‘Nasty attack’: Keating whacked for Reserve Bank tirade

A stoush has erupted between Treasurer Josh Frydenberg and former prime minister Paul Keating over the performance of the Reserve Bank.

Treasurer Josh Frydenberg has lashed out at Paul Keating after the former prime minister delivered a scathing attack on the Reserve Bank.

Mr Keating accused the bank of being “way behind the curve” in supporting the Federal Government’s efforts to mitigate the fallout from the recession and fund “mountainous sums” of government spending.

“The bank should be explicitly supporting the Government so the country does not experience a massive fall in employment, impacting particularly on younger workers,” he wrote in an opinion piece published in The Australian on Thursday.
“Those who have already been obliged to wipe out their super­annuation savings to support themselves.

“As history has shown, when a real crisis is upon us, the RBA is ­invariably late to the party. And so it is again.”

Former prime minister Paul Keating says the Reserve Bank has been ‘way behind the curve’. Picture: Nikki Short

Treasurer Josh Frydenberg says the Reserve Bank is independent and Mr Keating shouldn’t be attacking the bank like he has. Picture: NCA NewsWire / Gary Ramage

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But Mr Frydenberg told Today on Thursday that Mr Keating’s comments that the Reserve Bank didn’t do enough to help the Government fight the coronavirus-induced recession were misguided.

“This was a vindictive, nasty, revenge attack,” Mr Frydenberg said.

“The reality is the Reserve Bank didn’t have as much room to move on interest rates as they did in previous crisis like the global financial crisis.”

Mr Frydenberg defended the bank, pointing to a $75 billion injection in the markets and its purchase of $60 billion worth of bonds.

“We have worked very closely with them,” he said.
“You just can’t help but think that Paul Keating had his nose put out of joint by the comments by the governor of the Reserve Bank around superannuation.”

Reserve Bank governor Philip Lowe has raised concerns that a legislated increase to the superannuation guarantee will come at the cost of future wage growth.

But the push to delay the super contribution increase from 9.5 per cent to 12 per cent over the next five year has angered Mr Keating.

“We’ve got a bunch of little bitchy Liberals trying to knock off 2.5 per cent off people’s income for the rest of their lives,” he said earlier this month.