Mr Keating slammed the RBA for not doing enough to support Australia’s economic recovery and called for it to directly finance government stimulus through more bond purchases.
“If the Reserve Bank actually got off its tail instead of producing silly little minutes once a month and actually bought more of the bonds and put them on their balance sheet, we could do this without a lot of hurt,” Mr Keating said.
“You get all this wise talk… Look, they’re basically a bunch of bureaucrats. What they should do is get off their tails and buy more government debt, in which case we can afford the JobKeeper and the JobSeeker right to the beach, not the dumper 100 metres out.”
RBA governor Philip Lowe has previously said that modern monetary theory is not on the RBA’s agenda, calling it “trickery in financing” and saying “there is no free lunch”.
“There is no way of putting aside the government’s budget constraint permanently,” Governor Lowe told the standing committee on economics.
“The separation of monetary policy and fiscal financing is part of Australia’s strong institutional framework and has served the country well. The Australian government and the states and territories have ready access to the capital markets and they can borrow at historically low rates of interest.”
Mr Keating also took the Liberal Party to task as it inches toward cutting the SG increase over concerns it will hit wage growth as the recovery gets underway.
“There’s a reason the stock market is at 6,300. From 1959 until today we’ve seen a huge increase in the profit share of the economy and a long-term decline in the labour share of the economy,” Mr Keating said.
“The last thing you want is some bitchy performance from the Liberal party trying to knock off compulsory super.”
Mr Keating is facing a mountain of opposition from not just the Liberal Party but independent economists, while Governor Lowe has also warned that the increase will drag wage growth – but Mr Keating didn’t take it lying down, saying he’d heard it all before in 1992.
“The worst thing about all these so-called economists – you can buy the whole lot of them, frankly, for not much – is that they have no emotion, no courage, and no sense of fairness.”
