Reserve Bank bigger, not brasher
The Reserve Bank is charged with maximising sustainable employment and may now lead by example by itself taking on dozens of extra staff.
Staff numbers at the bank rose by 19 to 274 in the year to the end of June, with a $5 million increase in its staffing expense to $36.5m.
But governor Adrian Orr has told MPs the bank is anticipating ‘‘a much more significant increase’’ over its next five-year funding period.
‘‘The begging letter is on its way to the Treasury for inspection and then we will be going into our funding agreement discussion with the minister of finance in mid-March,’’ he said.
Orr told Parliament’s finance and expenditure select committee he was not comfortable talking about the scale of the possible resourcing increase ahead of those discussions but said it was ‘‘30 per cent perhaps’’.
‘‘The biggest percentage change in staff would be in supervision.’’
The Reserve Bank’s existing resource was at the low end, if not ‘‘the lowest’’, in the OECD, he said, indicating it had had only one fulltime employee monitoring each major bank.
‘‘We need more resource to meet the expectations of our stakeholders.’’
The Reserve Bank’s conduct and culture reviews had found banks and life insurance companies ‘‘seriously wanting in some core activities’’ concerning risk management and problem mitigation, Orr said.
‘‘We are moving from a ‘tell us how things are going’ regime, to a ‘tell us and show us’ regime.’’
National Party MP Paul Goldsmith questioned Orr on the bank’s reaction to ‘‘criticism and debate’’ during exchanges at the select committee, saying the Reserve Bank governor had ‘‘very significant independent powers’’ over the industries the bank regulated. ‘‘From my point of view it is very important that we have open and robust discussion,’’ Goldsmith said.
‘‘We would not want to have an independent governor with a glass jaw or a sensitivity to robust criticism,’’ he later added.
Orr said the bank had ‘‘unprecedented engagement’’ in its two reviews of bank capital and ‘‘the future of cash’’ last year. ‘‘We have been proactive in encouraging open engagement,’’ Orr said.
In December, the Reserve Bank demanded the big four Australian-owned banks find about another $20 billion to put into their businesses over seven years to reduce the risk of them failing in a crisis. The decision was preceded by tense discussions with the banks, which warned it would result in a wider spread between the interest rates banks offered depositors and the rates they charged borrowers.