Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I'm pleased to resume the speech on the Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 that I began in the other chamber, where I had laid out our strong commitment to an independent, credible, capable Reserve Bank. It's very clear that those opposite don't share that commitment. I also said that we consider completely unacceptable a strategy from those opposite to sack and stack the Reserve Bank board to serve their own purposes. It has become very clear and very apparent not only that they are not committed to an independent, credible, capable Reserve Bank but that they are committed to sacking and stacking the current board.

This is a treasurer who learned his trade from Wayne Swan, the President of the Labor Party, and from Paul Keating, whose view of the Reserve Bank was that they do as they're told. Of course, what happens with Labor treasurers is that they lose control over the economy, they lose control over inflation, and growth stops. It shudders to a halt. And they want to be able to control the Reserve Bank for their political purposes in the lead up to an election! When it wrecks the economy, when they've got their foot on the accelerator, for instance, when the Reserve Bank has their foot on the brake, the engine stalls, but they don't care. They don't care as long as they can serve their own political purposes. Let me tell you that this Treasurer and this Prime Minister are only about the politics. They couldn't care less what implications it has for the engine when their foot is on the accelerator as the Reserve Bank's foot is on the brake.

We saw that in the extraordinary comments that were made over the last week. The person who led out was the Treasurer. He led out before he set the rest of his dogs—his surrogates—out. He started by blaming the RBA for all of his woes. They're his woes. It's his economic disaster that's hurting Australian households and has seen their standard of living collapse since he became the Treasurer, but he went and said, 'I'm going to shift the blame to the Reserve Bank. I'm going to find an excuse. It's the Reserve Bank smashing the economy. It's all them.'

He was backed in by the Prime Minister. He was backed in by the other members of the government's frontbench. I'm sure the member opposite agrees with him. He was backed in by those Labor aligned commentators, like Stephen Conroy and Stephen Koukoulas. They all backed him in. He was then backed in on Friday by the ALP president, his mentor, Wayne Swan, who said that he was very disappointed in the Reserve Bank and that—wait for it—it was punching itself in the face. Those are extraordinary comments from a former treasurer. It shows a complete disrespect and disregard for an institution that has served this country well. It is not perfect, but it has served this country well. This is a country that over multiple decades has had stronger growth and lower inflation than almost any other country in the world. But this is their view, and it's because it's not serving their political purpose. At the end of the day, that's where they come out.

But it goes even deeper than those comments from the ALP president. Shocking quotes came out from an ABC report by Jacob Greber, where he revealed:

One senior Labor figure described them—

that is, the RBA—

to the ABC on Friday as "barbarians" and "weirdos" in the thrall of a "bizarre group-think". Bullock is a "nutter" …

These are the comments. I hope those opposite don't agree with these comments, but these are the comments from a senior Labor figure reported by a very credible economic commentator, Jacob Greber, and it truly is shocking. The idea that what you do in the week leading up to introducing legislation that they want bipartisan—

Honourable Member:

An honourable member interjecting—

Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

No. I'll take the interjection. Those opposite are bringing in a new piece of legislation to reform the Reserve Bank that allows them to sack and stack the board. In the week leading up to that, you sent the dogs out. You sent the surrogates out to say that the Reserve Bank is filled with barbarians, weirdos and bizarre groupthink and that the governor is a nutter. What sort of an outfit is this? It's an economic joke! What sort of a treasurer is this? He is helpless and hapless.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Deputy Speaker, I ask you to ask the member for Hume to not reflect on the Treasurer when today he clearly indicated he had nothing to do with the statements that the member for Hume is connecting him to. He's misleading the Federation Chamber completely.

Zoe McKenzie (Flinders, Liberal Party) Share this | Link to this | Hansard source

I think the member for Hume is referring to comments other than those made by the Treasurer.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

No, he then directed it directly to the Treasurer.

Zoe McKenzie (Flinders, Liberal Party) Share this | Link to this | Hansard source

I ask the member for Hume to continue.

Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I connected it to a senior Labor figure. I certainly hope it wasn't the member opposite who said these things. I certainly hope not! Perhaps he can clarify that at some point. I certainly hope it wasn't either of the members opposite who said this, but they did say the Reserve Bank was a bunch of 'barbarians and weirdos in thrall to a bizarre groupthink' and they did call the governor a 'nutter'. It's truly extraordinary.

It is clear that the attacks on the Reserve Bank were led by the Treasurer. That's the time sequence. He led them out. Out went the surrogates and out went the proxies; out they went, attacking this institution. At the end of the day, we know what they're really on about. What they're really on about is two things. One is shifting the blame for their failures. There's been a nine per cent reduction—a collapse—in the Australian standard of living. No other OECD country has seen it. Michael Read at the AFR laid this out just a short time ago. No other OECD country in the world has seen a collapse in its standard of living like Australia has in the last two years.

It's extraordinary how unlucky Labor governments always are, isn't it. They're terribly unlucky. They wreck the economy every single time. We're the worst in the OECD. We've got inflation which is stuck. Core inflation since January has not moved, and there is not a single advanced country in the world, other than Australia, where inflation hasn't moved since January this year. We are the only one. We are at the back of the pack every single time. Our inflation is higher than any other advanced country in the world. We're at the back of the pack in dealing with it. The answer, for the Treasurer and for those opposites, is to shift the blame to the RBA and then try to seize control, which no doubt will lead where it always leads with Labor—wrecking the institution and wrecking the economy. Labor's plan is clear to see.

Let's look at the economists' reaction to the war that Labor is waging against the RBA. Well-respected RMIT economics professor Sinclair Davidson said:

All the economic indicators are going the wrong way, and what is the government doing? Fighting with the RBA.

Highly respected former RBA board member Warwick McKibbin said:

You want to think that the government and the central bank are working together in the same direction for the benefit of the country. To make those sorts of comments—

the sorts of comments made by the Treasurer and others—

suggested that maybe there's some other agendas at work—

we know what they are—

and that's not helpful.

Another former RBA board member, Graham Kraehe, said:

For the treasurer to then be coming out and saying, 'Well, this is the Reserve Bank's fault'. I don't think another serious economist in the country … would agree with that.

I can assure you, Deputy Speaker, this Treasurer is not a serious economist. He is a doctor of spin, not a doctor of economics. 'Doctor' he likes to call himself, but it's not of economics, and Graham Kraehe has made the point that there's no serious economist that would back in what the Treasurer has said.

The truth is what's sitting behind this is Labor's failed economic management. We only have to look at the facts to see how bad it's been for Australians. Those opposite like to pat themselves on the back and say how good Australians have it. Every single day we hear them say that, but let's look at the facts. Living standards and real disposable incomes have fallen by 8.7 per cent since Labor came to power. Albo's little gold coin is worth almost 10 per cent less than when those opposite came to power. That's what you get with Labor—aspiration dies and hope dies. Australians are, understandably, seeing less and less light at the end of the tunnel as things continue to get worse. Labour productivity has collapsed by 6.3 per cent. There is no pathway to prosperity without labour productivity. Paul Keating understood that, but Paul Keating is at war with this Treasurer. Everyone is at war with the Treasurer now—the Productivity Commission, the RBA and most economists around the country. He, on the other hand, has failed to win the war against inflation and certainly hasn't won the war on productivity, which has collapsed by 6.3 per cent. Household savings are down by over 10 percentage points. Australians are giving up hope. They're cracking open the big piggy banks because they've run out of anything else. So they've essentially stopped saving under this government. They have to to make ends meet. Personal income taxes are 25 per cent higher than when Labor came to power.

Chris Richardson makes the point that we have had raging inflation over the last two years, which has been at its highest level since Labor has been in power. Shame. The Prime Minister should take note of that. Inflation is terrible for households. It drives up interest rates, it drives up the cost of living, it drives up taxes being paid and it drives bracket creep, which means the tax rate goes up as well.

Interest paid on mortgages has almost tripled, and the economy is experiencing the slowest GDP growth since the 1990s. Indeed, there have been six quarters of GDP per capita going backwards. That's a household recession. Households have seen their GDP per person going backwards for six consecutive audits, which is absolutely extraordinary. In the 50 years since we've been keeping that data we haven't seen that before. Fifty years ago was a long time ago. Abba had just put out 'Waterloo', the Rubik's cube had just been invented and the Fonz had just appeared on our TV screens in Happy Days. They were happier days. They were under Gough Whitlam, but they were happier days, I have to say. But the truth is it's a long time in which we haven't seen anything like what we are seeing today.

You see a lot of economists talking about the desperate situation with our economy that came out of the national accounts just last week. Warren Hogan said: 'We are going backwards in terms of our living standards. Our productivity is falling. Our government is growing. If this is our new economy'—it might be the fourth economy—'then the standard of living of one of the world's wealthiest countries is going to go away.' The KPMG chief economist Brendan Rynne has this to say: 'The public sector has a foot on the accelerator and the Reserve Bank's foot is on the brake. It's stalling the economy. In effect, we are in no man's land.' He is saying it, too. It's a good line. He said: 'Government spending is not sustainable and is effectively taking from Peter to pay Paul.' Brendan Rynne goes on to say: 'Whilst there's this idea that government spending has saved the economy, what it's effectively done is just move the deck chairs around.' That's what those opposite like to do. They certainly want to do that with the Reserve Bank, don't they? They want to move deck chairs around there and get rid of the people they don't like and put some of their mates in. EY Chief economist Cherelle Murphy has said the lack of coordination between fiscal and monetary policy means the path to low and stable inflation and therefore lower interest rates is slower than it needs to be.

We want to see this economy get back on track. We want to see Australians' standard of living restored. We want to see inflation back within the target band. We want to see interest rates getting back to the level where they are sustainable for Australians. We want to see real wages rising, not falling the nine per cent they have for working families under this government. We want to see the productivity that drives prosperity getting back on track. But the only way to do that is to get back to basics. That means cutting red tape, securing our energy future and reforming our tax system so that it's simpler and fairer, with lower taxes, particularly for small business. We've announced a substantial expansion of accelerated depreciation. It means restoring sensible workplace laws that are good for both workers and employers, for both sides, something that those opposite used to believe in. It means encouraging small business and enterprise and supporting a strong financial sector. All of that leads to a situation where Australian families see hope restored, their standard of living restored and their aspirations restored and Australians believing again that Australia is the greatest country in the world to live in. That's what we stand for. That's what we will be fighting for all the way through to the next election.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Thanks for waking me up after the shadow Treasurer spoke. I rise to support the Treasury Laws Amendment (Reserve Bank Reforms) Bill as brought to the House by the Treasurer, my good friend, my neighbour, the honourable member for Rankin. The bill seeks to implement reforms to strengthen the Reserve Bank of Australia and make it more independent, efficient and ready for the rest of the 21st century. The first question we need to ask the chamber, the mighty backbench team opposite me, is: Why would the LNP fight the Reserve Bank by voting against this positive change? Why would the LNP fight against the Reserve Bank when the governor said she supports this legislation? Why would they vote against this positive change? Why are they fighting the Reserve Bank? That's the question that we'll come back to throughout this debate.

With respect, we had a shadow Treasurer who spent 24 minutes successfully avoiding the legislation in front of the chamber. It was quite a droit move, I guess, because the Treasurer has worked hard with the shadow Treasurer over the past 18 months to reflect the shadow Treasurer's views and gain bipartisan support. We don't want to go off dancing with the crossbench in the House of Reps or in the Senate. This is a serious piece of economic legislation that should be debated by the parties of government. Instead, those opposite seem to be running for the hills, and betraying Menzies. He must be spinning in his grave at what has become of the mighty Liberal Party, or the LNP version in Queensland. We needed this to have bipartisan support, which is why the Treasurer, the member for Rankin, worked with the shadow Treasurer.

The Labor government believes that the reforms to the RBA, one of Australia's most important economic institutions, should enjoy opposition endorsement. In fact, on a number of points, Labor accepted the opposition's preferred approach because it wants to drive this important legislation forward. As I said, the shadow Treasurer had six requests that he put to the Treasurer. And how many of those six requests were accommodated? All six. Sadly, the member for Hume was then rolled in yet another example of the constant negativity we get from the coalition. I saw negativity trotted out every single day under Tony Abbott when he was the opposition leader. I saw that in the 43rd Parliament, where he perfected the art of saying no. The Leader of the Opposition has obviously copied from the Tony Abbott playbook and has just said no to everything. He doesn't believe in national unity. He has no vision for our nation. All he can do is say no. His default response to any reform is to say no. It's his go-to happy position.

Over history, many countries have been led by the strongman leader. If you look through your history books, you can see them. They're peppered throughout the history books. And the member for Dickson, having studied under Tony Abbott, has said, 'Give me some of that tactic.' Deputy Speaker, have you ever been to Aldi? I don't know about the Aldis in Victoria, but in Queensland, the middle aisle has a treasure trove of amazing things. The member for Dickson, the opposition leader, has become the strongman bought in the treasure trove at Aldi. That's where he's picked up his strongman persona. It does not quite work. He's a poor man's emulation of Tony Abbott. Contrast this approach, the 'Dr No' approach, with the Albanese Labor government. This bill was not discussed by the shadow Treasurer at all. He touched on it once in 25 minutes. This bill implements the government's response to an independent review of the Reserve Bank of Australia.

I heard the backbenchers opposite talking about independence. This is a review that was not mentioned by the shadow Treasurer. We're backing this reform to reintroduce the independence of the RBA and to mandate the RBA's overarching objective, as supported by Governor Bullock. I've heard a lot of questions of late about people supposedly attacking the RBA. Those speaking need to indicate why they are attacking a piece of legislation that the Reserve Bank governor supports.

The measures included in this bill and the other associated changes represent the biggest reforms for the Reserve Bank in over three decades. These measures will ensure that our monetary policy framework is sound and that the RBA can make the right calls that are in the best interests of the Australian people and the Australian economy. I say again: to vote against them, as the LNP intends to do, is to fight the Reserve Bank governor's recommendation.

Australia as a nation has enjoyed historically good economic outcomes. Despite what the shadow Treasurer has said, most of those economic reforms were set up under Bob Hawke and Paul Keating. They were the economic visionaries who set Australia up for years and years of growth, as acknowledged by John Howard, the longest-serving Liberal Prime Minister. Our ability to stay stable and strong through crises such as the global financial crisis has made Australia a gold-star economy and meant that we're a strong market for foreign investment. One of the key reasons we're able to absorb supply-and-demand shocks to our economy is the ability of the RBA to adapt and react to changing economic times. The RBA is a strong arm's-length institution in Australia. Maintaining and strengthening its independence is imperative in futureproofing our economy. Giving the RBA a strong set of aims and the tools necessary to achieve them will ensure that the Australian economy continues to be stable long into the future.

One of the recommendations from the Reserve Bank review was to ensure the trajectory of the RBA was a long-term objective. This bill seeks to implement this recommendation with the mandate that the overarching objective of the RBA is to—and I quote for those opposite—'promote the economic prosperity and welfare of the people of Australia both now and into the future.' How could the LNP vote against this? Why would they want to fight the Reserve Bank? It is a big question that goes to the character of those opposite, I would suggest.

As our financial systems evolve and become more complex, our targets must also involve. This bill confirms that monetary policies should have the dual objectives of price stability and contributing to full employment. You'd have to be an idiot to vote against such a proposition. Without setting out strong targets for the RBA, we cannot have a stable monetary policy, and this outlines the RBA as a robust arm's-length institution while still giving it a strong set of aims. We all agree that the RBA is a vital institution and it's imperative that we continue to ensure its ability to operate in the modern financial system. Part of this approach will be to replace the existing Reserve Bank Board with a new monetary policy board and a governance board.

The Monetary Policy Board will be responsible for the monetary and financial system stability policies of the RBA, chaired by the governor. The Governance Board will determine the policy of the RBA that is not within the remit of the Monetary Policy Board or the Payments System Board and will be the accountable authority of the bank. The Payments System Board will continue to set the RBA's payment system policy and will be chaired by the governor. This approach will aid in delivering stronger monetary policy decision-making and will give the RBA the flexibility to make nuanced monetary policy decisions. So I ask again: why would the LNP fight the Reserve Bank by voting against this positive change?

This bill will also clearly delineate the responsibilities of each board and establish a mechanism to facilitate consultation in the event of any overlap. The governor of the Reserve Bank will be a member of all three boards and will be responsible for resolving any disagreements between the boards. The governor will be the first chair of the Governance Board; this enables continuity during a period of change. External chairs may be appointed after the initial transition period. The governance model will ensure that the Monetary Policy Board and the Payments System Board can achieve their legislative functions independently. All three boards will be subject to the Public Governance, Performance and Accountability Act 2013 except where there are inconsistencies with their statutory functions. So I ask yet again: why would the LNP fight the Reserve Bank by voting against this positive change?

Existing members of the Reserve Bank Board will transition to the Monetary Policy Board automatically. The exception is if they advise the Treasurer that their preference is to be on the Governance Board. The Labor government is happy to respect the wishes of the current board members, especially as the Monetary Policy Board has a different set of responsibilities and expectations. These include time commitment, public engagements and the publication of unattributed votes. This proposed amendment has been included to meet the expectation of the opposition specifically, as discussed and agreed on with the shadow Treasurer, and with the expectation that all current board members automatically move to the monetary policy board. So I ask again: why would the LNP fight the Reserve Bank by voting against this positive change?

The modern Australian economy requires modern monetary policy, ensuring that the dual mandate of the RBA is imperative for the future stability of the RBA. Full employment has always been a goal of monetary policy since the inception of the RBA. Price stability and managing inflation are goals that are consistent with how the RBA has interpreted its mandate for many, many years. Formalising these processes gives the RBA a stronger mandate to fulfil these responsibilities. In a modern, globalised economy, it's imperative that price stability remains a consistent goal to give us a good grounding in all international trade agreements.

The Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 reinforces the RBA's independence through limiting the power of the Treasurer to override the RBA's monetary policy decisions. The Treasurer will only be able to exercise this power in extreme circumstances, or when doing so is in the public interest. Asserting the autonomy of the RBA sends a strong signal both to Australians and the international market. This message is that we are committed to long-term stable economic management. So I ask again: why would the LNP fight the Reserve Bank by voting against this positive change?

Ensuring the RBA's independence allows it to get on with managing monetary policy and allows us to get on with the business of governing. The Albanese government has made strong economic management a priority since we were elected. Allowing the RBA to manage monetary policy while we focus on fiscal policy has ensured that we create sensible long-term economic reform.

This bill will also remove the power of the RBA to determine the lending policies of banks. This is a straightforward procedural change. The institution of APRA is now responsible for directing the lending activity of private banks, therefore it does not make sense for the RBA to have this remit. The RBA has not exercised its power to determine lending policy since APRA was established way back in 1998—last century.

One of the first acts of the Treasurer when we entered government was to conduct a review of the RBA. This is because we are dedicated to fact based, rational economic management. Reviewing our institutions is imperative in ensuring that we continue to meet the needs of a continually evolving economy. This bill is the combination of this review and implements the government's response to the many recommendations. The review, called An RBA fit for the future, indicates that to continue evolving our institutions need to keep up with the modern world. Just like the RBA we are dedicated to being fit for the future and the Albanese government has a clear commitment to a better future for all Australians. And so I ask again: why would the LNP fight the Reserve Bank by voting against this positive change?

Robust institutions, paired with robust governments, create a strong and stable nation. This bill implements key reforms to the Reserve Bank in order to make sure that our main economic institution is capable of combating the economic challenges of the modern world. The Labor government has consulted extensively not only with the shadow Treasurer and other members of the opposition but with current and former RBA staff and academics to develop a fact based bipartisan approach to our monetary policy. As I've mentioned, when making changes to the Reserve Bank, it is vital that we have a strong consensus on the way forward. So I ask those opposite again: why would the LNP fight the Reserve Bank by voting against this positive change?

Everyone in Parliament House understands the importance of stability when it comes to our national economy. That is why we've taken steps to make sure that these reforms come from a full review and with widespread consultation. So I ask yet again: why would the LNP fight the Reserve Bank by voting against this positive change?

The Albanese government is strongly committed to sensible and responsible economic reform and management. We do so as a party of government, not as a party of protest. This bill is the embodiment of this commitment and demonstrates how mature governments create long-term policy outcomes that benefit all Australians. So I ask those opposite yet again: why would the LNP fight the Reserve Bank by voting against this positive change?

In closing, I go back to this bill. It's quite a simple bill. It's a bill that has been consulted on with the opposition because they are a party of government. We did not want to go and consult the crossbench and see where some of their more extreme views would go. We wanted to consult with the party of government. The shadow Treasurer was on board and then was rolled by the guy that came from the Aldi treasure aisle.

In closing, we know that this legislation will create a stronger government, a strong economy, and a stronger Australia. I commend this bill to the House and ask the LNP to go back to the Aldi treasurer aisle and buy themselves a new leader.

Garth Hamilton (Groom, Liberal National Party) Share this | Link to this | Hansard source

I will miss the member for Moreton. I will miss him deeply. Labor didn't miss him; they shot him down in his prime, sadly. He was just about to cut loose, too. He knows the personal regard I have for him. On this, as with many of his speeches, he offers so much work for us to engage in, and I am going to take him up on three points because there are three points I think we want to hear as these Labor talking points get repeated through the rest of this speech.

Firstly, there is the bizarre accusation that we are somehow fighting with the RBA. Let's call this out. This is what we call an accusation in the mirror. It's a tactic you use to attribute your motives to your opponent and hope no-one will notice. Scoundrels across the world use it in politics to try to get away from the fact that they've been caught out. You've been caught out. You're fighting with the RBA. Every single credible economist is saying this. Labor is fighting with the RBA at the moment. There is no-one in the world who is going to listen to that speech, no matter how many times the member for Moreton or any other Labor members speaks afterwards and tries to twist the world around. They have picked a fight with the RBA, the world has seen it and that is what we're going to call it.

Secondly, when we speak to this piece of legislation, one of the things I'm going to raise is the various attacks that have been made on the RBA. That speech was, again, laden with attacks: attacks on the shadow Treasurer, attacks on the Leader of the Opposition, attacks on the character of us opposite. This is all they've got. They've been caught out. They're using poor logic in their arguments and they're using personal attacks.

I think the third point is very relevant to this piece of legislation: pointing to the time of Paul Keating as the Treasurer. Credit where it's due: some of his reforms will be remembered for a long time in this country for the benefit they raised. But, when we're talking about the independence of the RBA, I'd like to take you to one of Paul Keating's more famous quotes, talking about his relationship with Bernie Fraser, where he said, 'I've got the RBA in my pocket.' That was Keating's view on the relationship between the government and the RBA. So, if we're going to praise that time, let's remember that that's exactly the view he took in terms of how the government and the RBA's relationship should look. I think it's relevant when we look at the objections that this side of the House are raising to this particular piece of legislation.

I thank the member Moreton for all the fodder he gives us, but it was on 28 February that I first raised my concerns about the government's intentions around stacking the RBA. I called it out back then. It was in the Sydney Morning Herald. I was concerned that the proposed legislation at that stage was going to give Labor the power to stack the board so that they could control decisions on interest rates and effectively reduce the independence of the RBA by stealth. That was my concern at the time. I raised my concerns publicly and I stand by them. To his eternal credit, the shadow Treasurer argued, no, we must give the government the opportunity to demonstrate that their intentions are pure and that, in what is an important piece of work that has been done—the review of the RBA—they will not use the findings of the report to reduce the independence of the RBA and will act with a good conscience, putting the needs of the people of Australia first and ensuring that the independence of the RBA is maintained. The shadow Treasurer held that view.

It's important. I think it speaks to the views of this side of the House. We have treasured the independence of the RBA. In fact, I've talked about the relationship between Keating and Fraser. It was under Peter Costello and his relationship with Ian Macfarlane that we established, firmly, the independence of the RBA and gave them clear guidelines on conduct to follow. Ever since that time, by setting the target band of inflation that the RBA was to work towards, we have had that independence. We can see that in commentary from former prime minister John Howard, where he talked about how, in his time, there were decisions made by the RBA that certainly caused him a lot of grief but he had to accept that there was an independent decision-making process and that the RBA were the right people to make those decisions. They were the independent body to make those decisions. Whether we like it or not, that's the process. So this side of the House has stood up, and we have runs on the board in terms of this. This is important to us.

As time has gone on in this debate, there has been a worrying trend of attacks on the RBA and specifically on the RBA governor, Michele Bullock. These have been coming from Labor, starting directly from the Treasurer himself claiming that the RBA was smashing the economy—a claim that no credible economist has substantiated. No-one else is willing to stand behind that. That is a claim that has absolutely no substance and that no-one credible believes, and yet our Treasurer made it, trying to convince Australians that the pain that they're suffering—the economic pain that is going from household to household—is the result of the RBA.

This was followed up from the very top of the Labor Party. Wayne Swan decided to jump in and claim that the RBA was punching itself in the face. He was backing that up, going a little bit further than the Treasurer. Shortly, after Mr Swan's comments, the Treasurer tried to disassociate himself from those comments but maintained that the RBA were the bad guys in the situation and were, indeed, smashing the economy. If that weren't a bad enough hit job, they have now come in to put in front of us this legislation that enables the government to sack and stack the RBA board as they see fit.

We had this incredible piece from the ABC on Friday, with one senior Labor figure describing the RBA as 'barbarians', as 'weirdos' and as being in the thrall of a 'bizarre groupthink', and, worst of all, saying that Governor Bullock is a 'nutter'. This is coming from a senior Labor figure, quoted in the ABC. This is a series of attacks that we have seen coming from the government in the lead-up to putting this legislation on the table. The Treasurer's position has been backed by the Prime Minister, by members of the government frontbench and by Labor aligned commentators. No-one from the government has acknowledged that these statements are indeed attacks that are without precedent, that do nothing to help the Australian people and that do nothing to maintain the independence of the RBA. There is no apology from the government for these baseless attacks. The government was then challenged: 'So if you think the RBA should change its attitude then simply change the target band. Go on: change the target band. If you want to see interest rates reduced, change the target band, which would allow the RBA to make a different decision.' When they were challenged with that, of course, they ran away from that: 'Oh, no, we wouldn't want to actually do anything. These are just attacks. These are simply attacks we're going to throw out.'

When we see these sorts of attacks come through, it absolutely makes us question the motives of the government in bringing forward this legislation. Why else would you try and drag the RBA through the mud in the way that they have tried to do here, in the lead-up to the introduction of legislation that would enable them to sack and stack the board in a way that suits the government of the day? It's incredible; it's absolutely incredible. Why are we here? Why are we seeing this? Why does the government feel the need to increase its influence and to remove the independence of the RBA board?

We're here because things are bad. The economy is in a very, very bad way. Living standards have fallen by 8.7 per cent since this government came to power. That is incredible. That is more than in any other OECD country. Productivity has collapsed by 6.3 per cent. We've seen that household savings, which were built up during the COVID period, are now down 10.2 per cent. The economy has absolutely stalled. Outside of the pandemic, it's experiencing the slowest GDP growth rates since the 1990s. Things are bad.

When going through this piece of legislation and the intent that is clearly behind it, I think it's important for people who believe in the independence of the RBA to stand up and say, 'Things are bad, but it is not the fault of the RBA.' The RBA have a very clear mandate, a very clear target band that they have to bring inflation down to. That is their job. This side of the House absolutely stands by any measures that can be made to improve the board, the functioning and the way that the RBA works. We have been committed to that all the way through, and the shadow Treasurer's patience in working with the Treasurer on this bill all the way through is a demonstration of our willingness to engage in that process. But we must make this point very clear to Australians: this is not the RBA's fault. We are not here because of the RBA. The challenges you are facing in your economy are not because of the RBA. Do not listen to these attacks. These attacks were done as a prelude to this legislation coming through. They have a clear purpose, and it is not a purpose that aligns with the betterment of Australia. It is not a purpose that will help bring inflation down. It is not a purpose that'll make life easier for Australians and Australian households and businesses. It is purely a political purpose. It will enable the government of the day to influence and put pressure on the decisions of the RBA. I think that is a terrible situation.

We can debate this piece of legislation, but the reality is that it'll go through the House and it'll go up to the Senate, and there we will see a prelude of what a minority Labor-Greens government might look like. We'll get a little sniff of just what a Labor-Greens minority government might look like, because it is there that the Greens will have their way with the RBA. That's a terrifying thought, because we've already heard that it is the express intention of the Greens to enable the Treasurer to have the power to overturn interest rate decisions. That's what they're putting on the table as a starting point. The second one they've talked about is that they want the RBA to tell banks how to lend. This is where the Greens are starting from: a level of intervention which is unlike anything we have seen. This is where we're heading.

So, as sad as I am to see the process of the shadow Treasurer trying to work with the Treasurer on this and to see this come to the resolution it has, I am quite grateful, because we get to see a prelude of what a minority government might look like when the Labor government has to deal with the Greens and when Greens ideology will play out on such important issues as how the RBA board will function and operate. I think the Australian people will be grateful for the opportunity to see that too, because there is nothing more terrifying than the thought of the Greens being at the helm of the most important independent economic body in Australia and having the control and influence to get a Treasurer to overturn the RBA's decision on interest rates. What a terrifying thought! This is exactly what Peter Costello set out, way back in 1996, to ensure would never happen again—that never again could we have a treasurer, like Paul Keating, say, 'I've got the RBA in my pocket.' On this side of the House, we don't want that, and we have fought to maintain that position. As we stand here today, that is exactly where the government is taking us: back in time to a place where the Treasurer has the RBA in their pocket because that is explicitly the desire of the Greens party. We are going back in time and back to a worse place. This will not make life easier for Australians. This will not make life better for Australians. It is short-term opportunism on behalf of the government. They should be ashamed.

Anne Stanley (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Prior to the 2022 election, Labor committed to conducting an independent review of the RBA. The matter before us today is yet another example of the Albanese Labor government fulfilling its election commitments. The Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 addresses those aspects of the RBA review requiring legislation. It should be noted that not all recommendations of the review are covered by the bill before us. Some are being dealt with administratively by both the RBA and the government and partially through the Statement on the conduct of monetary policy, while other recommendations are progressed by the Council of Financial Regulators.

More than ever before, Australia needs a strong monetary policy and framework, and, more than ever, Australia needs a strong, high-performance central bank. The government knows these are challenging times, and we know the struggles that Australians are facing. It is timely that this bill is before us today because the legislation is central to ensuring that we have the best and strongest monetary policy possible to meet both the challenges of today and those of tomorrow.

Firstly, the legislation before us reinforces the independence of the RBA in the operation of monetary policy. The corollary of this is removing the government's power to override monetary decisions. Interestingly, this override has never actually been used, but formalising it is nonetheless important if we're going to have a genuinely independent operation of monetary policy.

Secondly, the bill mandates the RBA's overarching objective to promote the economic prosperity and welfare of the people of Australia now and into the future. This statement of intent is important to ensure that the RBA stays on track to serve the people it is meant to—all Australians.

Next, the bill confirms that monetary policy should have the dual objectives of price stability and contributing to full employment. The dual mandate is consistent with how the RBA interpreted its mandate for many years. Both of these mandates will ensure that inflation and its destructive effects are addressed as well.

Fourthly, two new boards will be created. One will be focused on monetary policy, and the other will be focused on the management of the RBA. The Monetary Policy Board will be responsible for the monetary and financial system stability policies. It will be chaired by the governor. The Governance Board will determine the policy of the RBA not in the remit of the Monetary Policy Board or the Payments System Board and will be the accountable authority of the bank. The Payments System Board will continue to set the RBA's payments system policy. This governance model minimises the potential for confusion or conflict by clearly delineating the responsibilities of each board and establishing a mechanism to facilitate consultation in the event of an overlap. Importantly, the governor is set to be a member of all three boards and will therefore be charged with resolving any disagreements between them.

Fifthly, this bill clarifies the RBA's responsibility to contribute to the financial system stability.

Finally, the bill repeals the RBA's power to direct the lending activity of private or commercial banks, a function that was transferred to the Australian Prudential Regulation Authority back in 1998.

The RBA has been in existence since 1960. Since that time, as a nation we've faced any number of challenging economic circumstances, not least the GFC. The current times present their own unique set of challenges and difficulties. The task for this parliament is to ensure that our institutions, not least our central bank, are up to speed and fit for purpose to meet these challenges. This bill does that. I commend the bill to the House.

Keith Wolahan (Menzies, Liberal Party) Share this | Link to this | Hansard source

Thank you to my colleagues from both sides who have spoken on this bill, the Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023. It is a sad position that we have arrived at. It seems that in many negotiations for bipartisan support, which is to be welcomed, they don't always get there. The glue required for it to get there is trust. That trust was broken in the last week. And it was broken by the conduct and the actions of the Treasurer, backed in by others, including the former Treasurer and his former boss in their attack of the RBA. That's what changed here.

We've heard indignation upon indignation from those opposite saying, 'How dare you not sign up to the agreement that we were negotiating with you?' It happened because of the very calculated way in which the Treasurer sought to deflect attention and accountability from himself and the government to the RBA. That's the unprecedented change. That's why we're in this position. It is disappointing that that has happened. You have to ask: why has the Treasurer done that? He has done that because of the real economic data that is coming in. It's data that we know to be true when we speak to families in our electorate. They know they have less money in their pocket. They know that the prices of everything are going up. They know that their mortgage repayments are at record levels. They know they are being pushed into higher tax brackets through bracket creep. They know that real incomes are down because their real incomes are down.

Let's look at the data we've had come in. Living standards in Australia have collapsed. They have collapsed by a figure of 8.7 per cent since this government took office. It's common in various election campaigns for leaders or opposition leaders to ask, 'Are you better off than you were two or three years ago?' It's a legitimate question, and it can't be a question that's asked in a self-serving way when it suits. The answer to that question—and we're not fully through this term—is no, and by a figure of 8.7 per cent. The average wage in Australia is $95,000. The median wage, which half of all Australians are on, is $65,000. They didn't have 8.7 per cent sitting around in a savings account to deal with this loss in real income.

Let's talk about the three categories that are hitting Australians. Firstly, there is the cost of everything. The key energy commodity, gas, which is particularly important in the colder states like mine, in Victoria, is up 33 per cent.  For anyone who knows a little bit about compound maths, how does that work going forward? It works in this way. I spoke to a dry cleaner in my electorate, in Templestowe, who has been there for many decades. He said that in the last six years—and I acknowledge that goes over multiple governments—his gas bill for his drycleaning business is six times what it used to be. Other than wages—and he's self-employed, so he is the wage—gas is his No. 1 expense. It's gone up six times in six years. It's rising faster than it ever has before. Electricity is up 14 per cent, even after the rebates; rent is up 16 per cent; health is up 11 per cent; education is up 11 per cent; food is up 12 per cent; and insurance is up 17 per cent.

You can't just isolate those increases to this term. They are compounded over time so that when people reflect upon where they were five or 10 years ago, there are many multiple increases in the bills that are going out. So the first part of the trifecta is the cost of living. And it's more than a slogan. It is about real impact and that heartbeat that gets skipped when people open that envelope and look at the bill. The second part of the trifecta is interest rates and mortgage repayments. Those who are paying off a mortgage or trying to rent a house where the landlord is paying off a mortgage are getting hit harder than anyone else.

My good friend the member for Bennelong is sitting opposite. We've heard from the big bank CEOs who have quite clearly said that not all Australians have been hit equally. They're not. Those who have been hit hardest are aged between 30 and 44, and they live in the south-eastern states, including my state of Victoria and the member for Bennelong's state of New South Wales. They're being hit extra hard. It's not an accident that that's happening under this government's watch. The third part of the trifecta that leads to the drop in real disposable income is the fact that income tax is rising as Australians are pushed through higher brackets for income tax. That's what is referred to by the term 'bracket creep'.

So what does the government propose to do in all of this? The one thing they could do that is meaningful is to take pressure off the Reserve Bank by pulling spending back, and they haven't done that. In fact, they've done the opposite: they've put their foot on the gas. They have massively increased spending in this term, and that has caused, more than anything else, the Reserve Bank to have to do the work.

The second part is what we hear about all the time in question time, in talking points and in the media: 'Don't worry about the 8.7 per cent loss in real disposable income; the government's here to help.' But that help is treating the symptoms and not the cause of this economic crisis. We are giving families who are facing a $10 increase in a bill a $1 subsidy—10 to one. It's not even touching the edges. It's not helping, but the government get to say, 'We're here to help, and you voted against it, coalition.' 'Well, we are a serious party that is here to propose solutions that treat the causes and not the symptoms, and the cause is excessive government spending.' Then, again, the reply is predictable: 'Oh, well, coalition, tell us what key programs you're going to cut, including in veterans and in much-needed care-economy expense items.' Again, that's a cheap talking point. At the very time when families are cutting back on their own expenses—they're finding savings, and they don't have many places to look—we know there is waste and inefficiency in government. We know that, and there are many places to find savings. We know this government is not even looking for them, because it's having you or the RBA do all the work on the increases.

When we considered these reforms, there were some good parts that I think sensible people can agree on. But at the core of our concern is a lack of trust in this government to deal with it, because this government is looking for anyone to blame but itself. The Treasurer has shown that in question time. There's a reason the Treasurer was asked a question in question time today and yesterday. There were a lot of complaints that we weren't doing that in the last sitting period, but I do not think the government's too happy that they are getting asked. The Treasurer was asked to confirm if Australia had been in a household recession for the past six quarters, which is the longest-running per capita drop on record. It's a pretty simple question with a simple answer. What did he say? All he could say was that the government was throwing around multiple billions in subsidies—the very thing that's leading to the increase in interest rates. That's all he could respond with. He was invited to confirm that, since the government was elected, Australian families have suffered a bigger real fall in disposable income than any other OECD country—it's not a record you want to break. Again, instead of addressing that real concern, which is a fact, the Treasurer spent his time talking about the coalition, engaging in politics rather than actually solving the problems for Australian families.

This is bigger than the election cycle that we have before us. We have collapsing productivity rates in Australia. When we pull open and dust off the Intergenerational report from last year, we see that current projections of government spending will go from $25,000 per person to $40,000 per person in 2063, within a generation—and that's adjusted for inflation. Without increases in productivity, how does that work? How do we get to be the prosperous nation that people move heaven and earth to move to? How do we get to be a nation that rewards hard work, education and people who take a risk, rather than being born into the right family? How does that work when the average wage will still be, with no increases in productivity, $95,000—and a median of $65,000—when $40,000 per person is required for Commonwealth government spending alone? It doesn't work. So this isn't just about the immediate cycle. This is structural. This is serious. It's about what sort of nation we want to be and whether we can afford the things that Australians rely upon us to deliver.

It would have been nice to have worked together on this, but trust was obliterated when the government and the Treasurer sought to avoid responsibility for the very thing they have been elected to deal with. We talk about going to our electorates and earning their trust. Well, Australians lent their trust to this government at the last election, and it has been abused. I think Australians are asking themselves, 'Am I better off than I was 2½ years ago?' and the answer is a clear 'no'.

James Stevens (Sturt, Liberal Party, Shadow Assistant Minister for Government Waste Reduction) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023. It's been made very clear that the opposition will not be supporting the government's proposals here to reform the Reserve Bank Act. We approached this topic with a great deal of good faith, and it is very disappointing that the government has taken us to the point where we can't work with them and support them in reform of the Reserve Bank, because the thing I do agree with the Treasurer about is that these things should be bipartisan. We're talking about how the monetary policy of this country operates, and how the trusted organisation—the Reserve Bank—which quite rightly has independence from political interference, operates, governs itself and makes decisions that affect every single Australian. It is disappointing that the government is now pursuing reform without bipartisanship. This brings back memories of the last time they did this on something that required bipartisanship: the Indigenous voice referendum. We all know how that ended up. We'll see what negotiations they do in the Senate with the minor parties, but it's very regrettable that they want to push forward with reform of an institution that should be above partisan politics—the Reserve Bank—without bipartisan support.

What's just as regrettable is the behaviour of members of the broad Labor family on the record and off the record in the last few weeks, deciding to now start to turn the RBA and its decision-making into some kind of political attack point, deciding that they're feeling so much heat from the electorate in this cost-of-living crisis that maybe they can make it all someone else's fault. Some comments have been veiled. Some have been more direct. Some people have been cowardly and not put their name to their commentary in off-the-record briefings to journalists. The Treasurer has been very wishy-washy in what he's had to say and the confidence that he has and hasn't at different times expressed about the way in which the RBA operates. Former Treasurer Swan was outrageous and appalling in just the last week in the way in which he launched his own attack on the Reserve Bank and the decisions it is making.

The Reserve Bank is doing what it needs to do, which is make decisions with the policy lever it has: monetary policy, the cost of capital in our economy. If they were working in concert with those that have the fiscal policy lever—the federal government—then they might not have had to make some of the decisions that they have in the last few years since Labor was elected. I, like everyone, wish interest rates were lower, not like the government, because they're worried about their own political future, but because I genuinely care about the people who are struggling to meet the costs of their mortgages and other debts that they might have because interest rates have so dramatically increased since Labor came to power. But, of course, monetary policy interacts with fiscal policy. Monetary policy can loosen, encourage and stimulate the economy or it can contract to dampen the economy. The Reserve Bank has to make decisions based on their forecasts and various other sources of information that they have access to to make judgements on how the economy is travelling and, in particular, their primary goal, which is to make sure that inflation is kept between a target band of two and three per cent. That hasn't been the case for the last couple of years.

The Reserve Bank has increased the overnight cash rate, which obviously results in a cascade of rate adjustments across the various loans in our economy. The Reserve Bank is the most reliable lender in Australian currency. They print the Australian currency, so they're the most reliable lender. Whatever their rate is, every other rate will be set against it. The most significant one for any Australian is their mortgage rate. Mortgage rates are running high because the Reserve Bank has had to increase interest rates to try and tame inflation.

Fiscal policy can play a big role in inflation because government spending is an enormous part of economic activity: when it expands it fuels inflation, and when it contracts it puts downward pressure on inflation. We have a situation where the Reserve Bank, who are doing all the heavy lifting when it comes to addressing the overheating economy and high inflation, are now being attacked by the government. The government are not doing what they could with their own policy levers and are instead deciding to set up the RBA as a kind of straw man in the economic argument, as they heads towards an attempt to get themselves re-elected.

Politicising the RBA should be a no-go in our modern democracy. This wasn't always the case, and certainly in decades gone by there was a lot of politicisation of decisions of the Reserve Bank. Obviously, when government are thinking about electoral cycles and deciding what may or may not have a short-term benefit or hit to their political fortunes, that can cloud their judgement in making decisions in the best interests and the long-term price stability of our economy. Clearly, we should absolutely cling to the RBA's independence of politicians and election cycles and to the structure we have now, where the Reserve Bank operates independently and makes decisions in the medium- to long-term interest of price stability in our economy, not taking into account the political impact for any particular side of politics, particularly the government of the day.

What we've seen in the last few weeks, and what we're now highly suspicious of, which leads to us not being able to support these proposals, is the repoliticisation of the Reserve Bank, with political leaders cowardly starting to blame the Reserve Bank, criticising it and attacking it through the media. I'd love for the Reserve Bank to reduce interest rates, but I want them to do it because that's the sensible monetary policy decision to make. That will give them confidence that, by reducing rates, they can keep inflation in our economy within that two- to three-per-cent band, which we're not yet at. If the government of the day, this Labor government, wants to see interest rates reduced, it should think about what it could do to help the Reserve Bank have confidence that price stability in our economy, the inflation rate in our economy, is running in that target band.

In the decades gone by, when governments interfered in these things and either blatantly made monetary policy decisions directly or had shadowy processes that really meant the Treasurer or finance minister of the day was exerting influence on monetary policy decisions, we had rampant inflation. That was the case across different sides of politics, I might add, and it's clearly the case around the world where counties don't have independent monetary policy setting by their central banks.

The worst way to destroy wealth, to crush wealth, is for inflation to erode it away, because it gets absolutely everyone. It gets asset holders, it gets consumption and it gets real wages. No-one in the economy is rewarded in a high-inflation environment. Even worse than high inflation—or equally as bad—is high price volatility, where policy settings are changing dramatically. We see that overseas with countries that devalue their currency or bring about dramatic steps in their cost of capital by the way in which they set their cash rate at the central bank level. Business and investment completely evaporate away from those economies. We are very lucky that we've had decades and decades in this country where there has been very high confidence. Our independent central Reserve Bank and our floating exchange rate mean that there is a great deal of certainty for markets and for investors in our economy that kneejerk policy decisions that could leave capital stranded or dramatically devalued in our economy won't be made.

Our economy, particularly our jobs market and people's standard of living in this country, is very much contingent on strong investment that drives an expansion of the economy, economic growth and—the most important thing in our social compact—sharing the dividends of economic growth between those who invest their capital and the workforce of the economy—making sure that real wages are growing. Wages can grow on paper nominally, and if inflation is running hotter than that—as it has for the last couple of years—then workers are going backwards. Through a lack of price stability and high inflation through the politicisation of the central bank decision-making process, the biggest destruction of wealth will come to real incomes. We know that from any study of the history of high-inflationary environments.

We regret that we're not having a debate where there is genuine bipartisan support for reform to the Reserve Bank Act. That's very disappointing because it's the sort of thing that should have bipartisan support. When the Hawke-Keating government undertook the reforms that they undertook, that included central bank reform and, most importantly, things like floating the Australian dollar and having a market mechanism for the determination of the Australian dollar, which was politically difficult terrain to traverse. That was done with the support of the then opposition. Whilst what's in this bill is not in the league of those dramatic reforms, it's in the category of them, and it's really disappointing that the government's attitude is that they don't want to work with us in reform that everyone can support to something as significant in our economy as the governance of the Reserve Bank. With those comments, I urge the House not to support the second reading of this bill.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

Millions of renters, mortgage holders, young people and families across the country are really suffering and struggling to make ends meet in the wake of relentless Reserve Bank rate hikes. Since the Labor government came into power in 2022, rents have gone up by 31 per cent and the average mortgage payment has increased by a staggering $1,667 a month. Reserve Bank Governor Michele Bullock has publicly conceded that rate hikes are pushing people to the edge while she blithely continues to hike rates. To rub more salt in the wound, Bullock also said that people are now facing the brutal reality of having to sell their homes to survive. Who suffers most from this hiking of interest rates? Those least responsible for inflation. Yet Bullock has offered no relief or hope to the millions of Australians doing it tough, stating that she doesn't expect the RBA to cut rates in the near term.

According to the Treasurer, the Reserve Bank has smashed the economy. So why is he then seeking to remove the democratic oversight over the RBA? Another capitulation by Labor to the power of capital, the big banks and the corporations. Clearly, they are the ones who have the ear of this government—not you, everyday Australians. Labor's so-called reforms to the Reserve Bank of Australia are a lost opportunity for genuine change.

The RBA is described as independent, but we know that the decisions that it makes are political. These are decisions that affect every Australian. When the RBA makes a decision, someone loses. Right now, that is the 40 per cent of renters who are struggling to pay rent; the 1.6 million households in mortgage stress because of interest rate hikes; and the 85,000 Australian households who could be at risk of losing their homes. And the government wants to give Bullock and the RBA even more power? They want to remove section 11 of the RBA act, which gives the Treasurer the ability to overturn the RBA's decisions, leaving Australians at the mercy of unelected bureaucrats with zero accountability. It's appalling and dangerous.

Here's what section 11 of the RBA act actually does: it gives the Treasurer the power to intervene to override the Reserve Bank when necessary. The Treasurer could use that power right now to reduce interest rates. It's truly baffling. The government tells Australians that it's working on cost-of-living relief, but it has a massive lever it could pull to offer relief to thousands of Australians right now, at this very minute, and it's not only not using it but also trying to remove that power from this Treasurer and future treasurers. No wonder ordinary Australians are feeling abandoned, even targeted, by this government.

Don't let them treat you like idiots, Australians. It doesn't take a genius to realise that the Treasurer wants to rid himself of the power to overrule an RBA decision because he doesn't want to be blamed for massive increases in mortgage payments and rents. These are huge cost-of-living pressures right now for most Australians. Rather than backing everyday Australians, the Treasurer is once again choosing to wash his hands and let the banks and the corporations continue making massive profits off people's pain.

The banks aren't here for you; that's clear. Recently, we heard Matt Comyn, the CEO of the Commonwealth Bank, boasting about their half-yearly profit of $5 billion. That's not even a full year, and they've made $5 billion in profit. Then he calls the Greens proposal to tax such excessive profits 'insidious populism'—those are Matt Comyn's words. So of course he likes the system just the way it is.

Labor and the LNP are colluding when it comes to protecting the interests of the banks. Over the last decades, the big banks have donated $5 million to Labor and $6 million to the LNP. What do the banks get in return for this generosity? They get enormous profits—profits off the backs of hard-working Australians who are drowning in debt. There's no clearer example of how power really works in this country.

If you're facing the prospect of having to sell your home—thanks for the suggestion, Governor Bullock—or you don't think you'll be able to pay your rent at the end of the fortnight, I just want you to know that the Labor government has the power to bring down interest rates right now and it's choosing not to. The Labor government should retain and use its existing power to overrule the RBA and bring down interest rates. This bill, in its current form, again illustrates Labor's failure to stand up to the banks and the corporations—indeed, its comprehensive capture by them.

Instead of letting the RBA turbocharge the cost-of-living crisis, Labor should be stopping inflation and corporate profiteering—by supporting the Greens super profits tax, to tax corporations that are price-gouging and driving up the cost of essentials, by freezing rents, by putting dental cover into Medicare and by making child care free. These initiatives, proposed by the Greens, would actually bring down inflation and help people, as opposed to what the RBA, with the government's tacit support, is doing—pushing renters, young people and mortgage holders, who aren't causing inflation, to the brink.

Simon Kennedy (Cook, Liberal Party) Share this | Link to 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—

Matt Burnell (Spence, Australian Labor Party) Share this | Link to this | Hansard source

On a point of order, I think the member for Cook needs to be reminded to direct his remarks through the chair.

Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

If you could assist the chair. What was said just then?

Matt Burnell (Spence, Australian Labor Party) Share this | Link to this | Hansard source

He keeps referring to the Treasurer as you. He's putting his remarks through you, the Chair.

Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

It would assist the House if you could withdraw. And I remind you that we refer to members by their electorate name or by their title, for example, Treasurer.

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

Yes. I'm sorry. I think there might have been one 'you' in there. I was trying to refer to him as the Treasurer. The Reserve Bank has been extremely successful in managing inflation. As I said, between 1976 and 1984, inflation was growing by 9.3 per cent annually; between 1985 and 1992, inflation was growing by 6.3 per cent annually; and following the implementation of this target, between 1993 and 2023, inflation increased by just 2.6 per cent. This was the first soft-edged target adopted by a reserve bank in the world, and nearly all advanced economies now use the same framework.

When reflecting on this agreement, Prime Minister John Howard said, 'It gave confidence that interest rates would be set reflective of economic conditions, rather than immediate political considerations.' The RBA implemented a rate rise in 2007, held almost on the eve of a federal election, confirming the independence of this body. The Reserve Bank has saved Australian consumers and businesses billions and billions over the years in price increases driven by inflation and has saved their money from being devalued. It is regrettable that Labor and the Treasurer have chosen to throw away bipartisan convention when reforming this important institution and have instead chosen cheap populism with the Greens political party.

Australian needs a strong Reserve Bank now more than ever to combat inflation when we have higher inflation than most developed countries around the world. Interest rates are the major policy lever to combat this cost-of-living crisis we are now struggling with. This policy lever is crucial for the government given core inflation remains stubbornly high, higher than almost all other advanced economies in the world, at 3.8 per cent. Our core inflation is higher than that of the US, the UK, New Zealand, Canada, Japan and many other countries.

The Reserve Bank has provided crystal-clear advice that inflation remains too high. The governor is on record as saying:

Make no mistake, inflation is still too high and the board does remain concerned about the degree of excess demand in the economy.

The bank went on to call out Labor's inflationary spending and said:

The stronger outlook for public demand reflects ongoing spending and recent announcements by federal and state and territory governments.

That was the response, saying the government has its foot on the accelerator while the Reserve Bank is jamming on the brakes. The Australian economy is left to suffer in response.

What was the response to the bank's frank and fearless independent advice? Dr Chalmers, who has just left the chamber, said interest rates were 'smashing the economy', ignoring his own role in creating inflation. His former boss, mentor and president of the federal Labor Party, Wayne Swan, was quick to add that 'the RBA's punching itself in the face'. Then Jacob Greber, a journalist, said a senior Labor figure, who wasn't named, claimed the governor is a 'nutter', called the Reserve Bank 'barbarians' and called them 'weirdos'. What an attack on an independent institution as legislation where they can stack the board is coming before the House. The timing could not be more politically motivated or better. It's an absolutely ridiculous attack on what is one of our best institutions.

We have seen two former RBA board members come out and decry these comments made by the Treasurer and his mentor, Wayne Swan. Former RBA board member Warwick McKibbin said:

You want to think that the government and the central bank are working together in the same direction for the benefit of the country. To make those sorts of comments suggested that maybe there's some other agendas at work—and that's not helpful.

There sure are other agendas at work. Another former RBA member, Graham Kraehe, said:

For the treasurer to then be coming out and saying, 'Well, this is the Reserve Bank's fault'. I don't think another serious economist in the country … would agree with that.

They are fighting with the Reserve Bank currently. They are fighting with past board members. The Treasurer has tied one arm behind the RBA's back in trying to fight inflation with his loose fiscal policy and is shocked at this tight monetary policy, and it means we'll have higher rates for longer. Sadly, the people who will be hurt the most from that are everyday Australians, everyday families doing it tough. This loose fiscal policy has included an extra $315 billion in additional spending since 2022. That's $30,000 per household. Those opposite love to say, 'The coalition's going to be cutting $315 billion and hurting families.' But I'll tell you what: people in my electorate of Cook do not feel $30,000 better off. When I ask them how they feel after the last 2½ under a Labor government, they tell me they feel much worse off.

Make no mistake: the government has created this inflation crisis. The federal government is at an equal record of 11.8 per cent of GDP for the last quarter. The only other time a federal government has been at this level was during COVID-19—never, ever before. So, while we have high rates, while we are trying to take some of the demand out of the economy, they are stuffing the economy full of money, keeping interest rates higher and devaluing hardworking Australians' bank accounts and money at home.

What does that mean as a result? What have we seen? Productivity has cratered to 6.3 per cent. Not only are household savings being devalued by inflation; they've dropped 10 percentage points. We have the slowest GDP in over 30 years—since the early 1990s. We've been in a household recession for 18 months. What does that mean? It means that per capita GDP is going down. That means that each household is getting poorer and living standards are dropping. These are the implications of this policy for everyday Australians.

The Treasurer is intent on assigning blame for these higher interest rates to everyone but himself. Food is now up 12 per cent. Energy is up 14 per cent, even after these rebates they crow about. They have the hubris to crow about a rebate when the average Australian is paying 14 per cent more in energy prices. Day after day, in question time, I have to listen to them slapping themselves on the back about rebates. It's a one-off rebate that is now gone, while Australians are left with energy prices that are 14 per cent higher, and that's just in a year—it's well over 20 per cent over the last two years.

There's deferred health care. In 2023 a report by the Productivity Commission revealed that more people postponed or skipped GP visits in the preceding 12 months because of cost. Another report revealed that almost 50 per cent of people forwent heating their home. Labor's big spending agenda is keeping inflation higher.

What are the mechanical issues with this legislation? It's surely the role of this parliament to safeguard and promote the strength of the Reserve Bank, one of the most critical institutions in this nation. Strong institutions, like this bank, this parliament and the Public Service, are vital to a strong economy and a strong democracy. They were the model that the rest of the world followed only 30 years ago, but right now we are weakening them. Any actions that undermine the strength of our institutions need to be called out and halted. The comments made by the Treasurer, the former Labor Treasurer, the current president and an unnamed coward calling the Governor of the Reserve Bank a nutter were timed precisely, just before this legislation coming before the parliament.

The fundamental fault of this legislation is that it doesn't transition existing board members into the monetary policy board. Further, and less importantly, the section 11 test of 'extreme circumstances' has not been defined, leaving a back door for political decisions on what should not be political. Managing our economy is too important. We on this side of the House care about it, and we're not about to let the government wreck it. There's also an opportunity for Labor to stack the board, which they've already jumped at by appointing two former union officials to the board earlier in their term.

What are the risks of the Labor Party compromising with the Greens political party to deliver this reform, and what is the response of the Treasurer to the issues identified by my colleague the shadow Treasurer? Instead of bipartisanship with the coalition, the Treasurer now reportedly wishes to make a deal with the Greens. They don't value the independence of the Reserve Bank. They just called on the government to overrule the Reserve Bank on interest rate rises now, in an election period. That's what we just heard in this chamber. It's extremely dangerous. The Greens policy thought bubble on this significant issue was to try and retain section 11 of the RBA act and grant the Treasurer a veto over decisions made by the Reserve Bank. If you think inflation is bad now—if you think your money is worth less than before and you're worse off than you were 2½ years ago—wait until they get the Treasurer to work on this provision. It's going to get worse. We're standing up for the independence of the Reserve Bank and we're standing up for everyday Australians.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

I acknowledge the presence of the Greens leader, the member for Melbourne, in the room. I recognise that he's a decent person—although, philosophically, we are absolutely poles apart—but I do worry about the member for Melbourne and the Greens getting any control or say on the Treasury benches after the next election. What we're seeing with this legislation tonight, the Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023, is the rub: the Greens are already having a large say on policy, including—worryingly and disturbingly—economic policy. If you read the article by the Sydney Morning Herald's economics analyst, Shane Wright, who is a very good journalist—because I trained him! I'll take some credit for that; I'm sure Shane won't mind. But this article is headed 'Chalmers eyes Greens lifeline for Reserve Bank overhaul', and he writes:

Treasurer Jim Chalmers may drive through the biggest overhaul of the Reserve Bank in a generation with support from the Greens after the Coalition walked away from months of negotiations and concessions aimed at winning bipartisan approval for the changes.

Yes, we did, and the member for Hume took this position for good reason. We've seen the to and fro between Labor and the independent Reserve Bank in recent days and times, and it's worrying.

But let me go back a little bit. I want to acknowledge also the work that Dr Philip Lowe did as the eighth RBA governor. He was deputy governor under Glenn Stevens from February 2012 until he became the governor in his own right in September 2016, and he held that August role until September 2023. He was castigated and derided by regional newspapers for some of the comments he made about inflation. It was difficult at that time to predict what might have happened, particularly coming out of the back of the worst of COVID-19, and Dr Lowe did a very good job. Dr Lowe and I went to school together at St Michael's Regional High School. He also attended Trinity Senior High School in Wagga Wagga.

It's not that I stick up for the likes of Shane Wright and Dr Lowe, but they both have been in Wagga Wagga and they understand regionality. They understand what ordinary, everyday people expect from those in positions of power. Both of them occupy or occupied positions of power, Shane as a journalist with the Sydney Morning Herald and Dr Lowe in his position with the RBA. I thought Dr Lowe was unfairly treated by some sections of the media during the latter time he was the RBA governor, and I want to put on the record my thanks to him for his role, for what he did and for appreciating and understanding the very great pressures on regional Australians and what he did during COVID. I think it's important to place those sorts of things on the record.

We are in an inflation crisis at the moment. We are in a crisis of confidence and a cost-of-living crisis. Much of it—some might even argue all of it—has been brought about by Dr Chalmers and by Labor policies.

Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

I ask the member for Riverina to address the Treasurer by his title.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Sure—by 'the Treasurer'. I'm sure he wouldn't mind if I called him 'Dr Chalmers', because he has got a doctorate, but I take your advice.

I'm reading from the Sydney Morning Herald article:

The Coalition initially supported the move, but in recent months has raised fears Chalmers would "sack and stack" the new committee. It had demanded all members of the current board be moved to the new committee.

Chalmers had agreed to this, but also said he would not move a board member if they preferred to shift to the governance board.

I know that the member for Hume, the shadow Treasurer, has said that the RBA had been undermined by the Treasurer, who last week said high interest rates have smashed the economy, trying to deflect attention from the government's role in the country's inflation. Of course the shadow Treasurer is right in that regard. We previously considered this bill very carefully, but it was agreed that the coalition would continue to engage in good faith with the government. But, unfortunately, the government is now not acting in good faith with either us, the coalition, as the opposition or with the RBA.

You cannot have senior members of government—and journalists don't generally make these things up—describing members of the RBA as nutters or weirdos or barbarians. That is unacceptable, completely unacceptable. In August, the Treasurer wrote to the shadow Treasurer with some proposed amendments. The government's amendments leave open the option for a complete stitch-up of the RBA board. Following this and what I would say are extraordinary interventions of the Treasurer and his surrogates in just the past week, the coalition will not be supporting this bill.

Indeed, this particular legislation implements what the government said that it was going to do with the 2023 RBA review, but it goes too far. What will happen is that we will be seeing more and more intervention by the government into the independence of the RBA. We have a situation where the government has overseen huge increases in inflation, and then we have these incendiary comments by the Treasurer about how the RBA is smashing the economy. Then he was crab-walking back from that in question time, where he repeatedly talked about $1 trillion of Liberal Party debt.

First of all, it's nowhere near $1 trillion dollars. I see the member for Griffith agreeing with me. It's not often that the member for Griffith and I agree, but it's not $1 trillion. It's not more than $1 trillion either, Member for Griffith. It's nowhere near that. It's also not just the Liberal Party that actually did the job during COVID; it was the Liberal and the National parties together. In exchange for the debt that the nation found itself in, we saved tens of thousands of Australian lives at a time when the Chief Medical Officer of this nation, Dr Brendan Murphy, had said that we would lose, if something wasn't done, tens of thousands of Australian lives within weeks, if not months. We acted, and we did everything we could under bizarre, unique circumstances.

The world had not seen a pandemic like this since the end of the First World War. The First World War ended in 1918, and the pandemic of 1919-20 took the lives of many people. COVID-19 threatened to wipe out so many people off the face of this earth, and, indeed, it did. In fact, it killed millions. They were piling up coffins in churches because the morgues were filled in Italy. They were burying people in mass graves on Manhattan Island in the United States of America. They are two countries with good health systems.

We were faced with the prospect of what to do as a nation. We shut the borders. We put in place the National Cabinet; it worked well at the start. We put in place logistics. We put in place methods to get vaccines across the nation and throughout the Pacific. Not only did we save tens of thousands of Australian lives, but we also saved millions of jobs through JobKeeper.

Then we get the Treasurer of Australia standing up and saying, 'Well, what did we get for the trillion dollars worth of Liberal Party debt?' He should stop saying that because it's just not true. What we got was the second-best rating in all of the world from the Johns Hopkins centre, that institute which measured pandemic preparedness and pandemic reaction. We should be very proud of what we did because there are people today alive who would not have been so but for the actions that we took.

But Labor is growing more and more desperate. Attacks on the RBA are as unnecessary as they are unwarranted. Of course, when the Treasurer blames the RBA for 'smashing the economy', we see a very desperate Treasurer almost akin to the naughty schoolboy who didn't do his homework and who, when he comes to class and the teacher asks where the homework is, says, 'Well, the dog ate the homework,' the dog in this instance being the RBA for just doing its job. Michele Bullock is doing her job. She's doing the job she was asked to do and was put in place by this government to do.

What we're seeing is rampant inflation. What we're seeing is an economy that is not supporting business. Each and every day I go into my country communities in the Riverina and the Central West and I see more shops putting up 'Closed' or 'Closing down' signs in their windows. We see more and more people sleeping in their cars. We see tents appearing in places where people simply cannot afford either rent or their own home or other accommodation. What we're getting is a Treasurer blaming the Reserve Bank governor and the Reserve Bank board and then wanting to change the rules so that the government can sack the said board and do a complete job on the Reserve Bank board. This is just unheard of and unparalleled.

Then what we find is that the government wants to do a deal with the Greens, and here they are—the economic strategists of the nation.

Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

Put us in charge.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Did you say 'Hass'?

Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

Put us in charge.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

'Put us in charge'? My goodness! Hopefully not, Member for Griffith. It is a worry. Let me tell you: if the Greens have any say on the treasury bench then this nation is headed for far worse inflation figures and cost-of-living pressures that we have now.

So the coalition will not be supporting this bill. Labor's growing desperation is becoming more and more evident as time goes on. I know we have MYEFO, the Mid-Year Economic and Fiscal Outlook, coming up. I know we potentially have another budget prior to the next election, but who would know? Only the Prime Minister knows when he's going to go out to Yarralumla and hand in his commission. But, when he does do that, let's just hope that at the next election we don't see a minority government in conjunction with the Greens, because at the moment we have gas up 33 per cent and electricity up 14 per cent even after the taxpayer funded rebates of $300. I thought it was going to be $275, as was promised prior to the last election, but, of course, even though that was promised on almost 100 occasions, nothing was further from the truth. Rents are up 16 per cent. I know the member for Griffith had a lot to say about that and his solution to it, but I don't think he needs to be listened to either, because the Greens have done more to hold up local government development applications than anything, and that is causing a huge problem in local councils and states, who are most responsible—let's face it—at the end of the day for housing and the like. Health costs are up 11 per cent, education costs are up 11 per cent and food prices are up 12 per cent. All these costs add—it goes on and on and on—to people's mortgages and household bills. Financial and insurance costs are up 17 per cent.

Honourable members interjecting—

 I can hear the Greens yelling out. Rest assured that, if they get hold of the treasury bench, we are all in trouble—not just us here on Capital Hill but ordinary everyday mums and dads throughout Australia, families and businesses struggling to pay bills now.

This bill is not good. This bill will not be supported by the coalition. We should have an independent RBA. This doesn't give us that.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Riverina for his contribution. He's outlined very well why we won't support the Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023. I'm pleased that we've come to the position that we have in relation to not supporting this bill, because I didn't support it from the outset. What is proposed to be done in this bill—the government and all of us elected members of this parliament handing over absolute power to an unelected body—is, I think, a danger to our democracy. What I find interesting is that this isn't the only piece of legislation to go through this House that allows for this sort of thing to occur, where ministers take a hands-off approach and go: 'It's up to the bureaucrats—it's up to the Public Service or whatever other body we have set up.' I think that is a very grave danger to the foundation and stability of our democracy.

It's interesting that there has been much debate and discussion over the years—as Deputy Speaker Wilkie and the member for Melbourne would know, having joined me in this place in 2010—about the conduct of our banks et cetera. It finished up in a royal commission. What a lot of people probably don't realise is that there was actually a royal commission well before that. Back in 1935 there was a royal commission that was appointed to inquire into the monetary and banking systems that were then in operation in Australia. The reason it was appointed was that there was concern that the banks weren't doing their job and were actually making the Great Depression worse.

It's interesting to read some of the comments in that royal commission report. I want to thank a good friend of mine, Professor Bill Mitchell, for the work he's done on some of this. I'll quote his work. He's pulled these paragraphs out of the royal commission report so that I didn't have to go back and read through it again. In paragraph 143 of that report, it says:

It is essential for a central bank that its relations with the Government responsible for monetary policy should be close and cordial in order that there should be consistency between Government financial operations and those of the Bank.

Well, what have we heard in the past week or so? The complete opposite of that. We've heard the Treasurer say that the Reserve Bank is 'smashing our economy', and we've heard a former Treasurer say that they've been hitting themselves in the face. That, to me, doesn't speak of a 'close and cordial' relationship between the government and the Reserve Bank to ensure consistency between the government's financial operations and those of the bank—far from it. We've also heard the comments by the Reserve Bank governor on her concerns about government spending, both federally and across the states.

Why would we go down the track proposed in this bill, then, of removing the accountability of the Reserve Bank through the government, under section 11? I fully believe that section should be retained and never done away with, because the drafters of the legislation, back in 1957 or 1958—it was enacted, finally, in 1959—understood the necessity of the elected representatives in this parliament maintaining watch and power over our non-elected bodies.

To go back to that 1935 report, it goes on further to say:

In our view, proper relations between the two authorities are these. The Federal Parliament is ultimately responsible for monetary policy, and the Government of the day is the executive of the Parliament. The Commonwealth Bank—

it's the 'Reserve Bank' in modern parlance—

has certain powers delegated to it by statute, and the Board's duty to the community is to exercise those powers to the best of its ability. Where there is a conflict between the Government's view of what is best in the national interest, and the Board's view … the Government should give the Bank an assurance that it will accept full responsibility for the proposed policy, and is in a position to take, and will take, any necessary action to implement it. It is then the duty of the Bank to accept this assurance and carry out the policy of the Government.

Well, that has been done through the statement of principles that the Treasurer signed and provided to the Reserve Bank. The Reserve Bank's remit is twofold. It's to deal with inflation and to ensure full employment. So the Reserve Bank are doing their job only for the Treasurer to then turn around and say, 'I don't like what the Reserve Bank is doing.' Well, have that discussion but have it in a cordial way. I am sure the Treasurer and the Reserve Bank governor speak all the time. But to go out publicly and demonise the Reserve Bank and the governor and the rest of her team for doing the job that is actually mandated for them to do, which is tackle the inflation challenge as well as full employment, is an attempt, in my view, by the Treasurer to offload the responsibility for his part of the equation. It is about time the Treasurer accepted responsibility for what they've failed to do to deal with the inflationary pressures.

Hence I fully support the position that we as a coalition have now taken to oppose this bill, because I believe that the structure of the Reserve Bank should be retained, along with section 11. While I accept it has never been used, I believe fundamentally, for the protection of our democracy, that that provision should be retained because we never can say categorically in the future that we know that at some point that won't need to be used, heaven forbid. I hope it never has to be used. I hope that the cordial working relationship between the government of the day and the Reserve Bank is maintained and strengthened for the benefit of our country as a whole. I think the words from the 1935 royal commission report remain as valid and prescient today as they were then. I oppose the bill, and I am pleased that as a coalition we have taken the position that we have.

Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

There are millions of mortgage holders and renters right now across this country getting smashed by an economic system that they are not responsible for, and yet they are asked to pick up the pieces in skipping groceries and in choosing between feeding their kids and paying the rent. When it comes down to it, since 2022, rents have gone up a staggering 31 per cent. Monthly mortgage repayments, on average, have gone up by $1,600. What's happened is that a coalition of the Labor and Liberal parties have decided that they are okay with the Reserve Bank putting up interest rates and forcing ordinary people to pay for an inflation crisis that they had nothing to do with. Here is the reality: the Labor government right now could override the Reserve Bank—they have that power in legislation right now—and force the Reserve Bank to cut interest rates. And, yet, they choose not to. By doing that, they have decided to enshrine and protect an economic system that always punishes ordinary and everyday people for an inflation crisis they are not responsible for.

Let's be clear about what's driving inflation right now and why costs are going up. It is corporate price gouging. The IMF has pointed out that it is corporate price gouging that is one of the principal drivers of inflation right now. It is Coles and Woolworths using their duopoly power to drive up grocery bills. It is landlords using the fact that Labor refuses to cap rent increases to drive up rents right now. In fact, even the RBA says that one of the principal drivers of the inflation crisis right now is skyrocketing rents. They are increasing at close to twice the rate of standard inflation. Labor could stop that by freezing and capping rent increases. They choose not to and instead what they do is allow the Reserve Bank to jack up interest rates and punish ordinary and everyday people.

Let's be clear. You might be watching this at home right now, stressed out of your mind about how you're going to meet your next month's mortgage repayment and stressed out of your mind about how you're going to cop another rent increase. You might be watching the news as the Reserve Bank governor Michele Bullock is saying that she doesn't foresee an interest rate cut in the next few months. You might start to think, 'Well, how is this my fault?' You might start to think: 'Maybe I need to cut back more. Maybe I should have done more to pay off my mortgage earlier. Maybe I should have worked harder.' Don't think that, because the reality is that it is not your fault. It is not your fault. It is the fault of a political and economic system that always punishes ordinary and everyday people. It always chooses to punish them and allow big corporations to get away with making massive corporate profits.

In this same period, big corporations have made over $100 billion in crisis profits. That's according to Oxfam. That includes the National Australia Bank. It includes Woolworths. Those are financial institutions and big corporations that are making excess profits by using their monopoly and duopoly powers to drive up prices and punish ordinary and everyday people.

Here's how this economic system works. First, you have a big set of big corporations, banks, Woolworths, Coles. They drive up prices, taking advantage of their enormous economic power. That drives up prices and that drives up inflation. Then what happens, when inflation gets high, is the Reserve Bank kicks into gear and says, 'The way we're going to tackle this is to put up interest rates.' The effect of putting up interest rates is punishing mortgage holders and renters. Their intention is—and let's be very clear about this—to push mortgage holders and renters into financial pain to reduce their capacity to spend money in the economy. They claim that this will somehow decrease inflation. But let's talk about what they're decreasing spending on: food, rent, health, housing costs and food for kids.

When I was running a free meal program earlier this year, we had a nice family come up to us. They were dressed very nicely. They sat down with us. They were eating one of our free dinners. I asked them, 'Why are you here?' I thought that maybe they were there to talk to me about some issues in their local community. They had two young kids with them. They were living in Carina Heights. They turned to me and said, 'Well, look, to be honest, any night where we don't have to fork out and pay to feed our kids is another night we're more likely to meet our mortgage payments.' That shouldn't be happening in a wealthy country like Australia.

Politics is about choices. There is no political, economic or technical reason why we couldn't force the Reserve Bank to cut interest rates right now. A real plan to tackle inflation could be cutting interest rates The effect of cutting interest rates right now would be relieving pressure on mortgage holders, allowing them and renters to feed their kids and not have to make tough choices and not be forced to sell their homes, which is what Michele Bullock, the Reserve Bank governor, said they might have to do.

Instead what we could do is crack down on price gouging in supermarkets. We could tax the superprofits of big corporations and punish them for price gouging ordinary Australians. We could use that revenue to provide dental and mental health under Medicare and incentivise the states to freeze and cap rent increases. Indeed, one of the best ways to tackle inflation right now would be to cap rent increases. One of the key drivers of the inflation crisis is rents. We could do that, and we could relieve the pressure on millions of people.

Why is it that in this country it's always ordinary and everyday people who have to pick up the pieces of an economic system they're not responsible for? Why is it always that there is a single mum in this country having to choose between feeding her kids and paying the rent, while the Commonwealth Bank records a $9.69 billion profit? Why is it that in the middle of one of the worst housing crises we have seen in this country's history, while there are millions of people struggling to meet their mortgage payments or their rents, why is it precisely at that moment that the Commonwealth Bank can come out and record an over $9 billion profit?

Imagine what we could do with $9 billion. We could bring dental into Medicare. We could bring mental health into Medicare. We could put a down payment on bringing back free university and scrapping student debt. We could invest in building enough public housing. Instead, it's going into the profit margins of the Commonwealth Bank, which has made those profits because the Reserve Bank has put up interest rates, driving up mortgage costs that allow those big four banks to price gouge ordinary Australians, make more from mortgages, make more off that human misery and screw over ordinary Australians. The Greens are fighting hard to protect the current power that the federal government has to override the Reserve Bank of Australia and cut interest rates, because that is an important element of a democracy.

What interest rates are charged is a fundamental economic question in this country, and that should be subject to democratic review. I would argue that what Labor is attempting to do in scrapping the power that they have right now to override the Reserve Bank is to wash their hands of the responsibility of one of the key decisions in our economy and pretend they have nothing to do with it. But let' be very clear: in refusing to override the Reserve Bank of Australia and in attempting to get rid of that power, they are endorsing a political and economic system that time and again asked the people that are already doing it tough to suffer more while bankers, big corporations and politicians benefit by billions of dollars.

Anne Webster (Mallee, National Party, Shadow Assistant Minister for Regional Health) Share this | Link to this | Hansard source

I spoke last month about Labor's Future Made in Australia Bill and likened it to Labor's use of the term 'made in Australia' to Mickey Mouse as the sorcerer's apprentice in Disney's 1940 classic Fantasia. In the story, Mickey, as the incompetent apprentice, takes the magician's wand and inadvertently animates mops, buckets and furniture, in the process creating chaos in the wizard's tower. Labor's Mickey Mouse apprenticeship is on full display as described by the independent Reserve Bank of Australia, who called out the Labor government's spending as driving the rising cost of living. Australia is the only major economy where inflation is rising, not falling. Labor's homegrown inflation crisis, thanks to the $315 billion of spending, mostly on big government agenda items and equivalent to $30,000 more per household since they took office, is incredible. Household disposable income is heading south while in comparable economies household income is heading north.

My constituents in Mallee are feeling that cost-of-living pain acutely. We are living in Labor's homegrown cost-of-living crisis, and no amount of waving of wands, press conference trickery, TP tactics or pulling spending rabbits out of hats will convince the Australian public that this government has a fiscal clue what it is doing. Thankfully, Mickey's Fantasia mess is cleaned up when the wise wizard returns to set everything aright. The coalition's role has ever been thus in Australian politics: righting Labor economic chaos. My hope is sooner rather than later.

The coalition does not support this bill. We worked on a bipartisan position for over 18 months, but we are now at a point where, as the shadow Treasurer said this week, we need certainty and stability, not more change, at the Reserve Bank. The RBA is under unprecedented attack from this Albanese the Labor government and some of their proxies in the retired Labor operative space, as I will go into later. Even Gough Whitlam acknowledged the need for his ministers to fly economy, not first class, during a cost-of-living crisis his government faced. This government would make Gough Whitlam blush, such is the Albanese Labor government's bluster, trickery and gaslighting of Australians.

The coalition believes in the stable, credible and independent Reserve Bank of Australia. The independent RBA has hiked the cash rate 11 times on Labor's watch. The last cash rate hike was over 300 days ago, on 8 November 2023, yet Labor want to shift the blame to the RBA somehow smashing the economy. With Labor's abysmal track record of picking winners, the last thing we want is for Labor to stich up the Reserve Bank board. They've wrecked other government institutions with government appointments, and there is a huge cloud over Labor's connections with the disgraced CFMEU and questionable operatives in industry super. The coalition are very cautious about letting sack-and-stack Labor pick the team when Coach Chalmers is taking Australians to the bottom of the cost-of-living global ladder.

We on this side of the House have serious questions—

Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

Order. I would remind the member for Mallee to refer to the Treasurer by his title.

Anne Webster (Mallee, National Party, Shadow Assistant Minister for Regional Health) Share this | Link to this | Hansard source

The Treasurer. We on this side of the House have serious questions about how committed the Albanese government is to the continued independence of the Reserve Bank of Australia. Every day, the Treasurer and the Prime Minister demonstrate they are more focused on fighting others and shifting blame than fighting their homegrown cost-of-living crisis. The Treasurer is trying to fight and pin the blame for his own economic woes onto the Reserve Bank, the opposition leader, the Productivity Commission, the laws of economics and even his hero and old mentor, Paul Keating, over superannuation taxes. The Prime Minister, members of the government frontbench and Labor-aligned commentators, like Stephen Conroy and Stephen Koukoulis, joined in like children whacking a pinata, hoping the lollies of public support would fall out for them.

On Friday, ALP president Wayne Swan said that he was 'very disappointed' in the Reserve Bank and that it was 'punching itself in the face'. This was the same man who, in his stint as Treasurer, projected budget surpluses but never delivered one. The Rudd-Swan government was a master at converting black into red—net savings into net debt. Labor's frothing and loathing directed at the RBA exposes that they can't handle the truth. Rather than take responsibility—what a novel concept, responsible government—Labor goes around attacking truth tellers, threatening them with consequences for speaking the truth. They stack and undermine our independent institutions. They force those who come in good faith to negotiate with the government, even priests, to sign non-disclosure agreements.

One senior Labor figure has reportedly described the RBA to the ABC recently as 'barbarians' and 'weirdos' in the 'thrall of a bizarre group-think' and that the Reserve Bank chair, Michele Bullock, is a 'nutter'.  This brave unnamed source said, 'This is all coming from a Labor government fighting everything but inflation, a government that attacks the Leader of the Opposition for his truth-telling on the cost of living and accuses him of being the bad guy for telling the truth.' Perhaps the truth bombs from the RBA hit their mark the best when they criticised government spending as a driver of Labor's homegrown inflation crisis. After some pointed criticisms from the government, the RBA explained that their comment was also directed at state governments.

In my home state of Victoria, sadly, Labor has done incredible damage not only to Victoria's economy but also dragging down the national economy while they do it. This is the same Victorian Labor government that, to use a popular phrase, 'smashed the economy' in Victoria by making Melbourne the lockdown capital of the world. The Victorian Labor government was so inept that it was re-elected on a promise to host the Commonwealth Games. It then embarrassed Victoria and the nation after the election by admitting they couldn't afford to host it after all. It took a Freedom of Information request. In June last year, the Victorian health minister, Mary-Anne Thomas, wrote to Treasurer Pallas urging for an urgent bailout to save the state hospitals. It gets worse. Victorian Labor's priority primary care centres were rebranded urgent care centres, and, hey presto, Mickey Mouse, the apprentice Labor here in Canberra, came along and bailed out the clinics, saying, 'The Commonwealth will now run them.'

It should be bad enough that the Albanese Labor government is fighting everyone but the cost-of-living crisis. Now they are running a protection racket for the spend-happy Victorian Labor but bailing them out of their own mess. Getting answers out of the secretive Allan Labor government about their fiscal standing is just as hard as getting the Albanese Labor government to admit its economic missteps and take responsibility for its cost-of-living crisis. This Albanese Labor government is not only at war with the institutions but also with the overwhelming opinion of eminent economists as well. RMIT economist Professor Sinclair Davidson said:

… all the economic indicators are going the wrong way, and what is the government doing? Fighting with the RBA.

Former RBA board member Warwick McKibbin said:

You want to think that the government and the central bank are working together in the same direction for the benefit of the country. To make those sorts of comments suggested that maybe there's some other agendas at work—and that's not helpful.

Another former RBA board member, Graham Kraehe, said:

For the treasurer to then be coming out and saying, 'Well, this is the Reserve Bank's fault'. I don't think another serious economist in the country … would agree with that …

Warren Hogan said:

We are going backwards in terms of our living standards.

Our productivity is falling, our government is growing, and if this is our new economy, then our standards of living as one of the world's wealthiest countries is going to go away.

…   …   …

Bigger government is not what delivered our modern wealth …

EY chief economist Cherelle Murphy added:

The lack of co-ordination between fiscal and monetary policy means the path to low and stable inflation—and therefore lower interest rates—is slower than it needs to be.

KPMG chief economist Dr Brendan Rynne had this to say:

… the public sector has its foot on the accelerator and the Reserve Bank's foot is on the brake—it's stalling the economy.

In effect, we're in no-man's land.

He said that government spending is 'not sustainable and is effectively taking from Peter to pay Paul'. He also said:

While there's this idea that government spending has saved the economy, what it's effectively done is just move the deck chairs around.

Picking up on what Dr Rynne said, the chatter here in Canberra is that there'll be a May election and an early budget in March. This May, the Treasurer predicted inflation would come back into the RBA's target range of two to three per cent by Christmas. I don't want to scare you, but it's only 105 days till Christmas, and the RBA is only meeting three more times before Christmas under Labor's reduced meeting schedule. My fear is that Labor's pre-election budget will spend, baby, spend because it's all Labor knows how to do.

If you think the Albanese government are clawing at the institutions, economists and other truth-tellers now, wait until inflation isn't back into the target range by Christmas and the RBA hasn't cut rates. The Albanese government have gone past the denial stage of their fiscal grief cycle, and now they are in the anger stage. They are lashing out verbally at truth-tellers and lashing out at the Leader of the Opposition for standing shoulder to shoulder with hardworking Australians who are struggling to make ends meet, and it gets uglier from here. If the Treasurer's Nostradamus predictions on inflation don't come true by Christmas, voters may have some lumps of coal ready for the Treasurer's stocking.

Just like the economists, the numbers don't lie either. Last week, national accounts showed the slowest GDP growth since the 1990s outside the pandemic. Australia has reported its sixth consecutive quarter of negative GDP per person growth, the longest per capita recession in 50 years. In May 2022, the former coalition government left an economy with low unemployment, strong growth and recovering government finances, yet Labor have wasted it. Living standards—real disposable income per capita—have fallen by 8.7 per cent, productivity has collapsed to 6.3 per cent, household savings are down 10.2 per cent, personal income taxes are 25.3 per cent higher, and interest rates paid on mortgages have almost tripled. The economy is experiencing the slowest GDP growth since the 1990s outside the pandemic.

A Peter Dutton led coalition government will get Australia back on track with back-to-basics economic agenda. We will deliver strong economic management that fights inflation and boosts productivity. We are absolutely focused on restoring Australians' way of life. Winning the fight against inflation is the only way to ease the cost-of-living pressures Australians are facing now. The coalition will boost productivity, bringing essential fiscal discipline to bring down inflation and restoring Australia's standard of living. The coalition will get Australia back on track by delivering a back-to-basics economic agenda that includes cutting red tape, securing our energy future, reforming our tax system, restoring sensible workplace laws, encouraging enterprise and small business, and supporting a strong financial sector. That is how we will restore our standard of living and ensure future prosperity.

Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I would like to thank all the members who've made a contribution to this debate about some very important issues and a really key economic institution. Thank you for the opportunity to sum up the debate for the Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023.

This bill will strengthen the Reserve Bank's independence. It'll clarify its mandate and modernise its structures. It will deliver the biggest set of reforms undertaken at the Reserve Bank in over three decades, and it will implement the government's response to the independent review of the Reserve Bank of Australia. That review received input from current and former RBA board members, staff and others. It considered international best practice and it canvassed views from across the community. I want to again thank the review panel, some wonderful people—Professor Carolyn Wilkins, Professor Renee Fry-McKibbin and Dr Gordon de Brouwer PSM—for their work, and I also thank the more than 1,500 stakeholders who contributed to the review process. I released the review and its recommendations almost 18 months ago now, and I welcome the discussion and debate that has occurred since then.

We've already made some progress on implementation, and here I want to acknowledge the efforts of the Reserve Bank, led by Governor Bullock, in following through on many of the recommendations that go to its own internal operations. As part of our response, I've also agreed on an updated statement on the conduct of monetary policy with the RBA board. That was released in December last year, and I thank the board members for their engagement with that as well.

This legislation before us is the next step in implementing the review. The Reserve Bank governor has said herself that she is 100 per cent behind the changes that are being proposed. She has publicly called for them to be legislated, and that means that opponents of this legislation are at odds with the public position taken by the Reserve Bank governor. Our response to this extensive piece of work is in keeping with its recommendations to strengthen the RBA's independence, clarify its role and modernise its structure, as I said.

To give a little more detail: the bill amends the Reserve Bank Act 1959 and the Banking Act 1959 to reinforce the Reserve Bank's independence in the operation of monetary policy, renew the bank's statutory objectives, improve accountability and transparency in the bank's monetary policy decision-making, enhance the bank's governance arrangements to bring them into line with best practice, and clarify the RBA's responsibility to contribute to financial system stability.

As I said, we welcome the discussion and debate that has occurred in the House and in the broader community since my second reading speech in November of last year. Many MPs have highlighted, as I do again, the critical role the Reserve Bank has played in our economic success for well over six decades now. They've recognised how important it is that we equip the bank to continue serving all Australians in an increasingly complex and challenging economic environment, and they've accepted the review and the government's response to it as the best way forward.

At every stage, I've done my best to reach a bipartisan consensus on the changes before the House. I've always wanted this bill to be widely and broadly supported and for that support to include the major governing parties in this place. As a demonstration of my bona fides in this regard, I want to remind the House that the coalition, via the member for Hume, have raised six issues over the past year and we've responded to each of those six issues in good faith. Whenever there's been a lineball call, whenever there's been a view put to me by the opposition, we've accommodated that view. They wanted the chair of the governance board to be the governor, and we facilitated that. They wanted flexibility in term limits, and we facilitated that as well. They wanted senior RBA executives to have oversight of the operation of the bank; the bill makes the deputy governor a member of the governance board. They wanted to ensure that the dual mandate should exclude references to equal weight, and so the legislation and the statement of conduct on monetary policy that I agreed with the RBA board late last year doesn't mention equal weight for the dual mandate. They asked that section 11 be retained; we proposed an amendment that would have retained section 11 but focused it more appropriately. They asked that all current members of the RBA board should move to the monetary policy board, and we proposed an amendment that would transfer all current board members to the monetary policy board unless that was not their preference.

But, instead of being able to garner enough support for these changes that responded to his concerns and his suggestions, the member from Hume was rolled once again. I dealt with him in good faith. I engaged extensively with him. I had three face-to-face meetings. I organised multiple briefings for him with my department and with the review team. For the best part of two years, I put a premium on bipartisanship, but there is only so much you can do when you're dealing with someone who doesn't carry the necessary authority amongst his own colleagues.

The coalition have had every opportunity to support this important economic reform, and it's more than disappointing that at the last moment they have not. Our preference has always been and continues to be for bipartisanship between the two major governing parties on these issues. That's because I think that these issues and these changes should endure beyond any future changes of government. We will continue to do our best to ensure a bipartisan outcome.

I was planning to move our amendments in the House today as they directly address concerns raised by the coalition, but unfortunately, in light of the position that they announced yesterday, we will not be moving the amendments in the House today. Instead, as you'd expect, we will be considering our options and considering next steps. We are still willing to work across the parliament to help these important reforms get through. We are still committed to the passage of these reforms. We anticipate and we flag for honourable members that we will have to move amendments in the Senate to secure further support. It is not our preference—and I say this respectfully to the member for Griffith—to accommodate the Greens on this, but the coalition may force our hand.

The government is committed to strengthening the independent Reserve Bank in an increasingly complex and changing world. Our reforms are timely and measured, and they should be enduring. To support sustainable growth in our economy and to support a better future, we need an RBA that is transparent, strong and independent, an RBA that draws on more expertise to make its important decisions, an RBA that is at the forefront of international best practice and an RBA that remains world class, and that's what these reforms are all about. That's why I commend the bill to the House.

Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

The question is that this bill be now read a second time.

Question unresolved.

As it is necessary to resolve this question to enable further questions to be considered in relation to this bill, in accordance with standing order 195 the bill will be returned to the House for further consideration.

Federation Chamber adjourned at 19:07