The Labor Party’s Achilles Heel

The mandate and operational arrangements of the Reserve Bank of Australia (RBA) are under review, with the report due in March. The Labor Party’s political imperative for this review is to distance themselves from the recent interest rate increases that have hit households with mortgages hard. While they have been reminding the public that the RBA is an independent agency, they now want to take it further and impose press conferences on the RBA Governor after every board meeting. But why does this matter?

A History of High-Interest Rates under Labor

The Labor Party has a history of high-interest rates when in government. During the Hawke/Keating years, the standard variable mortgage rate averaged 14.1%, the highest of any single government. Even when comparing interest rates after inflation targeting was introduced, Labor still records a higher average of 7.2% compared to the Coalition’s average of 6.3%. This issue is particularly important for the Labor Party as around one-third of households have mortgages, making them a powerful potential voting block. The party wants to ensure voters don’t blame them for their painful mortgage repayments.

Why Press Conferences Matter

The idea of compelling the RBA Governor to give press conferences after every meeting of the RBA Board is a clever but hardball political move. While it goes against the notion of the RBA being an independent agency, it would ensure that at least once a month, the face of a bureaucrat would appear on TV screens to justify high-interest rates and painful mortgage repayments. By putting a face to the issue, the Labor Party hopes to shift some of the blame away from themselves.

Related Facts

• The RBA is responsible for setting monetary policy in Australia, including interest rates.
• The RBA Governor’s term is up in September this year, adding to the political urgency for the Labor Party to act.
• The Coalition has dominated office since the slaying of high inflation in the 1990 recession, giving them a lower average interest rate than Labor.

Key Takeaway

The Labor Party faces a political nightmare as voters impacted by recent interest rate increases blame the government. To avoid this, they want to distance themselves from the issue by reminding the public of the RBA’s independence and, if possible, imposing press conferences on the RBA Governor. The Labor Party is particularly vulnerable to this issue with its historical record of high-interest rates in government.

Conclusion

The review of the mandate and operational arrangements of the RBA is just one way the Labor Party is trying to distance itself from recent interest rate increases. By engaging in hardball politics and potentially imposing press conferences on the RBA Governor, they hope to shift some of the blame away from themselves. However, with a history of high-interest rates while in government, this issue remains the Labor Party’s Achilles heel, and they must find new and effective ways to deal with it.