Reserve Bank of Australia Annual Report – 2005 The Reserve Bank in the Community
Accountability
An important aspect of the Reserve Bank's accountability is its twice-yearly appearances before the House of Representatives Standing Committee on Economics, Finance and Public Administration. In 2005 the Governor and senior officers testified at hearings of the Committee in Sydney in February and in Melbourne in August. The hearings covered a wide range of issues, including the domestic and international economic outlook, inflation, the household sector, microeconomic reform, payments system reform, central bank governance and, of course, interest rates.
These hearings are given substantial media coverage and over the years have been held in various locations throughout the country. They are in addition to the long-standing requirement to provide Parliament with an annual report and financial statements.
The Statement on Monetary Policy is published quarterly, providing an analysis of the state of the economy, the outlook for inflation and the reasons for recent Reserve Bank Board decisions on interest rates. These statements provide information to the financial markets, media and the wider community on the Reserve Bank's thinking on monetary policy matters as well as being a basis for the Parliamentary Committee's questioning. A media lock-up is provided, which allows journalists to review the statements under embargo prior to publication.
Communication
In addition to the formal requirements, senior members of staff make speeches and presentations during the course of the year. During 2004/05, the Governor and senior officers spoke in Australia and abroad on topics such as the economic conjuncture and outlook, and on specific topics such as reform of the payments system and problems of statistical analysis and forecasting.
Published monthly, the Reserve Bank Bulletin is a record of media releases and comprehensive statistics, plus articles on numerous topics; in the past year, these included oil market developments, Australia's international trade, international capital markets and banking fees. In addition, it contains the more important speeches made by senior staff during the year.
The Financial Stability Review is published twice a year, in March and September. It gives a detailed assessment of the overall condition of Australia's financial system, focusing on potential risks to its strength and stability.
Research work conducted by staff is made available to the broader community through the Research Discussion Paper (RDP) series. Eleven RDPs were published in the past year, covering topics such as the profitability of the Reserve Bank's foreign exchange operations, the links between monetary policy and financial markets, housing investment cycles, trade and property ownership decisions. While this work is primarily of interest to professional economists, non-technical summaries of some of these papers are published in the Bulletin, making their findings accessible to a wider audience. Many of the RDPs focus on questions of relevance to monetary policy, though the views expressed are those of the authors rather than the Reserve Bank, with the aim of encouraging discussion and comment among researchers in these fields.
In addition to producing discussion papers and related Bulletin articles, staff publish work in journals in Australia and abroad. Examples of publications over the past year include journal articles on central bank foreign exchange intervention, household debt and financial constraints, and the co-ordination of monetary policy across countries.
As has been the case since 1989, the Reserve Bank held an annual two-day economic research conference in Sydney. These conferences bring staff together with leading academics, financial market experts and senior staff from central banks around the world to discuss a topic of general interest. The theme of the most recent conference was The Changing Nature of the Business Cycle.
The Reserve Bank publishes all this information in both electronic and hardcopy formats. While hardcopy publications remain important in meeting the needs of users, use of the website continues to grow strongly. Over 2004/05, the number of subscribers to the free email service for information posted on the website grew by over 20 per cent to nearly 10,500; this compares with around 1,000 subscribers for the hard copy Bulletin, about 10 per cent lower than a year earlier.
The Reserve Bank chairs the Small Business Advisory Panel. This panel was established in 1993 and meets annually to discuss issues relating to the provision of finance for small businesses. Membership of the Panel is drawn from a wide range of industries. The Panel continues to represent a valuable source of information on the financial conditions faced by small businesses.
Activities of the Regional Offices
An important dimension of the Reserve Bank's presence in the community is its Regional Office program. The Regional Offices, which are located across the country,[3] have two main roles. One is economic intelligence gathering, with economists in the Regional Offices seeking timely information about business conditions; this economic intelligence feeds into the monthly assessments of the economy provided to the Reserve Bank Board. A second role is representation, where the presence of Reserve Bank staff in regional locations is intended to improve communication with the wider community.
The liaison function of the Regional Offices ensures that staff interact with a broad cross-section of the community. The Reserve Bank has developed a pool of over 1,500 contacts with whom liaison is conducted. The bulk of these contacts represent individual businesses, though another valuable part of the program is in liaison with industry associations and government agencies. With the program now well established, many contacts participate in regular meetings with Regional Office staff. Liaison has grown steadily over the past few years, and has now levelled out at interviews with around 100 contacts per month.
In addition to their interaction with businesses and other agencies, Regional Office staff are often the first point of contact with the Reserve Bank for the public in their States, fielding a large number of enquiries about the role of the Reserve Bank, economic statistics and monetary policy decisions. Regional Office staff also give presentations to the public in their capital cities and increasingly in provincial centres. Most of these have been to teachers' associations and students (from both high schools and universities), though many have been to industry bodies. The presentations have generally been about the framework for monetary policy or current economic conditions. Other staff from Head Office have travelled interstate and given presentations on published research work.
The Reserve Bank's presence in the community has also been elevated by the hosting of functions in the Regional Offices. The Queensland, Victorian and Western Australian Offices have hosted Reserve Bank Board meetings, and a Board meeting is planned for the South Australian Office later in the year. Presentations on the Statement on Monetary Policy, which have become a regular event in all State capitals, are given by senior managers, who communicate the main themes of the Statement to liaison contacts as well as engage in discussion with participants.
Museum of Australian Currency Notes
During the year, a Museum of Australian Currency Notes was completed. Officially opened in late February, the museum tells the story of our currency notes against the backdrop of Australia's broader history. Visitors can inspect all the main series of notes from the first series in 1913-15 through to the advent of polymer notes, which has placed Australia at the forefront of currency note development.
The museum also displays some of the intricate artwork used in the notes and provides information on the men and women represented on our notes over the years. Displays of archival film and photographs help visitors experience some of the key episodes in the history of the notes.
So far, over 3,000 people have visited the museum, entry to which is free of charge. Tours and talks on the museum are available on request and these are becoming increasingly popular with school groups. The content of the museum is also available on the Reserve Bank's website (www.rba.gov.au/museum), which has received about 35,000 visitors since early March 2005.
Financial Assistance for Economic and Financial Research and Education
The Reserve Bank provides assistance for a variety of research activities that are closely aligned with its core functions. Ongoing funding has been provided towards the costs of a monthly survey of inflation expectations, undertaken by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne, and of a quarterly survey of union inflation and wage expectations, by the Australian Centre for Industrial Relations Research and Training at the University of Sydney. The Reserve Bank also contributed funds to support the research activities of the Centre for Applied Macroeconomic Analysis at the Australian National University.
Scholarships under the Elite Executive Honours Scholarship Program, organised by Axiss Australia, the government agency charged with positioning Australia as a global financial services centre, were again supported during 2004/05. This year, the two scholarships funded by the Reserve Bank under this program were for study at the Australian National University and the University of Queensland. In conjunction with the Australian Prudential Regulation Authority (APRA), the Reserve Bank has continued sponsorship of the Brian Gray Scholarship Program, initiated in 2002 in memory of a former senior officer of the Reserve Bank and APRA; four scholarships were awarded under this program for 2005, to two Honours students in actuarial studies at the University of Melbourne, an Honours student in commerce at the University of Western Australia and a PhD student in economics at the University of Queensland.
The Reserve Bank's financial assistance to Australian universities each year includes contributions towards the costs of their organising conferences in economics and closely related fields. In 2004/05, these conferences included the annual Conference for PhD Students in Economics and Business, held this year at the Australian National University, the Economic Society of Australia's 33rd Conference of Economists, held at the University of Sydney, and the University of New South Wales' 17th Australasian Finance and Banking Conference.
Along with a number of other central banks, the Reserve Bank made a contribution to the International Accounting Standards Committee Foundation; this was the fifth instalment of a five-year pledge to the Foundation by the Reserve Bank.
Charitable Donations
During the year, the Reserve Bank maintained the level of its financial support for charitable organisations, contributing a total of $20,000 to 16 Australian charities that seek to address a broad range of medical problems and disabilities. In addition, the Reserve Bank made its third annual contribution of $50,000 to the Financial Markets Foundation for Children, of which the Governor is Chairman; along with a number of other major Australian financial institutions, the Reserve Bank has committed to support the Foundation to this extent for a further seven years.
Statutory Obligations
Equal Employment Opportunity (EEO)
As required under the Equal Employment Opportunity (Commonwealth Authorities) Act 1987, the Reserve Bank reports to the Australian Parliament each year on its EEO Program. The Equity & Diversity Annual Report 2004 was tabled on 17 November 2004, and included a review of the Reserve Bank' s Disability Action Plan.
Health and Safety, Compensation and Rehabilitation
The Reserve Bank is required, in terms of Section 74 of the Occupational Health and Safety (Commonwealth Employment) Act 1991 (OH&S Act) and the conditions of its licence as a Licensed Authority under the Safety, Rehabilitation and Compensation Act 1988, to report each year on matters of health and safety, workers' compensation and rehabilitation as they affect the Reserve Bank.
The Reserve Bank's licence to self insure and manage workers' compensation claims is current until 30 June 2007, as is the Bank's agreement with Australia Post for it to undertake reconsiderations of workers' compensation determinations made by Reserve Bank delegates. Both the number of OH&S incidents reported (78) and claims determined (18) declined slightly from 2003/04, with the majority again occurring away from the workplace, namely during travel or lunchtime sport. Three requests for reconsideration of the Reserve Bank's workers' compensation determinations were received in the period; two affirmed the primary determination and one is pending. In terms of Section 68 of the OH&S Act, four incidents were notified to Comcare in the period; two related to absences of 30 days or more and two to dangerous occurrences. All were investigated and preventative actions taken to the satisfaction of the Reserve Bank and Comcare.
The Safety Rehabilitation and Compensation (SRC) Commission approved self-audit status in OH&S for the Reserve Bank on 16 September 2004, confirming the maturity of the Reserve Bank's OH&S management systems. Three audits were undertaken by independent auditors at the end of 2004 – two in OH&S and another in the claims management and rehabilitation functions. These audits showed no areas of non-compliance, with either the relevant legislation or the Reserve Bank's conditions of licence. The Reserve Bank's performance measured by the audit program and against SRC Commission indicators was reported to Comcare in March 2005 in the Reserve Bank's annual report on its Management Systems Review and Improvement Program. This report demonstrated a healthy workplace environment and evidence of continuing improvement.
Freedom of Information
Section 8 statement
Organisation and functions: The Reserve Bank is Australia's central bank. It was established by Commonwealth legislation in 1911. Its functions, powers and responsibilities are specified in the Reserve Bank Act 1959, the Banking Act 1959, the Commonwealth Authorities and Companies Act 1997, the Payment Systems (Regulation) Act 1998, the Payment Systems and Netting Act 1998, the Corporations Act 2001 and the Financial Services Reform Act 2001, and in Regulations made under those Acts. An organisational chart appears at the end of this Report.
Categories of documents: Lists of publications, including speeches, articles, occasional papers, information booklets, conference volumes, regular media releases and other publications are published from time to time in the Reserve Bank Bulletin. These publications, as well as other information about the Reserve Bank, are also available on our website (www.rba.gov.au). Other documents are held in the form of working notes and files covering policy and operational matters, statistical data, personnel, premises and general administration.
The Reserve Bank is an exempt agency under the Freedom of Information Act 1982 (FOI Act) in respect of documents concerning banking operations (including individual open market operations and foreign exchange dealings) and exchange control matters.
Facilities for access and Freedom of Information procedures: Enquiries under the FOI Act, including requests for access to documents, should be directed to the Secretary (in Head Office), the Senior Representatives in the Regional Offices (in Adelaide, Brisbane, Melbourne and Perth) or the Manager of the Branch (in Canberra). Applications should be accompanied by the application fee (currently $30). Facilities to inspect documents to which access has been granted are available.
Section 93 statement
One request, from a media organisation, for access to documents under the FOI Act was received in 2004/05, and was still in progress at the end of the year. By comparison, seven requests were received in 2003/04. While the number of requests received by the Reserve Bank in recent years may seem relatively small in comparison with those received by some other Australian Government agencies, the scope of the individual requests is sometimes very extensive and requires a large commitment of staff resources, including those of senior management, to meet. For instance, during 2004/05 substantial resources were engaged in work relating to a number of aspects of a request that arose in the previous financial year. The estimated number of staff hours spent dealing with all aspects of FOI requests in 2004/05 was around 240 hours, almost entirely related to the request that continued from 2003/04; staff hours in 2003/04 amounted to almost 500 hours.
An application for internal review that was received during 2003/04 (relating to a request that had been denied in part) resulted in a denial of the request.
The total cost to the Reserve Bank of administering the FOI Act in 2004/05 was estimated to have been $420,945, compared with approximately $125,830 in 2003/04. An application fee of $30 was collected in the year; there were no other charges.
Footnote
There are Regional Offices in Queensland, South Australia, Victoria and Western Australia. The Victorian Office covers Tasmania, the South Australian Office now covers the Northern Territory, and staff in Head Office cover New South Wales and the Australian Capital Territory. [3]