JIM CHALMERS:
Thanks, Kieran, I think one of the most important recommendations of the 51 specific recommendations in this absolutely first class Review that we've been handed, is to separate the making of decisions around monetary policy, around interest rates from the broader management and governance of the Reserve Bank itself. And what that means is, you can have quite a specialist expert monetary policy board chaired by the Governor, at the same time as you can have people with substantial governance and leadership experience on the governance board at the same time. And because we've had this one board for so long now, which has had to perform both of those roles, it gets harder to make sure that we've got the right amount of experience and different kinds of experience on the one board. So I think this change is really important.
KIERAN GILBERT:
Another change is the greater focus on full employment, it’s clearer that they'd be given equal weight to the aim of full employment plus price stability slash inflation, effectively. In practice, is it fair to say there's been more focus on inflation in the past? And is this a nudge in the direction of an RBA that might be more careful or cautious on the impact on the economy, and particularly the labour market?
CHALMERS:
I think what the Review does a really good job of doing is clarifying that the relationship between dealing with inflation and promoting full employment are of roughly equal weight. These objectives have been central to the Reserve Bank's objectives in the past. But what the Review does is really clarify that, under the overarching objective of the welfare of the Australian people and growing the economy the right way and all of those sorts of important things. Full employment and price stability are the two things that board members into the future will grapple with as they make these really important decisions.
GILBERT:
When you appointed the former head of the Fair Work Commission today to the RBA, Iain Ross, you said there's probably nobody better placed to understand the importance of the macro economy in relation to the wages and living standards of ordinary working people. Does that reflect an assessment from you that the RBA Board has not sufficiently been cognisant of the impact on average workers?
CHALMERS:
I'm reluctant to take shots at boards of the past. But it's been clearly a priority of mine for some time, whenever I've been asked about this, to see if we can make the board a bit more representative, both in terms of the kind of expertise that people bring to decision making, but also the type of experience that they've had. And Iain Ross is really quite an extraordinary Australian. And he's someone that I am really proud to appoint to the Reserve Bank Board, because he has had such long experience of understanding and grappling with the relationship between the performance of the economy broadly and what that actually means for ordinary working people in this country. And so he's someone I'm very pleased, has agreed to go on the board. He's a first class mind with a heap of experience and expertise and I think he'll make, along with Elana Rubin, quite a remarkable, terrific contribution to the board going forward.
GILBERT:
So we've got that sort of structural shift that we've already spoken about. Another important one that jumped out at me from the report is these sort of public facing changes, the fact that there's going to be 8 meetings as opposed to 11 but particularly a news conference, mandatory after every decision made. Have central banks, not just the RBA, but central banks more broadly, traditionally been just too guarded when it comes to their deliberations?
CHALMERS:
Well, our objective here is to make the Reserve Bank more transparent, more independent, and rely on more expertise to take its important decisions. And part of that is making sure that these decisions which are taken independently - and what we're proposing today will make the bank more an independent rather than less - is they need to have a structured opportunity to explain and defend those decisions. And they exist, at the moment, the Reserve Bank Governor does provide public commentary and has tried to explain, and in some cases defend decisions taken by the Reserve Bank Board. But what the recommendations today are all about is making that more structured, whether it's a press conference after a decision has been taken, whether it's a broader contribution of board members, to the public conversation about the economy and about interest rates within that. I think these are important ways of clarifying and structuring the type of transparency and accountability that we want to see in the Reserve Bank Board and the Governor.
GILBERT:
A lot of viewers today might be wondering, how did the RBA get it so wrong in terms of that forward guidance during COVID? Is there any light shed on that?
CHALMERS:
Obviously, that's a very contentious thing. But as you know, Kieran, you and I have been talking about these issues for some time, and I don't take potshots at the Governor or the Board, or try and second guess decisions or comments that they've made. I cherish the independence of the Reserve Bank and I take it really seriously and my role seriously, and I don't want to get into that. What the Review Panel have done, is they have provided an assessment of recent decisions which have been taken but that's not the overwhelming focus of the report. The overwhelming focus of the report is not about one decision, one set of decisions, one set of commentary or analysis. It's about how we ensure the best combination of structures and processes and independence and expertise, so that we can learn from the past and strengthen the Reserve Bank into the future. That's the overwhelming focus of the absolutely first class work that the Review Panel have handed to the Government. And that's why the Government intends to support or does support in‑principle, all 51 recommendations. They've come at these recommendations in a really considered way. Part of that has been analysing the past, but only in order to build on the success of the bank in the past to learn from some of these contentious decisions and commentary that has been provided, and to strengthen the bank into the future.
GILBERT:
You've said that you want to consider Governor Lowe's tenure along with the Cabinet later in the year, mid‑year I think you said, ahead of his September wrap up of his current contract. Is he really still in the mix for the next RBA Governor?
CHALMERS:
Yes, the Government hasn't taken a concluded view on the Governor's appointment. In the normal course of events, an appointment that comes up in September would be considered by myself and the Cabinet and the Prime Minister closer to the middle of the year, and that's our intention. We've always said or we've said, particularly over the course of recent months, that we wanted to release the RBA Review and the Government's initial views on that Review and its recommendations, and then contemplate the role of Governor somewhere closer to the middle of the year. Nothing has changed in that position. We will do it in the usual consultative, collaborative way. I care deeply about the view of my Cabinet colleagues, and especially the Prime Minister, as we make what will be a really important appointment. Whether it's the reappointment of Governor Lowe or choosing somebody else, we will do the work to come to a concluded view closer to the middle of the year.
GILBERT:
Now quickly, I know you've got to go. But on the Budget, a bit over two weeks now from your second Budget. Is it done? Is it finalised?
CHALMERS:
Not yet, Kieran, we had the Expenditure Review Committee met for most of Monday, Tuesday and Wednesday, this week, and we were able to take a number of decisions. But as always, a couple of weeks out, there's a little bit more to bed down still. But we're in the homestretch of putting the Budget together and the Budget will be a difficult balancing act. It will provide cost‑of‑living relief without making inflation worse by doing it in the most responsible way, it will lay the foundations for future growth in our economy and also try and make us more resilient to the kinds of economic uncertainty and volatility, which is a feature of the economy right now. And so we've been doing a heap of work as you'd expect. There's a little bit more to do. We've done a heap of work in the course of this week. We'll finalise it in the course of the next week or so and then obviously looking forward to releasing it on the ninth of May.
GILBERT:
Indeed, will it be cautious or ambitious, this Budget?
CHALMERS:
It'll be responsible. The overwhelming priority will be to put a premium on what's responsible in the context of global uncertainty around the world and substantial cost‑of‑living pressures here at home. And we'll need to try and make decisions which make things a little bit easier for people in the near term at the same time as we lay those foundations for future growth in the economy as well. So a series of difficult balances to strike. But overwhelmingly, I think people will see this as a responsible Budget, a premium on what we can afford to do, what's sustainable, what's good for people right now, dealing with these extreme cost‑of‑living pressures. And what's good for the economy into the medium and longer term too when it comes to, for example, investment in cleaner and cheaper energy.
GILBERT:
Treasurer, you're busy, you've got to go. I appreciate your time.
CHALMERS:
Thanks Kieran.