19 July 2024
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Is this the Coalition's “Angus Taylor to the rescue” plan for interest rate sufferers?

Peter Switzer
12 June 2024

After Peter Dutton, the second man who ‘would be’ PM is Angus Taylor, who’s standing in the way of a new and (hopefully) improved Reserve Bank that’s expected to do a better on job on important issues such as interest rates. The question is this: is Angus Taylor helping or hurting high rate sufferers?

To remind you, Taylor’s opposite number is Treasurer Jim Chalmers, who recently announced that the RBA was to change, basically creating two boards out of the old one. One board would do the interest rate setting ‘stuff’ with experts (who should be good at doing this crucial job), while the other board would look at governance issues at the central bank.

While I don’t want to drag up a negative past, the Chalmers’ RBA innovation idea came after former Governor of the big bank, Dr. Phil Lowe, had a forecasting ‘shocker’, telling us he expected rates to be on hold until 2024. That was bad for borrowers and his reputation when rates were hiked 13 times, and the Albanese Government copped the backwash because it was seen to be not doing enough to bring inflation and rates down.

So, that’s how we got a proposed new RBA board set up, which also featured the RBA Governor fronting the media after each rates decision. The idea was largely given the ‘thumbs up’ but apparently Angus Taylor is seeing something most of us have missed, and because of his opposition to aspects of these changes, the new RBA boards won’t start on 1 July, when it was planned they’d kick off.

By the way, Dr Chalmers did get an independent review to back his new RBA era and has asked for bipartisan support for his plan. However, since March, Taylor has argued that the existing board should be migrated ‘holus-bolus’ into the new rate-setting board.

The SMH’s Shane Wright explained his argument this way: “Taylor has argued to Chalmers that with inflation elevated, the bank needs a consistent and credible approach to reducing inflationary pressures. He has declared the membership of the new interest- rate-setting board a ‘threshold’ issue for the Coalition.”

His concern was that the new board would have Iain Ross and Elana Rubin added and two others would be dropped. This pair has strong connections with the Labor party and the ACTU, while Ross was also President of the Fair Work Commission.

This certainly looks like Labor putting some of their friends on the board, but I guess they could argue a lot of Labor voters have home loans and care about what happens to interest rates. And the people on the board in the past have hardly done a great job.

Wright explained what the boards would like, if Chalmers gets his way. “Three members of the current board would automatically be on both the governance board and the interest rate committee, including RBA governor Michele Bullock, deputy Andrew Hauser and Treasury secretary Steven Kennedy,” he wrote. “The other members of the board, apart from Ross and Rubin, are Liberal-appointees Ian Harper, Carolyn Hewson, Carol Schwartz and Alison Watkins.”

These last four are big end of town players, while you’d have to hope Bullock, Hauser and Kennedy are honest public servants.

As I take on the role of ‘referee’ for these sorts of economic/political spats, Taylor looks like he’s playing politics to get noticed. I don’t think it’s a real winner pinning his support to a board that stood by and let Dr Phil Lowe make a big mistake on his 2024 call. They might have told him privately he was making a mistake when he said that in 2021, like I did and other economists did at the time, but some of them should have had the guts to go public on it.

Oh yes, but they might have lost their cushy gig if they did that, which must be more important than doing one of the most crucial policy decisions any government body can be involved in.

Angus, that old board isn’t worth saving. You’d be better off portraying yourself as the saviour for interest rate sufferers out there because they’re in need of one.

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