Treasurer Jim Chalmers says former RBA Governor Philip Lowe has a vendetta against the government. Photo: Michelle Kroll.
The Federal Government has taken the unusual move of criticising a former Reserve Bank of Australia governor, following criticism Labor’s spending is fuelling inflation.
Former RBA governor Philip Lowe, who is now the chair of the ASX’s corporate governance advisory body, took a swipe at the government in an article published in The Australian Financial Review on Wednesday (18 February).
He said Labor’s cost-of-living handouts and lack of initiatives to boost the economy meant the nation was stuck with high interest rates and low wage growth.
“Productivity capacity of the economy is not growing very quickly, and the government wants to keep spending and wants to keep offering people handouts, which adds to demand, which in the normal course of events would be fine,” Dr Lowe wrote.
“But if the supply is not growing, you can’t do it, and if you try to do it, then interest rates have to go up.”
The comments came the same day newly released data showed that real wages in Australia fell in 2025, with wage growth outpaced by price increases.
Treasurer Jim Chalmers rebuked the former RBA governor, suggesting there was a personal vendetta against the government.
“Obviously, I think it is a matter of public record Phil Lowe would have liked to have been reappointed by the government,” Dr Chalmers said.
“After he wasn’t reappointed, he’s become a fairly persistent critic of the Labor government in the pages of the Financial Review and elsewhere.
“I think to some extent that’s just human nature. I understand that.”
The Treasurer also had a backhanded dig at Dr Lowe’s time as the RBA boss, particularly over his incorrect public predictions during the COVID-19 pandemic that interest rates would not rise.
Dr Chalmers noted that “out of respect” he had not made “any public criticism of his record as RBA governor or the forward guidance he gave or any of the decisions he took”.
Anthony Albanese took somewhat more of a low road, however, when he was asked to respond to Dr Lowe’s remarks.
“I haven’t seen his comments. But you know Phil Lowe? Phil Lowe, the footballer, former Manly player, or former RBA Governor?” the Prime Minister said.
“You have people who are exes who get their name on the paper. I haven’t seen his comments, but what I’m focused on is today, making a difference today, right now.”
Wages rose 0.8 per cent in the last three months of 2025, taking the annual pace to 3.4 per cent, while consumer prices rose 1 per cent in the month of December and 3.8 per cent across 2025.
In releasing the latest data, the Australian Bureau of Statistics said across both the private and public sectors, wages rose 0.8 per cent.
On an annual basis, public sector wages grew at a faster pace than the private sector for the fourth consecutive quarter.
Annual public sector wage growth was 4.0 per cent in the year to December 2025, higher than the 2.8 per cent at the same time last year.
Private sector wages rose 3.4 per cent over the same period. This was higher than the 3.3 per cent growth recorded in the year to December 2024.
“Strong growth in public sector wages for 2025 was due to new state public sector agreements that delivered multiple pay rises over the course of the year,” ABS head of statistics Michelle Marquardt said.
“Multiple pay rises occurred when agreements included backdated increases that took effect soon after the agreement was finalised, and a further scheduled rise was received later in the year.”
The Treasurer responded to the figures and defended the government’s economic record.
But he noted that inflation would be “a little higher than we like” into the end of this financial year.
“Of course, with inflation higher than we would like, that has applications for the real wages calculation,” Dr Chalmers said.
“But the overwhelming story of this Labor government has been real wages growth.
“Our focus as a government is on fighting inflation, addressing these longstanding productivity issues in the economy and dealing with this global economic uncertainty. That’s the focus of the government.
“We see strong and sustainable wages growth as part of the solution to cost-of-living pressures, not part of the problem.”
He added it was clear that the inflation number would be a “little higher than we like” in the middle of the year.
Speaking on talkback radio, Opposition Leader Angus Taylor said his focus is on reducing government spending.
And he outlined a few areas he would target if returned to government.
“Well, you have to make sure you get rid of unnecessary waste,” Mr Taylor said.
“I mean, spending billions and billions on thousands of kilometres of power lines in this country for Labor’s net zero obsession. Gotta go. It’s gotta go. I’ve believed for a long time. This is madness.
“Slush funds for green hydrogen projects that are not going to deliver and are not delivering, got to go.
“So, we’re going through already. We’ve started the work on going through Labor’s waste and making sure every dollar of it goes.”
