Former Labor PM accuses Coalition of lying during election and says quantitative easing ‘not worth doing’

This article is more than 10 months old

This article is more than 10 months old

Paul Keating has weighed in on the economic debate, telling Scott Morrison’s government to drop its promise of a surplus and stimulate growth as monetary policy has “run its race”.

The former Labor prime minister and treasurer has told News Corp the quest for a surplus should not be regarded as sacrosanct.

Instead, the government should embark on productivity enhancing infrastructure spending and turbocharge vocational educational trading.

This reckless government and its business and media mates are determined to damage superannuation | Paul Keating Read more

“Monetary policy has run its race,” Keating said. “There is no more that central banks can do.

“Even if the Reserve Bank of Australia moved into the Australian version of quantitative easing, the impact would be so economically marginal as to be not worth doing.”

The central bank has cut the official cash rate three times in recent months to a record low of 0.75% and financial markets see a 50/50 chance of another reduction before the end of the year.

Keating also accused the government of lying during the election campaign by telling voters “we are running a strong economy”.

Data since showed the economy was growing at just 1.4%, half the average rate of the last 30 years, he said.

“This is not a record one would boast about,” Keating said. “The case for fiscal expansion is simply staring you in the face.”

On Saturday, the shadow treasurer, Jim Chalmers, said the government could afford to put in place “reasonable, proportionate and measured” stimulus in a way that won’t prevent the budget from returning to the black.

“The government needs to stop pretending that everything’s hunky-dory in the economy,” he told reporters in Brisbane. “The absence of a plan so far means that Australians are struggling and the economy is floundering.”

On Friday, the finance minister, Matthias Cormann, said the government was ready to do more to help boost the economy but was not prepared to waste a “crazy” amount of money as it claims former Labor prime minister Kevin Rudd did during the global financial crisis.

The treasurer, Josh Frydenberg, reportedly met with the ANZ chief executive, Shayne Elliot, and the National Australia Bank chairman, Philip Chronican, on Friday, urging them to loosen credit and encourage home buyers.