Peter Tulip, who worked at the Reserve Bank for nine years, said internal and external scrutiny of the bank was lacking and called for new leadership. Governor Philip Lowe’s seven-year term ends this year.
Charging
“A big theme of the review is the problems with the RBA culture; that it is insular, hostile to criticism, lacking in curiosity, hierarchical,” said Tulip, now chief economist at the Center for Independent Study. “Ultimately this (change) is going to have to be leadership driven and I don’t think the leadership that ran the bank responsible for all the issues documented in the review has the commitment to the culture in my opinion. Change is needed, which is why we need new leadership at the bank.”
Stephen Anthony, chief executive of Macroeconomics Advisory, said an explosion in the Reserve Bank’s buying of government bonds had supercharged inflation. “If governments had been asked to finance their budgets through the market during the pandemic, we wouldn’t be in as bad an inflationary environment as we are in today,” he said.
Garnaut said the central bank has led to unnecessarily high unemployment and weak wage growth over the past decade by keeping the official cash rate higher than in similar countries, and urged it to work more closely with the federal government, including joint research.
“In terms of the welfare of the Australian citizen, they made a very big mistake, and that was that between 2013 and 2019 they maintained interest rates significantly higher than in other developed countries. As a result, we had considerable unnecessary unemployment,” he said. “There must be an explicit recognition that it is the combination of fiscal and monetary spending that determines whether we have full employment and low inflation and the right amount of debt.”
The University of Melbourne panel was attended by former head of competition watchdog, Allan Fels, former chief executive of the Grattan Institute, John Daley, and former federal minister, Craig Emerson.
The Morning Edition newsletter is our guide to the biggest and most interesting stories, analysis and insights of the day. sign up here.
