Leadership Matters: Ryan Stokes tackles the Reserve Bank, nuclear power ‘NIMBYs’ and the housing crisis

The Reserve Bank of Australia lacking decisive leadership, a solution to convert nuclear power “NIMBYs”, and fixing a key driver of the nation’s housing crisis are front of mind for leading business executive Ryan Stokes. Speaking at a Leadership Matters breakfast in Perth on Thursday, the chief executive of market darling Seven Group Holdings gave his take on some of Australia’s pressing issues. Reserve Bank lagging behind Mr Stokes took issue with the Reserve Bank of Australia, saying the central bank needs to stop chasing the tail of outdated economic data if it wants to implement effective monetary policy. He believes the RBA needed to show greater leadership as a steward of Australia’s economy. “The constrictive and inflationary impact of higher rates and the lag effect of monetary policy suggests they (the RBA) can act in line with or ahead of the data, not after it,” he said. “A true test of leadership is knowing when to act, which is often in advance.” Economic headwinds in Australia are being exacerbated by the RBA, according to Mr Stokes, but he said the country is still the best place for the $17 billion company to deploy its capital. “We remain confident in the Australian economy, despite the sluggish GDP growth, which is more a function of the current monetary policy” The cash rate in Australia currently sits at 4.35 per cent. The RBA has not cut the rate since November 2020 amid the COVID-19 pandemic — when it was at a record low 0.1 per cent. It is now out of step with other major central banks, such as the US Fed Reserve and European Central Bank, which have already started easing cycles. Mr Stokes suggested the RBA’s laser-focus on inflation was a deviation from the organisation’s charter. “The RBA, with the deliverance of its power, should ensure that monetary and banking policy is directed to the greatest advantage of the people of Australia, the economic prosperity and welfare of the people of Australia,” he said. “That’s not my opinion. That’s a direct extract from a Reserve Bank Act of 1959. “Interestingly, the Act did not mention inflation. In the pursuit of these objectives, the RBA has come to the view that having a medium, long-term target on inflation is essential.” Rising interest rates have left millions across the country facing significant mortgage stress. Nuclear NIMBYs Mr Stokes says there’s no such thing as a “free lunch” when it comes to renewable energy and he believes there is a way to convert the nuclear “NIMBYs”. He reckons renewable energy will play a big part in the future energy mix, but warned it is not a panacea. “No one can possibly believe it (renewable energy) is free, there’s no such thing as free lunch, there’s no such thing as free energy, there’s no pot of gold at the end of the rainbow,” he said. “Everything has a cost to it, for 140 years our entire economy has been built on an alternating current grid . . . when you turn the light on when you want to it works, that means you’ve got to have dependable power.” He says a grid fully-powered by renewable energy is not compatible with having cost-effective and dependable power, given the base load of renewables like wind and solar are highly variable — which is where nuclear could come into the equation. Mr Stokes was one of the first prominent business or political figures in Australia to advocate for a serious discussion about nuclear power’s role in the energy transition, at a time when nuclear was a relatively taboo topic. Now, the conversation has entered the mainstream and more Australians are backing a nuclear future. The Coalition earlier this year tabled a plan to convert seven sites of existing coal-fired stations into nuclear power operations. “Nuclear is a carbon-free power source, so it makes sense to be talking about that to reduce carbon emissions,” Mr Stokes said. Mr Stokes thinks there is a solution to deal with the rest of the population who remain nuclear “NIMBYs”, an acronym for the phrase ‘not in my back yard’. “To deal with the NIMBYism — that’s easy, you can find ways to incentivise people to want to live around a nuclear power environment.” Mr Stokes says offering free electricity or other sweeteners to those who live near nuclear plants could reduce “traditional concerns”. The housing crisis Excessive regulation — not a lack of construction materials — is largely responsible for the nation’s housing crisis, Mr Stokes said. He weighed in on the Federal Government’s target to build 1.2 million houses by 2030, a target which most economists and industry analysts say will almost certainly not be met. By now, the Government should have started construction on about 250,000 homes, but the number of housing starts is currently languishing around 130,000. The chief executive of Seven Group Holdings, which owns Boral — Australia’s largest concrete and cement maker — says the price and availability of building supplies is not the problem. “There’s plenty of (construction) materials, right, that’s not a factor. Construction materials are not a major cost impediment,” Mr Stokes said. “If you look at what it costs to go from idea at the site to a family moving in, the duration of approvals are a huge cost impediment in that process. “You buy a site, have to go through the rezoning, development applications, and everything associated with that . . . the amount of time value and cost is substantial.” He said there was “ no single silver bullet” to fix the issue, rather it should be part of a broader push to reduce excessive green and red tape. “We need a much greater focus on productivity from both State and Federal governments,” he said. “The increase in regulatory oversight and green tape is a deeply concerning trend that is impacting productivity. “From a regulatory perspective, there seems to be an imbalance with a focus on avoiding and eliminating risk without appreciating the associated costs of compliance among these risks, and the most significant concern is the excessive layering of green tape, particularly at the Federal level.” Mr Stokes also believes a lack of skilled labour in Australia is also an issue. “We need skilled migration, this needs to be coupled with investment in infrastructure to underpin a productive and vibrant economy.” Seven Group Holdings is a major stakeholder in West Australian Newspapers Limited, the publisher of The Nightly, thewest.com.au and The West Australian.