pearler by rba at reps eco committee

Tough luck xenophon and Fielding - backed the wrong horse, bad news for OZ

"In an extraordinarily brave testimony to House of Representatives? Economics Committee last Friday, Australia?s most respected and independent economist, the Governor of the Reserve Bank of Australia (RBA), Glenn Stevens, has cast enormous doubt over the Gillard Government?s economic credentials. He also showed why he is rapidly emerging as one of the world?s top central bankers."........................




"Under the pressure of exceptionally targeted questioning from the next generation of Liberal Party leaders, Kelly O?Dwyer and Steve Ciobo, Governor Stevens revealed that:

1) There was no place for a National Broadband Network (NBN) in his summary of national infrastructure priorities that will need to be funded by both the private and public sectors over coming decades;

2) If taxpayers are to be forced to underwrite 100 per cent of the $27 billion of equity risk capital associated with the NBN, then ?of course, a proper cost-benefit analysis? should be carried out before committing to such an extraordinarily large investment, and that any productivity benefits from the interconnectivity enabled by the NBN, ?hinges on how much you pay to do it and how efficiently it is done?;

3) Had the Rudd-Gillard Government?s fiscal stimulus, which was the third highest in the OECD, been substantially smaller the RBA would have cut interest rates further and lifted them back to normal levels more slowly. As a consequence, businesses and household would likely be paying lower interest rates today while taxpayers would have substantially less government debt to service;

4) The RBA?s liaison with industry has revealed mounting concerns about the effects of the new labour market rigidities introduced by the Rudd-Gillard Government?s workplace relations laws, which risk stimulating inflation pressures and thus higher interest rates;

5) As Joe Hockey has argued, there are ?huge moral hazards? in Australia?s financial system that need to be addressed, and which have been created by the unprecedented application of taxpayer guarantees;

6) Banks are not like normal private sector businesses, and even smaller banks are likely going to be ?too big to fail?;

7) The circa $1 trillion worth of taxpayer guarantees have created a ?contingent liability? that exposes taxpayers to risk, despite the asinine arguments by banking lobbyists to the contrary; and

8) As leading economists like Christopher Joye have posited, the RBA has evolved the way it sets monetary policy and become increasingly forward-looking in its approach.

Unfortunately, since Governor Stevens?s transcript was released on Friday evening, only one newspaper, The Australian, has reported on these profound disclosures, and even it was limited to the NBN and fiscal policy revelations."




http://www.abc.net.au/unleashed/41548.html