The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Tuesday, May 17, 2011

RBA Board Member: No inflation problem here

Some quite remarkable comments from a current RBA Board Member, claiming we do not have an inflation problem in Australia (note that according to the RBA's own forecasts for core inflation we have a very serious inflation problem this year):

"One of the biggest brakes on the non-mining part of the economy is an Australian dollar that has traded at 29 year highs against the U.S. dollar in recent weeks.

"This is one of the most constraining influences across this country," Corbett said.

But despite the rise in utilities, Australia isn't suffering a wider breakout in price pressures. "We haven't got inflation. We have got very moderate inflation. Are there issues which Australia will have to face going forward? Undoubtedly," Corbett said, highlighting ongoing aggregate demand linked to the mining boom and inflationary pressures building elsewhere in the world, especially the U.S. and Asia, as points of concern.

Establishing a new sovereign wealth fund should be paramount, Corbett said. "There is a very, very strong moral argument that this generation should not use up all those resources and leave empty holes and basins for future generations," he said. "We should only allow our resources to be developed at a rate that suits Australia."

Corbett also pushed back against the government's plans to introduce a new carbon pricing scheme, which is currently being negotiated with a view to implementation in mid-2012.

"There are concerns, and well-based concerns, this will render Australia uncompetitive and put a cost not only on our steel industry but many others which will in fact make them non-viable, and we can't afford to do that."

"We will have plenty of time to act when the rest of the world acts," he said. "To act ahead of the rest of the world is not smart.""