Interview with Nour Haydar, ABC Afternoon Briefing

14 July 2023

NOUR HAYDAR: Now as we heard a little earlier, the Federal Government has criticised the Opposition Leader Peter Dutton, for comments he made earlier in the week, arguing the position of governor would be tainted if it were filled by a senior public servant. The argument erupting after the Treasury and finance secretaries were mooted as potential replacements for Phil Lowe. Mr. Chalmers today saying Mr. Dutton's remarks had no bearing on his decision to choose an internal hire to get the Coalition's response to Michele Bullock's appointment. I spoke to the Shadow Finance Minister, Jane Hume earlier. Senator Jane Hume thanks for speaking to afternoon briefing. There's been a lot of back and forth over the last couple of days over who should be appointed to the role of governor of the RBA. Are you satisfied with Michele Bullock being appointed to the position?

JANE HUME: Well, first of all, I think it's really important to say that the Coalition thanks Phillip Lowe for all his dedicated work over the last few years, particularly in times that have been really economically quite difficult and fraught. He really has had a steady hand on the tiller, both during Covid and also now that inflation has been rising so rapidly. At the same time, of course, the Coalition congratulates and welcomes the appointment of Michele Bullock. She is a very experienced economist. She is also a very well qualified and has spent a long time at the Reserve Bank. So she's a very qualified central banker as well and we think that her appointment will be very, very welcome and necessary during these difficult economic times, which we don't think are going to end. Because let's face it, you can change shoes at the head of the Reserve Bank, but that doesn't change the pain for millions of Australians right now who are feeling the cost of living pressures, whether it be at the bowser or when they pay their mortgages, when they pay their rent, when they pay their energy bills. And so what we want to see now is a steady hand at the RBA. But most importantly we want to see the Labor Government do its bit with fiscal policy rather than just turn all the heavy lifting over to Michele Bullock as the new governor to keep ratcheting up interest rates to respond to rising inflation.

NOUR HAYDAR: You've previously advocated for Phil Lowe to remain in the job to have his term extended. Would you have preferred for his term to have been extended, as was the case with the previous two governors of the RBA?

JANE HUME: Well, I think it's a really important here is continuity, particularly at a time of financial crisis. And let's face it, we are in a cost of living crisis right now. That continuity is really important. And Michele Bullock does provide that. She's been in the room when those decisions have been made by the RBA to keep ratcheting up interest rates in response to the rising cost of living and rising inflation. So that will be very important and I think extraordinarily helpful.

NOUR HAYDAR: But you had said that the Government was unfairly demonising Dr Phillip Lowe for interest rate rises. Would you have preferred to have seen him stay in the job and to see through this tightening cycle?

JANE HUME: I stand by those comments because, you know, let's face it, I think that the government was trying to abdicate responsibility, its responsibility for reining in its spending and doing its bit, its fair share of the heavy lifting to get inflation under control. Instead, they pointed to the RBA and specifically to Philip Lowe and said the reason that interest rates are rising is his fault. Well, that's unfair. The RBA have one task and that is to keep interest rates and to keep inflation between that 2 to 3% band and they have one tool to do it, and that's interest rates. So if you've got to keep inflation low and you've only got interest rates to do it, of course. Philip Lowe is going to have to make those difficult decisions. He's making the difficult decisions or has made those difficult decisions because the Government has failed to do its bit. I think that Michele Bullock is very well placed to continue the good work of Philip Lowe in reining in inflation because inflation is the thief in the night. It erodes your purchasing power, it eats away at your savings and it lowers your standard of living. Jim Chalmers said that inflation was public enemy number one, but he said it back in October. Back then, in May, in the more recent budget, the objective of lowering inflation had magically disappeared from the fiscal strategy. That's why Philip Lowe has had to do all of the heavy lifting on behalf of Australians, because the only way you can lower the cost of living in a sustainable way is to keep inflation down.

NOUR HAYDAR: The Government's repeatedly denied that it's taken this step because of interest rate rises, arguing that it was assessing the term of the governor as it would under any other circumstance. I want to ask you, though, about Michelle Bullock. She has had four decades of experience at the RBA, but the review into the RBA pointed out the need for cultural change. Is she really the right person to be delivering on that cultural change?

JANE HUME: Well actually the review into the RBA didn't suggest that you clean the joint out and throw the baby out with the bathwater. The RBA has done an exceptionally good job at the tasks that it's been set over many years. In fact the review of the RBA just aligns it more to other central banks processes around the world and the Coalition has said that we support the findings of the RBA review. That said, we want to see what is in the detail of the legislation that the Government introduces in order to enact those changes.

NOUR HAYDAR: Prior to this announcement, the Coalition had been arguing against appointing someone from inside the public service to the role of governor, suggesting that would undermine the bank's independence. By extension, does that mean that the Coalition does not think the Treasury, the Secretary of Treasury, should sit on the RBA board as they currently do and as they would under the changes recommended by the RBA review?

JANE HUME: Well, there's a wholesale change to the RBA board that's recommended by the review, not just the removal of the Treasury Secretary, but I don't think that we should interpret the position of the Coalition not to appoint a department head to the RBA governor's position as any indication that they that we don't have confidence in those senior public servants. Quite the opposite. We've actually been at pains to point out that particularly Steven Kennedy and Jenny Wilkinson, who were mentioned on that short list, are fine public servants, you know, great minds and very dedicated to the work that they do much admired by both sides of politics. It was really more about a perception of independence with those two department heads so close to the fiscal strategy of the government to then move to be in charge of monetary strategy and be independent immediately. You can understand why some Australians would question the proximity that they have from government and their independence.

NOUR HAYDAR: And it's not just the reality of independence that's important, it's the perception to the RBA review itself pointed out the need to have people who understand both monetary and fiscal policy working together and communicating with one another. Are you concerned that you have in the process besmirched the reputations of both Jenny Wilkinson and Steven Kennedy? And do you think that they are capable in their current roles of providing frank and fearless advice to government? I think we've made it very clear all the way through.

JANE HUME: This has absolutely nothing to do with the capability or the capacity or the character of either of those two public servants. Indeed, they are fine public servants and we've repeated that numerous times. The idea that we have just besmirched a character of those is a Labor government concept. That's a Labor government talking point. Not at all. What the Coalition has been suggesting quite the opposite. Our suggestion is what we've been saying is that the perception of their independence is compromised not because they've been public servants, but because they were so close to implementing the fiscal strategy of this government. It's very hard to flip the switch from one day to another and have that perception of independence. And look, let's face it, this is not the first time this has happened. Back in the 1990s, then treasurer Paul Keating, appointed Bernie Fraser, who was his treasury secretary to the Governor of the Reserve Bank. He then went and cried about it saying that he had the governor in his pocket now, poor Bernie Fraser had to do speech after speech defending his independence. And you don't need to believe me on that one. They’re still on the RBA’s website. We wouldn't want to make the same mistake twice. Back then. There was an economic crisis and a Labor government right now. There's an economic crisis and a Labor Government. We wanted to make sure that the government knew the Coalition's position was it didn't want them to make the same mistake.

NOUR HAYDAR: Jane Hume I want to park the issue of the RBA side for a moment and turn our attention to the Fadden by-election taking place tomorrow. Back in April, in your home state of Victoria, the Liberal Party lost what was once a safe Liberal seat in Aston. Are you worried that there'll be a repeat in Fadden tomorrow?

JANE HUME: Well, I think the circumstances are very different, both from Queensland to Victoria, but also since April, particularly the cost of living crisis has got so much worse. I was up in the Gold Coast just last week in the neighbouring electorate of Moncrieff and I visited an organisation called Serving Our People, which is a free supermarket open to those that are homeless or in distress They were telling me that they've had almost a doubling of new customers coming to see them seeking help, seeking assistance with food relief during this cost of living crisis just in the last month alone. Those things are playing out right around the country, but the Gold Coast is no exception. The seat of Fadden is no exception. And we know that there are people on the ground that are angry with the government, wanting them to do more to bring down the cost of living that will play out in this by-election.

NOUR HAYDAR: Senator Hume, we'll find out the result in just over 24 hours or so from that fat and by election tomorrow evening. Thanks for your time.

JANE HUME: Great to be with you.