Jamie Briggs (Mayo, Liberal Party) Share this | Hansard source

I join with the member for Dobell, following his largely high-quality contribution in this place, in thanking the governor and the staff of the Reserve Bank for their cooperation at the hearing. I also acknowledge the work of the committee secretary, Mr Boyd, and his staff in putting this report together. They obviously do a lot of work to get these things ready.

I thought we had a very high-quality discussion with the Reserve Bank governor. It is one of the main opportunities that the parliament has to interact with the Reserve Bank governor and ask about issues that are driving his thinking in relation to dealing with monetary policy. I thought the Reserve Bank governor was very frank with the committee. I think he was very honest and open about where he thinks monetary policy is going and the factors playing into that. It was welcomed by our side of politics, but probably not by the others so much, when the Reserve Bank governor quite clearly outlined that there is a link between reckless fiscal spending and higher interest rates. I thought that was a pretty telling moment in the morning’s proceedings.

The other aspect that the governor made very clear was his very deep and clear concern that the re-regulation of the workplace in Australia is leading to increased pressures on wage-price increases, leading to bottlenecks in Western Australia through increased strikes, as we have seen. The governor expressed deep concern about that and the impact it will have on our productive performance and, ultimately, on not just interest rates but also the employment levels of Australians. The governor very specifically made that point. I think that is of major concern. It is heartening to see that the putative Prime Minister, the Deputy Prime Minister, indicated through the Australian newspaper yesterday that she is considering winding back some of her more draconian union based laws. So I think those were the major policy aspects impacting on monetary policy in Australia that we got from the hearing.

I thought there was some other interesting discussion about the structural issues in and around the bank. We had a discussion with the governor about claims aired through the ABC Lateline Business program last year of pre-leaking of board decisions prior to the board meeting. I thought the governor was very strong in his dismissal of those accusations, and it was a good opportunity for the governor to clear that up. It was an important issue; interest rate movement is very market-sensitive information and claims that that information was being pre-leaked to the market were obviously worrying. They were worrying for this place and obviously also for the governor, because he was very strong in his dismissal of those accusations.

We also had a very good discussion about the board structure. There are some who claim, and I have some sympathy for this claim, that we do need to consider this given, as the Reserve Bank governor himself has identified, that there is an increasingly difficult role for the central bank—a more complex role, interacting in global movements. There is some merit in reconsidering the structure of the Reserve Bank board. This is not because it has done a bad job over the years; certainly in recent times it has performed quite well. Part of our role in this place, and an important role of this committee, is looking at the issues that will need to be addressed by the Reserve Bank and by the parliament in the future. It is an appropriate moment, given that the governor in his 50th anniversary speech highlighted the more difficult circumstances in which the bank is operating, to give some consideration to whether there need to be some more market-based professionals, market-based economists, on the board. The governor, while supporting the board, I thought took on board some of those questions and we had a reasonable discussion. I personally would like to see that sort of review or consideration take place, to see whether it is high time to change the structure of the board.

Against that there is the developing and important issue of the consideration the governor is giving to changing the way the bank operates in respect of leaning against the wind, where the bank sees a developing problem in an area like the housing market. We had a very good discussion on this. It is a contentious issue and I think it is a very big policy issue. I am very concerned to make sure that, if that decision is made, it is made in conjunction with the government of the day, with the parliament, and there needs to be a full and open debate about whether that is a good policy or not. I am concerned that with a very weak and ineffective Treasurer these decisions might be made without due consideration being given to them in this place. I am concerned to ensure that the governor undertakes any changes to the way he operates in setting monetary policy in conjunction with the parliament and the Treasurer of the day. There should be a full and open debate about this issue, if in fact we decide to go down this path. It would be a massive change to the way the bank operates and it would have a very real-world effect on people’s house prices and the interest rates that they pay. It is a developing issue. Yes, it is technical and it is pretty dry and it is not a matter that the Daily Telegraph will splash across its front page—the member for Banks does not need to worry about that too much—

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