Professor Ian Harper has had better weeks. First, as the Reserve Bank’s micro-economic patsy, he was thrown under the interest rate bus to set up Phil Lowe’s elegant back flip with pike:
The clearest indicators of ongoing momentum of Australia’s economy are strong employment growth and a rapid shift in the federal budget toward surpluses, said Ian Harper, a member of the Reserve Bank of Australia’s policy-setting board.
…“The domestic economy, everything I’ve seen, shows that it is still strong,” Mr Harper told The Wall Street Journal on Thursday.
“So long as jobs growth is strong and unemployment is low, then fears about some sort of collapse in consumption, or inability to be able to pay bills, really have to be put way down the list” of policy concerns, he said.
Prof Harper said his personal view is that the next move in interest rates will be upward.
Not so, three days later.
Then Monday we got the Hayne Royal Commission report which dismantled some of Professor Harper’s most celebrated work on micro-economics, via the AFR today:
One of the key architects of Australia’s financial system says he feels chastened and rebuked for underestimating bad conduct by the banks, and acknowledges that the regulatory system needs to work more vigorously.
However Professor Ian Harper, a member of the Reserve Bank board who helped to design the financial system as part of the Wallis Inquiry 22 years ago, warned the federal government against adopting two key recommendations of the banking royal commission which he said would undermine the twin peaks model “fire-tested” in the global financial crisis and endorsed by multiple inquiries.
Professor Harper has reservations about Commissioner Kenneth Hayne’s recommendation to try to spread oversight of the superannuation system across both the Australian Securities and Investments Commission and Australian Prudential Regulatory Authority, and warned that the creation of an oversight body for the regulators risked blurring the twin peaks into one.
I’m not sure why anyone would reverse over the Professor Harper speed hump today for advice. We need a new comprehensive inquiry into Australia’s utterly broken financial regulation architecture.
Professor Harper can stay in hospital.
