News National Don’t play politics with RBA, Wong says

Don’t play politics with RBA, Wong says

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The opposition has accused Treasurer Joe Hockey of playing politics with the Reserve Bank of Australia, while a former RBA board member says the treasurer’s predecessor, Wayne Swan, is guilty of economic vandalism.

Mr Hockey this week announced a one-off $8.8 billion grant to the RBA to buffer it against what he said was an volatile economic environment.

The treasurer described it as a necessary measure that should have been taken by the former Labor government, which instead withdrew “extraordinary” dividends from the RBA and weakened its position.

That sparked an angry response from former finance minister Penny Wong on Thursday, who accused Mr Hockey of playing politics with the RBA.

The central bank should be above politics, she said.

“It really demonstrates that Joe hasn’t quite made the transition from opposition to being the treasurer of the Commonwealth of Australia,” Senator Wong told Sky News.

“The suggestion that he made that this was because, that Labor somehow had been asked for this, or that Labor had somehow done something wrong in relation to the RBA isn’t correct.

Warwick McKibbin, whose 10 year tenure on the RBA board was not extended by Mr Swan in July 2011, later told ABC’s 730 on Thursday that the year his term expired the RBA had made a large loss due to the high Australian dollar.

The following year there was a small profit of over a billion dollars, he said.

“The treasurer was requested not to extract that from the balance sheet of the bank,” he said.

“He ignored that request and took half a billion dollars so that he could reach the budget surplus in 2012/13.

“That to me is economic vandalism.”

Mr Swan, who was judged by Euromoney magazine in 2011 as the world’s greatest Treasurer, told 730 he was not surprised by Mr McKibbin’s criticism after not reappointing him to the RBA board.