Have you ever wondered how the members of the Reserve Bank board can so nonchalantly inflict the pain of constant interest rate rises on the families of Australia?
Here’s why. The members of the board which make these decisions don’t feel the pain of their decisions.
They’re all multi-millionaires – high-flying corporate executives, academics or economists with massive incomes which separate them from the pain of mortgage payments.
It’s well-known that the Reserve Bank Governor, the dismally untalented Philip Lowe, has a million-dollar annual salary – and the last time he borrowed to buy a home he got a special cut-price mortgage deal because he’s one of the privileged elite.
And whenever I hear him speak about lifting interest rates, I get the strong impression that he doesn’t understand, or he doesn’t care about, the impact of these decisions on ordinary individuals and families.
Recently I saw a television interview in which Governor Lowe expressed the view that a likely outcome of his decisions to constantly lift our interest rates was that the unemployment rate would increase from around 3.5% to about 4.5%.
He said, casually, this would be “a pretty good outcome for Australia”.
That would mean 120,000 more people would lose their jobs and if Lowe felt any remorse for those people, he certainly didn’t show it.
Because Philip Lowe will not be one of those people losing their income in times when everything costs more and rental accommodation is scarce and incredibly expensive.
To him, that 120,000 is just a number on a computer screen. They’re not people with families to feed and bills to pay.
Frankly, I find him disgusting.
But Philip Lowe and his cohorts on the Reserve Bank board don’t spend any time at ground level where the pain of their decisions are felt.
They sit in an ivory tower boardroom a long way from the harsh reality of having to find an extra $1000 or $1500 a month to service the mortgage.
They include people like Alison Watkins who, until 2021, was the Managing Director of Coca Cola Amatil, earning an income package of $5.5 million per year.
Watkins is currently a director of CSL, a director also of Wesfarmers and Chancellor of the University of Tasmania.
She’s not struggling to pay her mortgage.
The Reserve Bank board also includes Mark Barnaba, an investment banker who was the founder of Azure Capital and is currently a director of Fortescue Metals, one of the nation’s biggest mining companies, where he is paid almost $1 million a year to attend board meetings.
He’s not living on struggle street, either.
The RBA board also includes Steven Kennedy, a top-level public servant who is currently Secretary to the Australian Treasury on a salary of more than $800,000 a year.
There’s also Carolyn Hewson, a former investment banker who has been a director of some of Australia’s biggest companies, including BHP, Westpac, AMP and Stockland – and is currently a director of CSL and director of Infrastructure SA.
And economist Ian Harper, who is Dean of the Melbourne Business School.
This is a private club of elite citizens who haven’t spent any time recently trying to decide whether to cut back on meals, or reduce their kids’ sports activities, or find ways to reduce power consumption this winter or cut back on the use of the family car because petrol costs so much.
They’re the high-fliers who arrogantly and ignorantly inflict extraordinary financial pain and stress on ordinary Australians – and are not having any trouble sleeping at night.
Now, the Federal Government recently announced a shake-up of the Reserve Bank and the way they make decisions about our interest rates.
How are they going to improve things? By injecting another layer of high-flying economists into the decision-making process.
For me, that’s just more of the same – more elite number-crunchers who have no understanding or empathy for the people whose lives they massively impact.
It’s time we challenged this whole process of how decisions on interest rates are made – and how we deal with the problem of high inflation.
The notion that constantly lifting everyone’s mortgage rates is the best way – indeed the only way – to deal with high inflation, is archaic and nonsensical.
It’s time the Federal Government took responsibility for the situation and started addressing the individual components of high inflation, like high petrol prices – remembering that when we pay $1.90 per litre to fill up the car, 46 cents of every litre is a tax charged by the Federal Government.
It’s time the Federal Government addressed the high cost of rental accommodation, by understanding that the chronic shortage which is causing the rental increases was caused by the decisions made by politicians.
And addressing the high cost of home construction, again caused by shortages of everything, again caused by poorly-considered decisions by politicians.
In the meantime, those of us at ground level will have to go on paying more and more on our mortgages, because of the decisions made by the elites who live in high-rise boardrooms.
