Monday, 26 May 2008
Reserve Bank Amendment (Enhanced Independence) Bill 2008
Consideration in Detail
Schedule 1, items 1 to 4, page 3 (line 5) to page 5 (line 3), omit the items, substitute
After section 24B
24C Governor and House of Representatives
The Governor shall make himself or herself available to give evidence before the House of Representatives Standing Committee on Economics, or any successor committee designated for the purpose of this section by the Speaker of the House of Representatives, at times and places to be agreed with the Committee but in any case not less than four times per year if requested by the Committee.
In the Treasurer’s observations about the Reserve Bank Amendment (Enhanced Independence) Bill 2008, he seeks to address a core problem with this very ill considered bill, which is that we have advice from the Parliamentary Library that:
Under the changes proposed by the Bill, in the event the position holder—
that is to say, the governor or deputy governor—
is not of good behaviour there is no mechanism for termination as this requirement is not specified as a ground under new subsection 25(8).
The Treasurer has said that the Office of the Australian Government Solicitor takes a different view. That may well be the case, but on a matter as important as this it is completely unacceptable that there be any doubt or contention whatsoever. What we have in this bill is not an effort to make the Reserve Bank governor or the deputy governor more independent. If that had been sought, if it had been desired to take the question of the removal from office of those persons away from the control of the executive government and vest it in parliament, then the legislation would, as the Treasurer foreshadowed when he made the announcement of his intentions, mirror the legislation relating to the removal of the taxation commissioner or indeed the Australian Statistician where the parliament—in a not dissimilar fashion to the way judges can be removed—votes on whether there has been misbehaviour in office sufficient to enable removal.
This bill does nothing for independence, and takes three circumstances which have been historically, and should be in effect automatic, vacancies in the office. Instead of there being a statutory requirement that the office is automatically vacated in the event of incapacity, bankruptcy or holding an outside job, it provides a mandatory requirement that the Treasurer shall terminate the appointment so that there is a time and date certain as to when that officeholder’s office comes to an end. We would now be in the absurd situation where the parliament could resolve that a Reserve Bank governor who is incapable, bankrupt or has an outside job—perhaps working for a bank somewhere else—would be able to remain in office. It is a ludicrous outcome and has nothing to do with independence.
By contrast, the opposition is presenting a very practical and concrete proposal which will improve accountability on the part of the Reserve Bank. We have an outstanding central bank; it is one of the world’s best—many would say the world’s best. Its accountability is enhanced by its biannual appearance before the House of Representatives Standing Committee on Economics, and that is an opportunity for the whole of Australia, through its elected representatives in the House of Representatives, to draw out from the Reserve Bank governor and his senior officials their views on monetary policy and the economy generally, and that greatly adds to the sum total of economic knowledge that we have as a country and our ability to question the decisions of the bank.
Every quarter, the bank produces a comprehensive paper on monetary policy: the Statement on Monetary Policy. It is much anticipated; it is a key document in the flow of information from the Reserve Bank and it would be very appropriate for the House economics committee, following the publication of the statement on monetary policy, to then speak to the Reserve Bank governor and his team, thereby doubling the accountability and the transparency that the House economics committee is able to provide. That underpins the independence of the bank. It is that accountability that gives the bank its independence. What this bill does, by contrast, is absurd, it is ill thought out and it presents, at the very best, a situation which raises considerable doubt as to whether the ability to remove a governor who is misbehaving can continue. (Time expired)