Phew, missed by that much. A week from the coup and the day after the cabinet reshuffle, people in financial markets and in some areas of business are heaving sighs of relief that Tony Abbott and Peta Credlin have been turfed out before they could focus on the Reserve Bank’s board renewal, which is due to start later this year. There were growing fears that the central bank faced a partisan assault from Abbott and Credlin similar to what we saw when Abbott won the 2013 election and immediately sacked several heads of federal departments, including the head of Treasury, Martin Parkinson. All were removed for apparently participating in the formulation of public policy contrary to the beliefs of Abbott and Credlin — particularly Parkinson, who played a leading role in climate change policy, including the carbon tax. — Glenn Dyer
Four out of nine. Driving this concern was the knowledge that four of the nine board members of the RBA are up for renewal or replacement in the next year, including the most important one, that of the governor, Glenn Stevens, who has been there since September 2006. Others include Catherine Tanna, whose term is up on March 29 next year, and John Edwards (a well-known economist), whose term is up on July 30 next year. Glenn Stevens’ term is up on September 17, 2016. But the first replacement happens this year when the term of the longest serving board member, Roger Corbett (the former CEO of Woolworths and just retired chairman of Fairfax Media), expires on December 1. He has been on the board since 2005. With three official members of the board (Stevens, deputy governor Phil Lowe and Treasury secretary John Fraser), half the business members on the board are due for renewal in the next year. For the federal government it represents a rare chance to influence monetary policy for years to come. And that was part of the concerns about Abbott and Credlin — that they have shown little or no understanding (or interest) of monetary policy and the need for an independent central bank.
In a normal administration, Corbett’s replacement will have been on the radar for a while in Joe Hockey’s office, but as we all know, Hockey’s nominee would have had no certainty of getting up once it got to the Prime Minister’s Office. Had Abbott not been sacked by the Liberal Party, there is no certainty that the other three replacements would have happened in the conventional fashion either. And the most important replacement, that of the new governor, was not certain to be found in the usual way — from within the upper ranks of the RBA and in particular, the deputy, in this case the highly respected Phil Lowe. There have been persistent reports that the Abbott government was entertaining the idea of looking outside the bank for Stevens’ replacement (instead of promoting Lowe) for someone who was more amenable to the hard-right policies of Abbott and Credlin, especially in the area of labour market reforms and taxation. — Glenn Dyer
Do the right thing, Malcolm, Scott. The one name bandied around the Sydney business establishment for RBA governor under Abbott was Maurice Newman, whose chairmanship of Abbott’s business council expired last Saturday. A former broker and investment banker, Newman unfortunately has a blinkered and limited view of the world, being a climate change sceptic, which leaves him on the outer with many in business these days, but not with the former PM. Now its down to Malcolm Turnbull and Scott Morrison to follow convention in refreshing the RBA board after consulting widely (even with the opposition about the new governor) ahead of the next federal election. Unlike Turnbull, Scott Morrison (like Abbott) has never worked for a living in the financial markets or in business, so it will be up to Turnbull to make sure Scott Morrison follows form and doesn’t go off the reservation. One person Turnbull should turn to for assistance is Dr David Gruen, currently the deputy secretary (economic) in the Prime Minister’s Office and formerly Treasury’s chief head of macroeconomics (the most important forecasting role in Treasury). He was in that role from 2003 to 2014. Before Treasury, he was head of the Economic Research Department at the Reserve Bank of Australia from May 1998 to December 2002. In fact, Gruen should be head of Treasury and not John Fraser. — Glenn Dyer
Indeed, Gruen would be a fantastic appointment, but better as the Head of Treasury.
Abbott’s sacking of Parkinson made a political appointment of one of the only two non-partisan sacrosanct roles left in govt, that of Head of Treasury and the Governor of the Reserve Bank.
The one thing that has been in Australia’s favour ever since getting rid of the ideologically blinkered John Stone has been the excellence of the people in these two key posts, particularly through the Hawke/Keating years, but also through Howard/Costello and Rudd/Gillard.
Sure, they did make some errors, but they always learned from them, and at an institutional level, so Gruen would be the perfect replacement.
The appointment of John Fraser has been the first departure from good appointments to these roles for 30+ years.