Howes attacks Reserve Bank on interest rates

Updated April 11, 2012 09:25:15

Union heavyweight Paul Howes has mounted an outspoken attack on the Reserve Bank of Australia, accusing it of botching its interest rate calls and endangering manufacturing jobs.

The head of the Australian Workers Union says the Federal Government must urgently review the bank’s charter.

Speaking ahead of a crisis meeting of steel workers in Melbourne today, he said the bank had to cut rates, or see more jobs head overseas.

The union boss says he will talk to Prime Minister Julia Gillard about his concerns at a meeting of the Manufacturing Taskforce this afternoon.

“The steel sector in particular is bearing the brunt of the impact of the high Australian dollar and we have grave fears for the future of steel making in this country on the current setting,” he said.

“My worst fear is that we won’t be making any steel here at all.

“And the reality is, if you don’t have a steel industry in this country, you can’t have a manufacturing industry.

“One of the real issues that our country has to come to terms with is that a high Australian dollar is good for nobody.”

Mr Howes says the Federal Government has to ensure it has “the right policy settings for our decision makers”.

“I mean, I’ve been wondering now for the last couple of months, do we have the charter right for the RBA?” he said.

“The RBA’s obviously got a charter to deal with inflation. We know the importance of that.

“But they have the most ability to impact on the Australian dollar.

“We believe very strongly that they need to cut rates to put downward pressure on the Australian dollar.

“If that doesn’t happen soon, we’re going to continue to see substantial job losses flowing from not just manufacturing, but our whole dollar-exposed sections of the economy.”

Mr Howes says the RBA has made the wrong call on interest rates “consistently” and has “compounded those bad calls”.

“And for some bizarre reason in this country, it seems like it’s religious heresy to criticise the decisions of the RBA,” he said.

“I do not think that the governors of the RBA are infallible and I think it’s right for us as a nation to have discussions about when the RBA gets it wrong.

“And this year they’ve consistently got it wrong.”

Climate Change, Industry and Innovation Minister Greg Combet says it is not the Government’s role to tinker with the RBA’s charter.

“I don’t think it’s a good idea to be debating the Reserve Bank board’s charter,” he said.

“It is independent – that’s very important, I think, in economic policy settings in this country that the Reserve Bank does operate independently and manages our monetary policy.

“And of course, Paul’s quite right, however, in talking about the impacts of the high dollar on manufacturing and on the steel industry.

“And of course that’s one of the reasons why the Prime Minister convened a Manufacturing Taskforce, because the challenge here is to recognise that we might be living with a high Australian dollar for some time to come.”

Topics:banking, industry, business-economics-and-finance, unions, government-and-politics, australia

First posted April 11, 2012 07:36:13