Chris Pearce (Aston, Liberal Party) Share this | Hansard source

I rise as Deputy Chairman of the Standing Committee on Economics to speak to the Review of the Reserve Bank of Australia annual report 2007 (first report). This was an interesting report, as you have just heard from the chair, the member for Dobell, because this was the first time that the Governor of the Reserve Bank of Australia and senior colleagues had had the opportunity to be questioned by the Australian parliament following the election last year. Of course it was during that election that the current government promised to lower the cost of petrol, to cut the cost of groceries and to lower home loan interest rates, and we all know now as a matter of history that, since the Rudd Labor government was elected, all three of those things have in fact gone up.

The report is a detailed report and it has been tabled, but I would like to focus on two issues in the report if I could. The first one is the nonsense that the Labor Party and particularly the Treasurer have been peddling about the inflation genie being out of the bottle. Even today in question time we heard the Prime Minister talking about the inflation monster. So the genie has now been converted and is now a monster. I asked the governor a very direct question. I said:

Some people have said that ‘the inflation genie is out of the bottle’. The plain meaning of an expression or a phrase such as that is that something, if you like, is out of control, off and running, cannot be controlled, cannot be fixed—it is all over the place. My question to you is: would you agree that inflation is out of control?

I got a very interesting answer from the governor. He said.

I do not want to comment on colourful things that are said in public debate, but what we have said is inflation has risen and that is a problem. It has to be dealt with and we are dealing with it. We will contain it and it will come down. Is it out of control? No, I have never said that. I have tried, if you like, to make balanced comments that one cannot say that there is not a problem. There is a problem, but I do not think it is out of control.

So we have the Prime Minister calling it a monster, we have the Treasurer saying the genie is out of the bottle, but the Governor of the Reserve Bank has said that inflation is not out of control.

The other aspect that I want to particularly touch on—and we heard the chairman of the committee continue to peddle this fallacy just a minute ago—is about the 20 so-called warnings. This is a very interesting line that the Labor Party continues to try to run. Again I asked the Governor of the Reserve Bank a particular question. I asked:

Could you outline to the committee what warnings you have issued to the current government?

The governor said:

Warnings about what in particular?

I then said:

Have you issued any warnings to the current government?

The governor said:

I am not sure what we mean by ‘issuing warnings’. We meet with the Treasurer monthly, as has long been the tradition, and talk about the economy and the various risks it faces. I do not think that would qualify as: ‘Treasurer, I am warning that you’ve got to do this or that.’ Most of our conversations with governments over the years have not been of that sort of nature. They are an exchange of information and opinion about what is happening, what issues may be arising and how we are thinking about things.

I then asked:

Did you issue any warnings to the previous government?

That was the previous Liberal-National coalition government. Mr Stevens said:

About?

I said:

Well, did you issue any warnings to the previous government?

We have just heard the chair of the committee say that there were 20 warnings, and this is what the Governor of the Reserve Bank said to my question about whether he issued any warnings to the previous government:

I cannot recall us writing a document saying, ‘We warn you of X,’ if that is what you mean.

So the Governor of the Reserve Bank is on the Hansard record as saying that there were no warnings issued to the previous government; yet we have the Prime Minister running out there peddling this line. We have the Treasurer and even the chairman of the committee five minutes ago saying that the previous government ignored 20 warnings when the Governor of the Reserve Bank of Australia said in Hansard that the Reserve Bank did not issue any warnings whatsoever.

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