A must read. One solution is to reappoint Professor McKibbin and then give Ross Garnaut the position that will be vacated by Donald McGauchie in April. The fact is that we need more not less economic experts on the RBA Board. The other political appointees are generally a waste of space with almost zero capacity to interrogate RBA decision-making, which is their primary, if not sole, purpose. This is something that Dr Stephen Kirchner, Professor Adrian Pagan, who is a former RBA Board member himself, and I have argued in favour of for years. One should also not underestimate the opportunity costs associated with Warwick offering to serve another term: he could likely make very large sums of money acting as a financial consultant to hedge funds and investment banks. It is, therefore, extremely generous of him to sacrifice these prospects in order to act as the taxpayer's representative on the Board. This is what some of the nation's top economists had to say on the question:
UBS's Matt Johnson:
''It would be a mistake,'' the UBS economist Matthew Johnson told the Herald. ''You can count the number of people who are global experts in the empirical work Warwick does on one or two hands.
''Warwick is the man of the hour. He is one of the few people internationally who understands the linkages that are driving our engagement with Asia. We are lucky enough to have one in Australia, and we've got one with experience of central banking. The bar would be pretty high to replace Warwick.''
HSBC's Paul Bloxham:
A former Reserve Bank staffer and HSBC economist, Paul Bloxham, described Mr McKibbin as an exceptional thinker and said it would be ''hard to find someone as suitably qualified'' to replace him.
The CIS's Dr Stephen Kirchner:
''Why would you pass over Warwick given that he wants the job,'' the University of Technology, Sydney professor Stephen Kirchner said.
''There are other economists in Australia with his technical skills, but I don't think there are any that also have his level of engagement with public policy, and that's what you need in that role.
''Reappointing him would show the Treasurer was willing to have a robust culture of political debate. It seems to me both sides of politics take the view that anyone who expresses an opinion contrary to government policy basically becomes an enemy and is subject to retribution.''
And the one dissenting voice (every market economist I know thinks we would be very lucky to keep Warwick):
The Grattan Institute chief economist, Saul Eslake, disagreed, saying ''with absolutely no disrespect to Warwick it would be reasonable for him to be thanked assiduously for his service and wished well for the future. There are good reasons for having turnover. With the exception of Nugget Coombs there hasn't been a Reserve Bank governor who has lasted more than 10 years.''
The Treasurer also has to decide by April on a replacement for the former National Farmers Federation director Donald McGauchie.
