps in trying to tell the RBA what it should decide — though that kind of Trump-like interference can’t be ruled out for a prime minister who has borrowed so extensively from Trump’s playbook — but in portraying the RBA as out-of-touch bureaucrats who don’t understand the real lives of hard-working Aussies. Morrison will be on the side of Aussie workers, and against the Martin Place elitists.
US-controlled News Corp stands ready to help in such a campaign. Today, The Australian editorialised that there was no case for the bank to raise rates on Tuesday: “Uncertainty remains about the global outlook and how long it will take for post-pandemic supply-chain issues to be resolved. Higher rates will have little impact on global oil prices or building costs forced higher by supply constraints. Many of our inflationary problems are driven by a squeeze on supply rather than an excess of demand. This is not possible for the RBA alone to solve.”
In 2008, The Daily Telegraph was less subtle, attacking then-governor Glenn Stevens as “the most useless man in Australia”, accusing him of wanting to raise interest rates and encourage politicians to lift taxes. The previous year, Stevens and the RBA board had enraged the Coalition with their election campaign rate rise.
Remember Concetta Fierravanti-Wells’ assessment of Scott Morrison’s character — ruthless, an autocrat and a bully, no moral compass. His period as prime minister has seen a collapse in standards of integrity in public life, all the way up to his own conduct and that of his office. Trashing the Reserve Bank, or even trying to bring its independence to an end, would be entirely in character for a man known to do and say anything to preserve his power.
This could be the most dangerous moment in Australian economic policy since the Reserve Bank became independent in the 1990s.
I am interested to know why Morrison wants power so much ?
Having achieved it three years ago, he doesn’t seem to know what to do with it !
Same with Abbott. Even Turnbull, who seemed to have a few convictions, obviously valued power more than money, as many do. I was going to say human nature, but then think of the apes fighting to be alpha male.
I would say, it’s because psychopaths tend not to look at power as something that they can use to help others, but rather, as something that can be used to further heighten their own opinions of themselves. For instance, getting away with lying in public, corruptly allocating funds, flouting conventions, etc, are all ways of saying to themselves, that they’re superior to others, because nobody has been successful in reeling in the egregious behaviour.
Stratospheric narcissism.
Spot on. Morrison is the definition of a sociopath.
Yes Anonymous Bosch you obviously are in agreement with Wilkinson & Pickett a well respected pair of sociological researchers who capture the essence of those like Morrison very well in their book “The Inner Level” (2018). In their book they refer to the ‘pathological narcissist. The pathological narcissist is often characterized as lacking in empathy, reacting badly to criticism and being excessively preoccupied with themselves, with success and their image. The pathological narcissist has no compunction in lying, cheating, cutting corners and bending/breaking rules in his/her quest for power. In this they are not that far removed from some of our wealthiest business leaders
Wilkinson & Pickett further contend that narcissists ‘tend to be regarded as effective leaders probably because of the confidence they exude. Morrison’s arrogance and aggression also most likely explains his higher popularity among dis-empowered males than among females. However, they argue that narcissists like Morrison become increasingly unpopular as their ‘arrogance and aggression come to the fore.
Sounds like a perfect description of the biggest morally bankrupt PM this nation has ever produced. One who thrives on division at a time when our nation is crying out for cohesion and fairness and social justice. The sooner Morrison and his sycophants are consigned to the dustbin of history the better for all fair minded people.
I thought you were writing about Putin.
Well, I was going to point out, that in my semi-educated opinion, I would consider Morrison and Putin to conform to most definitions of high functioning psychopathy, while Trump and Johnson seem to be the very epitome of narcissism. But I didn’t want to get into a long technical discussion of the differences between psychopaths and narcissists.
Not forgetting Sociapath!!!
“Doggie in a manger”? …..To stop successors finding out what he’d done, with that power?
Control of the purse strings. The ability to enrich grifters so he can grift off them in retirement.
Like Howard he wants to remake the country in his image.
Also, for the right everywhere it’s always and first and foremost about keeping the other side from winning power.
Don’t forget also that he’s fighting higher powers. He’s on a mission from God, with Brother Stuie, to win Australia for Christ after all. The ultimate prize. Whether we like it or not.
The seemingly unimportant aspect of this religious war that appears to have escaped most Australians or is relegated to ‘not something to be discussed’ is that it is real. The ‘christian’ right has been active in Canberra, and other places, for decades, once upon a time taking the word ‘lions’ in their name, why one asks.
That Australians seem unaware of this reality or don’t care is troubling to say the least. The ‘christian’ right has developed strategies to marginalise those who don’t agree with them and the tactics often appeal to the venality of the ‘true believers’, the sub-text of ‘prosperity christinity’ being a beautifully simple example, if you are not rich it’s your fault and we can write you off as in any way ‘worthwhile’, that’s according to what we define as ‘worthwhile’.
Simple answer. He does know what to do with it. Promoting mates to lucrative and influential positions, EG the AAT, Diplomatic posts. Pleasing his “God” via the Hillsong church and keeping his loyal mates in office. and making sure that women know their place, like Jen, in the home. Not to mention keeping the funds flowing to the LNP via the miners and developers.
Just keeping his “broad church” rolling along happily.
Less the dog that finally catches the car and doesn’t know what to do with it, nor even Frank Hardy’s ‘Power without Glory’.
A similar essential vacuum was well captured by Deane Welles in 1977 with his excoriation of the Fraser years, “Power without Theory“.
With Scummo, his mean end is just “being there” – clearly simple minded but utterly lacking Chance(y Gardiner)’s disingenuous charm.
The proof will be in how politicised the RBA has become. I have detected the gradual right leaning for some time now. If they kowtow to Morrison, Frydenberg et al, their so called independence will be trashed.
Agreed
As I’ve commented before: better to offend a tired government on its way out than a fresh government on its way in.
Philip Lowe’s tenure is until Sept 2023 when he could be re-appointed. Ergo should he earn a re-elected Morrison’s ire, he’s safe for a while yet. Fifteen months is plenty time to prepare his CV & look for another career opportunity.
Five of the other board members have several years yet to serve therefore Morrison or his Treasurer (if re-elected) do not present an immediate threat to them.
Morrison has no shame, what does he care about alleged independence of a statutory authority, meh…
The RBA is only nominally independent, regardless of what either they or the government say – the RBA is a government created and controlled entity, and if the government chooses to tell them what to do they’ll have to do it.
The independence of the RBA was always just a ploy to politically isolate the government of the day from the pain that monetary policy imposes in a neoliberal economic framework. And it actually makes for even more incoherent general economic policy than you’d have without it – the perfect example being the RBA cutting rates while being pretty damn explicit about asking the government to stop with their policy of driving wages down. Having the government and RBA literally acting diametrically opposed clearly demonstrates the stupidity of it all – RBA “independence” hasn’t made for better economic policy, it’s just made the politics of the whole thing even murkier, and the nature of the failings even more idiotic.
A far better approach would be for the RBA to set their target interest rate at 0 and leave it there, managing lending activity using prudential regulation rather than interest rates. At least then this game of highly politicised non-political economic policy could be thrown out the window, and the blame for economic policy failures could be sheeted home to the ones that actually failed – the government.
The RBA is supposed to be independent of government. Morrison and Frydenberg are endeavouring to influence the RBA for their political gain. I would call that corruption.
So would I.
I’d call almost every thing they do corruption. These rats are corrupt five times before breakfast.
It would be proved corruption if there was some way it could be policed.
Stock in trade sophistry from Tosh Fraudenberg.
I don’t think they will raise rates next week, I don’t think they have the balls to go against Morrison/Fraudenburg. Be better to offend Albanese.