KATHLEEN HAYS:
I want to start on the independent review of the Reserve Bank of Australia because it seems like it's due anytime now. It could include things like more meetings every year - or fewer, I should say; a press conference after every meeting. Bottom line: are you close, have you set a date, are you ready, have you made up your mind?
JIM CHALMERS:
I'll be looking to release it really soon. Hopefully, in the next week or two. We've received the report from a really terrific panel. They've made, I think, some very wise recommendations. I will confer with my Cabinet colleagues. I will also confer with the Opposition and with the crossbench in the parliament to try and get an element of bipartisanship around the Reserve Bank Review. I think it's a good opportunity for Australia and for its central bank to see what we can do better and so that's the spirit with which I'll release it.
HAYS:
So is this more than tweaks? Is there some kind of shake‑up here that we're going to be seeing soon?
CHALMERS:
I think in order for it to be worthwhile, the recommendations need to be robust and meaningful, and they are. And so when I release it, whether it's in the next week or two, certainly before the Budget on May 9, people will see the thought that's gone into it. And it’s really an opportunity not to kind of second guess all of the decisions that have been taken in the recent past but to try and work out if we've got the right objectives and processes and structures to make these really important decisions.
HAYS:
What objective would you change? You want to have price stability and an economy that grows - would you change that?
CHALMERS:
Obviously inflation targeting is a really important role and I wouldn't expect there to be substantial changes there. Nor would I expect there to be a winding back of the independence of the Reserve Bank, which is a key feature of our central bank in Australia. But there are other meaningful changes which will be proposed and I look forward to perhaps coming back on the program and talking about them when they're out in the wild.
HAYS:
We'll be glad to have you back. Governor Lowe has said that he would like another term, have you made up your mind yet?
CHALMERS:
We've said both privately and publicly that in the normal course of events an appointment, which comes up in September would be considered closer to the middle of the year. And we also want to get this Reserve Bank Review out there and considered and discussed and talked about and consulted on, because that's an important part of the future of the bank as well.
HAYS:
In the past, you've expressed publicly support for Governor Lowe and the policies he's taken on inflation and more. Why wouldn't you keep Phil Lowe?
CHALMERS:
I've said before, and I say again, I've got a really terrific working relationship with Phil Lowe and that's really important. But I also cherish the importance, the centrality of the independence of the central bank of Australia as well. We take these decisions about appointments in the usual methodical way. In the normal course of events that would happen towards the middle of the year and that's what people will see.
HAYS:
The RBA softened its stance a bit - and I think another question for you because you've been supportive of the inflation fight - is this the correct way to not get into sticky inflation that you can't get down?
CHALMERS:
Well, two things about that. First of all, in cherishing the independence of the bank, it means not pre‑empting or second guessing the decisions that they take. I've got my own job to do but certainly in Australia, even as inflation is moderating, it's still more persistent than we would like. It will be higher than we'd liked for longer than we would like and so whether it's the work of the independent Reserve Bank or the work that I do in the Budget with my colleagues, what we need to do is make sure that we are providing some cost‑of‑living relief in a way that doesn't add to inflation and make the problem worse, we lay the foundations for future growth, and we make our economy and our budget more resilient to global economic shocks of the kind we're talking about here.
HAYS:
What have you learned here? What have you heard [from] conversations [with] Janet Yellen and others - a lot going on - war in Ukraine still going on, China's reopening. How has this informed your view of the possibilities and the risks for Australia's economy this year?
CHALMERS:
A Ukrainian victory couldn't come soon enough for the global economy. The Russian invasion is the source of so much human suffering and economic volatility and so a good economic policy is an end to the war, first and foremost. But beyond that, the global economy is a precarious place right now and it's characterised by uncertainty and volatility and we take that very seriously, even as inflation moderates, we've seen spot fires in the banking system which have been put out by the authorities and so, so much of what we're talking about here is how do we align our domestic agendas and our budgets and our regulatory settings to be carefully calibrated to these difficult global economic conditions.
HAYS:
The IMF slightly downgraded its global forecast but said there are very big risks from the global banking crisis or whatever you want to call it that seems to have stabilised. Is this a concern, tighter lending conditions? Not necessarily for your banks, but the economic reverberations to Australia?
CHALMERS:
First of all, as I think you're acknowledging, Australian banks are very well capitalised, very well regulated and very well placed to deal with this volatility. But obviously around the world, we need to make sure that whether it's supervision, whether it's stress testing, that it takes into account developments since the Global Financial Crisis, particularly when it comes to non‑banks and also when it comes to the speed of potential bank runs. And so my contribution here has really been to urge my colleagues for the full implementation of Basel III but also to see where the speed of these developments is an additional concern so that we can get quicker and smarter when it comes to dealing with these problems.
HAYS:
Well, as you said, you're going to have that RBA Review decision soon. You said before the Budget on May 9.
CHALMERS:
Before the Budget. Ideally in the next couple of weeks but certainly before the Budget on May 9.
HAYS:
And you're going to call Bloomberg and let us know so you can come back and announce it right here on Bloomberg television.
CHALMERS:
I'll do my best.
HAYS:
Okay, Jim Chalmers, Treasurer of Australia.