EDITORIAL: Labor’s RBA pile-on betrays economic incompetence

Now it’s Wayne Swan’s turn to join the pile-on against the Reserve Bank.

The Rudd/Gillard era former treasurer gave the bank an almighty spray on breakfast television on Friday, continuing Labor’s efforts to blame anyone but itself for Australia’s woeful economic growth.

“I think the Reserve Bank is putting economic dogma over rational economic decision making, hammering households, hammering mums and dads with higher rates, causing a collapse in spending and driving the economy backwards, and doesn’t necessarily deal with the principal pushes when it comes to higher inflation,” Mr Swan said.

Yep, according to Mr Swan, it’s the fault of the meanies at the RBA that you’re struggling with the price of everything. Your friends in the Labor Party, however, are doing everything they can to help.

“The Government is doing a lot to bring down inflation, but the Reserve Bank is simply punching itself in the face. It’s counterproductive, and it’s not good economic policy, and I’m incredibly disappointed with what they’re doing,” Mr Swan said.

It’s an extraordinary statement from a man who fancies himself an expert in economic policy.

But it should hardly be surprising.

After all, this is the man who taught Jim Chalmers everything he knows about the economy.

Which, judging by the Treasurer’s recent performance, is not a lot.

The fact is that Australians have been left dealing with high interest rates for longer as a direct result of the Labor Government’s weakness.

The Government has a number of levers at its disposal it could pull in order to rein in inflation. But it won’t do it.

Because those levers — slowing down government spending, or increasing taxes — would be unpopular. And with an election next year and the prospect of minority government looming large, Dr Chalmers is desperate to be everybody’s friend.

So it’s left to the RBA to deal with. They have only one lever to pull — interest rates.

It is, as governor Michele Bullock has repeatedly acknowledged, a blunt instrument, and one which causes a lot of pain for households. But the alternative, as Dr Chalmers and Mr Swan should know, would be to let inflation run out of control, which would cause far greater pain in the long run.

If the goal of this coordinated smash-up is to intimidate Ms Bullock into bringing down interest rates early, Mr Swan and Dr Chalmers are going to be disappointed.

Ms Bullock has shown no signs that she will be cowed by bullying behaviour or attempts to undermine the RBA’s independence.

And if the goal is simply to have someone else to point the finger at when Australians come looking for someone to blame for their ever-tightening budgets, they might be also be disappointed. It may have worked before, but Australians won’t be fooled again.