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Chapter 1 Introduction
The House of Representatives Standing Committee on Economics
(the committee) is responsible for scrutinising the Reserve Bank of Australia (RBA) and for ensuring its transparency and accountability to the Parliament, the community,
and the financial sector.
The appearance by the Governor of the RBA at biannual public hearings of the committee is an important element of the RBA’s accountability
framework. The details of this framework are set out in the Fourth Statement
on the Conduct of Monetary Policy, agreed between the Treasurer, the Hon
Wayne Swan, MP, and the RBA Governor, Mr Glenn Stevens. The statement formalises the biannu al appearance before the committee. The statement, which is reproduced at
Appendix B, states:
The Governor has also indicated that he plans to continue to be available to report on the conduct of monetary
policy twice a year to the House of Representatives Standing Committee on
Economics, Finance and Public Administration. The Treasurer expresses continuing
support for these arrangements, which ensure the continued transparency and
accountability of the Reserve Bank’s conduct of monetary policy—and therefore
the credibility of policy itself.
A second procedural mechanism for achieving this accountability is set
out in the Standing Orders of the House of Representatives, which provide for
the referral of annual reports within a committee’s area of portfolio
responsibility for any inquiry the committee may wish to make. Accordingly, the
committee may inquire into aspects of the annual reports of the RBA.
Scope and conduct of the review
The second public hearing of the committee with the RBA during the 43rd Parliament was held in Canberra on 11
The proceedings of the hearing were webcast over the internet, through
the Parliament’s website, allowing interested parties to watch and listen to
the proceedings as they occurred. The transcript of the hearing is available on
the committee’s website.
Before the hearing, the committee received a private briefing from Mr Stephen
Walters, Chief Economist, JP Morgan. This briefing provided valuable background information for the committee and perspectives on issues for discussion at
the public hearing. The committee appreciates Mr Walters’s cooperation and
The public hearings with the RBA continue to bring issues of monetary
policy into the public arena, and have assisted in providing a public face to
parliamentary committees and the RBA. The committee welcomes the Governor’s
frank and open comments at the hearings. In addition, the hearings are an
important means whereby financial markets can be better informed on the current
thinking of the RBA.
The report focuses on matters raised at the public hearing, and also draws on issues raised in the RBA’s Statement on Monetary Policy. The Statement
on Monetary Policy may be viewed through the RBA’s website.
Next public hearing with the Reserve Bank of Australia
The committee will conduct the next public hearing with the RBA on 26 August 2011 in Melbourne. More details will be circulated in the weeks leading up
to the hearing.