Reserve Bank governor Michele Bullock has angrily pushed back at accusations from a Coalition senator that she is gaslighting Australians.
Bullock, usually calm and reserved during parliamentary hearings, responded sharply after Nationals’ senator Matt Canavan – a trained economist – used different measures of wage growth to suggest the governor was at odds with the experience of most Australians.
“I think people are only going to get angrier in this country if they’re gaslit into thinking the economy is okay when their lived experience is absolutely terrible right now,” he said.
Bullock, who often discusses the amount of correspondence she receives from people about their living conditions and impact of the bank on their cost of living, pushed back strongly during a Senate estimates hearing into the Reserve.
“I take exception to that comment. I am not gaslighting anyone,” she said.
“I have said that there are certain aspects of the economy which are doing well, and one of them is the labour market, which is positive for people.”
Bullock had earlier noted that while there were a lot of complaints about the economy, she said it was doing “okay”, with the jobs market a particular strong point.
“But that is not to say that you can’t recognise that are some parts of the economy that are doing well, and the labour market, I think, has been a really positive thing for his country,” she said.
The Reserve Bank has a dual mandate – to hold inflation between 2 and 3 per cent and to have as many Australians in work as possible.
The jobless rate is at 4.1 per cent – among the lowest in the developed world – with 165,000 jobs created over the past year.
But Canavan said he did not believe the labour market was “doing that well”, and claimed Australians’ incomes were falling.
He said the economy should support “peoples’ basic ability to provide for themselves and that has gone backwards at a rate that we’ve never seen”.
Bullock, however, noted that a measure of incomes that takes into account wages, tax, interest and inflation showed incomes had grown since the pandemic.
“We’re looking at a measure of what people are actually being paid. It’s not shooting the lights out either, but it is above where it was pre-COVID,” she said.
The argument with Canavan followed questions from Liberal senator Jane Hume about whether government spending had contributed to the Reserve Bank’s decision to lift interest rates this month.
Noting she had answered questions on the issue many times, Bullock said it was spending by households and businesses that had been the key factor in the nation’s changing inflation outlook.
The governor said demand across the economy was running faster than its ability to supply goods and services, which was contributing to inflation.
Public and private demand were both contributing, but public spending over recent months was in line with what the bank had been expecting.
“If you look at the difference between our forecast in November and where we have inflation back into the band and you look at our forecasts now where it isn’t, the key difference is not fiscal policy. It is pretty much the same as it was in November,” she said.
“The key difference is private demand.”
Bullock pushed back on suggestions that the Reserve should wade into the political debate over government spending contributions to inflation.
