STEPHEN JOHNSON: Spin merchant Jim Chalmers’ attack of ex-RBA chief Philip Lowe won’t mask his own failures

Jim Chalmers has gone from being a spin merchant to an attack dog and this time his usual target isn’t a Liberal Party politician.

For the first time since becoming a Labor staffer turned Treasurer almost four years ago, his object of scorn is a former Reserve Bank governor.

His new bullseye is Philip Lowe, an easy target at that, who’s reinvented himself as a Dr Phil style economist with some simple, homespun commonsense minus a TV studio audience, a moustache and a Texan accent.

He’s also an economic hate figure, with a doctorate from Massachusetts Institute of Technology.

In 2021, at the height of Sydney and Melbourne’s lockdowns, this Dr Phil from inner-city Randwick infamously promised the RBA cash rate would stay on hold until 2024 “at the earliest” only for interest rates to go up 13 times in 2022 and 2023.

Talk about commitment issues.

A dozen of those increases occurred on Labor’s watch, before Dr Lowe’s successor Michele Bullock and her Labor-appointed monetary policy board followed suit earlier this month.

So, when the former RBA chief goes slams Labor’s high spending record, Dr Chalmers resorts to his first instinct: spin.

“When it comes to a couple of the issues of substance that he raised, for example spending, spending as a share of the economy has come down from almost a third of the economy, when he was the governor now to closer to a quarter of the economy,” he responded.

Dr Phil’s advice has turned the spat with Dr Chalmers into a verbal version of something from the late Jerry Springer’s show with flying fists and chairs.

No mention was made of COVID lockdowns that saw government spending soar to the highest levels since World War II as a share of gross domestic product.

The 26.9 per cent of GDP forecast for 2025-26 by Treasury would be the highest since 1986 outside of COVID during a time of high inflation.

Real wages are going backwards again for the first time in more than two years.

But rather than address Dr Lowe’s concerns about government handouts fuelling inflation, Dr Chalmers took the battle of the PhDs to a new level.

He’s blaming someone else, like a deadbeat figure of fun on Dr Phil getting jeered.

The best form of defence can be attack, so the instinct was to highlight how Dr Phil wasn’t reappointed in 2023 for another three years.

Break-ups are messy.

“I haven’t engaged in any public criticism of his record as RBA governor or the forward guidance he gave or any of the decisions he took,” the Treasurer said.

Ouch.

“I’m not interested now in having an argument with Phil Lowe,” he continued.

“Obviously, it’s a matter of public record: Phil Lowe would have liked to have been reappointed by the Government.

“After he wasn’t reappointed by the Government, he’s become a fairly persistent critic of the Labor government in the pages of the Financial Review and elsewhere.

“I think to some extent, it’s human nature. I understand that but I have a very respectful view of Phil Lowe.

“He’s the former Reserve Bank governor and he’s got his name in the paper today.”

For the record, Dr Lowe had this to say as chair of the Australian Securities Exchange’s new corporate governance advisory board.

“I hope the government turns out to be more ambitious than it currently looks like it will be because if it doesn’t and productivity growth remains weak, the supply capacity of the economy will remain weak,” he said.

“That means that demand growth has to remain weak and real wage growth has to remain weak. That’s the fundamental problem.

“Productivity capacity of the economy is not growing very quickly and the government wants to keep spending and wants to keep offering people handouts, which adds to demand, which in the normal course of events would be fine. But if the supply is not growing, you can’t do it and if you try to do it then interest rates have to go up.”

Dr Phil’s advice has turned the spat with Dr Chalmers into a verbal version of something from the late Jerry Springer’s show with flying fists and chairs.

With economists forecasting another hike in May, it’s brutal.

But as a Treasurer, he’s resembling Oprah Winfrey leaving a set of car keys under every seat of the studio audience and jumping for joy.