Topics: RBA Review; inflation; cost of living; Federal budget

E&OE

ANGUS TAYLOR

Well, can I start by saying that the Coalition welcomes the release of the Reserve Bank of Australia review. I've had the opportunity to work closely with the reserve panel over recent months. We've sought to make this process as bipartisan as possible and appreciate that the government has too and I think the result is that is a good step in the right direction. We know we need a strong, independent, credible, capable Reserve Bank in this country. We have a big task ahead of us as a country; to beat the strong inflation that we have seen emerging in recent months and Australian households and businesses are suffering terribly from that very strong increase in the cost-of-living pressures and cost of doing business pressures they are facing. It is central to achieving the outcome we need to on inflation and interest rates, we need an effective Reserve Bank, one that is doing the job well. It's critical that the lessons from the past are learned. And I think this review does a very good job of going through recent history and looking at some of the lessons that need to be learned some of the work that needs to be done and some of the initiatives that need to be implemented.

Can I highlight, a couple of initiatives, recommendations in this review that I think are particularly important: We are pleased that the review panel has stuck with the 2 to 3 per cent inflation target, there are some who would like it to have been higher, but we don't need it higher. We need inflation coming back to the 2 to 3 per cent range. There is a big job to be done to get it there. Can I highlight also, that the panel recommended very close interaction between both fiscal policy and monetary policy, it is easy to think that getting rid of inflation is only the job of the Reserve Bank. That's not correct. The government needs to play its part in bringing down inflation, that's absolutely essential. We also welcome the focus in the review on transparency and accountability of the Reserve Bank. And I think there's several recommendations in there that I think will enhance that transparency, and accountability of the Reserve Bank. And finally, we welcome the fact that it is dealt in on with some of the errors of the recent past, there have been great challenges in the forecasting and guidance that's been given by the Reserve Bank and many households and businesses have paid a real price for those errors. It's important that everything be done as much as possible, at least to prevent that happening again in the future.

Can I finish on a slightly less bipartisan note, we have an upcoming budget in the next few weeks and in that budget, there is an opportunity for the government to play its role in fighting inflation. It must be the number one priority of the government. The government talks the talk on this, but it needs to walk the walk. And to do that we need to see a budget that is managing its spending because if it doesn't, households will need to manage theirs instead. If you want to get rid of inflation, it's absolutely crucial that you have a government that has a commitment to budget balance, a commitment that was taken out of the last budget. We need to see that. And we need to see your government that is tackling head on the challenges of inflation without raising taxes, and certainly without having a big spending budget. Our fear is that is what we're going to see in the budget. Our hope is that we will see sort of fiscal conservatism that is needed, that all households are having to exercise right now. But it's incumbent on the government to do the same. I’m happy to take questions.

JOURNALIST:

Given the criticisms of the bank, is Governor Lowe's position untenable?

ANGUS TAYLOR:

Well we think that the appointments and reappointments for that matter, should follow the recommendations laid out in the review, and they're very strong recommendations about how those appointments should be made. And they're very clear recommendations about how those appointments should know they should be merit based and we want that process.

JOURNALIST:

Just on those recommendations, and we've seen the full report, is there anything in there that you disagree with or think needs to be stronger? What has been the briefing process been like with the Treasurer's office as well?

ANGUS TAYLOR:

Yeah, starting with the latter, we have sought to make this as bipartisan as possible. The independent, credible, capable Reserve Bank is so essential to our economy. We have had a Reserve Bank, in effect that served this country well for a long time, despite recent errors that I outlined a moment ago. And we appreciate the opportunities we've had to engage with the panel and with the Treasurer's office so we're very positive about that. Look, we'll look through all the detailed recommendations, we've only just received a full copy of the report and so we'll work our way through those in the coming days and weeks. And of course, there'll be legislation, no doubt drafted on the back of that, that we will again have to consider it on merits but our goal here is to make the process as bipartisan as possible. Where I think there is a difference between us and the government is about the upcoming budget, we do want to see an upcoming budget that plays its role in fighting inflation, because the government has a crucial role in fighting inflation and shouldn't be left to the Reserve Bank.
 

JOURNALIST:

Is Philip Lowe the best person to lead the RBA through this transition?

ANGUS TAYLOR:

I'm not going to get into personality assessments, or evaluations of people, even individuals right now. What I will say is, I think it's just essential that the appointment process be followed as per the recommendations in the review. I think there was very good work done on the need for intellectual diversity in the bank and making sure that we've got the right people around the table, not just for the overall Reserve Bank board, for the monetary policy board as well. And I think those recommendations should help.

JOURNALIST:

Is moving from 12 meetings a year to eight going to reduce or increase the amount of time between those potential rate prices, and would you welcome that? And how important is it that you know that decision making also includes that the impact on households?

ANGUS TAYLOR:

Yeah, it's important to note that it's always going to be at the discretion of the bank to have additional meetings and are there likely to be 8 changes every year? Probably not. So, it's always a good thing to have more, though, if that's necessary. So, I think that's absolutely fine. I think what's essential in the recommendations is that there’s real transparency and accountability around those decisions, I think it's positive to have the Governor talking about those decisions soon afterwards, and making sure that they will understood make sure that they will communicate. Many people have to make crucial decisions for their families, their households, into their businesses, on the back of the decisions that are made by the Reserve Bank, and so having absolute transparency around that is really crucial and I very much welcomed the recommendations in that area.

JOURNALIST:

Then there has been a failing in the past. Because the Governor today said, you could say too much and too little, has he struck the wrong on balance when it comes to say too little or too much?

ANGUS TAYLOR:

Well, I think their review is very clear about some of the challenges in the recent past around the guidance, and the forecasts that have been made by the Reserve Bank. They have highlighted the errors that have been made there and other reports have done exactly the same. The crucial thing now is to make sure they're not repeated.

JOURNALIST:

How confident are you that these reforms will be implemented by the target of July next year?

ANGUS TAYLOR:

Well, I do think it's crucial that the government get on and lay out an implementation plan and work with us on the pieces where there needs to be collaboration with the rest of the Parliament, and do it as quickly as possible. We'll certainly be there to help. But as I say, a strong, independent, credible, Reserve Bank is absolutely essential. So, getting on and following these recommendations I think is crucial.

JOURNALIST:

Has the Opposition become distracted over the Voice, and should they draw their focus back on the cost of living? Those were the comments of Karen Andrews, as she left the front bench. Do you agree with those comments?

ANGUS TAYLOR:

Well, I think the Prime Minister has got very distracted with all sorts of things. The one thing we can't get the Prime Minister to talk about its cost of living, he seems to be completely disinterested in the topic. And yet I can tell you, when I get out and about and talk to businesses and talk to households, it is their number one issue. And I tell you, from our point of view, we will always treat as the number one issue. It has to be our priority. It must be priority going into the budget.

JOURNALIST:

What about the Opposition Leader, is he distracted?

ANGUS TAYLOR:

I think the Opposition Leader is absolutely focused on the cost pressures facing Australians. I mean, look, indigenous disadvantage is an important issue. And it's important in government and in Opposition and in the Parliament that we deal with the full range of issues that Australia is facing. But the top priority right now has to be cost of living. The Prime Minister doesn't treat it as his top priority. He shows disdain for the number of questions. We ask about it in Question Time on a regular basis and I think it is time for the Prime Minister to treat the cost-of-living as his top priority.

JOURNALIST:

Just getting back to the review. You say you welcome the focus on transparency and accountability. Can you give us any examples of where you think that was lacking?

ANGUS TAYLOR:

We just haven't had a process where board members are expected to make more transparent their points of view on the policy, I'm talking here about the monetary policy board. In the two-board structure, we just haven't had that it has been a feature in the United States, for instance and elsewhere, but it hasn't been featured here. And I think it's a very positive recommendation that there should be much more transparency that way, much more clarity about how the debates unfold and where people sit. And I think that is so crucial, because so many decisions are being made in this country, on the back of the decisions being made by the Reserve Bank, when you make any kind of investment when you buy a house, when you invest in a business, you are making the when you when you invest in your own education, for that matter, you are making decisions that will be affected by the decisions. And that’s why transparency is so crucial.

JOURNALIST:

Should workers, therefore, have seat at the table?

ANGUS TAYLOR:

Well, look, we want the right people around the table to make those decisions that should be merit based and that's what's recommended. Recommendation 14.2 lays it out very clearly what the skills and experience matrix, that's what we need around it. And we need the very best people to make tough monetary policy decisions around the table of the monetary policy board and then the overall governance board, of course, people with the appropriate board experience in capability that needs to be brought to bear they're very different skill sets, which is why separation has hesitant.

JOURNALIST:

Just going to talk about the budget. Obviously, there's a need for government to rein in spending, but there's going to be you know, millions of Australians looking for cost of living, believe are there any particular levers that you want Treasury challengers to pull something like the fuel excise, which obviously was cut six months, last year, other levers that you want him to look at?

ANGUS TAYLOR:

Well, what I want the Treasurer to focus on, is balancing his budget, making sure he's managing his spending, because otherwise households have to do it for him. It's That's it. That's how inflation works. We haven't had a big bout of inflation. But it's very simple. If the government can't manage its finances, households and businesses have to do the work for the government. So that's what we want to see the treasurer focused on. The other thing I'd say is, is don't make the situation worse. Don't put in place energy policies or industrial relations policies that are going to just exacerbate the situation. We don't need that we need a very clear focus on dealing with the pressures that Australian families and Australian businesses are facing and as I say it's the number one issue and will be treated as such.

ENDS