The new shadow treasurer, Tim Wilson, says he does support the Reserve Bank’s twin objectives after his call for a more targeted focus on taming inflation was decried as a strategy to drive up interest rates and unemployment.
Just two days into the new role, Wilson signalled to the Nine papers that the opposition would review the legislated mandate that requires the bank to maintain equal focus on two goals: keeping inflation within its 2% to 3% target band and achieving full employment.
Wilson suggested the RBA’s “core purpose” should be to lower inflation, after an unexpected jump in prices growth prompted Michele Bullock’s board to hike rates for the first time in two years earlier this month.
The comments were immediately seized upon by the treasurer, Jim Chalmers, and the Australian Council of Trade Unions secretary, Sally McManus, who said Wilson’s approach would mean higher interest rates and unemployment.
“The dual mandate has been a mainstay of Australian economic policy since it was formalised by John Howard and Peter Costello and has been supported by both sides of politics and the independent Reserve Bank,” Chalmers said.
“This radical departure from that bipartisanship is an early sign of Tim Wilson’s extreme ideology on the economy that would see more people out of work if ever he got his hands on the levers.”
McManus said Wilson’s “disgraceful” suggestion echoed the view of sections of big business, which wanted a large pool of unemployed workers in order to suppress wages.
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In an interview with Guardian Australia, Wilson said he “certainly support(s) the dual mandate”.
But the Goldstein MP argued the bank was failing to deliver on that mandate, insisting it was not putting enough emphasis on curtailing inflation.
The headline monthly inflation rate was 3.8% in the year to December, up from a low of 1.9% in June of last year.
“They have got it wrong, and I think they’ve got it wrong in multiple periods where we’ve ended up in a situation where we’ve got inflation that has been led to be out of control. And you know, Australia, to be blunt, doesn’t have an unemployment problem presently,” Wilson said.
“They’ve clearly misread inflation, so they’re clearly not putting enough emphasis on inflation. And they basically had to admit publicly that they thought inflation was under control.”
Wilson was open to some form of review of the RBA’s mandate but is not proposing to remove the employment objective.
“The dual mandate is about balance, and the objective isn’t to crash the private economy, but that is what Australians are now living through higher inflation, lower annual wage growth and rising prices,” he said.
The unemployment rate remained steady at 4.1% in January, according to Australian Bureau of Statistics figures published on Thursday.
The new opposition leader, Angus Taylor, did not respond directly when asked if the bank’s dual mandate should be scrapped but backed Wilson’s argument that inflation was too high.
“I absolutely support Tim Wilson’s opinion that inflation is too high in this country and everything reasonable should be done to make sure that we get that inflation down and we get interest rates down, we restore our standard of living, and we give Australians hope again,” Taylor said.
“That’s what Tim wants to see, and he has made a strong point that there needs to be a very strong focus from the Reserve Bank and, more importantly, the government, that has been letting Australians down on getting inflation down.”
In a separate intervention on Thursday, Wilson told The Australian that the 47% top marginal tax rate – which applies to incomes above $190,000 – was “punitive” and a disincentive to work, leaving the door open to changes as part of a wider vision to lower income taxes.
Wilson called for a “robust conservation” about the tax settings, which he said should be geared towards encouraging Australians to “take risks” such as setting up small businesses.
“If you tax something, you are going to discourage it. If you lift the tax or reduce the tax, or provide tax relief, you will incentivise that behaviour,” he said.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: theguardian.com
