SHOW ME THE PLAN

I was reading a news article by the ABC's Michael Janda’s providing an analysis of Australia's central bank decision to raise the cash rate to 4.6%.

There’s been plenty of frustration around the world and in Australia about rising inflation and interest rates, alongside commentary that it might get worse before it gets better. Not welcome news in a cost of living crisis.

I'm not against raising interest rates as an intervention to reduce inflation, if it works. The majority of economists agree with the policy.

But this has me thinking about leadership and politics and asking:

Beyond raising interests rates, where is the implementation plan that clarifies what people and businesses are expected to do to slow down inflation? There is none.

The outcome is clear: return inflation to the RBA’s 2–3% target.

The intervention is also clear: raise the interest rates.

But raising rates is simply one intervention - intended to change people's behaviour around borrowing, saving, spending, investment and demand. According to the central bank, the effects of an interest rate rise can take one to two years to emerge.

In other words, sit tight and cross your fingers as the central bank relies on millions of decisions by households, businesses and governments to work out and produce the desired change.

But where is the more specific implementation plan for reducing inflation? Do we need one?

If this were an organisational or business challenge, I’d expect the leaders to ask:

• What are the numbers showing?

• What exactly needs to change?

• Who needs to change?

• Who is accountable for the change?

• How do the different interventions fit together?

• How will we know whether the strategy is working?

• What happens if it isn’t?

System-wide change requires more than pulling one lever and hoping naturally align with the intervention - even a very significant one like raising interest rates to curb inflation.

It requires a clear explanation of the problem, a future state and target, coordinated action, feedback loops and a visible explanation of how everyone’s actions can contribute to achieving the outcome.

Without that clarity and direction, people see the sacrifices they’re making with higher repayments, reduced spending, deferred investment but not necessarily how those sacrifices connect to the desired outcome, lower inflation.

That’s when frustration grows and blame fills the strategy gap. People need more from their politicians than a discussion or decision on:

“Should interest rates go up or down?”

They need to understand:

What needs to change, who needs to change, who is responsible and how will we know whether it’s working?

Because ultimately, a decision to raise interest rates is an intervention, not a change strategy.

Knowing a problem and deciding an intervention is one thing. Government leading the change to achieve the outcome is another.

Can We Have a Plan Please!