The legacy of Peter Costello

It was disappointing to read John Hewson on the Reserve Bank of Australia (“Matter of Interest”, February 12-18). He says he admires “inflation targets”, which the then treasurer Peter Costello imposed on the

RBA. Low targets are designed to strangle economic activity and boost market speculation. The Bank of Canada and RBA agreed this removed their independence from government. Costello also took away RBA powers to control financial markets and banks, creating new entities, APRA and ASIC. Banking royal commissioner Kenneth Hayne said these were weak. Costello also tried to close government bond issues, which infuriated bond traders. The aim was to reduce government money if needed to boost activity. Current Treasurer Josh Frydenberg directed ASIC and APRA to ignore Hayne’s proposals – so creating a property bubble and mass household debt. Given wage suppression, asset inflations bring an inevitable crash, about which the RBA is most worried but can do nothing.

– Jocelyn Pixley, Paddington, NSW