For what may have been his last parliamentary grilling, Reserve Bank governor Philip Lowe went out with more whimper than bang.
Lowe, the punching bag of the left, right and plenty of mortgage holders, could have expected a set of stocks to have been erected in committee room 2R1 of federal parliament on Wednesday.
Politicians of all persuasions love to blame everyone (bar themselves) for any manner of troubles. Lowe, as the head of a central bank in the midst of the most aggressive tightening of monetary policy since the 1980s, should have fit the bill.
Since he last appeared before a Senate hearing, interest rates have been pushed up another full percentage point. His name is being used as the butt of jokes by comedians. Letter writers (and meme generators) reckon Lowe and the bank are the cause of most financial troubles.
But instead of rotten fruit and snarling questions, Lowe was able to methodically work through a range of issues that stretched from inflation to the bank’s gold holdings to the country’s newest villains, PwC.
It’s important to remember that in Senate estimates hearings, where federal public servants are grilled by all sides of politics, parties seek to embarrass their opponents or find a cudgel to bludgeon them.
The Coalition went into the hearing trying to get Lowe to back their view that Treasurer Jim Chalmers’ budget was a bin fire of inflation that would force the bank into taking the cash rate to double digits.
But Lowe more than dead-batted their efforts. According to the governor, “the budget didn’t change our outlook for interest rates”.
If that wasn’t clear enough, he went on. “I don’t think that the budget is adding to inflation. It’s actually reducing inflation,” he said.
Last November, Greens’ senator Nick McKim gave Lowe the once-over for the governor’s oft-repeated statement that interest rates were unlikely to start climbing until 2024.
This time, McKim peppered Lowe with questions about PwC and its relationship with the RBA.
Lowe surprised everyone with his strong take on the shortcomings at the consulting giant.
The names of those involved in the tax leak scandal should be revealed, he said, while there’ll be no new contracts with PwC until there’s a “satisfactory response” to issues around transparency and accountability.
“We want to know that they meet the standards in their own commercial behaviour that we would expect to meet in our institution. If they don’t do that, then we don’t want to work with them,” he noted.
Lowe said he understood the pain many people are going through as they deal with high interest rates, but argued if inflation got out of hand the situation would only get worse for them.
He did, however, argue that the high prices for rents may force people to “economise” when it comes to their housing choices. By that, he meant find a flatmate or move back into mum and dad’s place.
That argument was the only jarring point across the two hours of interrogation which ended with a gentle reminder that Lowe may not have to go through such an experience again.
Lowe’s current seven-year term ends in early September with long odds that the governor will be asked to continue.
Liberal senator Dean Smith said he looked forward to talking to Lowe again in October.
“Well, perhaps, we’ll see,” he finished.
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