By Rachel Clun
Opposition leader Peter Dutton has threatened to withhold support for the government’s choice of Reserve Bank governor if the candidate were “tainted” from working closely with government – a comment former bank head Bernie Fraser has rubbished.
Treasury Secretary Steven Kennedy and Finance Secretary Jenny Wilkinson are among the country’s top economists tipped to be in the running for the job of RBA governor.
Opposition Leader Peter Dutton during a Q and A at an Institute of Public Affairs event in July.Credit: Dominic Lorrimer
Treasurer Jim Chalmers is widely expected to announce the next governor of the Reserve Bank on Friday, with current governor Philip Lowe’s seven-year term set to expire in September and work under way to reform the bank following the independent review.
“We’ll support the government when they make the announcement, but not if it’s somebody who is tainted, or can be seen to be tainted – even if it’s somebody of a very high calibre and character – and whether it’s been somebody that’s worked closely with the Liberal or Labor government before,” Dutton said on 2GB radio on Thursday morning.
“We don’t want somebody there who’s been involved in the political process at a senior level, and I think that’s a very important point to make, and we’ve made that clear to the government as well.”
Fraser, who was treasury secretary before becoming RBA governor in 1989, said public servants had a duty to offer frank and fearless advice to politicians.
Former RBA governor Bernie Fraser.Credit: Alex Ellinghausen
“There shouldn’t be any black mark against anyone that’s being considered who happens to be a public servant,” he said.
Fraser said it did not make any sense to argue that public services should not be considered for the position of governor.
“It’s nonsense – I don’t know how anyone can say that and believe that,” he said.
Someone with a solid understanding of fiscal policy could only help the central bank in the period ahead, Fraser said: “Fiscal policy and monetary policy have to work hand in glove.”
“Public servants that are familiar with Finance or Treasury and or other departments really get a feeling for fiscal policy, and they’re able to recognise the relationship between fiscal policy and monetary policy.
“I don’t see any grounds at all that anyone can say that public servants would be risky as a governor of the bank.”
Climate Change and Energy Minister Chris Bowen said while he would not speculate on who will be the next governor, the opposition leader should reflect on his comments.
“That’s an insult to departmental people,” he told reporters on Thursday when asked about Dutton’s comments.
“Mr Dutton should respect that whoever is RBA governor at any given time will be governing themselves with all rigour and independence that other governors have.”
AMP chief economist Shane Oliver said Fraser was the RBA governor who set the bank on the path of independence.
“Bernie Fraser was one of the RBA’s best governors,” he said.
Oliver, who believes Lowe should be reappointed for a three-year term to see through the rest of the fight against inflation, said excluding people who had worked in the public service would restrict the pool of potential candidates.
“It’s a perfectly reasonable thing that someone would have had some of their career at the RBA, maybe some of it in Treasury or Finance, or the OECD or the private sector. It would be a good thing,” he said.
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