The new shadow treasurer, Tim Wilson, has said he supports the Reserve Bank’s twin objectives after calling for a more targeted focus on controlling inflation as a strategy to raise interest rates and unemployment.
Just two days into the new role, Wilson has signed off on nine papers, which will see the opposition review a statutory mandate that requires the bank to maintain an equal focus on two goals: keeping inflation within its 2% to 3% target band and achieving full employment.
Wilson pointed to the RBA’s “main purpose” being to reduce inflation, with an unexpected rise in price rises prompting Mitchell Bullock’s board to raise rates for the first time in two years earlier this month.
The comments were quickly seized upon by the Treasurer, Jim Chalmers, and the Secretary of the Australian Council of Trade Unions, Sally McManus, who said Wilson’s policy would mean higher interest rates and unemployment.
“The dual mandate is central to Australian economic policy, formalized by John Howard and Peter Costello and supported by both sides of politics and the independent Reserve Bank,” Chalmers said.
“This radical departure from that bipartisanship is an early sign of Tim Wilson’s extreme ideology on the economy, which will see more people out of work if he ever gets his hands on the levers.”
McManus said Wilson’s “disgraceful” suggestion echoed the sentiment of big business, which wanted large numbers of unemployed workers to suppress wages.
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In an interview with Guardian Australia, Wilson said he “certainly supports(s) a dual mandate”.
But the Goldstein MP argued the bank was failing to deliver on that mandate, insisting it was not focusing enough on reducing inflation.
The monthly core inflation rate was 3.8% in the month to December, from a low of 1.9% in June last year.
“They’re wrong, and I think they’ve been wrong for a number of periods where we’ve had inflation out of control. And you know, Australia, frankly, doesn’t have an unemployment problem right now,” Wilson said.
“They clearly misread inflation, so they obviously weren’t paying enough attention to inflation. And they basically had to publicly admit that inflation was under control.”
Wilson is open to some form of review of the RBA’s mandate but has not proposed removing the employment target.
“The dual mandate is about balance, and the aim is not to crash the private economy, but Australians are now living through high inflation, low annual wage growth and rising prices,” he said.
The unemployment rate was steady at 4.1% in January, according to Australian Bureau of Statistics figures published on Thursday.
The new opposition leader, Angus Taylor, did not respond directly when asked whether the bank’s dual mandate should be abolished but supported Wilson’s contention that inflation was too high.
“I certainly support Tim Wilson’s view that inflation in this country is too high and everything should be done reasonably to ensure that inflation comes down and interest rates come down, we restore our standard of living and we give Australians hope again,” Taylor said.
“That’s what Tim wants to see, and he makes a strong case that there needs to be a much stronger focus from the Reserve Bank, and particularly the government, to discourage Australians from getting inflation down.”
In a separate intervention on Thursday, Wilson told The Australian that the 47% top marginal tax rate – which applies to incomes above $190,000 – was “punitive” and a disincentive to work, opening the door to changes as part of a broader vision of lower income taxes.
Wilson called for “robust protection” of tax settings, which he said should focus on encouraging Australians to “take risks” such as setting up small businesses.
“If you tax something, you discourage it. If you lift a tax or lower a tax or give a tax break, you encourage that behavior,” he said.
