Chalmers's Lowe blow after ex-RBA governor offers rebuke of 'handouts'

Chalmers suggests ex-RBA governor's spending critique is due to personal vendettaBy political reporter Tom CrowleyTopic:Federal Government6m ago6 minutes agoWed 18 Feb 2026 at 4:07amThe former RBA governor says government "handouts" have contributed to higher rates. (AAP/James Brickwood and ABC/Callum Flinn)In short:Jim Chalmers has suggested comments by former RBA governor Philip Lowe criticising government spending are motivated by Mr Lowe's disappointment that he was not renewed as governor.Mr Chalmers says he has "respect" for the former governor but does not want to argue with him.abc.net.au/news/chalmers-dismisses-criticism-from-philip-lowe/106359398Link copiedShareShare articleJim Chalmers and Anthony Albanese have responded with contempt after former Reserve Bank governor Philip Lowe suggested government "handouts" were fuelling inflation and rate hikes.Mr Chalmers said he had "respect" for the former governor but impugned his motives, implying his criticism was motivated by his disappointment that the government had not extended his tenure when it expired in 2023."Phil Lowe would have liked to have been re-appointed by the government. After he wasn't re-appointed he's become a fairly persistent critic of the Labor government," the treasurer told reporters."I think to some extent that's just human nature. I understand that. I have a very respectful view of Phil Lowe."In comments first reported by the Financial Review, Mr Lowe, who now heads an advisory body to the Australian Stock Exchange, said the federal government should be more "ambitious" about boosting the economy's productive capacity.Without such change, he said that if the government wanted to "keep offering people handouts" then interest rates would "have to go up".Phil Lowe the Manly player?The treasurer's unprecedented rebuke of a former central bank governor came after the prime minister earlier suggested Mr Lowe's comments were irrelevant."Phil Lowe the footballer, former Manly player, or former RBA governor? You know … you have people who are exes, who get their name in the paper. I haven't seen his comments," Mr Albanese said.Mr Chalmers took a veiled swipe at Mr Lowe's tenure at the helm of the Reserve Bank, saying that "out of respect" he had refrained from "any public criticism of his record as RBA governor or the forward guidance he gave or any of the decisions he took".Real wages growth goes backwardsWage rises are not keeping up with inflation, meaning household budgets are being increasingly squeezed with inflation outpacing wages growth.The mention of "forward guidance" is a reference to comments Mr Lowe made during the COVID pandemic that interest rates would not rise, which turned out to be wrong and drew criticism from a subsequent independent review of the bank.Mr Chalmers has pointed to the fact that public demand has grown more slowly than private demand over the last year as evidence that the government is not the primary cause of persistent inflation, although the handouts Mr Lowe referred to count as private."We know there's more work to do, plainly, on productivity. We have a very big, bold, broad, ambitious agenda of productivity we've been rolling out," Mr Chalmers said.The treasurer was speaking after the release of new wages data from the Australian Bureau of Statistics, which showed that wage growth lagged inflation in the last three months of 2025 and that public sector wages grew slightly faster than private sector wages.New Shadow Treasurer Tim Wilson said the government was "pump priming" the economy and it was "clear" this was "the key driver of inflation"."The treasurer's engaging in a form of demand denial about his responsibility to drive inflation exceeding wages," he said.Posted 6m ago6 minutes agoWed 18 Feb 2026 at 4:07amShare optionsCopy linkFacebookX (formerly Twitter)Top StoriesMillionaire economist's dire warning for Australian property marketTopic:Income Distribution