‘Boomer fantasy’: Reserve Bank boss Philip Lowe blasted over wage growth claim

The Reserve Bank governor has been accused of living in “boomer fantasy land” over his claim wage growth would prolong inflation problems.

In a speech earlier this week, Mr Lowe said he wanted wage growth capped at 3.5 per cent.

He also warned that the recent Fair Work Commission decision to boost the minimum wage to 5.2 per cent should not be repeated across the workforce.

“Three-and-a-half per cent is kind of the anchoring point that I want people to keep in mind,” Mr Lowe said on Tuesday.

Camera IconRBA governor Philip Lowe has been criticised for a speech earlier this week: NCA NewsWire / Jeremy Piper Credit: News Corp Australia

“If wage increases become common in the 4 and 5 per cent range then it is going to be harder to return inflation to 2.5 per cent.”

He has previously said he expects inflation to reach 7 per cent this year.

But his comments have been slammed by Australian Council of Trade Unions secretary Sally McManus, who questioned whether the RBA boss had lost touch with reality.

“All of this is just a fantasy because they don’t understand what actually happens at the bargaining table,” she told ABC RN.

“I don’t know how he can say that – wages on March 31 were 2.55 per cent up, how is that anywhere near what he is saying in 3.5 per cent?” Ms McManus said.

Minimum Wage Decision
Camera IconSally McManus has quizzed if Mr Lowe understands the bargaining process. Brendan Beckett Credit: News Corp Australia

“We’re not achieving 3.5 per cent, let alone 5 per cent, let alone 7 per cent.

“To think somehow that the system is going to deliver across-the-board pay increases of 5 or 7 per cent is boomer fantasy land and not realising that a whole system would be incapable of delivering that.”

Despite union calls for wage increases, the Albanese government appears to be heeding Mr Lowe’s warning.

“We have never said or implied there’d be an ongoing matching at wherever headline inflation was,” Industrial Relations Minister Tony Burke told the AFR.

Asked if she believed Labor had changed its tune, Ms McManus pointed the finger at the RBA boss.

“He was the one who said that so long as wages keep up with inflation and productivity, they’re not inflationary,” she said.

Industrial Relations Debate at NPC
Camera IconInnes Willox says the problem is a ‘told-you-so’ moment. Kym Smith Credit: News Corp Australia

Meanwhile, Australian Industry Group chief Innes Willox claims the Fair Work ruling let the genie out of the bottle.

“I hate to say we told you so, but we told you so,” he told ABC RN Breakfast.

“That we have the Reserve Bank governor saying wage increases need to be significantly less than what has been given tells us that perhaps there’s concern that this is going to run out of control and create more inflation as we warned it would,“ Mr Willox said.

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