Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

Yesterday I was talking about the impact of monetary policy. The member for Wentworth made a significant contribution—if I can put it that way—to the debate yesterday. He is the same person who, in 2006, said that we were overdramatising interest rate rises. He also said that interest rate rises were a fairy story. My predecessor in the seat of Blair actually gained national notoriety during the federal election campaign when he described interest rate rises as something to the political advantage of the coalition government of the time.

But I want to talk about the contribution made by the member for Wentworth yesterday. I had a look at the Reserve Bank Act 1959. Section 25 of that act says that the Treasurer shall terminate the appointment of the governor or deputy governor on the following grounds—if that person:

(a)

becomes permanently incapable of performing his or her duties; or

(b)

engages in any paid employment outside the duties of his or her office; or

(c)

becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with his or her creditors or makes an assignment of his or her salary for their benefit ...

What we are seeking to do here is, of course, change that and provide that the Governor-General may terminate the appointment of the governor or deputy governor. The amendment bill under section 25(8) specifies those same grounds. But it says, in a machinery provision, that if you want to use those grounds to terminate then you have to go through both houses of parliament. So, in that regard, what we are doing here is effectively making a machinery provision.

What the member for Wentworth did not say at all yesterday is that there were amendments to section 24 of the Reserve Bank Act 1959. Those amendments say:

(1)

The Governor and the Deputy Governor:

(a)

are to be appointed by the Treasurer; and

(b)

shall be appointed for such period, not exceeding 7 years, as the Treasurer determines but are eligible for re-appointment; and

(c)

hold office subject to good behaviour.

If you were listening to the contribution of the member for Wentworth yesterday, you would think that the appointment of the Governor and Deputy Governor of the Reserve Bank was actually akin to the appointment of a Supreme Court judge in the United States; that you could not get rid of them at all except on very specific grounds. He did not talk about the protection of section 24 at all in his contribution—that is, the appointment could be for a specified period not exceeding seven years and that those particular persons only hold office subject to good behaviour. That is quite significant. What I am saying here is that the only spin in relation to this matter is actually coming from the member for Wentworth.

We have taken significant steps, and the Reserve Bank has agreed with them. We now have the situation where, in addition to greater transparency and accountability as a result of this legislation, the Reserve Bank releases minutes of each central bank board meeting and releases a public statement in respect of interest rates irrespective of any adjustment decisions made by the board. No longer does the Reserve Bank only provide statements when they adjust the official cash rate. The increased transparency helps business people and working families to understand the reasons behind monetary decisions which have a real impact on their lives. Furthermore, future Reserve Bank board appointments will only be made through a registry compiled by the Secretary to the Treasury and the Reserve Bank governor from which the Treasurer will make a choice.

These are significant changes we are making. As I said yesterday, this is all about perception. It is about improving the public’s perception and it is about more arm’s-length aspects of monetary policy. It is also about enhancing the reputation of the Deputy Governor and the Governor of the Reserve Bank, thereby enhancing the public’s perception of the openness of government and the openness of the Reserve Bank. It is about improving the public standing. These reforms are important and I believe they herald a new era of independence and transparency in monetary policy. They are good amendments and I think the member for Wentworth is wrong in his legal analysis of the legislation. I would commend to him section 24 of the Reserve Bank Act. I think he needs to have a good look at both the bill and the act to see that substantive and machinery provisions are different matters entirely.

I commend the bill to the House and commend the Treasurer for what he is doing. This is a commitment of the new government. It is an election commitment. We have said that we believe it is important that monetary policy be effectively used by the Reserve Bank. We think this is important in fighting inflation and we are not leaving it up to the Reserve Bank board alone. The budget that was handed down just a couple of nights ago goes towards helping working families and individuals in my constituency in Blair. That budget will make an important contribution to help them in their fight against inflation and help them in their domestic budgets. I commend the bill to the House and I congratulate the Treasurer for what he has done in this regard.

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