A ‘partisan observer’: Chalmers rebuffs Howard criticism

Jim Chalmers has pushed back at claims by former Liberal prime minister and treasurer John Howard that the treasurer is diverting attention from his own failures to control government spending by blaming the Reserve Bank for “smashing the economy”.

Chalmers this morning told this masthead that while he respected Howard, he was not an objective observer and had had his own disputes with the RBA.

Treasurer Jim Chalmers has pushed back at criticism from former Liberal PM John Howard.Credit: Alex Ellinghausen

“His is a partisan view printed for partisan purposes, not an objective view,” Chalmers said.

On Sunday, the treasurer said high interest rates were “smashing the economy”, sparking criticism from the Coalition that the treasurer was placing blame on RBA governor Michele Bullock.

In an op-ed published in The Australian, Howard said Bullock does “not deserve the Chalmers broadside”.

“Chalmers’ clumsy attempt to shift blame for the painful consequences of high interest rates has badly backfired,” he said.

Howard added that Chalmers’ statement about rate rises “had a tone of desperation about it”.

“Interest rates are determined by domestic and international economic conditions, not by personal caprice of the treasurer or the board of the Reserve Bank,” he wrote.

“There is little argument that the Albanese government has lost control of expenditure.

“Despite any wordy protestations to the contrary, Chalmers has tried to shift the blame for the pain experienced by borrowers at present onto the shoulders of his own anointed bank governor. It is not only an unworthy deed, but it is also transparent.”

But Chalmers said Howard’s view was not a dispassionate analysis of his comments or views.

“I have a lot of respect for John Howard and he’s earned the right to express a view. I’m not interested in a public slanging match with him,” he told this masthead.

“Frankly he deserves better than to be rolled out every time Peter Dutton and Angus Taylor can’t carry an economic argument. They’ve completely vacated the field on the economy in ways Mr Howard never would have.”

Chalmers noted that an “objective observer” would have acknowledged the government’s control of spending and saving of extra revenue since it had come to office in 2022.

“If he was an objective observer, he’d acknowledge our two surpluses in two years after our predecessors delivered none, he’d acknowledge almost $80 billion in savings, that we’ve banked almost all of the upward revisions to revenue where he spent most of them, and that our budget consolidation in our first year [in government] was bigger than he and Peter Costello managed in theirs,” he said.

Howard has previously taken issue with the Reserve Bank.

In his 2010 autobiography Lazarus Rising, Howard revealed his displeasure with the RBA’s decision to lift interest rates just ahead of the 2007 federal election.

“The bank had ignored the implied understanding which had existed between the government and the bank, since full RBA independence in 1996, that the RBA saw to it that it kept out of the crossfire during election campaigns,” he wrote.

“So far from preserving its aloofness from the political fray, the RBA had run the risk of being seen to enter the lists against the government by lifting rates so close to the election.”

Howard, who lost his seat at the 2007 election, said the rate increase had “coloured reporting of the economic aspects” of the campaign. The RBA took the cash rate to 6.75 per cent in late 2007, the highest they had been for 11 years.

Howard’s book came out while RBA governor Glenn Stevens, who oversaw the 2007 rate increase, was still at the helm of the central bank.

Chalmers’ comments come ahead of Wednesday’s June quarter national accounts, which economists expect to show the economy barely growing through the past 12 months.

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