Recently appointed Chairman of The Pisces Group, John Hewson, has criticised the Reserve Bank of Australia for excessively using interest rates to try and manage inflationary pressure at the Mortgage and Finance Association ofAustralia 2008 National Convention.Dr Hewson likened the use of interest rates to control inflation to 'using a sledgehammer to tune a Ferrari', and questioned the sense in increasing interest rates when the impact of rising oil, food and commodity prices were starting to impact ordinary Australians anyway.Dr Hewson went on to question the validity of the 2-3 per cent inflation target, calling them arbitrary. Heargued that the recent rate increases made by the RBA had gone too far, and that the previous rate hikeshad not had a chance to take effect.Dr Hewson also criticised the Deputy Governor of the Reserve Bank Board, Ric Battellino, saying hisstatement to the Senate Select Committee on Housing Affordability underplayed the severity of the housingaffordability crisis in Australia.Dr Hewson said that evidence that, in some cases, 35 per cent of the cost of a home was attributable togovernment taxes and charges presented a compelling case for reform. He went on to claim that this year'sBudget "fiddled around the edges" but did little to address housing affordability, and that the increaseddemand for housing brought about by the first home saver accounts introduced by the Government wouldcompound the problem.Phil Naylor, CEO of the MFAA, said: "Not everyone will agree with comments Dr Hewson made today at theMFAA Convention, however there is nothing wrong with a bit of healthy debate about what reforms andchanges are needed in order for Australia to maintain a healthy and competitive mortgage industry.""The RBA's decisions on interest rates have a clear impact on the mortgage and finance industry and thecurrent economic and business climate has presented the industry with very real challenges," said Mr Naylor."The lack of available finance, the renegotiation of broker commissions and the impact of rates on first timebuyers are all factors having a bearing on lenders and brokers."We have worked hard to secure speakers for our National Convention that we believe will challengemortgage and finance professionals and equip them with the skills and information they need to weather the
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