RBA Deputy Governor Stops Short Of Declaring Australia an “Earthly Paradise”
- Published on
- 27 Jun 2024, 07:38 PM
By Sophia Rodrigues
(Sydney, June 27, 2024) – In his first speech since taking over as the Reserve Bank of Australia’s deputy governor, Andrew Hauser stopped short of declaring Australia “an earthly paradise” and a country he is infatuated with.
But when you combine that with the title of the speech “Strangers in Paradise,” and his comment earlier this month about Australia having a “secret sauce,” it is evident he thinks of Australia as a prosperous country.
Hauser is the first central banker from another jurisdiction to be appointed to a senior role at the RBA. His views are important because it comes from a new and different lens, and because he is a member of the monetary policy board.
“When economic conditions are as challenging as they are today, it can be easy to forget just how prosperous modern Australia is. Measures of relative affluence, such as GDP or wealth per head, regularly place the country in the top echelon globally,” Hauser said in a speech at the Citi A50 Australian Economic Forum in Sydney.
“Of course, the distribution of that prosperity is far from uniform -- so it would be brave for a new and infatuated stranger to declare Australia an earthly paradise,” he said, adding, that the cross-country GDP trend gap between Australia and the UK “feels very real.”
The speech didn’t contain anything that is of relevance to current monetary policy settings. The closest he came to talking about monetary policy was reminding that the RBA has independent authority to set monetary policy to achieve a flexible inflation target that gives appropriate weight to employment outcomes.
According to Hauser, the three drivers of Australia’s prosperity are its diverse range of resource endowments, its strong but adaptable pro-growth institutions, and its longstanding welcoming environment for foreign investment.
One of Australia’s most significant above-ground resource endowments is sunlight where there is very substantial further headroom for solar capacity, he said.
The macroeconomic framework has been a clear strength over the past 40 years. Australia has a fully flexible exchange rate, an independent authority to set monetary policy, and its gross public debt lies well below that of many other developed countries, he pointed out.
Hauser noted there are many opportunities for inward investment in Australia due to a substantial pipeline of investment projects waiting to be financed.
In his closing comments, he said the three drivers are not sufficient to guarantee prosperity in the future and its continuance relies on Australia making the right policy calls and on the continued functioning of global institutions.
--Contact: Sophia@centralbankintel.com