Dean of Melbourne Business School, Ian Harper
Next month's federal budget may be more restrictive than most pundits are so far anticipating, or so Ian Harper, an RBA board member and Dean of Melbourne Business School, suggested at an economics conference in Melbourne yesterday.
"In the review of the Reserve Bank ... people said to us it is a problem for us that the Treasury secretary (Steven Kennedy) is a member of the board of the Reserve Bank," Harper said.
"That does not mean the Treasury secretary can't inform the board about thinking on fiscal policy, and he does."
Controversially, however, Harper previewed those comments with this: "The budget next month is likely to be a whole lot more in the black than people are expecting."
In fairness, the University of Melbourne (and its business school) hosted the Western Economic Association International conference, and Harper was speaking in his capacity as Dean.
Harper was also open on the (little followed) debates last year between the Australian government and the RBA on the pros and cons of recapitalising the Reserve Bank, in light of its multi-billion dollar losses arising from its pandemic era bond purchase program.
"We asked the government whether to recapitalise the bank, or work it off [the losses]," he said.
"The result of that conversation with the government was: we just carry it."
In a further glimpse, Harper reflected on "a significant debate on the board" as to whether the governor, Philip Lowe, should accept an invitation from ABC's 7.30 Report early in the pandemic.
"The interview was likely to be hostile and twist the words," he said.
"In the end, the governor did decide to do it, and executed perfectly by Philip, if I may so."
Riffing off the recent banking crises in the US and Europe, Michele Bullock, the RBA's deputy governor, told the conference "we are not seeing a tightening of financial conditions on the banks” - in the sense of any further recent rationing of credit, over and above the monetary tightening.
“And none of the banks have reacted in any way," she said.