But according to economist Stephen Koukoulas, this emergency measure by Hockey was completely unnecessary. You can read his full article here.
Stephen highlights that it was an odd decision given the RBA's annual report expressed no concerns about their existing reserves, and neither have financial markets. It was odd too because the $8.8 billion is borrowed money with an interest cost of around $350 million annually.
It is also questionable to blame Labor for raiding the bank given that during their time in government the Howard Coalition extracted $20.2 billion in dividend payments or $1.83 billion a year ($3 billion per annum in today's dollars).
Under Labor, the RBA paid a total of $7.9 billion in dividends or $1.3 billion a year ($1.5 billion per annum in today's dollars). In the last three Labor budgets, the average dividend was only $410 million a year. Hardly the irresponsible cash grab that Hockey painted it as.
Hockey also claims that the $8.8 billion is necessary to deal with economic headwinds. Another questionable assertion. Koukoulas suggests a better approach would be to come to an open arrangement (uncontroversial and cheaper) where the Commonwealth would guarantee the RBA whatever funds it needs if an urgent cash injection is ever required (something the government already does).
Another critical issue to consider is that $8.8 billion in the event of a bailout is nowhere near enough money. Recent bailouts have cost foreign governments in the order of 50 per cent of GDP and more ($800 billion in Australia’s case).
What parking almost $9B with the RBA does is... positions the money as Labor's waste, allows Hockey to score a few more political points, and gives the RBA an extra $9B which the Coalition can extract at any time as a 'dividend payment'. And all for the paltry sum of $350M a year.
Hockey is either the most incompetent Treasurer we've seen since John Howard, or he is a master manipulator who thinks little of wasting tax payers' money on cheap (or should I say expensive) political stunts.
And they keep telling us 'the Adults are in Charge now'!
You make up your own mind.