Is Labor setting Michele Bullock up for failure?

CANBERRA, AUSTRALIA, NewsWire Photos. JULY 14, 2023: The Prime Minister, Anthony Albanese and Treasurer, Jim Chalmers with Michele Bullock the Next Reserve Bank of Australia Governor at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

Last week the Albanese government announced Michele Bullock would replace Philip Lowe as the governor of the Reserve Bank of Australia. Bullock is a lifer at the RBA and replaced Guy Debelle as the deputy governor in April last year. She is clearly qualified for the role and there appears to be little, if any, doubt about her ability to do it. And that really should be the end of it: competent person is appointed to commensurate role.

Instead, the fourth sentence of Jim Chalmers’ statement refers to Bullock as the first female governor of the RBA.

True to form, the Albanese government never misses an opportunity to tick a box and indulge in pointless identitarianism. After all, the political solution to any problem is to appoint a woman.

The reality is – regardless of competence – a bloke was never going to be appointed governor. That’s because, in 2023, being male means you’re fundamentally unsuitable for anything except self-flagellation and paying tax.

And while the blokes who run the Labor Party are revelling in arrogant self-congratulation, a successful RBA governor needs more than a simple blessing from the Treasurer who appointed her.

More than a year on from forming government, Labor remains a commentator on, rather than manager of, the economy. A menagerie of Labor ministers has blamed the state of the economy on every possible, potential and improbable cause except its own policies and performance.

Mostly, Labor blames the former Coalition government, but that tired line has become increasingly difficult to resuscitate. Inflation is all Vladimir Putin’s fault and interest rate rises are to be laid squarely at the feet of the RBA and, in particular, outgoing governor Lowe.

The Albanese government takes no responsibility for the impact that an additional $185bn in government spending and broadbased pay rises are having on the economy.

Effectively, the government has its foot on the accelerator while the RBA is desperately pumping the brake.

It is obvious to anyone who can use a calculator that the RBA is limited in its ability to tame inflation if the government refuses to exercise fiscal restraint. We have had 12 rate rises in 15 months and, while headline inflation has subsided slightly, core inflation remains sticky and stubborn.

Michele Bullock

It makes Bullock’s promotion look more like a hospital handpass. This isn’t the first time a woman has been handed a smouldering bin fire frocked up as an opportunity. It’s called a glass cliff: where a woman is promoted to a more senior position in a time of crisis when failure is likelier.

So, has Labor set Bullock up to fail? Well, numerous variables will affect the Australian economy across the next year or so. No doubt Labor hopes inflation will continue to trend downward and that any remaining rate rises occur under the governorship of Lowe.

Then Bullock will have a clean run and record, and Labor can continue its self-congratulation because the governor it appointed wasn’t a big meanie to Australian mortgage holders.

Of course, Bullock has been deputy governor for each of the rate rises since May last year. She has been as much a part of the decision-making as Lowe himself.

To expect Bullock, a lifetime public servant, will take a radically different approach – or an approach that appeases Labor’s political agenda – is unlikely and unrealistic.

Back in June, Bullock said the quiet bit out loud: that unemployment needs to increase to 4.5 per cent to dampen demand and tame inflation. While we don’t want to see people losing their jobs, there’s an inescapable relationship between unemployment and inflation. However, the inquiry’s recommendations propose the RBA give equal consideration to taming inflation and maintaining full employment.

Philip Lowe

In reality, its asking the RBA to mix oil and water, which will likely complicate the RBA’s role and make decision-making more difficult and opaque. The report also proposes the RBA give a press conference after each board meeting. While this is designed to improve transparency, it creates greater risk to the board should it provide commentary that is then relied on but whose forecast doesn’t eventuate. We’ve been here before.

Most important, Labor’s fiscal management will have the greatest impact on the effectiveness of the RBA. If Labor doesn’t apply restraint to spending or promoting broadbased pay rises, Bullock’s job will be harder than it needs to be.

Or will she simply become the eventual scapegoat for future interest rate rises and, god forbid, any recession? Will Labor be so focused on electoral self-preservation it will throw the first woman appointed RBA governor under the bus? One assumes so: the party had no qualms about throwing the first female prime minister under a bus and she was one of its own.

Ultimately, Bullock is a positive political appointment for a government keen to disassociate itself from rate decisions made under its watch. She is a capable woman and it’s in all our best interests that she succeeds in her governorship. Let’s just hope the Albanese government hasn’t set her up to lose its skin for it.

Caroline Di Russo is the Liberal Party president in Western Australia.