Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

Brian Burke would be a tremendous appointment—the man who has previously controlled the West Australian Labor Party and continues to pull its strings. I am sure the New South Wales Labor government would be able to come up with some of their mates to appoint to the RBA board. I digress and will now return to the substance of this bill. The bill amends the Reserve Bank Act by conferring the power of appointment of the bank’s governor and deputy governor—not the members of the board—to the Governor-General instead of the Treasurer. This returns to the position that existed prior to 2002. The appointment of the governor and deputy governor of the bank would be the responsibility of the Governor-General. But appointments to the two boards within the Reserve Bank—namely, the Reserve Bank board and the Payments System Board—would still be made by the Treasurer. Further, the bill is completely and utterly silent about the composition of the Reserve Bank board—for example, the desirability of including the Secretary to the Treasury on that board. It does not say anything about that.

It is the process of termination of these appointments that raises the gravest considerations about this ill-considered bill. The process the bill proposes for the termination of appointment of the governor—and this applies equally to the deputy governor—is for the Governor-General to terminate the appointment where both houses of parliament, in the same session of parliament, present an address to the Governor-General praying for the termination of the appointment on a ground specified in subsection (8). I will get to that in just one minute. Alternatively, the Governor-General could suspend the appointment. The relevant minister, assumedly the Treasurer, must then table a statement in each house that identifies the grounds for suspension. Parliament then has 15 sitting days in which to decide whether to terminate the appointment.

Imagine the effect and the chaos that would result during that time. The motion to terminate must be passed by each house in the same session of parliament; otherwise, the suspension will end. Under proposed section 25(8), there are only three grounds for the termination of appointment: permanent incapacity, engaging in outside employment or becoming bankrupt. These are the only three grounds on which the appointment of the governor or the deputy governor can be terminated. Under the existing legislation, the Treasurer must terminate the appointment in the event of permanent incapacity, engaging in outside employment or bankruptcy. You really have to wonder what this bill is seeking to advance. The bill would make this an optional decision of the parliament. At this point, I would like to note that section 24 of the Reserve Bank Act will be amended to provide as follows:

(1)

The Governor and the Deputy Governor:

(a)

are to be appointed by the Governor-General; and

(b)

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

(c)

hold office subject to good behaviour.

Parliament appears not to have the power to remove a governor for not being of good behaviour. Subject to what follows later, that power will reside within the Governor-General. I think this prompts a number of questions that really undermine the credibility of this legislation. Could the Governor-General remove the Governor of the Reserve Bank on the ground of failing to be of good behaviour without parliament having to agree to that removal? The legislation is not clear on that. Does proposed section 24(1)(c) give any power to the Governor-General to terminate an appointment given proposed section 25(9) states that an appointment must not be terminated except on a ground identified in subsection (8)—the three grounds that I mentioned earlier? I note that the Bills Digest of the Parliamentary Library has had a look at this issue. This is what it says:

New subsection 25(9) provides that the termination of the Governor or the Deputy Governor can only be terminated on a specified ground and by the means specified by new section 25. This limits termination to the grounds specified and in the manner specified by the section. As noted earlier, the Governor and the Deputy Governor hold office ‘subject to good behaviour’ which is an on-going requirement and a prerequisite for holding office ... Under the changes proposed by the Bill, in the event the position holder 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). If a Governor or Deputy Governor did not offer a resignation to the Governor-General under amended section 24B there is no power to remove the Governor or Deputy. This can be contrasted to the present position in that although the grounds of removal from office are the same, there is no strict limitation on the Treasurer’s current power to terminate an appointment as will be the case under the proposed amendments.

This bill is obviously a rush job. It is a rush job for the government to say that they have done something to enhance the independence of the Reserve Bank when, when they said that they were going to do it, they had absolutely no idea what they would actually do to implement that promise. It is a bill that will lead to completely perverse outcomes if the parliament were not disposed to terminating the appointment of a governor who had become bankrupt or incapacitated. Imagine what would happen then if this House were divided on whether a governor or deputy governor should be terminated. Imagine the chaos that would ensue and imagine what that means for Australians who rely on the Reserve Bank to administer sound monetary policy in Australia. This bill does not clearly provide for the termination of the governor who does not continue to be of good behaviour. So, clearly, the opposition cannot support these ill-thought-out amendments.

What we will do is move our own amendment to this bill, and I think it is a very sensible amendment. We will seek to improve the independence of the governor and we will seek to improve the RBA’s accountability to the Australian people through this parliament. Accountability and independence would be achieved by requiring the governor to testify before the Standing Committee on Economics. This is an approach that is taken in similar jurisdictions, such as the United Kingdom and the United States. It is also required by the European parliament. We believe that it is sensible for the bank to appear before the parliament on a more regular basis. Through that, they are more accountable to the Australian people. Currently it happens twice a year; we believe that it is sensible for these hearings to happen four times a year. I think that is a sensible amendment and it is one that has my wholehearted support.

This bill is a clear example of how this government operates. After six months I think we are getting a pretty good view about what is important to this government. What is always important to it are style and spin—it is never the substance. You always need to look at what this government does and not at what it says. The Treasurer and the Prime Minister wanted to appear to be economic conservatives. They do not understand what that term actually means. Their public relations company told them it was one they should use.

So they have tried to come out and pretend they are economic conservatives and now they have had a ‘road to Damascus’ style conversion to believe in the independence of the Reserve Bank, which is something the Labor Party has always opposed and never believed in. They said that they would enhance the independence of the Reserve Bank; they have no idea how to go about doing that so they came up with this ridiculous bill that will cause confusion and has the serious potential to adversely impact on the creation of monetary policy in Australia. It is a bill that cannot be supported by the opposition and I urge all members to take a good look at it and join us in opposing these ill thought out measures.

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