Making appointments to the leadership of the two key financial supervisors in the lead-up to a federal election could be contentious. Wayne Swan’s choices for the heads of the Reserve Bank and the Australian Prudential Regulation Authority are, however, both safe and uncontroversial.
It isn’t particularly surprising that Swan has reappointed the existing Reserve Bank governor, Glenn Stevens, for a further three years. Stevens’ existing seven-year term expires in September but there was a precedent for a half-term extension set by his predecessor, Ian Macfarlane.
It makes sense for Stevens, who has presided over the central bank during an extraordinarily challenging period during the lead-up to the financial crisis and its aftermath, to continue to lead the Reserve Bank through what remain difficult and uncertain times.
While not without his critics – he’s been variously accused of leaving rates too high for too long and then pushing them down too low – the evidence of his competence is in the results.
The Reserve Bank has, despite erratic fiscal policy and the pressures created by the resource boom and strong dollar over the past five years, played a central role in maintaining reasonable economic growth with modest inflation. It now has to deal with the subsidence of the mining investment boom, a recessed manufacturing sector and the continuing strong dollar.
When his extended term ends, his deputy, Philip Lowe, will have been in place for nearly five years and well-placed to succeed him. The Reserve Bank also has bench strength, most notably assistant governors Guy Debelle and Malcolm Edey, to provide options for the next government.
The appointment of Wayne Byres as the next chair of APRA, to succeed the long-serving John Laker, is also likely to be welcomed.
Byres is currently secretary-general of the Basel Committee on Banking Supervision, a critical and very prestigious role at this point in the history of the global financial system.
Previously he was APRA’s general manager responsible for the supervision of large complex banks which, given how strongly the Australian majors and the overall banking system held up during the financial crisis relative to most of their international peers, provides a strong endorsement of his credentials to be the next chair of the organisation.
Byres will serve out his term at the Basel committee with Laker, who Swan says strongly recommended that Byres should succeed him (as did Glenn Stevens and Treasury head Martin Parkinson), remaining in the position until June next year.
The current deputy chair of APRA, Ross Jones, isn’t seeking reappointment and will be replaced by Ian Laughlin, a former senior insurance industry executive and non-executive who has been a member of APRA for the past three years.
With Jillian Broadbent retiring from the Reserve Bank board after 15 years Swan also announced the appointment of Kathryn Fagg as an Reserve Bank director.
Fagg has had a range of senior executive roles within Australian corporates, including Linfox, BlueScope Steel, ANZ, McKinsey and Esso (where she started as a petroleum engineer) and therefore will bring an unusually broad range of industry experiences to the Reserve Bank boardroom.