Shadow Treasurer Malcolm Turnbull has very quietly had himself appointed to the most interesting of the House of Representatives Committees: the Standing Committee on Economics. That’s the one that gets to quiz Reserve Bank Governor Glenn Stevens and his senior executives twice a year.
It’s the first time that the Federal Opposition’s Treasury Spokesman has been on the committee. In the last parliament, Craig Emerson was the senior opposition economics wonk, along with Lindsay Tanner, who is now the Finance Minister.
Turnbull has a big score to settle with the Gov and he’ll get his first chance this Friday.
In some of his ill-judged comments on economics policy, Turnbull questioned if the RBA was tackling inflation the right way. Then in a speech delivered earlier this month, Stevens explained to everyone just how inflation is controlled in Australia. The second paragraph of his introductory remarks contained these comments:
There is extensive commentary around at the moment about “blunt” instruments, concerns over the effect of rising interest rates on particular indebted sections of the community and the appeal in various quarters for some other way of dealing with inflation. Hence, it seems a sensible moment to re‑visit just how monetary policy works. It is also important to have a realistic assessment of the extent to which other instruments are available to help in the job that monetary policy is charged with.
Now who could he be talking about? In fact, if you read the Gov’s speech it contains a clear demolition of Turnbull’s claims that the final figures for last year showed inflation under control.
When the December quarter CPI was released in late January, Turnbull referred to “a lot of fairy stories about the important challenge of inflation” and said that the Coalition had bequeathed to Labor a headline rate “just a fraction below 3%”.
In his speech, Stevens said that the figure Turnbull had referred to had been held down by both an unusually low result in March 2007 and a change in the way childcare costs had been calculated in the September 2007.
Unfortunately, the situation at present is not quite as benign as that. The headline figure owes quite a bit to the unusually low result in the March quarter of 2007, which was affected by some unusual and temporary effects. When we get the March 2008 figures towards the end of April, we will most likely find that the rise over the four quarters is more like 4 per cent.
And on the same day the Governor’s speech was released, Treasury Secretary Ken Henry released a statement saying that Turnbull’s claims that his department had recommended an $18 a week rise in the minimum wage were “false”. Turnbull then issued a statement saying he was still right.
If Turnbull goes for the Gov, it will be pretty unedifying. It’s easy to belt a public servant, even an independent one like the RBA Governor. It’s a much tougher test of your abilities to make a genuine contribution to the economic debate and make some telling criticisms about current policy. To do that you have to be focused on the issues, not on ego.