From Schwartz Media. I'm Ruby Jones. This is seven AM. When Jim Chalmers said that interest rate hikes were smashing the economy, he was either stating the obvious or starting a war, depending on who you ask. For weeks in question time and in the news, a picture has been forming of an aggrieved treasurer angry at the governor of the Reserve Bank. At the same time, senior unnamed Labour insiders have called Michelle Bullock a nutter and the RBA
board widows. But behind the apparent breakdown between the government and the Reserve Bank, there's a much more bitter feud going on between Jim Charmers and Angus Taylor, who's recently walked away from a bipartisan plan to fix the Reserve Bank. Today special correspondent for the Saturday Paper Jason Cottsucus on how the deal unraveled and what it means for the
future of the Reserve Bank. It's Tuesday, September seventeen, So Jason, it's been more than two weeks now since we heard Jim Chalmers say that interest rates are quote smashing the economy. Those comments have dominated the news ever since. So why do you think that is well.
For the last two weeks, it feels like we've heard nothing else that here's Jim Chalmers at war with the Reserve Bank and how they are smashing the economy.
Treasurer Jim Chalmers has declared the Reserve Bank is smashing the economy. I think the Australian people, frankly expect me to tell it like it is, and I've been making that point for some months. What I said overnight.
Wasn't you his statement to Overnight making multiple ments of the Reserve Bank's thirteen interest rate hikes, saying the impact of interest rate rises are smashing the economy.
It was three days before the release of the June quarter national accounts. Those accounts were expected to show, and subsequently did, show that the economy was barely growing by just zero point two percent in the three months to June thirty, and parts of the media framed this as
a rift between the RBA and the Treasurer. On the Monday, the day after the Treasurer made those comments, the Australian newspaper led its paper with the headline RBA rates smashing nation and that Jim Chalmers had turned on the Central Bank. We also found In that story, former Liberal treasurers John Howden Peter Costello rising to criticize the Treasurer's comments. It felt like they were really trying to confect some kind
of battle. In fact, it wasn't long before we saw the words, you know, Jim Chalmers has gone to war with the Reserve Bank, and that he was trying to shift blame for a barely growing economy onto the Reserve Bank. He tried to do the media rounds to try and sort of tamp down the story.
You know, we've got different responsibilities, the Reserve Bank and the government, but we've got the same objective, which is to get on top of this inflation challenge, and we need to do that in a way that doesn't smash an economy which is already a.
Weak Even Michelle Bullock, you know, the Reserve Bank governor, had to brush away questions that the two of them were somehow suddenly at war, but she rebuffed that, saying both she and the treasure were just doing their jobs.
Right. Okay, So how would you describe then, the relationship between the Reserve Bank Governor, Michelle Bullock and Jim Chalmers Right now, Well, it.
Was Jim Chalmers who appointed Michelle Bullock. She was carefully chosen. She's the first woman to lead the Reserve Bank in its history. He described her as the right person to lead the RBA into the future.
Michelle Bullock is the person best placed to take the Reserve Bank into the future. Michelle is an outstanding and economist but also an accomplished and respected the leader.
And when Jim Chalmers appointed her, of course we knew that an independent review into the bank would soon be handing down recommendations on how the bank should be structured into the future, and that Michelle Bullock was going to be the one who would have her hand on the tiller as those reforms were handed down and would be implemented.
And one of the main things that the review recommended was splitting the Reserve Bank Board into a board that would look after the management and operations of the bank itself and then a separate committee that would just consider monetary policy and whether interest rates should be moving up or down. And since the review made its recommendations, the government has been working with the Coalition to try to get their support to make the changes outlined in the review.
Both Jim Charmers and the Shadow Treasury spokesman Angus Taylor have both emphasized the importance of a bipartisan approach here because whatever changes are made are going to last much longer than any one government lasts, so bipartisanship has been very important from the outset, and that's why Jim Chalmers has had three face to face meetings with Angus Taylor since the review was handed down. He's also arranged for three in person briefings by Treasury officials for the opposition,
and they've exchanged also a bunch of letters. So things were pretty much going in the right direction up until Thursday, August twenty two, when Jim Charmers was heading home to Brisbane after a couple of pretty tough eliamentary sitting weeks, and suddenly his offers started getting all these calls from journalists in the press gallery offering variations of the same question, which was you know, was it true that Charmers and Taylor had finally reached an agreement to reform the Reserve Bank?
And the deal that journalists thought was on the table had to do with this signature proposal to split the RBA board into two, and Chalmers staff were scratching their heads at the requests for comment, they couldn't tell where the story was coming from. It certainly wasn't from them.
Okay, So you've got journalists in Canbra clearly getting this tip that there is about to be a deal announced on changes to the Reserve Bank. So where is this story coming from, Jason Well.
Earlier that day, Jim Charmers had written to Angus Taylor agreeing to a key coalition demand that would see all of the existing RBA board members who wanted to move across to the new interest rate setting Board in order to eliminate the perception or the possibility that Charmers was going to try to stack the board with people sympathetic to the government's political agenda. Chalmer's offers played down the
suggestion that a deal had been done. What they were saying was that they had actually received no response, either formal or informal, from Taylor's office to the letter that Jim had written earlier that day. But Friday morning's papers carried the detail of Chalmer's letter to Taylor, the Australian Financial Review leading off its front page with a story headlined Charmers offers deal on RBA split. The Australian splashed with treasurer deals in libs with RBA two point zero.
Whether or not Jim Chalmers was annoyed with the Coalition for leaking the detail of the previous day's letter to Angus Taylor, he certainly didn't show it when he fronted up to the media on Friday morning at a press conference in Brisbane. In fact, Jim Charmers went out of
his way to praise Angus Taylor. He said that, you know, while the tour had their differences, in this instance, Jim Charmers said he thought that Angus Taylor had the right instincts, and he went into some detail about the kind of good faith negotiations the two had been having over the previous few months and how Jim Chalmers had tried to accommodate the changes that the Coalition had wanted, and he talked about how important it was that these changes be
above and beyond bi partisan politics. So I think at that point a deal was looking pretty good and the legislation would sail through the.
Parliament coming up after the break the deal unravels. So Jason, Jim Chalmers has spent more than a year working on these reforms the Reserve Bank. Central to this is this new board which would set interest rates. And he's been negotiating with the Coalition. He's agreed to everything they've asked for. The Coalition appeared to be backgrounding that a deal was imminent, So tell me what happens next.
So then Jim Chalmers and his advisors wake up last Tuesday morning to see in the newspaper that the deal is off. Angus Taylor had told the Australian Financial Review that the Coalition would not be going ahead with supporting Labour's reforms to the RBA. This was the first that Charmers had heard that he'd heard nothing from Angus Taylor or anyone else in the Coalition for two weeks. And then he wakes up to.
That headline, right, and so what reason does Angus Taylor give this?
Well, it's quite curious because even though the Government had given into every one of Angus Taylor's demands. He told the Australian Financial Review that recent public comments from not only the Treasurer but other senior labor figures in an attempt to blame the RBA for their own economic failures, you are deeply unsettling. And he added that considering recent events, the Coalition has serious questions about the government's commitment to
the continued independence of the Reserve Bank of Australia. We will not be complicit in Labour's sack and stack strategy, which is why we'll be opposing this bill.
Okay, So tell me a bit then about what else we've heard from other labor figures about the RBA.
Well, when's one accused the RBA of punching itself in the face and putting economic dogma over rational economic decision making, and Swan said that high interest rates were quote hammering households, hammering mums and dads and causing a collapse in spending and driving the economy backwards. You know, there's many other senior labor figures who've been very angry at the bank's
interest rate rises. And I think there's also been a lot of frustration with the bank's repeated failures on economic forecasting, a point highlighted in last year's review of the RBA. So at the end of this week, while Jim Chalmers is busy insisting that his relationship with Michelle Bullock is going just fine, up pops an analysis piece on the
ABC's news website. That piece by the ABC's Jacob Grieber quoted a senior labor figure describing Michelle Bullock as a nutter and the RBA board as barbarians and weirdos in the thrall of a bizarre group think. And I think once that piece came out, well Peter Dutton saw an opportunity to blow up these reforms, and the coalition's shadow Cabinet met on Monday and agreed that they would pull out of any deal with the government on splitting the RBA board into two.
Okay, So is what we're looking at here, Jason, a case of when politics gets in the way of policy, Because it seems like there was a lot of good faith negotiation when it came to these reforms. Labor was making concessions, including around this fear of board stacking that the coalition had, and it seemed like there was a strong possibility of a deal. But then the politics changed and the criticisms of the Reserve Bank got louder, and the Coalition, it seems, saw a political opportunity.
I think that's absolutely the case, and what we saw last week was the Coalition walking away from the very reforms it had worked very hard on and agreed to with the government. I think it's fair to say that Jim Chalmers and his office were absolutely furious at the decision by Angus Taylor and the Coalition to blow up these reforms.
The position that has been reported from the Coalition is irresponsible. It's disappointing, but it's not especially surprising given Peter Dutton's pathological negativity and Angus Taylor's weakness.
Yeah, as one labor saucer was close to Jim Charmers put it to me, Angus Taylor was putting the national interest last and all for the chance to gain the advantage during a one parliamentary sitting week. In the view of one labor source I spoke to, that made Angus Taylor a clown.
Okay, so where does this leave the treasurer Then, when it comes to getting these reforms.
Through, well, Jim Chalmers is in a difficult position because the only way he can get these reforms through now is to negotiate with the Greens and the cross Bench. But even if he does get agreement from the Greens and the cross Bench on these reforms to the bank, he won't have the agreement of the coalition, and he won't have that bipartisan support for long lasting changes to
the Reserve Bank. The idea that charmers would try to, as Angus Taylor puts it, sack and stack the board with friendly faces doesn't really make sense because the term of the appointments to that new interest rate setting board would be for five years, so that's not just beyond the next election, but beyond the election after that. This was done purely for the short term political interest, not
that the long term national interest. Perhaps the coalition thinking was in a similar way that Tony Abbott when he was Opposition leader, was always trying to create chaos. The more chaos, the worse the government looks. Blowing up the reforms to the Reserve Bank is probably something in that vein. It's making the government look as though it can't get its agenda through the parliament.
Jason, thank you so much for your time.
Thanks Rby, great to talk with you.
Also in the news today, former US President Donald Trump has survived an apparent assassination attempt at his private golf course in Florida. During a security check of the area, secret Service agent spotted a fifty eight year old male suspect hidden amongst the bushes holding an assault rifle. The man fled the scene, but was later arrested and paced into custody. And Australians have experienced a record number of data breaches in the first half of twenty twenty four.
Between January and June this year, the Office of the Australian Information Commissioner was notified of five hundred and twenty seven data breaches, the highest in three and a half years. Malicious and criminal attacks were behind two thirds of the breaches, with the majority of them described as cybersecurity incidents and Ruby Jones this is seven am. Thanks for listening.