Treasurer Jim “Chicken” Chalmers has done us all a favour, potentially, by giving the RBA an external rocket up the wazoo:
Treasurer Jim Chalmers has lured a foreigner to become the Reserve Bank of Australia’s new deputy governor, appointing British central banker Andrew Hauser as second in charge at the central bank.
The appointment of an external candidate to fill the bank’s second most senior role is the latest move by Dr Chalmers to overhaul the RBA, which is undergoing its most significant restructure in decades after the release of an independent review in April.
Dr Chalmers will this week introduce legislation giving effect to a handful of the review’s signature recommendations, including the creation of specialist boards for interest rate setting and governance, and refining the central bank’s inflation and employment mandate.
As heir apparent to Captain Bullock, Hauser is in a significant position to shape the bank’s future. It desperately needs some outside perspective to break its closed-loop intellectual culture.
Above all else, that includes a willingness to call out fiscal authorities on their nonsense.
In the current circumstance, that means making the case that fiscal juicing of demand – via excessive spending and quantitative peopling – is making the RBA’s job damn near impossible.
Mr Hauser has witnessed such political stupidity before:
He was integral to the Bank of England’s response to UK prime minister Liz Truss’ disastrous mini-budget in September 2022, which triggered a sharp sell-off in gilts that threatened the solvency of the nation’s pension funds. The turbulence forced the Bank of England to implement an emergency £19 billion bond purchase program, which lasted for 13 days.
Hauser was also a measured voice during the UK Brexit. Though this might be interpreted as either supporting the government of the day or the actual policy implementation.
Which brings me to the point. Not only should Chicken Chalmers clean out the RBA.
He should clean himself out with a fiscal manager who understands that living standards advance via productivity-enhancing reform, not the opposite.
