The Governor of the Reserve Bank is an austere, detached figurehead who, on the rare occasions he speaks in public, does so with caution and erudition. Until he’s off the leash in the final weeks before his retirement, that is. Only then, it seems, can he tell it as it is.

Over the past few weeks, outgoing Reserve Bank governor Ian Macfarlane has been telling it as it is. Last month he told the House of Representatives Economics Committee, in his last appearance before retiring, that he’d been wrongly interpreted as endorsing the July tax cuts and misrepresented by the Treasurer when he said he was urged to make the tax cuts by the Reserve Bank. And last night he revealed on ABC Radio’s Sunday Profile that the Reserve Bank was “disappointed” by the Government’s claims during the last election campaign that interest rates would be lower under the Coalition than under Labor “because this seemed to imply that the central bank did not have the independence to set interest rates”.

Macfarlane’s defence for not spilling the beans while they were still hot is that those kind of comments would have been too political — “there was no way that I could speak out without effectively becoming a third force in the election,” he said last night of the government’s interest rate claims.  In other words, he was wedged by the government of the day. And so was the much-vaunted independence of the Reserve Bank.

Peter Fray

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