The Times Australia
The Times World News

.

The Greens’ demands on the RBA make for bad economic policy. Is it also crazy politics?

  • Written by Michelle Grattan, Professorial Fellow, University of Canberra



When the Greens tell Labor they’re ready to negotiate, what they usually mean is they’re preparing to make populist demands that can’t or shouldn’t be met.

So it is with their “ask” on the Reserve Bank legislation.

Treasurer Jim Chalmers wants to split the Reserve Bank board into two, one to run monetary policy and the other to administer the bank.

He got close to agreement with the Liberals, but then they saw an advantage in walking away. The Greens jumped in to fill the void, demanding an interest rate cut in exchange for their support.

“Both the Treasurer and the RBA Governor have said the reforms are important. Now they know what they have to do to get them done – provide some much needed relief to mortgage holders,” the minor party’s treasury spokesman Nick McKim said on social media on Monday.

“We are unashamedly using our political power to fight for mortgage holders who are getting smashed by high interest rates.

"The power exists for the Treasurer to bring down interest rates. Time to stop the pretence that the RBA is independent.

"Time for Jim Chalmers to end his ritual ashen-faced handwringing, end the pretence there’s nothing he can do, and intervene to bring down interest rates,” McKim said.

“We are deliberately bringing the RBA into the centre of the political debate where it belongs. The RBA board are unelected technocrats, not high priests who are beyond criticism. Every decision they make is political.”

When it comes to the Greens, the government gives as good as it gets.

“The Greens are out of control,” Finance Minister Katy Gallagher told the ABC on Monday. “It’s crazy what they’re saying to us,” adding, rather primly, that it was “a bit unseemly” for McKim to be “issuing ultimatums”.

Leave aside the unseemly – that’s a common political trait. What about the crazy?

What the Greens are demanding is bad economic policy. Whether it is crazy politics remains to be seen.

From time to time the Reserve Bank comes under sharp criticism, from experts and from the public.

Chalmers and McKim agree on one thing – the “smashing” power of high interest rates.

But the bank’s essentially independent status is a bulwark against monetary policy becoming the creature of short-term politics, as McKim would have it.

(The bank isn’t totally independent. Section 11 of the RBA Act gives the treasurer the power to overrule it, with statements from both the treasurer and bank tabled in parliament. The section has never been invoked.)

What the Greens are proposing, having the treasurer use his power to overrule the bank board to get his way on legislation, is irresponsible.

It’s also illogical. The whole point of the proposed dual boards is to strengthen the bank’s expertise as the independent setter of monetary policy. But McKim wants, in essence, to scrap that independence.

The stand on the Reserve Bank is typical of the Greens policy positions more generally. They’re presently holding up the government’s housing legislation in the Senate, making demands they know the government won’t meet, such as controls on rents.

When challenged, the Greens point out that after playing hardball on earlier housing legislation, they won extra funding.

They’re probably hoping the government will decide to buy them off this time with some more housing money. Notably, they have delayed the latest bills rather than vote them down. To do this they’ve teamed up with the Coalition – expediency overcomes ideology with these bedfellows.

Monday’s announcement that the Australian Competition and Consumer Commission has launched legal action against Coles and Woolworths over their allegedly misleading behaviour on product discounts feeds right into the Greens’ (and the Coalition’s) policy for the power to break up the big supermarkets.

The government reacted on Monday by releasing an exposure draft of its mandatory food and grocery code of conduct, which has been in the pipeline for some time. A government inquiry by former Labor minister Craig Emerson argued against divestiture powers but it’s easy to understand how cash-strapped families struggling with grocery bills could see that as appealing.

In general, is wild economics savvy politics? We won’t know until after the election.

The Greens were on a roll in 2022. They ended up with four lower house members, up from the one (leader Adam Bandt) they had before. The extra seats, all in Queensland, were won from both Labor (one) and the Liberals (two).

They also came out of the election with a record dozen senators (now 11, after Lidia Thorpe’s defection).

In the hunt for more lower house seats, the Greens would hope to pick up votes from those on the left who see Labor as too conservative, people financially hurting who are attracted to populist solutions, and young voters turned off the major parties.

Given its present radicalism, one wonders whether the Greens will hold the two Brisbane seats they won from the Liberals.

It’s difficult to chart the likely trajectory of the Greens, given their small share of the vote, and the heavier concentration of their support in particular areas. But Labor is certainly afraid of them. With the government on the back foot, it knows the potential attraction of easy-sounding solutions.

The Greens hope there will be a minority Labor government after the election, and that they would be in a position to twist that government’s arm on multiple issues.

The risk for them, however, is that if they overreach now, some of their potential but still undecided voters might become wary about how they would behave if their power was much enhanced.

Read more https://theconversation.com/view-from-the-hill-the-greens-demands-on-the-rba-make-for-bad-economic-policy-is-it-also-crazy-politics-239595

Times Magazine

Headless CMS in Digital Twins and 3D Product Experiences

Image by freepik As the metaverse becomes more advanced and accessible, it's clear that multiple sectors will use digital twins and 3D product experiences to visualize, connect, and streamline efforts better. A digital twin is a virtual replica of ...

The Decline of Hyper-Casual: How Mid-Core Mobile Games Took Over in 2025

In recent years, the mobile gaming landscape has undergone a significant transformation, with mid-core mobile games emerging as the dominant force in app stores by 2025. This shift is underpinned by changing user habits and evolving monetization tr...

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

From Beach Bops to Alpine Anthems: Your Sonos Survival Guide for a Long Weekend Escape

Alright, fellow adventurers and relaxation enthusiasts! So, you've packed your bags, charged your devices, and mentally prepared for that glorious King's Birthday long weekend. But hold on, are you really ready? Because a true long weekend warrior kn...

Effective Commercial Pest Control Solutions for a Safer Workplace

Keeping a workplace clean, safe, and free from pests is essential for maintaining productivity, protecting employee health, and upholding a company's reputation. Pests pose health risks, can cause structural damage, and can lead to serious legal an...

The Times Features

Tricia Paoluccio designer to the stars

The Case for Nuturing Creativity in the Classroom, and in our Lives I am an actress and an artist who has had the privilege of sharing my work across many countries, touring my ...

Duke of Dural to Get Rooftop Bar as New Owners Invest in Venue Upgrade

The Duke of Dural, in Sydney’s north-west, is set for a major uplift under new ownership, following its acquisition by hospitality group Good Beer Company this week. Led by resp...

Prefab’s Second Life: Why Australia’s Backyard Boom Needs a Circular Makeover

The humble granny flat is being reimagined not just as a fix for housing shortages, but as a cornerstone of circular, factory-built architecture. But are our systems ready to s...

Melbourne’s Burglary Boom: Break-Ins Surge Nearly 25%

Victorian homeowners are being warned to act now, as rising break-ins and falling arrest rates paint a worrying picture for suburban safety. Melbourne residents are facing an ...

Exploring the Curriculum at a Modern Junior School in Melbourne

Key Highlights The curriculum at junior schools emphasises whole-person development, catering to children’s physical, emotional, and intellectual needs. It ensures early year...

Distressed by all the bad news? Here’s how to stay informed but still look after yourself

If you’re feeling like the news is particularly bad at the moment, you’re not alone. But many of us can’t look away – and don’t want to. Engaging with news can help us make ...