Accountability and Communication | Reserve Bank of Australia Annual Report – 2007

Reserve Bank of Australia Annual Report – 2007 Accountability and Communication

Relationship with Government

Section 11 of the Reserve Bank Act 1959 sets out the relationship between the Government and the Reserve Bank Board. It confers substantial independence on the Board, but balances this with an obligation to inform the Government of its policies ‘from time to time’ and a requirement for Parliamentary accountability. The regular meetings of the Governor, Deputy Governor and senior officers with the Treasurer shortly after Board meetings serve to keep the Government informed.

Reporting Obligations

The Reserve Bank is a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act 1997 (CAC Act) and, for these purposes, the members of the Reserve Bank Board are the directors of the Reserve Bank. As such, they are responsible for the preparation of the annual report and, at the meeting of the Board on 7 August 2007, they resolved that the Chairman sign the annual report and financial statements as at 30 June 2007, transmit them in accordance with the requirements of the CAC Act and arrange publication.

The House of Representatives Standing Committee on Economics, Finance and Public Administration has, in its Standing Orders, an obligation to review the annual report of the Reserve Bank and the annual report of the Payments System Board. The Committee holds twice-yearly hearings, at which the Bank presents its views on the economy and responds publicly to questions from Committee members. In 2006/07, the Governor, Deputy Governor and senior officers attended hearings in Sydney in August 2006 and in Perth in February 2007. These appearances, and the quarterly Statement on Monetary Policy (see below), are important elements of the arrangements embodied in the understandings between the Governor and the Treasurer outlined in the Third Statement on the Conduct of Monetary Policy.

Communication

The Reserve Bank views it as very important to ensure a high degree of transparency about its goals, decision-making processes and the analysis and reasons behind policy decisions. Transparency not only facilitates the accountability of an independent central bank in a democracy, it also increases the effectiveness of monetary and other policies by promoting informed decision-making by the community. Accordingly, the Bank has an extensive program of communication.

The Statement on Monetary Policy, published quarterly, informs the financial markets, media and wider community about the Reserve Bank's thinking on monetary policy and provides a basis for the Parliamentary Committee's questioning of the Bank. These statements provide an analysis of the state of the economy, the outlook for inflation and an explanation of recent Reserve Bank Board decisions on interest rates.

The Reserve Bank Bulletin is a monthly record of media releases, speeches and comprehensive statistics, plus articles on numerous topics, which in the past year included commodity prices, hedge funds, banks’ global bond funding, the kangaroo bond market and banking fees.

The Financial Stability Review, published in March and September each year, gives a detailed assessment of the overall condition of Australia's financial system. As well, there is analysis and views on issues of specific interest; in the past year such issues included interest-only loans, owner-occupier housing debt and assets, international financial reporting standards and private equity in Australia.

Communication also takes the form of speeches. During 2006/07, the Governor, Deputy Governor and senior officers gave 18 speeches on various topics, such as the economic conjuncture and outlook, reform of the payments system, underlying inflation, risk and the financial system, capital flows, developments in retail finance, and the foreign exchange market.

The Reserve Bank disseminates research conducted by the staff in the form of Research Discussion Papers (RDPs). While the views expressed in these papers are those of the authors and do not necessarily represent those of the Bank, their publication encourages discussion and comment on economic issues among a broad range of researchers. During 2006/07, 13 RDPs were released on a wide range of topics, including the measurement of inflation and the modelling of a number of aspects of the Australian economy, such as the behaviour of the household sector. Staff have also had their work accepted in various publications, such as the International Journal of Central Banking, Asian Economic Papers and The Economic Record.

The Bank holds regular conferences, bringing together academics, central bankers and other economics practitioners. The 2007 conference was on ‘The Structure and Resilience of the Financial System’. A volume of the conference papers and discussions will be published later in 2007, the 19^th in the series. The Bank also issued a call for papers for a research workshop to be held later this year focusing on issues relating to monetary policy in open economies, with the aim of attracting papers from academics and practitioners, both domestically and overseas.

The Bank publishes information in both electronic and hardcopy formats. Demand for hardcopy publications has been declining as use of the website continues to grow strongly. In 2006/07, the number of page views/downloads of information on the website averaged 40,200 per day. The number of subscribers to the email service for alerts about information published on the site totalled nearly 12,000 at the end of June 2007.

The Bank continues to convene its Small Business Advisory Panel, which meets annually to discuss issues relating to the provision of finance and the broader economic environment for small businesses. Membership of the Panel is drawn from a wide range of industries across the country. The Panel represents a valuable source of information on the financial and economic conditions faced by small businesses.