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Time ticking for choice on Australia central bank chief
[SYDNEY] Australian Treasurer Scott Morrison is running out of time to anoint a new head of the central bank as an early election looms large in the decision process.
The long-serving and highly regarded head of the Reserve Bank of Australia (RBA), Glenn Stevens, retires in September after a decade at the helm.
An election will be called in the next couple of weeks and convention is that the government does not make major position choices during the campaign. Either Mr Morrison announces very soon or risks the opposition Labor party getting the pick, with the latest polls showing the race is neck and neck.
The main contender is RBA Deputy Governor Philip Lowe, a career central banker of 36 years who has been groomed for the top role.
Mr Stevens was asked at a parliamentary hearing in February what qualities were needed for a governor.
"I think the deputy governor has all the admirable qualities needed and more, more than me," he said. "A thick skin is probably the primary one, actually." His opinion should carry weight given Morrison called Stevens the "rock star of central bankers" last year.
Financial markets also consider Mr Lowe a safe pair of hands as the economy weathers the end of a once-in-a-century boom in mining investment and shifts to more service-led forms of growth.
"Lowe has spent his whole career learning the performance art of central banking, and it is very much an art form," says Paul Bloxham, chief economist Australia at HSBC and himself a former RBA staffer. "He would be the perfect continuity play - the easiest handover you could imagine. And wouldn't you want continuity when the RBA deserves much of credit for Australia's success?"
So far, the government has been noncommittal, saying a range of candidates were being considered.
It is easy to see why competition for the post would be fierce.
It boasts an annual salary of a million dollars, a minimum seven-year term, lots of travel and a great retirement package. Also, financial markets hang on your every word as it is arguably the most important job in the economy.
COULD HAVE BEEN A CONTENDER
One name in the frame is David Gruen, a former RBA staffer and currently deputy secretary on economic matters at the Department of Prime Minister and Cabinet.
Another, Martin Parkinson, is also at the Department of Prime Minister and Cabinet and served as Secretary to the Treasury from March 2011 to December 2014.
The current Treasury Secretary, John Fraser, might also be on the short list. He already sits on the RBA's nine-member policy board and has market experience through a long stint at Swiss bank UBS.
The links to Treasury reflect the way the two institutions orbit each other at the centre of policy making-power.
Some former executives from the major commercial banks were touted for a while, but that seems highly unlikely now given a rash of scandals in the financial sector.
There have been suggestions Mr Morrison could pick someone from offshore, as the Bank of England did with Canadian Mark Carney.
Yet, with an election looming it would be a brave government that argued it could not find a native that was up to the job of setting Australia's interest rates.
There's also the question of morale at the central bank.
Should Mr Lowe replace Mr Stevens then his job comes open, and so on down the line. Without that, many of the best and brightest might feel the chance of career progress is gone and seek work elsewhere.
Having won so much acclaim for its performance in the wake of the global financial crisis, it would be a poor reward if the RBA's line of succession were broken now.