The shadow of Scott Morrison still hangs darkly over Canberra in the shape of his choice for Governor of the Reserve Bank of Australia (RBA), Philip Lowe.
This is just one way the Morrison government still wields power.
Other examples are those massive stage three tax cuts, giving away hundreds of billions to those who least need it, making it almost impossible to fund health services, public housing, and education adequately.
Labor opposed them, unsuccessfully, in opposition, and don’t have the courage to even delay them now they’re in power.
There are so many examples. The shocking nuclear submarine deal started by Morrison is now much worse.
They may end up costing Australian families half a trillion dollars. It’s not like they’re even useful for Australia’s defence.
If they are ever delivered, they’ll be part of America’s attack force trying to prevent the Chinese taking Taiwan.
Scott Morrison must be sniggering behind his hands on the back bench as he sees his policies and his choice of RBA governor are still in place.
I have a theory about the current governor. He knows his term is expiring on September 17 this year, and surely it is unlikely his tenure will be extended.
I believe he wants his legacy to be that he’s known as ‘the man who crushed inflation’.
He must know at some level of his consciousness that jacking up interest rates every month to curb inflation, damaging the economy at the same time, hits the poorest hardest.
Those who have borrowed money are the ones who pay for it directly. Those who rent properties are seeing their rents skyrocket as landlords, encouraged by rental managers, increase rents way beyond the inflation rate to whatever level the market will bear.
Some can use the excuse of higher interest rates, but many are simply profiteering.
The governor knows the pain he is causing, but shows no sign of compassion for those suffering.
In 1990 Paul Keating announced that Australia was in recession, and added those memorable words: ‘… this is a recession Australia had to have’.
It’s likely that Philip Lowe has the same view. He is inducing a recession whose depths we won’t know for some months yet.
We are already in a per capita recession (our population is growing faster than the GDP) and, if signs in our local area are anything to go by, we are in a real recession.
Several long-standing businesses have closed in Byron Bay, including much-loved Fresh.
Others are teetering on the brink.
One Airbnb manager reported that 90 per cent of properties they manage were vacant over this last long weekend.
There are vacancy signs on many hotels. A shopkeeper reported she made no sales at all one day recently.
If this is happening in a tourist hot spot, imagine what may be happening elsewhere.
The governor urges us to reduce spending to slow inflation, and yet the RBA hosted a lavish, exclusive dinner in Perth last month costing nearly $25,000. The drinks bill alone was over $4,000.
To add insult to injury, this was just after announcing yet another rate increase. How could it be conceivably justified to use our money to host wealthy guests?
The Reserve Bank of Australia needs urgent reform, as was highlighted in the recent review ordered by Treasurer, Jim Chalmers, entitled An RBA fit for the future.
The current board lacks the expertise to deal with the more complex inflation environment.
The board was criticised for its misjudgement on inflation that led to Philip Lowe announcing in February 2021, ‘The board will not increase the cash rate until actual inflation is sustainably within the two to three per cent range’.
The board does not expect these conditions to be met until 2024, at the earliest.’
The board maintained that view for months.
That misjudgement was a catastrophe for very many families acquiring new homes and now struggling to keep them.
That tragic error has been compounded by the brutal use of the single blunt instrument that the RBA uses to curb inflation – constant interest rate hikes. Other reserve banks are using new tools, but not Australia’s RBA.
It’s quite clear that the RBA needs an Augean stables-style flush out to remove the detritus. It is critically important to restore public confidence in the Reserve Bank.
The new board needs to have a wide-ranging understanding of the tools that can now be used to tackle inflation. It needs to examine and question the executive’s decisions far more rigorously.
Much of the pain being felt by Australian families could have been avoided if there had been a greater level of expertise and competence in the RBA.
We need urgent reforms. It’s time for the Albanese government to step away from the shadows of the Morrison era.
♦ Richard Jones is a former NSW MP.
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