Chris Pearce (Aston, Liberal Party) Share this | Hansard source

I rise today to comment on the Reserve Bank Amendment (Enhanced Independence) Bill 2008, but before I begin my remarks on the bill I have to say something about the speech we have just listened to from the member for Leichhardt. He talked about the Labor Party now being economic conservatives—they have joined us as economic conservatives—and he talked about how the Labor Party wanted to enhance the independence of the Reserve Bank. He was not here when the coalition attempted to enhance the independence of the Reserve Bank and the then leader of the Labor Party, Kim Beazley, threatened to sue us, to take legal action, because of what we wanted to do. The member for Leichhardt also talked about the hearing of the House of Representatives Standing Committee on Economics in Sydney on 4 April, giving many quotes from the Reserve Bank governor, and he said in his speech that the previous government had ignored warning after warning from the governor. But what he failed to tell the parliament today is that at that committee hearing on 4 April I asked the Reserve Bank governor directly whether he had issued any warnings to the previous government. The governor said that he had not issued any warnings to the previous government, yet we have the member for Leichhardt saying that there was warning after warning. Other questions I asked of the Reserve Bank governor were: ‘Do you think inflation is out of control? Do you think the inflation genie is out of the bottle?’ Of course, that is what we have been hearing from the good old-fashioned rooster, Mr Swan, who is now the Treasurer. And what the Reserve Bank governor said at that hearing on 4 April was that inflation was not out of control. So it is always interesting how new members in particular like to just quote aspects that suit their pitch of the day.

This bill adds nothing positive to the functioning or the performance of the Reserve Bank or its officers. The bill purports to provide the same dismissal mechanisms as for the Commissioner of Taxation and the Australian Statistician. But in making this attempt, the bill fails to achieve its desired goal, that being to implement a clear and consistent procedure for the removal of the governor or the deputy governor. It also fails to provide the people of Australia with the certainty they currently enjoy under section 25 of the Reserve Bank Act. This is an important section because it provides for clear mandated action by the Treasurer for the removal of the governor or the deputy governor in three particular events. They are: if either officer becomes permanently incapable of performing their duties or if they engage in paid employment outside the office of the Reserve Bank or if they become bankrupt. The circumstances are clearly spelt out and the action to be taken is mandated. There is no need for debate in this place or the other place and no need to form consensus on the course of action to pursue because there is no choice by the incumbent Treasurer on how to act—it is mandated. This provides both the Reserve Bank officer and the Australian people with confidence and clarity in the dismissal mechanism.

As a former parliamentary secretary to the Treasurer, I know that Australia’s Reserve Bank is one of the finest institutions of its kind in existence. One of the reasons for the bank’s high esteem within Australia and globally is the transparent, objectively verifiable conditions under which it functions in our marketplace. This bill seeks to do damage to that transparent process, in my view, by adding the requirement for a parliamentary debate and, indeed, a vote to achieve what is currently required by law.

Under this proposal there must be a meeting of both houses of parliament, both must agree the governor or deputy governor should be dismissed, based on one of the three conditions I outlined earlier, and then request that the Governor-General dismiss the governor or the deputy governor. What would previously have been an automatic and somewhat efficient action mandated by the current legislation would be turned into a time-consuming and faintly ridiculous bureaucratic nightmare. In the unfortunate circumstances that a governor or deputy governor fell into any one of the three categories, we would have to proceed with this meandering journey through both houses of parliament to achieve what is currently a brisk and very effective method.

The unfortunate, and possibly unintended, consequence of this bill would be that the three circumstances I have outlined would be the only circumstances under which the governor or the deputy governor could be removed from office. Let us consider that matter for a second. Currently, the governor and the deputy governor hold office ‘subject of good behaviour’. But according to the Bills Digest, that requirement—that the governor or the deputy governor continue their respective ‘good behaviour’—is lost as a means of dismissal, if either the governor or the deputy governor breaches that requirement of so-called ‘good behaviour’. So if either party were to behave in a mendacious manner, that would no longer be grounds for a sacking—regardless of what this parliament believed was in the best interests of this nation. I think this is the thin end of the wedge. If it can be possible for a governor or a deputy governor of the Reserve Bank to be lying or deceptive or otherwise injurious in conduct and yet still remain in the role, the loss of confidence in the market could be absolutely devastating. The parliament would be divested of the opportunity to consider proved misbehaviour or mental incapacity as grounds for termination from the role.

This is a shoddy bill that the Treasurer has rushed into the chamber. It beggars belief. You have to ask yourself: what could be the motivation for such a bill? Of course, the motivation is, pure and simple, political ‘spin’. This bill reverses the law that was supported by Labor. The bill is nothing more than a crass example of political expediency so that the Treasurer and the Prime Minister can mistakenly claim to be economic conservatives.

The shadow Treasurer has foreshadowed an amendment which I support. It is all about increasing the number of occasions that the Reserve Bank governor appears before the Standing Committee on Economics, from twice a year to four times a year. This is an excellent amendment. These appearances could take place after the publication of each of the quarterly statements. This is in the interests of the Australian people and of the Australian market. Mr Speaker, I am heartened, as no doubt you are, that with Labor now being the self-professed home of economic conservatives we will see eye to eye in this place on matters of economic conservativism such as this. That being the case, I am confident that the remarks of the opposition today, together with this amendment, will be supported by the Australian Labor Party, as they should be. The amendment that is proposed will provide for greater transparency and greater accountability and bring the Reserve Bank governor before the parliament of Australia not on two occasions a year but on four occasions. That can only be a positive thing for the Australian people and the Australian markets. The Australian Labor Party should not oppose the Reserve Bank governor talking with the parliament of Australia on an increased number of occasions. I support the amendment, but I do not support the bill as proposed by the government.

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