This morning Treasury Secretary Ken Henry talked — when permitted to by Coalition senators — about the Rudd Government’s bank guarantee and the claims, made with alarming prominence in The Australian yesterday, that the RBA had always wanted a cap on it. In terms of a demolition job on a press report, Henry’s evidence was about as comprehensive as you could get. The RBA and Treasury were “of one mind” on the issue of unconditionality, and both the RBA and Treasury had been working since the start on where retail banking deposits became wholesale lending and thus, under the scheme announced by the Government, would attract a premium for a government guarantee. Henry confirmed what Wayne Swan and the Prime Minister and Glenn Stevens said yesterday inside and outside Parliament. The Australian’s front page article on Tuesday was “unfortunate and fallacious”.

Despite all that, the usual suspects at The Australian were lining up this morning to yell “gotcha” and declare that the Government had made its first major mistake and had “backflipped” on the guarantee.

The world may have changed, we may be facing the biggest economic crisis since the 1930s, but it’s comforting to know The Oz maintains its prejudices and reflexive willingness to cheer for the Coalition regardless of the available evidence.

Peter Fray

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