The grumbling about “Abbott’s office”, the shorthand for Tony Abbott’s chief of staff Peta Credlin, started less than a year after the Coalition came to power.
That Credlin’s management style made MPs, business leaders, and other stakeholders feel isolated is a matter of record. The failure to build and maintain a broad constituency of influential supporters, over time, chipped away at confidence in Abbott and his senior team. That eventually turned into open hostility. The breakdowns in relationships on multiple fronts – his team was caught flat-footed by Turnbull’s leadership challenge because they had run out of allies – led to Abbott’s downfall.
Now it appears that Australia’s highly-regarded central bank governor, Glenn Stevens, and his team at the RBA, was on the receiving end of some of the hostility too.
Jacob Greber recounts in the AFR that a group of investment bankers got the impression that Abbott’s office was “openly hostile” towards the Reserve Bank of Australia and its signals to financial markets about the value of the dollar.
The office was particularly angry about the fact that the Australian dollar had rallied back to just shy of US94¢ from US86¢ in early 2014.
Only months earlier the Reserve Bank had embedded in its regular statements language about how interest rates were in for a “period of stability”.
Markets took that as a sign that rate cuts were a thing of the past, removing one of the downward forces on the currency.
Yet the investment bankers were told in no uncertain terms that the Reserve Bank had “f–ked up” its communication and that the government would have to “fix” the institution.
The ham-fisted bluster and aggression that characterised so much of Abbott’s two-year prime ministership was being turned on the Reserve Bank, despite it having a global and local reputation as one of the world’s out-performing central banks.
There are many in financial markets who believe the RBA waited too late before starting to cut rates in the wake of the GFC, keeping the dollar too high and dampening the business community’s appetite for investment. And it is absolutely true that the presence of the phrase “a period of stability in interest rates” in the monthly statements on the cash rate was an important factor in keeping the Australian dollar a little high for comfort.
But broadly Stevens and the RBA team are highly respected for their stewardship of the economy. This is another good illustration of the Abbott administration misreading the realities of Australia’s economic challenges.