VIDEO: Reserve Bank keeps interest rates on hold

SARAH FERGUSON, PRESENTER:  Laura, to go back into the politics of the day, a hard day for the Opposition. Where they able to salvage a message on what their future tax policy might look like after today?

LAURA TINGLE, CHIEF POLITICAL CORRESPONDENT:  Welling, they tried, Sarah. I think they've got a bit of work to do. I think it is a really unusual position for them to be in where they're being wedged rather than the other way around.

So they're essentially trying to do two things. One of them is to say we're letting the tax cuts through, but don't pay any attention to that. Look at the fact that you can't trust the Prime Minister, negative gearing, all those sorts of things and promising that they will do more on tax at the next election.

So, they're trying to sort of spread the attention away from the latest tax cuts.

SARAH FERGUSON:  Did you think it was strange that during Question Time they went full bore on negative gearing. That's what I was curious about.

LAURA TINGLE:  Look, that's what their relentless attack has been about. I think that has been because when Labor originally opposed stage 3, it also linked that to changing negative gearing.

So they're just saying, well, they changed their mind on that, so we know that they must be lying about this other thing as well, but I mean, the Prime Minister was reasonably definitive about that in Question Time. He said they're talking about something that nobody is ever going to do which is quite an interesting response.

SARAH FERGUSON:  Strong language. So is the Coalition already raising possibilities about what it may do particularly about those high-end tax cuts?

LAURA TINGLE:  It is certainly suggesting it will do something more. It will go to the next election promising to do more for all taxpayers, but certainly higher income earners, but they did point out that it is going to cost about $9 billion a year to restore the tax cuts they originally promised.

They are saying we're going to have to cut back fat cat public servants and government spending and all those sorts of things.

But I think the interesting thing about this is, if they're talking about more tax, it will create an imperative on Labor to also be talking about more on tax and without a doubt, there is too much reliance on personal income tax base. So there may be a window here, that is a good, which is more talk about broader tax reform.

SARAH FERGUSON:  So sort of by stealth or through a political move even though as we saw both the Treasurer and the Prime Minister is very keen to say that this isn't politics, but all of those people who have been calling for wider tax reform, especially in the last few weeks, Allegra Spender, the BCA (Business Council of Australia) and so on, are we actually going to be able to see enough pressure built up where there is something more substantial put on the table?

LAURA TINGLE:  I think there is a scope for that to happen and I don't think, say that they did this for political reasons, horror, there is always a bit of politics and there is always a bit of policy, but Labor can justify this in terms of equity, in terms of cost-of-living, all of those things so that makes it okay, but as you say, without a doubt, there is a scope for a better policy outcome to emerge from these political imperatives.

SARAH FERGUSON:  We will see but let's go to the Reserve Bank because we had the first press conference today from the new Reserve Bank Governor. So I'll start with how she did because this is a new initiative for the Reserve Bank. We haven't seen this before. What did you make of it?

LAURA TINGLE:  I thought she was terrific if I can editorialise like that. I thought she was really good.

Michele Bullock came across as very down-to-earth. Yes, I understand the pressure of people with big mortgages or even small mortgages, but it is not just them who are suffering from inflation and made the case for why inflation has to be dealt with.

I think the other thing that was interesting to me about what she was saying was the markets tend to think that they are all knowing and all powerful. They're still predicting interest rate cuts by the end of this year or in the middle of this year.

Now, the statement from the bank after the board was talking about the possibility of rates going higher, but Michele Bullock was really saying, "Look, we're not going to move until we're sure inflation is going down into the middle of our 2 to 3 per cent range." That's like 12 months away.

So, she is not promising any rate relief for a really long time, but I think was very persuasive. For somebody who has not had to do this before at all and then had to escalate up to this whole new process of press conferences, I thought it was a really interesting and worthwhile exercise.

SARAH FERGUSON:  I know this isn't the whole of the new look Reserve Bank, but they did have the longer meeting. Did she say anything about whether that makes a difference to the quality of debate or the outcome?

LAURA TINGLE:  She did. She said that she thought it was much better, that they had time to really consider things properly and in much greater detail, look at the much bigger picture. So she said that was good.

But as you say, there are other changes to come with the appointment of the new Monetary Policy Board and the prospect of individual board members going out and having their tuppence worth in the public domain.

That starts probably from July, depending on the passage of legislation.

SARAH FERGUSON:  So more debate and possibility more talk about tax, who knew!

LAURA TINGLE:  Who knew! Policy.

SARAH FERGUSON:  Thank you very much indeed, Laura.

Thanks, Sarah.