Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

In my speech in the second reading debate I foreshadowed my amendment on sheet 5502 and I again outlined the case for appointments being made on merit. I indicated in that speech that there was a long history of debate surrounding the issues of appointment on merit. It is particularly important with respect to the board of the Reserve Bank that merit is secured. In my additional remarks in the Senate Economics Committee report on the Reserve Bank Amendment (Enhanced Independence) Bill 2008 I indicated that the United Kingdom parliament appointed in 1995 the Nolan committee to examine these issues. The chamber will recall that, at that time, it was a conservative government and they initiated this important accountability initiative. When that committee determined its principles, it set out a range of principles that should inform the making of appointments. Both the UK government and the UK parliament fully accepted the committee’s recommendations and the Labour government has itself advanced appointments on merits procedures even more in its own term of office. So the world has moved on overseas in this area, but we have not moved on sufficiently.

In effect, my amendment specifies a broad range of criteria that must be established by the minister. The amendment itself does not decide on what the criteria should be; it just determines a broad range of criteria. The amendment specifically says the general principles on which selections are to be made should include but not be limited to merit, independent scrutiny of appointments, probity, and openness and transparency. The purpose of putting those in is not because governments do not necessarily follow that or might not follow that, but to ensure that they do follow that, because governments and ministers change over time. That was understood in the United Kingdom and they are principles that I have sought to push in this parliament.

The other thing is to address a perceptual problem. There is a perception through the media, through the political class and in the populace at large that appointments are not always made, as they should be, on merit. This is particularly important issue with respect to the board of the Reserve Bank. That board has a really mighty responsibility and we need to be doubly careful in this area.

I have motivated these sorts of amendments at length before and I made quite lengthy remarks with respect to this amendment in my speech in the second reading debate, so I do not propose to detain the chamber any longer. I move Democrat amendment (1) on sheet 5502:

(1)    Schedule 1, page 3 (after line 4), before item 1, insert:

1A  After section 14

Insert:

14A Procedures for merit selection of appointments

        (1)    The Minister must by writing determine a code of practice for selecting and appointing the Governor, the Deputy Governor and the 6 other members as required by section 14 that sets out general principles on which the selections are to be made, including but not limited to:

             (a)    merit; and

             (b)    independent scrutiny of appointments; and

             (c)    probity; and

             (d)    openness and transparency.

        (2)    After determining a code of practice under subsection (1), the Minister must publish the code in the Gazette.

        (3)    Not later than every fifth anniversary after a code of practice has been determined, the Minister must review the code.

        (4)    In reviewing a code of practice, the Minister must invite the public to comment on the code.

        (5)    A code of practice determined under subsection (1) is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I listened very carefully to Senator Murray’s earlier comments and his comments now in moving his amendment. Although it is on a slightly different point, I was reminded that at one stage, according to the announcement of the Prime Minister and Mr Swan, the government had announced that it would make a number of changes to enhance the independence of the bank and the transparency of certain of its operations, and included in that was that the Secretary to the Treasury and the Governor of the RBA will maintain a register of eminent candidates of the highest integrity from which the Treasurer will make appointments to the board. Somehow or other that did not seem to make it into the Reserve Bank Amendment (Enhanced Independence) Bill 2008, and it is not clear that Labor has made or proposes to make any change to the status quo in that respect. In the past Treasury would, in consultation with the Reserve Bank, provide a list of possible candidates to the Treasurer, who then would make a recommendation to cabinet on possible board appointees. So we do not have a list and we do not really know what Labor proposes to do about the appointments.

But, on the broader point, I must say that, from the opposition’s perspective, we see some real merit in setting out a range of principles and criteria on which selection can be made on merit. I believe that, with regard to the independent scrutiny of appointments, its time has come. In the end, we have to give expression to all of this rhetoric: we either mean it or we do not. For those reasons, the opposition will be supporting the amendment moved by Senator Murray.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I should indicate that I have had to speak many times in response to Senator Murray’s amendments of this ilk. I would dearly love to give you a win on one of these before you leave, Senator Murray, but I think this is probably the least appropriate of all of the processes that you could have sought to amend. We have taken this process from a Liberal Party donor list and we have turned it into a process by which a list of names is put together by a range of people who would have some understanding of the needs of the Reserve Bank board and that list is then put forward. So, out of all of the times when I know you have beaten your head against the brick wall to try to get, in your view, a merits based approach, this one is probably the unkindest because we have actually substantially improved the process. So, as much as I would love to give you one victory—and I am sure, if you get a chance, you will tell me how many times you have moved this amendment—we unfortunately will not be supporting this amendment. But I do hope that you are able to acknowledge that we have substantially improved the selection process for the Reserve Bank.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

Family First supports this merit selection of appointments amendment, and I think we have supported quite a few in the past from Senator Murray. It is interesting to see that I think he is going to get this one through today, if the coalition support it. There can be no harm in passing this amendment. When you think about it, it just seems to make sense that there be procedures for a merit selection of appointments. So, as we have in the past, Family First will support this amendment moved by Senator Murray.

Question agreed to.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move opposition amendment (1) on sheet 5497:

(1)    Schedule 1, page 3 (after line 8), after item 2, insert:

2A  After section 24B

Insert:

24C Governor and House of Representatives

The Governor must 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.

I spoke at length in my second reading remarks about the opposition’s proposed amendments, but I will briefly recap. The amendments would insert a new section 24C to the Reserve Bank Act 1959 which would require the governor to appear before the House of Representatives Standing Committee on Economics at least four times a year. Presently, the governor generally appears before that committee twice a year, but this is optional and we think it is appropriate that it be formalised. We consider that it would increase the accountability and transparency of the Reserve Bank if the hearings were conducted four times a year in line with best practice, as we understand it, overseas. We consider that this amendment would certainly enhance the independence and accountability of the Reserve Bank.

I understand that Senator Fielding wishes to move an amendment to this amendment that would require the governor to also appear before a Senate committee. We did consider this very carefully and we came to the view that it would be just too confusing and difficult to manage if the governor were to appear in both houses. The convention has been that he has appeared before the economics committee in the House. We think that that should be formalised in the way we have proposed.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I move the Family First amendment to the amendment that the coalition already has before the floor:

(1)    Amendment to Opposition amendment no (1)

Omit section 24C, substitute:

24C Governor and Parliamentary Committees

The Governor must make himself or herself available to give evidence before the Senate Standing Committee on Economics and the House of Representatives Standing Committee on Economics, or any successor committee designated for the purpose of this section by the President of the Senate or the Speaker of the House of Representatives, at times and places to be agreed with the Committees but in any case not less than four times per year if requested by the Committees.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I think this is a very interesting topic and I want to take a little time to deal with it. Essentially, when statute requires people to appear before a parliamentary committee for oversight purposes, it is to make clear that there is a formal relationship between those people and the committee concerned. In law, it is unnecessary. This is the supreme body in the Constitution. No citizen, agency or person can refuse attendance before this chamber, this chamber’s committees, the joint committees or the House committees. Of course, if they do refuse attendance, those committees all have the power of subpoena. In actuality, there is no need in statute to require attendance, but for purposes of propriety, formality and clarity it is useful to ensure that individual bodies know exactly to whom they report in oversight terms.

Quite properly, previous governments have required, for instance, ASIC, to have a formal requirement to appear before the Parliamentary Joint Committee on Corporations and Financial Services. There is a specific statutory provision with respect to the Auditor-General and the Joint Committee of Public Accounts and Audit. And then, of course, there is the House of Representatives standing committee with respect to the Reserve Bank. The precedent is properly established. But when you go down that route, you then want to be sure that, where you are determining oversight by statute, it only occurs with respect to one master. You cannot serve two masters. I understand the sentiment of Senator Fielding’s amendment, but you really should not have an oversight rule or requirement which spreads the parliamentary responsibility. It should be either the Senate committee or the House committee or a joint committee; it should not be a number of them.

Having said that, Senator Fielding, it is entirely within the power of any committee, including any Senate committee, to call the Reserve Bank governor if they wish. There is absolutely no prohibition on that and there never will be, because the Constitution of Australia gives this parliament that authority and power. So I will not be supporting Senator Fielding’s amendment, on the grounds that you should only have statutory oversight given to one parliamentary body, and the parliament as a whole—not an individual house but the parliament as a whole—have decided that the House of Representatives standing committee is the appropriate one for the Reserve Bank.

The second point that I want to make is that I do not support the coalition’s amendment. I do not support it because I do think you can meet with the Reserve Bank more than twice, as is presently provided. You can meet with them as many times as you wish. I am convinced that if the House of Representatives Standing Committee on Economics says to the Reserve Bank governor, ‘Listen, we want you to come down and chat to us,’ then he will. It would be a very odd occasion if the Reserve Bank governor were to refuse such an invitation. So I think that it is unnecessary. You can have three, four, five or six meetings if you wish, but to put into statute that it must be a minimum of four is over the top. Assume a year such as 2007 when we had an election and there were actually very few sitting weeks and so on. To have been able to meet with the Reserve Bank governor in four quarters, for instance—which is what you would assume—might have ended up being very difficult.

Again, I have absolutely no problem with the coalition wanting the House of Representatives Standing Committee on Economics to meet with the Reserve Bank governor on more occasions than it does at present. I just do not think that it should be in statute. On those grounds I must say that, whilst understanding the motivation of Senator Fielding, I think he gives too little credit to the sheer power this parliament has to call who it wants, at any time it wants, either by invitation or through subpoena. Secondly, I think that it is undesirable to have someone having to report formally through statute to multiple committees. Thirdly, I do not think that it is necessary to put a greater oversight requirement into statute than exists at present.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

I do, obviously, support the amendment moved by Senator Coonan, because, with the greatest respect to Senator Murray, he is addressing the best-case scenario in relation to the Governor of the Reserve Bank. Quite frankly, I do not see that there is any harm at all in formalising an arrangement so that the governor knows exactly where the government is going. I think that there should be some formalising of this position.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

We will not be supporting the opposition’s original amendment or Senator Fielding’s amendments. While I genuinely believe that your amendment is made in very good faith, Senator Fielding, I take the point that Senator Murray made. On occasions I have considered requesting the Reserve Bank governor to appear before a range of Senate committees, and the indication that I have always had from his office is that he would be prepared to attend if an invitation were extended. So that is quite genuinely the case. It is not a prohibition that we cannot do that; it is just that we have not got round to doing it. I have contacted his office through the secretariat to see if he has been available, and he has always expressed a willingness to attend if the committee decided to go down that path.

I do have some difficulty coming to terms with the sudden blush of accountability discovered by the other side, though. After 11½ years they have suddenly discovered all of these new measures that they believe are important for the purposes of the independence of the Reserve Bank. They did not put them forward in government, they did not consider them in government and they were not supportive of ideas like this in government. They have run out of people on the donor list of the Liberal Party and the opportunity to reward their donors with seats on the Reserve Bank board, so now they have decided to go down a different path. It is entirely self-serving and hypocritical, and after 11½ years—

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

You should be very careful about discussions of donor lists.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Ronaldson, I am prepared to defend you; I have said that before. I know you personally have not been involved in that blog site because you cannot use your computer. But your staff, apparently, have been a little bit naughty! You need to take on a little bit more supervision in your own office.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

Point of order, Madam Temporary Chairman. I think that is a particularly cowardly reflection on my staff and I think that the Senator should withdraw it. He knows that is not the situation. It is cowardly and it should be withdrawn immediately. I do not mind engaging in banter across the table, but I think to mention staff is absolutely appalling and I am bitterly disappointed in Senator Conroy.

The Temporary Chairman:

There is no point of order.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I was not seeking to offend, Senator Ronaldson. Even though I am not required to, because what I said was not unparliamentary, I accept your admonishment, Senator Ronaldson, and I withdraw the aspersions that Tony Nutt is tossing around.

As I was saying, after 11½ years of stonewalling, of refusing point blank to any degree of accountability, the Labor Party comes forward with a package for enhanced independence and the Liberal Party decides that they want to take a couple of cheap political shots and put forward an amendment. As I said, Senator Fielding, I absolutely accept that you have had a consistent position on this, just as you and Senator Murray have had a consistent position of merit based appointments, for instance. But those opposite voted down Senator Murray on each and every occasion that he put that forward. We at least had the gumption to stand up and say no. Senator Murray was keeping his list of best refusals over many years, but if those opposite choose to vote for this, as you thought that they might, it would truly go down as one of the most hypocritical acts seen in this chamber in some years, because each and every time in the past it has been voted down. We will maintain our consistent position, which is that we will not support the proposition put forward. But if those opposite have suddenly discovered a new policy vision in the direction that they are going, then they will stand judged by the Australian public for being the hypocrites that they are.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I do not think this particular amendment is of such far-reaching significance that it deserves to take up so much time. I think it is important that the governor’s appearances before the House committee are formalised, for the reasons I have given. But it is a little bit rich for the minister to come in here and talk about people changing positions. When you actually look at Labor’s record when it comes to Reserve Bank independence, you see there has been a road to Damascus conversion. Labor’s record on this issue is distinctly lacking. When they were last in government, so far as I recall and my research shows, they made absolutely no attempt to make the Reserve Bank independent. Famously, former Prime Minister Keating boasted that the Reserve Bank would do as he said. It took the foresight, hard work and economic competence of the coalition, under the leadership of the member for Higgins, the then Treasurer, to issue a statement of monetary policy—as I think all of us think there should be—which clarified the bank’s role and the government’s commitment to respecting its independence.

In an extraordinary move, the then Leader of the Opposition, Mr Beazley, actually sought legal advice, because Labor did not support the reforms. Labor did not support the independence of the Reserve Bank. In 1996 they did not support an independent Reserve Bank, but by 2002 they had apparently changed their minds. The Prime Minister and Treasurer both supported the Financial Sector Legislation Amendment Act (No. 1) 2002, which amended the Reserve Bank Act so that the Treasurer appointed officers and board members, to streamline the appointment and termination processes. It is really only now that they want to undo the 2002 legislation and go back to the old system of the Governor-General making appointments. This is against statements they made in 2002. Back then they were supporting a streamlined appointments and removals process; now they want to turn back the clock. At the same time, they have told the media that this is the beginning of a new era of independence. Quite clearly, either the government are confused or they do not recall where they have come from in this debate.

It is important that we look at these amendments on their merits. There is a very clear argument, in the opposition’s view, for formalising the governor’s attendance at hearings of the House committee. It is quite true, as Senator Murray said, that this can be ad hoc and largely optional but not refused. But we think that formalising it, consistent with overseas practice, will be a constructive additional amendment to this bill.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

This is important. The coalition is putting forward the House of Representatives Standing Committee on Economics and saying that the Senate has no role to play. Senator Murray’s comments notwithstanding, there needs to be the political will to actually ask the Reserve Bank to the committee. You need the numbers in the committee for the Reserve Bank to be requested to appear before the Senate standing committee. The reason it has not appeared for some time is that there has not been that political will.

If it is fair enough to say in legislation that we want the Reserve Bank to appear before the House of Representatives Standing Committee on Economics, surely it is fair enough to put in legislation that it should also appear before the Senate Standing Committee on Economics. The whole idea of the Senate was to hold the executive to some account. The House of Representatives is, of course, dominated by the government of the day. The Senate really is where you should be looking at what the Reserve Bank is doing on a quarterly basis and holding it accountable for decisions it makes that affect everybody in Australia. If you are going to argue for the Reserve Bank to appear before the House of Representatives, surely it should also appear before the Senate. Notwithstanding what Senator Murray said—that you can ask for it to appear—you need the political will of the committee to ask for it to appear, and that has not been the case for some time. So let’s get it clear. Let’s make sure the Senate has the teeth it is supposed to have and put it into legislation right here and now. You cannot argue that you want this for the House of Representatives and not for the Senate. This is the red carpet here, not the blooming green carpet. I have all respect for the other house, but we should also be having the Reserve Bank appear before the Senate. I appeal to the coalition to support this amendment to have the Reserve Bank appear before both chambers.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

To follow up the comments from Senator Fielding, can I say to him that at the times when I was interested in pursuing an appearance of the Reserve Bank governor—notwithstanding that I spent 11½ years without the numbers on any committee—the committee never indicated that it would not be prepared to call the Reserve Bank governor. It was not a question of political will. It was not blocked by the incumbent government. I say that quite genuinely. It was more a question of whether or not I had decided I wanted to pursue the line of questioning with the Reserve Bank. I never found that the government of the day used the numbers to block an appearance. So, while I appreciate that you are genuinely addressing an anomaly created by a political stunt on the other side and that you are putting forward a consistent approach—whereas they are just putting forward a stunt—I would say to you that the Reserve Bank governor’s appearances were not blocked by a majority on the committee. I think Senator Murray has been on those committees for as long if not longer than me and, if it is political will, it is a question of asking.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

You can record that I am agreeing with you.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

If the coalition does not vote for Family First’s amendment for the governor to appear in front of the economics committee then I really look forward to the Senate Standing Committee on Economics listening to a participating member. When that request goes through, I hope that both the government and the opposition will support that request. I still appeal to the coalition to support this amendment—to formalise it, in a way—but I look forward to support from both sides of the Senate when Family First puts that request in for the Reserve Bank Governor to appear before the Senate Standing Committee on Economics.

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

The question is that Family First amendment (1) on sheet 5504 be agreed to.

Question negatived.

Original question agreed to.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move opposition amendment (2) on sheet 5497:

(2)    Schedule 1, item 3, page 3 (line 9) to page 4 (line 28), omit the item, substitute:

3  After section 25

Insert:

25AA Termination of appointment as Governor or Deputy Governor

Termination at request of Parliament

        (1)    The Governor-General may terminate the appointment of the Governor or the Deputy Governor if each House of the Parliament, in the same session of the Parliament, presents an address to the Governor-General praying for the termination of the appointment on the ground of misbehaviour.

Suspension by Treasurer

        (2)    The Treasurer may suspend the Governor or the Deputy Governor from office on the ground of misbehaviour.

        (3)    The Treasurer must cause to be laid before each House of the Parliament, within 7 sitting days of that House after the suspension, a statement identifying the office holder suspended.

        (4)    A House of the Parliament may, within 15 sitting days of that House after the day on which the statement is laid before it, declare by resolution that the appointment of the office holder identified in the statement should be terminated.

        (5)    If a resolution is passed by each House of the Parliament in accordance with subsection (4) in the same session of the Parliament, the Governor-General may terminate the appointment to which the resolution relates.

        (6)    If a resolution is not passed by each House of the Parliament in accordance with subsection (4) in the same session of the Parliament, the suspension of the office holder identified in the statement terminates on the day after the last day that such a resolution could have been passed.

Suspension does not affect entitlements

        (7)    The suspension of the Governor or the Deputy Governor from office under this section does not affect any entitlement of the Governor or the Deputy Governor to be paid remuneration and allowances.

Ground for termination

        (8)    The appointment of the Governor or the Deputy Governor may not be terminated on the ground of misbehaviour except as provided by this section.

This amendment has the effect of leaving section 25 of the Reserve Bank Act 1959 extant. That is, it will remain mandatory for the Treasurer to terminate the appointment of the governor or deputy governor on the essentially objective grounds of permanent incapacity, paid employment outside the Reserve Bank and bankruptcy.

In second reading comments, a lot of senators talked quite extensively about easily ascertainable objective grounds that should be immediate and quick. However, the amendment inserts a new section 25AA to the Reserve Bank Act 1959 which provides for parliamentary approval for the termination of the Governor or Deputy Governor of the Reserve Bank on the ground of misbehaviour. As I said in my earlier comments, these clauses have been essentially modelled on those applying to judges and other well-known statutory officers, so they align with other statutory officers. Thankfully, in Australia we have been very well served by our governors of the Reserve Bank, so this is recognition that the grounds of misbehaviour—should they ever arise—require different treatment, in our view. It is sensible and timely to separate out the objective grounds from the ground of misbehaviour that, I think, is in a different category. I commend the amendment.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

For the record, the Australian Democrats support the Liberal amendment.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

We will not be supporting the amendment.

Question agreed to.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.