Treasurer Josh Frydenberg and Reserve Bank of Australia governor Philip Lowe (Image: AAP/Mick Tsikas)

The independence of the Reserve Bank (RBA) is supposed to be a bipartisan policy in Australia. Accepted by Keating — who suffered politically from the bank’s inflation zealotry — and formalised by the Howard government, the central bank is supposedly above politics.

Except, as we’ve seen repeatedly in recent years, the Liberal Party is happy to trash core beliefs if they prove inconvenient.

Bringing trade unions into the centre of the economy and working with employers in the national interest? That 1980s idea has long since been abandoned as part of the hatred of industry super funds. A commitment to markets and price signals? Not when there’s political opportunity in opposing a carbon pricing scheme. Fiscal discipline? Not when there’s a chance to hand a lot of money to big business (see Josh Frydenberg and JobKeeper). Deregulation and small government? Not when fossil fuel donors have to be looked after.

Surely central bank independence is sacred?

Remember that, as reported by the AFR’s Jacob Greber, Tony Abbott and his office in 2014 thought the Reserve Bank had “fucked up” and they would have to “fix” it. The government has also had first John Fraser and then long-serving Liberal staffer Phil Gaetjens on the RBA board ex officio as treasury secretaries.

Now a “review” of the Reserve Bank has been mooted by the OECD — headed by Mathias Cormann — in its latest report on the Australian economy. The OECD would have consulted with Treasury on the report.

Josh Frydenberg is “strongly considering” a review.

There’s plenty of support for a review from both sides of politics. There’s a strong view from Labor — encouraged by Paul Keating — that the RBA ran monetary policy too tightly during the 2010s, leading to regular missing of the inflation target and unemployment higher than it should have been.

Then there are the ideologues who think tight monetary policy is the kind of tough-love moral suasion an economy addicted to cheap money needs. During the years when the RBA was missing its inflation target on the underside, they repeatedly demanded interest rate hikes. Unsurprisingly, one of their number, arch-neoliberal and former RBA board member Warwick McKibbin, has wheeled out his old call to switch to nominal income targeting.

The goal of many of these hardliners is to shift the goalposts so that the RBA permanently runs a tighter policy, regardless of the cost to employment. An economist with the right-wing Centre for Independent Studies also wants the review to focus on getting rid of the current full employment mandate completely.

But McKibbin also backs an examination of the board composition — especially the inclusion of more economists, while retaining business representation. He also thinks the secretary of the treasury should not be permitted to vote in board deliberations — a good idea since Tony Abbott egregiously politicised the Treasury, which is now best regarded as a giant office of the treasurer.

But what is the government’s agenda for a review?

Governor Philip Lowe has been making himself unpopular with the Liberals for years now by first calling for additional fiscal stimulus back when the government was still claiming to be “back in black”, and then by repeatedly drawing attention not merely to the wage stagnation being endured by Australian workers, but pointing out that governments, including the Commonwealth, bore a lot of the blame via their punitive public sector pay policies.

Lowe, now the undisputed leader of economic policymaking in Australia, has since elevated higher wages growth to the centre of economic policymaking in Australia (something that infuriates Liberals, who like wages growth perfectly well right where it is, thanks — maximising business profits).

More recently the bank has again drawn attention to its longstanding view of the government’s culpability on housing unaffordability via negative gearing and capital gains tax rules. “The bank has always held the view that the combination of negative gearing and concessional capital gains tax and, indeed, the way we tax older Australians — or don’t tax older Australians — combines to encourage essentially speculative investment in property,” assistant governor Luci Ellis told Parliament recently.

Not what the Liberals, who secured a surprise win in 2019 partly on the basis of a scare campaign about Labor’s modest negative gearing reforms, wants to hear.

The bank has also made it clear that housing affordability is something for politicians to fix, not monetary policy. Again, not a message a government — particularly the Morrison government, which hates taking responsibility for anything — wants to hear.

Neither side of politics is now going to do anything about housing affordability — not after 2019. Voters had their chance to elect a government that was prepared to undertake the most obvious fix on housing — negative gearing reform — and plumped for the outfit that prefers to have taxpayers subsidise wealth property speculators.

That’s that issue done and dusted, and we’ll live with the consequences. From the perspective of Martin Place, that’s the end of the matter.

So any review authorised by Josh Frydenberg should be seen entirely through the lens of a government that may well once again be thinking that the RBA is “fucked up” and in need of “fixing” — at least when it comes to wages, housing and fiscal stimulus. Central bank independence is a fine principle, but not if it gets in the way of politics.