RBA chief to face parliamentary grilling

Reserve Bank of Australia (RBA) governor Glenn Stevens will paint a rosy picture for
Australia's economic outlook when he faces a parliamentary committee on Friday.
But economists say such positive sentiments only cement expectations for further
official interest rate increases this year.
RBA assistant governor of economics Philip Lowe told a Sydney function on Thursday
that Australia was in much better shape than other advanced economies after defying
the worst of the global downturn.
Employment was growing and business investment remained high, while inflation was
likely to be consistent with the two to three per cent target over the next couple
of years.
"The central scenario for Australia over the next few years remains a positive one,
with the challenges that we are likely to face being quite different from those
facing the other advanced economies," he told a Committee for Economic Development
of Australia (CEDA) forum.
RBC Capital Markets senior economist Su-Lin Ong said the speech supported the
central bank's clear bias to lift interest rates, but it was also clear that it
harboured some uncertainty over the global picture.
"Whether it will be more confident by March to exercise that bias remains debatable
especially given the likelihood of lingering global sovereign concerns."
No doubt members of the House of Representatives economics committee will try and
prise out a more definite course for rates over coming months, but Mr Stevens, as
usual, will likely leave people guessing.
The contentious part of proceedings will be getting the governor to explain a recent
speech where he said central banks would be more accommodative with policy if
governments paid down their debt quickly.
Although Mr Stevens said he was not aiming his remarks at Australian policy, the
federal opposition - which has been solidly against the Rudd government running up
debt by its continued stimulus spending - can't see how the governor can omit
Australia in his thinking.
"With the Rudd government's reckless spending and significant increases in strikes
under the `fair work' act, monetary policy faces increasing external pressures over
the coming months," Liberal committee member Jamie Briggs said in a statement.
"This is a very important opportunity for the parliament to discuss these challenges
with the Reserve Bank governor."
One issue that Mr Stevens will gladly sidestep, being the sole domain of government,
is the brewing row over the pending Henry Tax Review.
Opposition treasury spokesman Joe Hockey again demanded the release of the review
after a News Limited report said Treasurer Wayne Swan had started talks with the
mining industry to discuss proposals in the review.
"If the treasurer is prepared to hold behind-closed-door meetings with specific
stakeholders, then he should also be prepared to discuss the Henry Review with all
Australians who will be affected by Australia's future tax reform," Mr Hockey said
in a statement.
"The endless speculation on the contents of the Henry Review is creating massive
uncertainty for both Australian businesses and Australian taxpayers."
Mr Swan's office would not comment on the report.
The government has said it is examining the review and will make it available some
time early this year.
"As the treasurer and I have said, we simply won't speculate on the review as this
would be neither helpful nor productive," Assistant Treasurer Senator Nick Sherry
told a Melbourne function on Thursday.