The Saturday Paper

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

Newspapers in English

Newspapers from Australia