Jan 31, 2014

Hockey’s RBA handout is looking sillier and sillier

The RBA's reserve fund has had a big boost from the falling Aussie dollar and a more settled US economy.Joe Hockey's ill-conceived $8.8 billion handout is looking sillier by the day, Glenn Dyer and Bernard Keane write.

It’s the kind of good news that Treasurer Joe Hockey would prefer to keep quiet: the Reserve Bank is heading for a profit this year of $6 billion or more. But don’t let anyone know, just in case people remember the circumstances in which Hockey gave an $8.8 billion handout last October.

Back then Hockey, in his first overseas trip as Treasurer, was sufficiently frightened by his exposure to the bigwigs of finance at the International Monetary Fund meeting in Washington that he decided the Reserve Bank needed a boost to its reserve fund, even though the central bank had not directly asked for it. Hockey’s tone back then was near-hysterical. The Australian Financial Review breathlessly reported: “Mr Hockey, who returned from Washington last week vowing to load up ‘both barrels’, said the Reserve Bank cash grant was needed because ‘we need all the ammunition in the guns for what’s before us’.” Hockey predicted another major clash between the Republicans and United States President Barack Obama early in the new year. “I don’t see a way forward out of that,” he said.

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9 thoughts on “Hockey’s RBA handout is looking sillier and sillier

  1. WakeUpAustralia

    Absurd outcome?

    Isn’t it plain as day that this was Joe’s plan all along?

    Push the money onto them… blow out the budget to make Labor look bad… then get it given back later so he can look like some kind of financial wizard.

    Joe the “$400million dollar” man!

    Eleventy my dear Abbott… Eleventy!

  2. klewso

    Fair crack?
    Shockey had to do something, to inflate those figures somehow, to exaggerate “the parlous state” of the economy, so he could blame Labor, so he could justify what he and Toady want to do, themselves?

  3. Dogs breakfast

    IT was only the other day that I’m sure I read an esteemed economics reporter explain what a master-stroke it was for Hockey to increase the RBA funding.

    It’s hard to get a hold of the truth here, but clearly it wasn’t an emergency, the RBA hadn’t even asked for it, it was hard to tell what it was going to be used for, because $8billion wouldn’t have bought a half a cent movement either way at any time in the last 10 years, and there was a clear political motive to increase the expected budget deficit.

    $400m a year in interest costs hardly seems like the work of a responsible government.

    I assume that the RBA doesn’t just sit on it, and will probably make money from it (much more likely than the government) so the cost may be immaterial, but when are we going to get the responsible government of adults, by adults, for adults.

    These guys are Children run amok, feeding on their own BS, which appears to be in never-ending supply.

    Thanks to anyone who can find the economics guru who was praising this brilliant non-move by Hockey.

    I would try to relate the logic behind his argument, but it is always difficult to remember the intended logical flow in a non-sequitur.

  4. oldsalt

    “Hockey gives RBA $8.8Billion” is something we are repeatedly told but can anyone shed light on the mechanisms by which something like that is achieved. A line of credit to that amount involves phenomenal fees into certain elite pockets. Is this more payback?
    Never stop asking “Cui Bono.”

  5. zut alors

    Hockey thinks he’s pulled a masterstroke with playing the pea & shell game but he’ll never be acclaimed the World’s Best Treasurer, a title given to Wayne Swan.

  6. Aaron

    I believe that the billions are raised through the release of a government secured bond issue.

  7. Jimmyhaz


    The government creates money through its central bank, in this case the RBA, through the lending of money to financial institutions. Government mandated securities (bonds) are a throwback to when we had a currency that was fixed to the gold standard, and has no real place in today’s economies.

    The RBA could stop issuing bonds tomorrow and there would be no reaction in the markets, the only purpose they serve is as a risk-free investment for the already wealthy.

  8. klewso

    “Field of Dreams”? “Clueless Joe”?

  9. Liamj

    Give Hockey some credit, he’s showing the elite shonks that he can jiggle accounts with the best of them. Plus, keeping the RBA cashed up & playing the market is essential for merchant banks to cream off their %’s. Joe’s next job is in the bag(man).

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