Peter Costello

In the role of Treasurer, implemented multi-year fiscal programs focused on deficit reduction, structural reform and, ultimately, repeated budget surpluses. Those fiscal outcomes materially affected the risk premia demanded by international investors and reduced sovereign vulnerability, which in turn influenced capital flows into Australian assets and supported the AUD. Worked with the Reserve Bank and financial regulators to sustain stable macroeconomic settings, communicating fiscal credibility through transparent budgeting and repayment of public debt. The combination of fiscal discipline and favourable terms for public borrowing lowered perceived macro risk and contributed to periods of currency appreciation by making Australia more attractive for portfolio and direct investment. Budget decisions and public statements about fiscal strategy under his tenure were routinely priced by FX markets, particularly during commodity-driven capital inflows. By changing the fiscal backdrop against which monetary policy operated, those Treasury actions had a direct and measurable impact on the Australian dollar’s valuation over more than a decade.