There’s a lot riding on the first big review in decades of the Reserve Bank of Australia (RBA).
Its terms of reference are comprehensive, ranging from an assessment of monetary policy arrangements to culture, management and recruitment. But it would be a mighty missed opportunity if this inquiry — launched in July and expected to report in March — doesn’t look at the people behind the decisions and how they navigate the changes that affect the rest of us.
If judgment was made on headlines, Treasurer Jim Chalmers would be class dux. He’s cool and calm, authoritative, warm and educated. But he also comes from a background where he understands that not everyone is born with a cot full of opportunities.
The headlines around big issues — such as the inquiry into the RBA and the need for well-being to become a pillar of the annual budget — have been greeted warmly. But like most things, the fine print doesn’t always deliver on the grandiose promises. In this case, a magnifying glass is needed to spot the budget’s well-being measures.
The inquiry into the central bank risks meandering down the same path, and this is why.
Australia is at a crossroads with a huge, complex and changing economic environment with challenges around each corner. We need a central bank to get the levers right. It needs to be form-fit to meet variables that traverse pandemics to natural disasters.
That’s what it says it does, although judgment varies widely on the timing and size of its recent cash rate rises. But does it consider the consequences of those decisions? Does the Reserve Bank — or the largely anonymous experts who make it up — understand the impact of cost of living?
It sounds trivial but it’s not. Do they fill their own car with petrol? Do they have a mortgage or a small business? Do they make these decisions on paper, or for the community?
The central bank’s job is one of the most important and most powerful in the nation, perhaps sitting just under prime minister and Australian cricket captain. But do you know any of the names or details of those who make up the Reserve Bank?
Challenge an educated friend and watch them fail to name a majority of members, who include Philip Lowe as governor, Michele Bullock as deputy governor, and members Mark Barnaba AM, Wendy Craik AM, Ian Harper AO, Carolyn Hewson AO, Steven Kennedy PSM, Carol Schwartz AO, and Alison Watkins AM.
They’ve all got lots of letters after their names — and they are all stellar in their fields of business and leadership and tax — but shouldn’t we know a bit more about them, and what they bring to a decision that acts as a game-changer to family budgets?
Paying the mortgage is becoming tougher for many, joining a confluence of cost-of-living rises that mean Australians are being forced to change schools, cancel Christmas holidays and consider selling their home.
How do we know those making the decisions genuinely understand that?
The Reserve Bank meets 11 times each year, on the first Tuesday of every month, except January. And those meetings are almost always in Sydney — although two are usually scheduled for other cities. Perhaps it’s only a small move, or even more about perception, but what if those decisions next year were made around a table at the RSL in Wagga Wagga in NSW, or the local school hall in Dalby in Queensland?
What if the public could go along and ask questions so they understood how and why decisions were made? That surely would meet Chalmers’ promise that our monetary policy framework operates in the interests “of the Australian people and their economy’’.
The credentials of the three people charged with reviewing the bank are impeccable. Carolyn Wilkins is a former deputy governor to the Bank of Canada, Professor Renée Fry‑McKibbin is one of the nation’s leading macroeconomists, and Dr Gordon de Brouwer has 35 years’ experience in public policy and administration — including in the Australian Treasury and the Reserve Bank.
Perhaps the make-up of our bank is just right. But that’s a question the review team should consider: do its members offer the skills and expertise and life experience to deliver the best decision? And are the consequences of their monthly rulings considered sufficiently?
We’d all be better off knowing that.
Would you like to be a fly on the wall of an RBA board meeting? What questions would you ask the board, given the chance? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
