Philip Lowe is cactus. But truth be told, his fate is a sideshow

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There are times when public life in this country is embarrassing.

Last week’s interest rate rise, and the speculation about recession that followed, felt like the most significant moment in this country’s economic debate for some time. It wasn’t the rate hike itself so much as what it represented: the concrete manifestation of the growing realisation that the many forces in the economy rushing towards each other could no longer be kept on their own rails. Inflation, house prices, wages, productivity, war, pandemic: a collision of some sort felt inevitable.

Treasurer Jim Chalmers (left) and Reserve Bank of Australia boss Philip Lowe.

But what perhaps should have occasioned a genuine discussion or discussions about these elements quickly collapsed into the much simpler and more entertaining story about a battle between two men. In the red corner, Jim Chalmers; in the blue corner, Philip Lowe.

Chalmers, of course, is winning. The treasurer has an immediate advantage: he gets to decide whether Lowe gets re-appointed. Before last week, Lowe was likely to be cactus. Then last week, Chalmers said Australians would find the most recent interest rate decision “hard to cop”. A few days later, Anthony Albanese had a swipe at Lowe as well. Such rhetoric gives the clearest indication yet of how much danger the government believes it is in from the developing economic situation. It also makes Lowe’s cactus-status almost inescapable, not because of the clues to the government’s thinking but because, through such comments, it has left itself little choice: it will now look silly if it sticks with him.

But as interesting as all this is in political terms, the truth is this: the blame game around interest rates and the debate over Lowe’s future are a sideshow. Inflation is a problem, but the far larger problems in our economy will still be there after inflation subsides, even if it were possible for the dedicated inflation-detectives to track down the dastardly villain who did this to us.

To give just one example: a few weeks ago, economist Professor Ross Garnaut gave a long and interesting speech in which he dealt with our terrible growth in productivity and our decline in real incomes. One fact we have paid too little attention to is the increasing role of oligopolies in our economy. Stepping outside the hot-button inflation debate, Garnaut pointed out that, while wages have suffered, profits in this country have risen impressively – even while productivity has been bad. That’s partly because there is too little competition and, he said, in the cases where that is unavoidable, we have failed to tax business properly.

Illustration: Joe Benke. Credit:

Actually dealing with such problems would be explosive. It would represent a massive challenge to structures of power in this country. But instead of raising such questions, much of our media seems obsessed with fitting whatever Philip Lowe said most recently into a hate-bait headline. Ten days ago, journalist Phillip Coorey pointed out the way Lowe’s fairly banal comments about housing had been twisted. He was right, and last week was worse still: Lowe’s comment that people would have more money if they worked more or cut back spending was a flatly logical explanation of a statistic (which he followed with an acknowledgment of the stresses people were facing), not the “let them eat cake” moment it was portrayed as.

And the problems, of course, will still be there after Lowe goes. His removal, assuming it comes, will be huge news. But the change will be largely aesthetic, with political implications both good and bad for the government. On one hand, it won’t have Lowe to kick around anymore. On the other, as I’ve previously noted, it will make it seem as though the government’s economic reign – and its opportunity for genuine economic reform – is only just beginning. The rest of us, though, will be suckers if we buy into the idea Lowe or his replacement matter as much as what the government actually does next.

On that question, one of the more interesting moments of last week came at the National Press Club, when Aged Care Minister Anika Wells did not rule out a levy in response to questions. “You have to say that if we’re not prepared to accept that cinder-block, linoleum-floor, four-bedroom anymore, then we need to work out how we’re going to pay for it.” On the ABC on Sunday she again kept the option open.

This felt like it might be one of the first forays – albeit fairly tentative – into the “public conversation” Jim Chalmers long ago suggested would be happening “by the second half” of 2023 about fiscal sustainability and structural savings. That conversation, should it actually happen, is likely to get heated. It’s also important: the government needs revenue.

But here again we seem stuck at the surface level, failing to ask the next question: why do we need revenue? Yes, more people are living longer, and what we all expect from services is rising. But what lies underneath this is a far larger social shift: the normalisation of outsourcing care. You can see this trend in aged care, child care, and care for people with disabilities. Much of the impact of this – gender equality, higher regulated standards – is wonderful. Some of it is not. But by focusing on hip-pocket issues we skip this discussion, once again avoiding talking about the actual structure of our society.

Or take the growing debate on whether workers should return to the office, framed largely as young people vs old. Again, there are far greater cultural shifts at stake: shorter working weeks, for example, partly a result of changing gender roles at home and at work. These factors are interacting with what seems to be a shift in younger generations away from the assumption that work is all-important. Which in turn is connected to house prices: as one friend put it to me recently, why would you put work at the centre of your life if it can never even deliver you a house?

There are huge changes occurring in this country. There are other huge changes that should occur. As long as our public discussion remains obsessed with personality politics, zero-sum generational contests and immediate hip-pocket concerns – simple stories about which it’s easy to have simple opinions – then we will fail to come to grips with any of them.

Sean Kelly is author of The Game: A Portrait of Scott Morrison, a regular columnist and a former adviser to Julia Gillard and Kevin Rudd.

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