The ongoing battle between the Reserve Bank and the federal government has David Koch predicting there is a better-than-even chance that we’re going to fall into an economic recession.

The good cop, bad cop routine that’s being played out by the federal government piling into the Reserve Bank has me scratching my head. It’s easy to blame the current economic conditions on our record-breaking consecutive interest rate rises coupled with inflationary pressures. But I think that’s only half the story.

Don’t get me wrong; I’m not a massive fan of the Reserve Bank. Particularly after Reserve Bank governor Philip Lowe assured businesses and consumers that they shouldn’t worry about interest rate rises until 2024. (Well didn’t he get that wrong, and aren’t you and I paying for it?)

But despite my disgruntledness towards Philip Lowe, it’s not all his fault – the government needs to take some responsibility. And that’s what’s getting under my skin. The federal government is now piling into Phillip Lowe and blaming him for sending us into recession. But it’s a clear case of good cop, bad cop – with Lowe and his interest rate rises being tarred as the bad cop of the analogy.

But is it all his fault?

Just last week, we had Fair Work announcing wage increases to the modern award rate of pay. So here we have good guy. Jim Chalmers, federal treasurer, beloved by the workers. Meanwhile, small businesses are coping with higher interest payments on our corporate debt, and our business debt and our customers are being squeezed by an increase in interest rates on their mortgages.

Chalmers seems to be pretty intelligent, but you cannot keep going to your market and saying we’re going to give you a pay rise so that you’re going to get a decent salary into the future and not expect that that’s going to flow through to inflation and higher interest rates.

Treasurer Chalmers, you are also the cause of the interest rates going up. Yes, Philip Lowe makes the decision but treasury decisions are underpinning those rate rises.

And when it comes to the treasurer, I’m a little concerned that Chalmers might be hedging towards a recession. Here’s why… Chalmers is a disciple of Paul Keating. Paul Keating was a magnificent treasurer, a revolutionary treasurer, a treasurer that changed our economy for a generation and made it more efficient. A lot of the great momentum of our economy over the last ten years can be put back to some of the changes Paul Keating brought in.

However, there’s one area that still makes me shiver – and this is why I think there’s a link between the way Jim Chalmers is behaving at the moment and Paul Keating –  Remember ‘the recession we had to have’?

My great fear is in the back of Jim Chalmer’s mind this, too, is the recession we have to have.

Now that’s all very well to say, but the pain that it brings so many small businesses, and so many Australian families is enormous.

And I feel for us if we’re going into a treasury experiment with Chalmers. One that is saying, ‘I’m going to bring revolutionary changes and evolutionary changes to the economy like Keating did, so we needed a recession to do it’.

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