Treasurer Jim Chalmers says he’s ‘telling it like it is’ on households, economy ‘smashed’ by RBA rate rises

Treasurer Jim Chalmers has doubled down on his comments against the RBA, saying he is “telling it like it is”, but refused to disclose if he’s told the Governor her board was “smashing the economy”.

Speaking in Perth on Monday, Dr Chalmers claimed Australian households would be doing it much tougher without Federal Labor’s cost-of-living relief package, and took responsibility for the Government’s Budget response to the crisis.

The Opposition had earlier declared a new front in the Government’s “war” with the independent RBA after the Treasurer said on Sunday that the Reserve Bank’s run of 13 interest rate rises had smashed the economy.

Dr Chalmers repeated his criticism of the RBA on Monday but denied the comments were an attack on the bank’s independence.

“It’s a fact. If you look at the economic data that higher interest rates are slowing our economy, that’s a fact, that’s not an opinion that is very clear from the data,” he said.

“That’s not taking a shot at anyone, that’s just recognising the facts of our economy right now. Of course, when our interest rate rises, that has an impact on household budgets and has an impact on the economy.

“The Australian people, frankly, expect me to tell it like it is, and I’ve been making that point for some months.”

When asked if he had made the same comments to RBA Governor Michele Bullock — during any of his frequent engagements with her — Dr Chalmers refused to elaborate.

“More broadly, I don’t second-guess decisions taken by the independent Reserve Bank,” he said.

“I don’t pre-empt future decisions that they might make. I engage frequently with the Governor of the Reserve Bank.

“Ever since we appointed her the Governor, the lines of communication have been open and the dialogue has been real, and we compare notes on how the economy is travelling.”

The Treasurer’s comments threatened to hurt the Government as the Prime Minister and his Cabinet embarked on a four-day pitch to West Australians in the must-win State.

While Anthony Albanese agreed there were economic consequences to rate hikes he stopped short of backing the Treasurer.

“Rate rises have an impact on the economy. That’s what they’re designed to do, to dampen demand,” he said.

“(Dr Chalmers) has made the comment about the economy slowing for a long period of time, and economists are expecting, when the figures are released this week, that they will show modest growth. That is just a fact.”

Mr Albanese wouldn’t say whether he wanted to see a rate cut by the end of the year — in line with expectations for central banks in other nations — saying the Government did not tell the RBA what to do.

“The Reserve Bank have a role to play in monetary policy. Our job is fiscal policy. To make sure we both want the same objective of getting inflation to moderate,” he said.

Dr Chalmers’ comments drew criticism from the Opposition, with Shadow Finance Minister Jane Hume arguing the Federal Government’s failure to curb high inflation had left the Reserve Bank with little choice.

“The reason why it’s no surprise is because these wars have been going on for two years now,” Senator Hume said.

“Inflation is the root cause of the problem. If you’re feeling poorer, you are poorer.

“You’ll recall that when Labor first came to government, Jim Chalmers blamed overseas factors for high inflation, then he blamed Philip Lowe, and now he’s blaming his handpicked replacement for Philip Lowe, Michele Bullock.

“The RBA can only respond to the inflation which it finds itself in, and the problem is the Government isn’t doing its fair share of the heavy lifting.

“It is turning responsibility entirely over to the RBA.”

Senator Hume said household disposable income had fallen dramatically in the past two years through a combination of inflation, interest rates and taxes.

Labor MPs — including Industry Minister Ed Husic — have backed the Treasurer as they caution the RBA against further rate hikes.

Mr Husic said given the state of the economy, increasing interest rates was “not a way to go”.

“The notion that you would go even harder on interest rates, given the way that the economy is going, obviously it’s up to many of us to speak up on that, and I certainly have a view that one thing cannot add to the other,” he said.

Dr Chalmers dismissed suggestions his Government’s cost-of-living package wasn’t working effectively enough to curb the effect of rate rises.

“Because in the absence of a tax cut for every taxpayer, energy bill, relief for every household, cheaper medicines, rent assistance, cheaper early childhood education, a wage rise for millions of Australians doing it tough — in the absence of our measures, people would be doing it much harder than they are,” he said.

“We acknowledge that people are still doing it tough, and that’s why our cost-of-living measures are so important.”