Proposed changes to the acts noted in the heading are astounding in their breadth and likely impact. They also represent a massive lost opportunity. The sort of opportunity we might take if we had a Labor Government working in the public interest as a Curtin / Chifley government had once done. Men like this ran a Labor Party that protected the public against financial overreach. Today, Labor sees its responsibilities quite differently.
Contact Your Local Member
After reading my submission, I hope you will take action and contact your local member. If you live in the Blue Mountains, your local representative is Susan Templeman.
Phone: (02) 4573 8222
What follows is my submission to Susan Templeman, expressing my opposition to changes to the Reserve Bank Act (1959) and the Banking Act (1959). These are the result of a Reserve Bank review. You can find the original document here.
22nd November 2023
ATTENTION: Federal Member for Macquarie, Ms Susan Templeman
I am writing to express my unequivocal opposition to Recommendation 1 and its sub-clauses recorded in the document titled:
RBA Review – An RBA Fit for the Future (see p17).
My reasons follow:
Recommendation 1: Affirm the RBA’s independence and clarify its statutory monetary policy objectivesSub-clause 1.1
The RBA should continue to have operational independence for monetary policy. The Government should remove the power of the Treasurer to overrule the RBA’s decisions (see Section 11 Reserve Bank Act).
In 1932, the Treasurer told the Commonwealth Bank (the Reserve Bank was called the Commonwealth Bank at the time) to issue money into the depression economy to provide employment. The Commonwealth Bank Governor’s refusal prompted a Royal Commission in 1937. The Royal Commission ruled that the government of the day is the ultimate authority over the banking system.
The Menzies/Lyons government ignored this ruling. However, when John Curtin and Ben Chifley came to power they used war powers to make the Commonwealth Bank do the bidding of the government. The success of this policy during WWII led them to legislate in the 1945 Banking Act that the Treasurer can overrule the Reserve Bank Governor.
When Menzies split off the Reserve Bank in 1959, the legislation remained. 1959 saw the creation of the current Reserve Bank to perform central banking functions. Concurrently, commercial banking functions were transferred to a new institution, which was named Commonwealth Banking Corporation. The Commonwealth Bank was subsequently sold off by Prime Minister Paul Keating.
The RBA should continue to have operational independence. The Governor should remove the power of the Treasurer to overrule the RBA decisions.
As you can see from the context provided here, the government’s ability to intervene in the public interest on matters affecting the livelihood of average Australians must take precedence over nebulous notions of banking independence. One might ask, independence from what? From the public interest and to facilitate bankers’ overreach.
Further, this is a betrayal of Labor’s legacy as a defender of the public interest over that of a rapacious financial system. What do you imagine John Curtin’s advice might be to Jim Chalmers’ were he alive today?
The Government should amend the Reserve Bank Act 1959 such that:
- The RBA has dual monetary policy objectives of price stability and full employment.
- The ‘economic prosperity and welfare of the people of Australia now and in the future’ is an overarching purpose for the RBA rather than a separate objective for monetary policy decisions
(see Section 11 Reserve Bank Act)
The aim appears to be to sacrifice unemployment to the task of managing inflation; an inflation for which the Reserve Bank and successive Federal Governments’ appalling management of the Covid-19 crisis are largely responsible
In fact, unofficially, the Reserve Bank has applied this policy outside its mandate for years using the spurious notion of NAIRU (the non-accelerating inflation rate of unemployment). Bank management wants to enshrine this as policy free from government interference. This will be achieved if maintaining full employment becomes a purpose rather than an objective. This recommendation must be struck down.
The Government should remove the RBA’s to determine the lending policy of banks (see Banking Act 1959 Section 36).
Over half the rate of inflation currently being experienced by Australian households is the result of utility costs and reckless bank spending into areas of an already overheated property market (see attached). Further removing constraints on banks’ capacity to fuel speculation on residential housing is an outrage.
I note all levels of government appear to be determined to hand over regulatory authority over an ever-expanding area of our lives. I note an unwillingness to engage with the public on issues of corporate and international non-government organisations’ invasion of public policy. While this is happening, are we expected to turn away to allow the banks to make their charge. This must stop. It must end now.
The Citizens Party and Robbie Barwick’s impassioned call to act is compelling viewing.