Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

For those who scoff opposite, I would draw their attention to the most recent statement to this effect by the International Monetary Fund. If you are able to bring your fiscal policy into balance with your monetary policy, and to ensure that you have got the right settings overall, you make the job of the Reserve Bank easier to bring down interest rates over time. That has been one of the core organising principles which we have sought to bring to bear in the debate on the economy.

As I said at the beginning of my remarks, the key thing is that it is the Reserve Bank which sets rates. I note with interest, on that score, that the Leader of the Opposition had something to say to this effect this morning. He was disputing the proposition that the independence of the bank should be respected. In fact, the Leader of the Opposition began speaking about a particular requirement of the bank to bring in a 50 basis point decrease. A journalist said to the Leader of the Opposition: ‘You have made a case for 50. If you are Prime Minister, does that give you carte blanche to tell the Reserve Bank what you expect in terms of rate movements—cuts or increases in the future?’ Mr Nelson replied, ‘Well, the responsibility of the Prime Minister and the government of the day is obviously to make sure that we get the economic settings right, to talk up the Australian economy, not to talk the economy down, to speak responsibly about the inflationary challenge that we face.’ All fine and dandy. We go on. Journalist: ‘Would you like to see the Prime Minister say what you have said?’ That is calling on the bank for a 50 basis point decrease. Mr Nelson: ‘No, I’m not going to comment on that at all.’ Journalist: ‘But you’re the alternative Prime Minister as well. If Prime Minister, does that mean that you will tell the Reserve Bank what you expect in terms of rate movements?’ Answer: ‘No.’ So what we have is the Leader of the Opposition going out on the doors this morning, saying to the Reserve Bank that there should be a defined decrease of a particular quantum in the cash rate, while we on this side of the House respect the independence of the Reserve Bank. But then he is asked the key question: ‘You’ve said that as Leader of the Opposition. If you’re elected as Prime Minister, are you going to say that as well?’ He says no.

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