Simon Kennedy (Cook, Liberal Party) Share this | Hansard source

That's one of the most dangerous economic ideas I've heard in my time in this place—having Labor overrule the RBA on interest rates. The RBA has been one of the most effective independent institutions that the Australian government has. To suggest that a political party should be overruling an independent body that is managing our economy and managing inflation is absolutely economic vandalism and risks plunging this country into a deeper economic crisis than it already finds itself in. That is absolutely ludicrous from the last member. We need to defend the Reserve Bank, which safeguards our prosperity; we need to defend it from politicisation. Suggesting that a party should be setting interest rates running into an election is absolute lunacy. Sadly, through inflationary periods, we're reminded of its importance. That is absolute populism to say that we should allow political parties to set interest rates.

Since the first formal agreement on the framework for monetary policy in 1996, which was the formal endorsement of the RBA utilising monetary policy to achieve an inflation rate of two to three per cent, we've seen its impact. Before this, from 1976 to 1984, inflation grew 9.3 per cent annually. Between 1985 and 1992, it grew 6.3 per cent annually. Following the implementation of this target and empowering an independent Reserve Bank, between 1993 and 2023, inflation grew by just 2.6 per cent annually. Why is this important? To quote Ronald Reagan:

The very word "inflation" leads us to think of it as just high prices. Then, of course, we resent the person who puts on the price tags, forgetting that he or she is also a victim of inflation. Inflation is not just high prices; it's a reduction in the value of our money.

What does that mean? It means that individual households get poorer. And if you had a populist policy like what was suggested here, we would see Australians right across the country get poorer. It's just a great example that you cannot listen to the Greens. If you allowed the Greens anywhere near the economy, if you allowed them to share the balance of power with Labor, which is a risk in the upcoming election, this is the type of economic vandalism we will see. We risk seeing inflation getting back to where it was—9.3 per cent annually—before the Reserve Bank was made independent. Suggesting that the RBA should be overruled by a political party leading into an election on interest rates is absolutely sheer lunacy.

Thanks to this Labor government, we still have too much money. I'm glad that the leader of the Greens is here. If we let a political party start overruling the RBA on interest rates in the lead-up to an election, it would be letting the kid into the candy store. It's absolute lunacy. I'm sure the Treasurer would absolutely agree. He would absolutely agree that you cannot let a political party overrule, as the Greens just suggested, an independent group of economists who have done an amazing job.

Pardon?

So the leader of the Greens—listen! We're sick of your politicising. We know you play footsies with the Greens when it suits. Now when they're talking about extreme measures—

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