July 7, 2025 • 6 mins
What’s the role of Treasury versus the Reserve Bank, and do they ever disagree?
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Episode Transcript
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Speaker 1 (00:03):
Welcome to Ask Fear and Greed, where we answer questions
about business, investing, economics, politics and more. I'm Adam Lang
and hello Sean Aylmer. Hello Adam Lang or Sean I reckon.
Speaker 2 (00:14):
This question is right in your sweet spot.
Speaker 1 (00:16):
What's the role of Treasury versus the Reserve Bank?
Speaker 2 (00:22):
And do they ever disagree?
Speaker 3 (00:23):
A disagree? They're like siblings, best of friends, never fight.
Speaker 2 (00:30):
Really ever.
Speaker 3 (00:32):
Well, yeah, I mean, you know my background, I worked
for the Reserve Bank for a while in my very
early days, and Treasury are always the other ones, like,
you know, we kind of like them. But I mean,
I'm sure as you go up the totem pole in
those organizations you become friends, and many people have jumped
from one to the other. But I always thought they
(00:53):
were the enemy, to be honest. But yeah, maybe that's
a bit I.
Speaker 2 (00:55):
Don't like Souths versus the roosters.
Speaker 3 (00:58):
Yeah, yeah, yeah, yeah, you know, Carlton Collingwood, like, what's
that sort of thing? As far as I'm concerned, got it.
But look, so the roles fairly simply. One looks after
monetary policy. The Reserve Bank looks after monetary policy, which
is primarily interest rates. Treasury looks after fiscal policy, which
(01:18):
is primarily the budget, so that's kind of fair enough.
There are big differences. So the Reserve Bank is independent
and by legislation it's independent. Treasury is not. It is
an arm of government. Now, having said that, I would
be very very confident that Treasury gives independent advice to
(01:42):
the government of the day, no matter who the government
of the day is. So whilst the Reserve Bank is
legislated as independent, I don't think that actually can take
away from the fact that Treasury is full of extremely
capable economists and others that provide I had great advice.
So we have the spending sign and the taxing side,
(02:05):
and then the interest rate side. The question much more
interesting is that, you know, do they ever disagree? So
for a while I think I just haven't checked this
for the last couple of years, but certainly for a
while as an economics reporter at the finn Review, it
was always a bit challenging to know whether or not
they agreed or disagreed, because I could get this wrong.
(02:29):
The Reserve Bank forecasts were like financial year forecasts, and
Treasury's forecasts were calendar year forecasts. Okay, and it was
almost like they did that deliberately, so people like me
couldn't quite work out whether they agreed or.
Speaker 2 (02:43):
Not Imperial and metric systems at the same time.
Speaker 3 (02:46):
Sort of, yeah, he kind of. And I mean, you know,
as I'm always saying to Michael when he's not on holidays,
things like the trend is your friend. He drives him mad.
But the trend is your friend, Adam. You know that
it's economist yourself, and so you could always sort of
see the trend and sometimes you would. You know, they
would disagree on parts of the economy, bits and pieces
(03:10):
of it, but broadly they are in agreement, now is them.
Remember the head of Treasury sits on the Reserve Bank
board as well, so you know, it's not as if
they're not clued into what they're doing. And I think
over time some of the country's best economists have come
out of well, academia, Reserve Bank, Treasury, They're kind of
(03:33):
the big three places for economists to come out of.
So I'd love to say they disagree. I'd love to
say they really dislike each other. I don't think that's
the case. So I mean, the woman Jenny Wilkinson who
is coming to run Treasury after Stephen Kennedy leaves. She
(03:56):
actually started at the Reserve Bank, and I knew her
from my Reserve Bank day. So she's done the Reserve Bank.
She's in finance, now running finance and going to Treasury.
David Gruin has a Reserve bank guy, he went on
to I'm not sure there was in treasure, but he
now runs the Austrain Bureau of Statistics. I think there
are a lot of really capable people who often have
(04:18):
time in Reserve Bank or treasury before doing other great things.
The rest of us, like me who worked at the
Reserve Bank, it wasn't actually a very good economist at all.
We end up we end up doing podcasts.
Speaker 1 (04:33):
So Sean, I can imagine whether they agree or disagree, right,
the high power intellects involved on both sides, and probably
some passion because of having done so much research into
their material. They would be willing to advocate a view.
But even when they disagree, I would imagine it's incredibly
respectful and very intelligent. Is am I picking that right?
Speaker 3 (04:57):
I don't know about that.
Speaker 2 (04:59):
Does it get being uncle?
Speaker 3 (05:00):
Yeah? I think you're sort of three quarters of the
way the part. I actually think they would disagree, because
a lot of these people are very confident of their
intellect with good reason, with good reason. But if they disagree,
I'm sure they'd love to have an intellectual argument with
each other about it and really rip in. I don't think, no,
(05:24):
I'm totally wrong Bernie Fraser. Of course, Bernie Fraser was
head of Treasury and head of the Reserve Bank. But
I don't think there's ever been anyone else who has
had both those two jobs. But I would imagine there'd
be robust, robust discussion if they agree disagree with something.
Speaker 1 (05:45):
That's excellent. Maybe we could have our own hosting, Sean.
We could do an event, be very.
Speaker 3 (05:51):
We could years. We could do you know, Colin woodv.
Carlton or South Roosters, but would have Jenny Wilkinson versus
Michelle Bullock.
Speaker 2 (06:00):
I like it brilliant. All right, thank you very much, Sean.
Speaker 3 (06:04):
Do we answer the question do you reckon?
Speaker 2 (06:06):
I think we did with a little bit of extra color.
Speaker 3 (06:08):
Yeah, excellent. Thanks Adam.
Speaker 1 (06:10):
If you have your own question for Fear and Greed,
jump onto the website Fearangreed dot com dot au or
send it through on any of the social media platforms.
Speaker 2 (06:18):
I'm Adam Lang, And this is ask fear and greed,
Welcome to Ask Fear and Greed, where we answer questions
about business, investing, economics, politics and more. I'm Adam Lang
and hello Sean Aylmer. Hello Adam Lang or Sean I reckon.
Speaker 2 (00:14):
This question is right in your sweet spot.
Speaker 1 (00:16):
What's the role of Treasury versus the Reserve Bank?
Speaker 2 (00:22):
And do they ever disagree?
Speaker 3 (00:23):
A disagree? They're like siblings, best of friends, never fight.
Speaker 2 (00:30):
Really ever.
Speaker 3 (00:32):
Well, yeah, I mean, you know my background, I worked
for the Reserve Bank for a while in my very
early days, and Treasury are always the other ones, like,
you know, we kind of like them. But I mean,
I'm sure as you go up the totem pole in
those organizations you become friends, and many people have jumped
from one to the other. But I always thought they
(00:53):
were the enemy, to be honest. But yeah, maybe that's
a bit I.
Speaker 2 (00:55):
Don't like Souths versus the roosters.
Speaker 3 (00:58):
Yeah, yeah, yeah, yeah, you know, Carlton Collingwood, like, what's
that sort of thing? As far as I'm concerned, got it.
But look, so the roles fairly simply. One looks after
monetary policy. The Reserve Bank looks after monetary policy, which
is primarily interest rates. Treasury looks after fiscal policy, which
(01:18):
is primarily the budget, so that's kind of fair enough.
There are big differences. So the Reserve Bank is independent
and by legislation it's independent. Treasury is not. It is
an arm of government. Now, having said that, I would
be very very confident that Treasury gives independent advice to
(01:42):
the government of the day, no matter who the government
of the day is. So whilst the Reserve Bank is
legislated as independent, I don't think that actually can take
away from the fact that Treasury is full of extremely
capable economists and others that provide I had great advice.
So we have the spending sign and the taxing side,
(02:05):
and then the interest rate side. The question much more
interesting is that, you know, do they ever disagree? So
for a while I think I just haven't checked this
for the last couple of years, but certainly for a
while as an economics reporter at the finn Review, it
was always a bit challenging to know whether or not
they agreed or disagreed, because I could get this wrong.
(02:29):
The Reserve Bank forecasts were like financial year forecasts, and
Treasury's forecasts were calendar year forecasts. Okay, and it was
almost like they did that deliberately, so people like me
couldn't quite work out whether they agreed or.
Speaker 2 (02:43):
Not Imperial and metric systems at the same time.
Speaker 3 (02:46):
Sort of, yeah, he kind of. And I mean, you know,
as I'm always saying to Michael when he's not on holidays,
things like the trend is your friend. He drives him mad.
But the trend is your friend, Adam. You know that
it's economist yourself, and so you could always sort of
see the trend and sometimes you would. You know, they
would disagree on parts of the economy, bits and pieces
(03:10):
of it, but broadly they are in agreement, now is them.
Remember the head of Treasury sits on the Reserve Bank
board as well, so you know, it's not as if
they're not clued into what they're doing. And I think
over time some of the country's best economists have come
out of well, academia, Reserve Bank, Treasury, They're kind of
(03:33):
the big three places for economists to come out of.
So I'd love to say they disagree. I'd love to
say they really dislike each other. I don't think that's
the case. So I mean, the woman Jenny Wilkinson who
is coming to run Treasury after Stephen Kennedy leaves. She
(03:56):
actually started at the Reserve Bank, and I knew her
from my Reserve Bank day. So she's done the Reserve Bank.
She's in finance, now running finance and going to Treasury.
David Gruin has a Reserve bank guy, he went on
to I'm not sure there was in treasure, but he
now runs the Austrain Bureau of Statistics. I think there
are a lot of really capable people who often have
(04:18):
time in Reserve Bank or treasury before doing other great things.
The rest of us, like me who worked at the
Reserve Bank, it wasn't actually a very good economist at all.
We end up we end up doing podcasts.
Speaker 1 (04:33):
So Sean, I can imagine whether they agree or disagree, right,
the high power intellects involved on both sides, and probably
some passion because of having done so much research into
their material. They would be willing to advocate a view.
But even when they disagree, I would imagine it's incredibly
respectful and very intelligent. Is am I picking that right?
Speaker 3 (04:57):
I don't know about that.
Speaker 2 (04:59):
Does it get being uncle?
Speaker 3 (05:00):
Yeah? I think you're sort of three quarters of the
way the part. I actually think they would disagree, because
a lot of these people are very confident of their
intellect with good reason, with good reason. But if they disagree,
I'm sure they'd love to have an intellectual argument with
each other about it and really rip in. I don't think, no,
(05:24):
I'm totally wrong Bernie Fraser. Of course, Bernie Fraser was
head of Treasury and head of the Reserve Bank. But
I don't think there's ever been anyone else who has
had both those two jobs. But I would imagine there'd
be robust, robust discussion if they agree disagree with something.
Speaker 1 (05:45):
That's excellent. Maybe we could have our own hosting, Sean.
We could do an event, be very.
Speaker 3 (05:51):
We could years. We could do you know, Colin woodv.
Carlton or South Roosters, but would have Jenny Wilkinson versus
Michelle Bullock.
Speaker 2 (06:00):
I like it brilliant. All right, thank you very much, Sean.
Speaker 3 (06:04):
Do we answer the question do you reckon?
Speaker 2 (06:06):
I think we did with a little bit of extra color.
Speaker 3 (06:08):
Yeah, excellent. Thanks Adam.
Speaker 1 (06:10):
If you have your own question for Fear and Greed,
jump onto the website Fearangreed dot com dot au or
send it through on any of the social media platforms.
Speaker 2 (06:18):
I'm Adam Lang, And this is ask fear and greed,
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