RBA governor heir apparent Guy Debelle votes with his feet on climate action

Guy Debelle’s departure from the Reserve Bank for Andrew Forrest’s green hydrogen play isn’t exactly the kind of subtle, indirect signal that we’re used to from central bankers — especially not the man widely assumed to be the next governor of the RBA.

Debelle has signalled that climate action — led by business — is his personal priority and a priority for a country where the federal government refuses point blank to take any meaningful action, and which demonises — with the help of the toxic Murdoch press — any ambition from Labor.

So it’s left to state governments — leaders such as Matt Kean in NSW — and business, either willingly or under increasing pressure from major investors, to drive the process of decarbonisation that needs to accelerate significantly to avoid even worse damage from global warming.

As chief financial officer of Forrest’s Fortescue Future Industries, Debelle will be in a strong position to influence that process — far stronger than even as a future governor of the Reserve Bank.

With Treasury reduced to an extension of the treasurer’s office, the RBA has for years now been the pre-eminent economic policy body in the country. It tells the truth when Treasury will only spin for the government — on the need for fiscal stimulus before the pandemic, on the need to address wage stagnation, on the need to manage and report climate risks.

It’s no coincidence that at Canadian investment giant Brookfield, which teamed up with Mike Cannon-Brookes to bid for AGL, former Bank of England governor Mark Carney heads Transition Investment, along with the gig of United Nations special envoy for climate action and finance.

In addition to the No.. 2 slot at the RBA, Debelle is well known and respected at the top levels of global finance and markets. He oversaw reforms to a new-look global rate setting mechanism which reformed the much abused Libor (or London Interbank Offer Rate) and a new code of conduct for global foreign exchange markets after massive abuses emerged during the GFC.

This built on his key role in Australia navigating the GFC as the assistant governor in charge of financial markets, where he saw the problems emerging from the subprime crisis in the US before most other people in Australian financing and banking.

Globally and locally, big investors are moving far more rapidly than most governments on decarbonisation — and certainly much faster than climate saboteur Australia, which prefers to work with deadenders like Russia and Saudi Arabia to prevent international action.

Debelle’s departure opens up both the deputy governorship and the role of heir apparent to Philip Lowe, whose term ends in September 2023. It also creates the possibility of the first female RBA governor, given Michele Bullock is currently assistant governor of the RBA’s financial system, and Luci Ellis heads its economic group and also holds the key role of chief economic advise to the RBA board.

Alternatively, the issue might be deferred until later in the decade if Lowe wants to be reappointed.

The talent pool at the RBA, however, has grown shallower in recent years as some of the country’s best economic and financial minds have declined to return to the RBA after study abroad, or to come back to Australia at all given the poor quality of governments and treasurers on offer.

Debelle’s departure is thus richly symbolic of a wider talent drift away from the federal public sector, constrained and corrupted by a government controlled by malign corporate actors, to increasingly powerful investors who have decided to take the initiative where politicians will not.