Brian Redican Shares His Wealth of Knowledge with AIB
As the Chief Economist for the NSW Treasury Corporation (TCorp), Brian Redican provides economic and financial market research to both internal teams and external clients to assist their management of around $70 billion in assets and an equivalent debt portfolio. Widely recognised as one of Australia’s leading economics and policy commentators, Brian will now be sharing his insights into Australia’s economic future with AIB finance students as an Industry Guest Lecturer.
Prior to assuming his current position in 2014, Brian spent 14 years working for Macquarie Bank heading up Australian and NZ economic research. During this time, Macquarie’s Australian economic research frequently received the top rating by fund managers based in Asia, Europe and the US. Brian has a Masters with Honours in International Macroeconomics from Queen’s University in Canada and a Bachelor of Economics and Asian Studies from the University of New South Wales. He provides regular commentary on economics and business developments in Australasia and East Asia for CNN, CNBC Asia and BBC World.
Brian is passionate about the utility of economics knowledge: “By having knowledge of economics, you can understand what variables will affect the output of the retail sector, or technology. If interest rates or exchange rates are affecting your business, you will get an insight into how they might develop over time, and that will enable you to make better business decisions for your organisation”. Economics also, Brian believes, affords people particular skills to think through daily business problems, including how to incentivise staff.
He’s optimistic about Australia’s economic prospects. While the world faces an ageing population, he says, it’s less of an issue here. We may not see growth on the same levels as the 1980s, yet slow steady growth is still achievable.
He’s also realistic about the potential fallout if we were to experience another economic crisis such as the 2008 GFC. In that case, there were three buffers in the Australian economy that cushioned us from the worst effects of the crash: a high dollar, budget surpluses and a high interest rate. Brian cautions that none of those buffers are as strong today, but they do still exist to a degree. The conditions are different, but that shouldn’t worry people unduly, he assures, as the country still has some flexibility.
Another risk that Brian identifies is the increasingly political polarisation that’s becoming evident in Australia as well as overseas. While Australia is, again, insulated from some of the worst excesses, the trend lines are the same. Why does it matter? Because the further apart the leading political parties are, the larger the policy shifts when power shifts from one side to the other. In turn, that creates uncertainty for businesses. “It becomes very hard for a business to take a guess at what the economy will look like in five years’ time when tax rate, spending policy and immigration policy might change very markedly with a new politician down the track,” Brian explains. Businesses react by becoming unwilling to take risks or expand their enterprise, leading to sclerotic growth in the economy.
At the other end of the spectrum is the issue of executive compensation. Does it lead to excessive risk taking? Brian thinks so. “One of the clear messages of economics is that incentives really matter, and so if you have the wrong incentives, you will get the wrong behavior,” he shares. His concern is that incentives can persuade executives to seek very short-term opportunities to boost share price, and in doing so, cause long term damage to the overall financial environment. His recommendation is to regulate incentives so that they incorporate ‘bonus paybacks’ that require the executive to refund the bonus if the company’s fortunes are reversed.
In general, Brian’s a cheerleader for the regulated Australian environment. Australia, he says, has a stable and well educated workforce, a robust legal system and a long standing record of good economic growth. All of these things attract foreign investment. We’re a country with reasonable economic equality, although he does sound a warning bell in relation to asset inequality and home affordability in particular.
Brian’s also a believer in teaching economics with a practical application. Without losing any of the rigour of conceptual models, he says, we should complement it with more context and more studying of economic history in order to better predict global shifts like the GFC.
We’re sure that Brian’s many years of economic analysis and passion for further education will advantage our students as they confront the economic variables of the business world.
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