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June 20, 2024

Why Philip Lowe needs to go

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Governor of the Reserve Bank of Australia, Philip Lowe.

The shadow of Scott Morrison still hangs darkly over Canberra in the shape of his choice for Governor of the Reserve Bank of Australia (RBA), Philip Lowe.

This is just one way the Morrison government still wields power.

Other examples are those massive stage three tax cuts, giving away hundreds of billions to those who least need it, making it almost impossible to fund health services, public housing, and education adequately.

Labor opposed them, unsuccessfully, in opposition, and don’t have the courage to even delay them now they’re in power.

There are so many examples. The shocking nuclear submarine deal started by Morrison is now much worse.

They may end up costing Australian families half a trillion dollars. It’s not like they’re even useful for Australia’s defence.

If they are ever delivered, they’ll be part of America’s attack force trying to prevent the Chinese taking Taiwan.

Scott Morrison must be sniggering behind his hands on the back bench as he sees his policies and his choice of RBA governor are still in place.

I have a theory about the current governor.  He knows his term is expiring on September 17 this year, and surely it is unlikely his tenure will be extended.

I believe he wants his legacy to be that he’s known as ‘the man who crushed inflation’.

He must know at some level of his consciousness that jacking up interest rates every month to curb inflation, damaging the economy at the same time, hits the poorest hardest.

Those who have borrowed money are the ones who pay for it directly. Those who rent properties are seeing their rents skyrocket as landlords, encouraged by rental managers, increase rents way beyond the inflation rate to whatever level the market will bear.

Some can use the excuse of higher interest rates, but many are simply profiteering.

The governor knows the pain he is causing, but shows no sign of compassion for those suffering.

In 1990 Paul Keating announced that Australia was in recession, and added those memorable words: ‘… this is a recession Australia had to have’.

It’s likely that Philip Lowe has the same view. He is inducing a recession whose depths we won’t know for some months yet. 

We are already in a per capita recession (our population is growing faster than the GDP) and, if signs in our local area are anything to go by, we are in a real recession.

Several long-standing businesses have closed in Byron Bay, including much-loved Fresh.

Others are teetering on the brink.

One Airbnb manager reported that 90 per cent of properties they manage were vacant over this last long weekend.

There are vacancy signs on many hotels. A shopkeeper reported she made no sales at all one day recently.

If this is happening in a tourist hot spot, imagine what may be happening elsewhere.

The governor urges us to reduce spending to slow inflation, and yet the RBA hosted a lavish, exclusive dinner in Perth last month costing nearly $25,000. The drinks bill alone was over $4,000.

To add insult to injury, this was just after announcing yet another rate increase. How could it be conceivably justified to use our money to host wealthy guests?

The Reserve Bank of Australia needs urgent reform, as was highlighted in the recent review ordered by Treasurer, Jim Chalmers, entitled An RBA fit for the future.

The current board lacks the expertise to deal with the more complex inflation environment.

The board was criticised for its misjudgement on inflation that led to Philip Lowe announcing in February 2021, ‘The board will not increase the cash rate until actual inflation is sustainably within the two to three per cent range’.

The board does not expect these conditions to be met until 2024, at the earliest.’

The board maintained that view for months.

That misjudgement was a catastrophe for very many families acquiring new homes and now struggling to keep them.

That tragic error has been compounded by the brutal use of the single blunt instrument that the RBA uses to curb inflation – constant interest rate hikes. Other reserve banks are using new tools, but not Australia’s RBA.

It’s quite clear that the RBA needs an Augean stables-style flush out to remove the detritus. It is critically important to restore public confidence in the Reserve Bank.

The new board needs to have a wide-ranging understanding of the tools that can now be used to tackle inflation. It needs to examine and question the executive’s decisions far more rigorously.

Much of the pain being felt by Australian families could have been avoided if there had been a greater level of expertise and competence in the RBA.

We need urgent reforms. It’s time for the Albanese government to step away from the shadows of the Morrison era.

♦ Richard Jones is a former NSW MP.


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14 COMMENTS

  1. Why the Reserve Bank needs to go.
    Are Australians blind and stupid ? The Reserve Bank consists of a board who, manipulate the economy to suit their business interests, much like PWC has been shown to be guilty of, but nobody calls them out. Very often it can be obvious they are more concerned for the interests of foreign governments than the welfare of the nation.
    Treasurers especially Keating, have been decorated by foreign interests for betraying Australia.
    Keep on smiling ! G”)

    • Just last week, it was revealed the RBA underpaid almost 1200 staff $1.15 million over seven years.

      Also, the cost to renovate their headquarters at Martin Place in Sydney has blown out to $500,000,000.00 (that’s $500 million million dollars).
      The RBA had a choice to relocate and build a completely new building for $450 million.

      Having trouble counting perhaps.

  2. I do agree that Phillip Lowe should go – for incorrectly forecasting rates would not rise until 2024, in the midst of a housing bubble problem. Because of the consequences for so many of this glaring failure.

    Sadly Richard, your first paragraph reveals that your first thought is no better than the politicians in the major parties – focused on political appointments, rather than the merit.

    It would be good if you could tell us what these other instruments are that the Reserve Bank has at its disposal, rather than making the glib statement that such alternative instruments exist but giving no further information. As it stands, it looks like a baseless claim demonstrating biased thinking looking for an argument to fit a narrative.

  3. While closely mirroring current populist sentiment, no-one can spread resentful ‘doom & gloom’ better than this ex-Senator.

  4. It’s not just Lowe, there is a whole LNP appointed Reserve Bank Board that makes these decisions that need to be removed.
    I believe the Albanese Govt is forced by protocols to wait for their terms to expire which hopefully isn’t to much longer.
    As for Morrison, this wretched individual, “No doubt the worst PM since federation”, refuses to even turn up to Parliament for Question Time to daily listen to the damage he and his LNP are still inflicting, with the landmines he and his deplorable LNP have left everywhere for Albanese to clean up. If you are interested in whats happening, take a look at Question Time, “It’s probably the most entertaining thing you will find on TV these days” and see what Labor are up against and what they are doing to repair the damage inflicted on Australia.
    Remember if you don’t support Albanese and Labor, the only alternative is Dutton and many LNP don’t want that either?

  5. Tweed, “Remember if you don’t support Albanese and Labor, the only alternative is Dutton and many LNP don’t want that either?”.
    The choice isn’t a binary one as you would well know.

    The 2022 Federal Election primary vote numbers were roughly; 1/3 ALP, 1/3 LNP and 1/3 Others – .the Others are increasing their primary vote share as the ALP and LNP continue to bleed their primary vote share.
    And further, of the 151 HoR seats only 15 seats were won on primary vote; 8 ALP and 7 LNP.
    The voters see ‘alternatives’ to the make believe binary choice of Lab or LibNat.

    • Precisely. The two party system is becoming obsolete. They no longer have a stranglehold on government. I can see a new coalition coming up – Labor, Greens and independents. Then we might get some real action on urgent issues like homelessness, the climate crisis and inequality. Corporate lobbyists wouldn’t be happy.

      • Good luck with that one, Richard. If by independents you are thinking of the Teals I’d suggest you heed the lamentations of Liberal blue bloods who wonder why, with their background and credentials, they are not in the fold. Sure, they represent the more moderate wing of the cons who know we need climate action and think a woman’s place is everywhere, but did you notice where a considerable number drew the line on industrial relations reform?

        Anyone hoping for a Teal provided social justice Nirvana might be waiting a while.

        • Lizardbreath, Teals are a space to watch.
          The issues of climate, government integrity, treatment of women, saw the emergence of the Teals.
          Those issues are nowhere near to being properly addressed, the Lab and LibNat duopoly just isn’t cutting it.
          So the stage has been set for more Teals and Independents and Greens HoR arrivals, stripping away Lab and LibNat numbers.

          • Look, I prefer them to the increasingly right wing and evangelistic LNP. They targeted Tory seats though and can’t be too frightening for the well healed set. Monique Ryan is a delightful exception.

            There are positives about independents; I just warned about assuming that the Teals (a pseudo party?) are all about social justice.

            Diverse representation can be a positive if the proponents are focused on good principles and desirable outcomes above playing to the crowds and winning more seats.

            Just an example: if you are a committed crusader looking to foster political cooperation you might say something like “We welcome Labor’s economic management that sees increasing revenue intake and an extra 2 million devoted to housing.”

            If you’re an ambitious young politician more interested in self aggrandisement and political games, you might say something like “Labor’s caved into us”.

            Watch out Adam Bandt!

            Meanwhile further investment in long term and emergency housing is kicked down the road.

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