Reserve Bank of Australia Annual Report – 1992 The Bank's Administration and Earnings

Staffing

The Bank's staff (excluding Note Printing Australia) declined by a further 233 during the year, to 1976. As the following table shows, numbers employed in both the Bank and NPA have declined appreciably since 1983:

Staff Numbers

End June	Bank	NPA	Total
1965	1,987	804	2,791
1970	2,644	838	3,482
1975	2,977	775	3,752
1980	3,019	629	3,648
1983	3,174	653	3,827
1984	3,083	625	3,708
1985	3,014	585	3,599
1986	3,053	565	3,618
1987	2,878	552	3,430
1988	2,656	516	3,172
1989	2,301	487	2,788
1990	2,298	278	2,576
1991	2,209	283	2,492
1992	1,976	273	2,249

The reductions in the Bank reflect a number of factors, including the winding-down of the Exchange Control and the Rural Credits Departments, which has been partly offset by the creation of the Bank Supervision Department. More important have been regular reviews to eliminate overstaffing, and substantial investments in computers, communications networks and other automatic processing machinery. The reductions have been achieved by natural attrition and rounds of voluntary redundancy in 1987, 1988, 1989 and 1991.

The major restructuring of the Bank which commenced in 1990 was completed during 1991/92. As explained in last year's Report, the Bank now has a flatter organisational structure with eight levels replacing the previous 23-level job classification system. The new structure has shorter reporting lines and provides for more authority to be delegated to individual Departments.

The restructuring proceeded from the top down. At the most senior levels, all positions were spilled and advertised externally; 2 of the 12 positions were filled by outside candidates. At the middle levels, most positions were spilled and advertised internally. At more junior levels, around half of the positions were advertised, while the others were filled by confirming incumbents in positions where their performance was assessed to be of an acceptable standard.

Within the more restricted number of job classifications, the steps within salary bands are larger but progression is no longer automatic. Instead, progression depends on satisfactory performance as assessed in regular appraisals of staff. A system of bonus payments for truly exceptional performance was implemented for the first time in 1991/92; 47 bonuses were awarded (equivalent to about 2 per cent of total staff) in what turned out to be a relatively wide distribution among salary levels and between head office and the branches.

As part of the restructuring, the resources devoted to in-house training were increased. Training courses have been reviewed and upgraded to meet changing job requirements, and greater use has been made of outside experts and specialised external training programs. Bank assistance is provided to staff to pursue undergraduate and post-graduate degrees in Australia and some post-graduate degrees overseas. Over 70 Bank staff have post-graduate degrees.

Budgeting

The budgeting process has been streamlined since 1989 to make it more effective as a management tool and internal discipline, and as a basis for greater public accountability.

The total budget is built up from “bids” submitted by Assistant Governors and Heads of Departments to provide for ongoing and proposed new work programs during the year ahead; the bids are finalised in discussions with the Governors. Once approved, relevant authorities are delegated to Assistant Governors and Heads of Departments. Disbursements relative to budget estimates are monitored closely throughout the year. The trend in the Bank's operating costs over recent years is reflected in the following table:

Operating Costs^*

	$million
1987/88	172
1988/89	169
1989/90	170
1990/91	180
1991/92	185
* Excludes some extraordinary items, such as redundancy payments.

Reasonable cost containment is one focus of the budgeting process. Another is the objective of charging for certain Bank services on a full cost recovery basis. The cost of providing banking services to the Commonwealth, which in the past was recouped through an interest margin between the Bank's borrowing and earning rates, is now recovered largely on a fee per transaction basis; these fees were negligible in 1987/88 but amounted to almost $7 million in 1991/92. Similarly, fees for cash distribution services have risen from $0.7 million to $2.7 million over the same period.

In working towards full cost recovery – or “user pays” – the Bank is mindful that, as the provider of the service, it has an obligation to offer the service at the lowest possible cost. Much of the Bank's restructuring and investment in automation reflected this concern. The total cost of the core banking service provided to the Commonwealth Government, for example, has fallen by 13 per cent over the last five years.

The Bank's Earnings

The Bank's accounts for 1991/92 are detailed in the financial statements appended to this Report.

In brief, the Bank's net operating earnings amounted to $2,554 million in 1991/92, an increase of $841 million (49 per cent) over 1990/91. Of these earnings, an amount of $200 million was transferred to the Bank's reserves; details of the Bank's various reserves, which have been built up over the years, are contained in Note 3 to the Financial Statements. The balance of earnings is distributed to the Commonwealth, partly as an interim payment in the year of the earnings and partly as a final payment in the following year.

Net operating earnings and their distribution since 1982/83 are summarised in the table below: