Better housing policy, a bigger role for government in keeping the economy in good health, and less “vitriol, personal attacks and clickbait” in the public sphere have all made Reserve Bank governor Philip Lowe’s parting wishlist.
Dr Lowe is due to step down as head of Australia’s central bank late this month, passing the reins to deputy governor, Michele Bullock.
Making some final remarks in a speech to the Anika Foundation, Dr Lowe commented on the role of interest rates in the housing market.
“Interest rates influence housing prices, but they are not the reason that Australia has some of the highest cost of housing in the world,” he said.
Rather, the high cost of housing in Australia was a “serious economic and social problem” stemming from a range of choices made “as a society”.
“Choices about where we live, how we design our cities, and zone and regulate urban land, how we invest in and design transport systems, and how we tax land and housing investment,” he said.
Dr Lowe also called for a “stronger helping hand” from the government to manage the economy.
Interest rates were effective but had limitations, not least the fact their impacts were felt unevenly across the economy, he said.
Some innovative thinking would be needed to do this.
“In particular, it would require making some fiscal instruments more nimble, strengthening the (semi) automatic stabilisers and giving an independent body limited control over some fiscal instruments.”
He also acknowledged the difficulties he had faced communicating in the digital age.
There were learnings to be gleaned from his ill-communicated forward guidance – that interest rates would not start rising until 2024 – that landed him in hot water.
But he stressed this was not a “promise”, but guidance with conditions attached, noting this was one of many points attributed to him inaccurately in his time as governor.
Dr Lowe said he had not made points such as “…everybody needs to get a flatmate, people need to work more hours to make ends meet and young adults should stay at home because of the rental crisis”.
While acknowledging that some of his explanations had “missed the mark”, he said “the media has some responsibility too”.
“My view is that we will get better outcomes if the public square is filled with facts and nuanced and informed debate, rather than vitriol, personal attacks and clickbait.”
He also reiterated his concerns about sluggish productivity and warned of an uncertain era for maintaining price stability.
-AAP
