Bullying Michele Bullock? When it comes to fighting inflation, we’re a tag team

The Coalition has accused Jim Chalmers of bullying his hand-picked RBA chief Michele Bullock as the Treasurer accused the opposition of quietly coveting a recession for its own political gain.

Treasurer Jim Chalmers in question time at Parliament House on Monday. Picture: NewsWire / Martin Ollman

The Coalition has accused Jim Chalmers of bullying his hand-picked Reserve Bank chief Michele Bullock as the Treasurer accused the opposition of quietly coveting a recession for its own political gain.

With parliament returning on Monday, question time was dominated by claims of fraying relations between the Albanese government and the central bank as Labor faces renewed pressure over its handling of the economy.

Seizing on comments made by the Treasurer, who last week declared the RBA was “smashing the economy” via its aggressive run of rate hikes, the opposition accused Dr Chalmers of threatening the institution’s independence. “Why does the Albanese Labor government think it’s ­acceptable to bully the independent RBA in this way, when all they’re doing is cleaning up Labor’s economic mess?” deputy Liberal leader Sussan Ley asked during question time.

In response, Dr Chalmers pointed to remarks made by Ms Bullock, who on Thursday emphatically denied relations between Labor and the central bank were strained. “The governor made it clear she doesn’t agree with the assessment put forward by the deputy leader,” he said.

“As the governor said, the government and the governor are aligned when it comes to the fight against inflation.”

The economic stoush follows the release of anaemic GDP figures last week that showed the economy expanded by 1 per cent in the 12 months to June amid faltering private consumption, a further rundown in household savings and a decline in real disposable incomes.

Dr Chalmers said the opposition, which has gained ground in the polls during the cost-of-­living squeeze, was barracking for a further deterioration in the economy for its own advantage.

“They desperately want higher interest rates, they desperately want the economy to go backwards, because it serves their political purposes,” he said.

“They hope if we go into recession, no one will notice we’re in the third year of a parliamentary term and they don’t have any costed policies.”

With Labor criticised for overseeing record government spending which the Coalition and some economists have argued is undermining the RBA’s efforts to tame inflation, Dr Chalmers was unabashed, arguing its outlays had halted an economic contraction.

“It would be diabolical if we pulled $315bn out of the economy as the shadow treasurer wants,” he said, adding mooted ­Coalition spending cuts would “push our economy into recession”.

While the Coalition has opposed billions in outlays since Labor came to government, the $315bn in spending cited by the Coalition includes the automatic indexation of government payments and pensions, which have risen strongly owing to inflation.

Dr Chalmers demanded the Coalition “come clean” about its planned “secret cuts” to transfer payments and social benefits.

“It means cuts to the pension costing $146 a fortnight, cuts to the single parenting payment, $123 a fortnight, cuts to affordable housing, cuts to Medicare and cheaper medicines, cuts to fee-free TAFE,” Anthony Albanese later added.