Media Release Housing Assistance to RBA Staff

Some recent press reports have made quite misleading reference to housing assistance the RBA provides to a small proportion of its staff. Here are the facts:

• For many years, subsidised housing loans were a common condition of employment for staff in the banking industry. The RBA continued such an arrangement for its staff after separation from the Commonwealth Bank in 1960.
• In recent years, the RBA removed this particular condition for the bulk of its staff. Neither the Governor nor the Deputy Governor receive any housing assistance. Assistant Governors, all other staff at the most senior levels and a large number of middle management staff, are now employed on individual contracts, which do not offer any housing assistance at all. Contrary to some media reports, no staff involved in the formulation of policy advice are in receipt of any form of housing assistance. No new staff joining the Bank since 1 July 2001 have been eligible for housing assistance. These changes were announced in the Annual Report for 2000/2001.
• There remains a proportion of long-serving staff in junior and middle ranks who still have loans outstanding as a legacy of the old arrangements. These staff can borrow an amount determined by their salary, up to a maximum of $200,000, for the purchase of a residence. That cap has remained unchanged since June 1992, so that the benefit has fallen well behind the very large rise in house prices, especially in Sydney where virtually all the relevant staff work. The interest rate is concessional, set at half of the Commonwealth Bank's standard variable mortgage rate.
• Only about one quarter of the RBA's staff are now receiving the benefit, compared with most staff a few years ago. The size of loans outstanding is now around $25 million, and the cost to the Bank of the interest subsidy is around $370,000 per annum, plus Fringe Benefits Tax. The proportion of staff receiving this assistance, the amounts outstanding and the annual costs can all be expected to continue falling over time.