Wayne Swan flags Warwick McKibbin exit from Reserve Bank
- From: The Australian
- February 01, 2011
WAYNE Swan has indicated that outspoken Reserve Bank board member Warwick McKibbin may not be reappointed when his term on the board expires in July.
The Treasurer said while the Reserve Bank board needed continuity, it also needed "new blood".
"I think (Professor) McKibbin has served two terms, that's a pretty long stint on the Reserve Bank board," he told the ABC, while adding that no final decision had been made.
Although Professor McKibbin has served two five-year terms, Mr Swan broke an unwritten convention that this was the limit when he reappointed company director Jillian Broadbent for a third time in 2008.
Former Reserve Bank governor Bernie Fraser said yesterday there was no case for imposing a fixed term on the board's members. "If someone remains active and alert and continues to contribute in a helpful way to the governance of the bank and the country, then I think there shouldn't be any issue of whether two terms is a limit," Mr Fraser said. "I can understand the desire for new blood from time to time, but I wouldn't be making room for new blood by axing someone who has been a major contributor."
Mr Fraser said Reserve Bank governor Glenn Stevens would be expected to discuss Professor McKibbin's contribution to board debate with Mr Swan before a decision was made.
There has been speculation that Professor McKibbin will be dumped from the board because of his criticism of both the government's economic stimulus program and its flood levy.
Opposition Treasury spokesman Joe Hockey said decisions on the Reserve Bank board membership should be decided strictly on merit. "There is no doubting Warwick McKibbin is Australia's pre-eminent economist and his views are hugely important for mature political debate in Australia," Mr Hockey said. "He would be a major loss to the RBA board."
Mr Fraser said Professor McKibbin's suitability for the board should not be based on his comments on government policy.
"Warwick has been an active public commentator on all sorts of economic and political issues," Mr Fraser said.
"What is said in that commentary that might be critical of the government of any persuasion shouldn't be seen as contrary to his Reserve Bank board activities."
HSBC chief economist Paul Bloxham, who was a senior economist with the Reserve Bank until September last year, said Professor McKibbin was well regarded by the staff. He noted that he had international standing as an academic and also knew Reserve Bank issues intimately, having worked there himself for more than 10 years. "I think you'd be hard pressed to find someone who was as equally qualified," Mr Bloxham said.
There have been suggestions the government's climate adviser and fellow ANU academic Ross Garnaut might be chosen to replace Professor McKibbin.
Managing director of funds management firm Rismark, Christopher Joye, said yesterday that the best way to strengthen the Reserve Bank board would be to appoint Professor Garnaut when former Telstra chairman Donald McGauchie's second term expired in March, while reappointing Professor McKibbin for a third term.