The Governor of the Reserve Bank of Australia, Philip Lowe (pictured) has called on the Government to “loosen the purse strings” and spend up big on infrastructure.
In an address to the Australian National University’s Crawford Leadership Forum, Dr Lowe said it was important to keep perspective in the face of economic doom and gloom.
“It’s true the global economy has slowed, but it’s still reasonable,” Dr Lowe said.
“We wish it were better but it’s still reasonable and I think we need to keep that in perspective.”
He said he did not think the world was heading to a global financial crisis similar to that of 2007-08.
“I say that because the financial system is much stronger than it was a decade ago. Capital levels are much higher, liquidity ratios are much higher, bank balance sheets are simpler,” he said.
However, the Governor did see the need for more infrastructure spending.
“I’ve long been talking about the benefits of infrastructure investment,” he said.
“It would benefit the demand side of the economy and it would add to the productive capacity of the nation.
“In Australia but also globally, I think there’s a lot to be said for further spending on infrastructure.”
Dr Lowe said Governments, both in Australia and overseas, should have their top drawers full of good ideas that were shovel-ready in case growth slowed.
He also showed support for more independence when it came to infrastructure analysis and funding decisions.
“Some more independence for project selection from the political process would be a good idea,” he said.