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Howes calls for Reserve Bank charter review -

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Howes calls for Reserve Bank charter review

Broadcast: 11/04/2012

Reporter: Tom Iggulden

There are calls for the RBA to have more power to influence the price of the Australian dollar, as
the Government announces regulations to help the manufacturing sector get a bigger slice of the
resources boom.

Transcript

TONY JONES, PRESENTER: Tomorrow the Prime Minister sits down with some of the country's most
powerful business leaders who are expected to press Julia Gillard to cut red tape.

The meeting will be conducted amid increasingly dire warnings about the manufacturing sector from
both unions and employers.

The Government's response is more regulations, which it says will give local business a fair go at
benefitting from the resources boom.

Political correspondent Tom Iggulden reports from Canberra.

TOM IGGULDEN, REPORTER: Bosses and workers are joining together to tell Canberra what it already
knows: manufacturing is slowly being starved.

INNES WILLOX, AUST. INDUSTRY GROUP: We argue we are at a point where there are very real risks of a
permanent loss of capability, particularly in manufacturing where capabilities are so hard to
rebuild.

PAUL HOWES, AUST. WORKERS UNION: In fact this is the worst period for steel that we've ever had
since we've manufactured steel in this country.

TOM IGGULDEN: The question is: what to do about it. Today the Government followed up on its promise
to give Australian businesses the inside track on a slice of the hundreds of billions of dollars
being poured into building resource projects.

GREG COMBET, INDUSTRY MINISTER: This is an endeavour by the Commonwealth to make sure that
Australian businesses get a fair go.

TOM IGGULDEN: Unions claim in some projects up to 90 per cent of the work's going to foreign
companies now the Government's tightened rules for resource project investors.

GREG COMBET: Including reporting to the Federal Government about the way in which Australian
businesses are being given opportunities to participate in those projects.

TOM IGGULDEN: The minister's shrugging off concerns the new regulations will reduce international
competitiveness.

GREG COMBET: We do not think it will place an extra regulatory burden of any consequence on the
companies that are involved in the projects themselves.

TOM IGGULDEN: But it's the high Aussie dollar that's really hurting local manufacturers, leading
some to think out loud about ways of lowering it.

GREG COMBET: Well it's of course not my position to be commenting on what interest rates should or
should not be.

PAUL HOWES: Well, I'm not a minister of the Crown like Mr Combet is.

TOM IGGULDEN: Mr Howes is calling for a change to the Reserve Bank's guiding principles to take
into account the value of the dollar after the bank failed to cut interest rates at its last
meeting.

PAUL HOWES: I believe the RBA has made the wrong call. I think that the manufacturing industry, in
fact most home owners in this country, need a cut in interest rates. We need a cut in interest
rates so we can get some downward pressure on the dollar.

TOM IGGULDEN: The call to change the bank's rules has some scratching their head.

JOE HOCKEY, SHADOW TREASURER: Fundamentally, the Reserve Bank doesn't have that many mechanisms
available to it to control the Aussie dollar.

TOM IGGULDEN: Others directly attacked Mr Howes.

WARWICK MCKIBBON, AUST. NATIONAL UNIVERSITY: The Reserve Bank has done a better job than any other
central bank in the world. To tinker with it now and to argue as Paul Howes does that there's
something wrong with the process just shows how out of touch he is with economics.

PAUL HOWES: I suppose in his world would be the ANU, which I didn't realise the university in
Canberra was the real world.

WARWICK MCKIBBON: We know from the '70's that if we let the unions drive policy, you end up with
very high inflation, you end up with policy eventually being pushed to very extreme levels and you
end up with a major recession.

PAUL HOWES: I think he RBA needs to listen not just to academics at the ANU in Canberra, but to
ordinary, decent, hard-working Australians.

TOM IGGULDEN: A couple of different business groups are backing Mr Howes' call for the Reserve Bank
to drop interest rates at its next meeting, and if the power of lobbying doesn't work, well
financial analysts say the latest round of economic data should prove move persuasive.

Tom Iggulden, Lateline.