About this inquiry

The RBA Governor’s appearance before the committee at biannual public hearings are an important element of the Bank’s accountability framework. The details of the framework are set out in the Statement on the Conduct of Monetary Policy agreed between the Treasurer and the RBA Governor.

In addition, the committee has the power, under Standing Order 215(c), to inquire into the annual reports of departments and authorities within its areas of responsibility, as set out in the schedule presented by the Speaker.

Track Inquiry

Past Public Hearings

09 Aug 2019: Canberra, ACT

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Inquiry Status



Accessibility

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Documents

Answers to Question in Writing

Q No.
Member Question Response
QW1 Wilson In less than a year the RBA has stated it believes the most likely next movement in rates is up, then that rates would remain stable, then reduced, and now that the economy is at a turning point. Can the RBA outline what confidence it believes Australians can take from such a claim given that the RBA has not a consistent position on the direction on the Australian economy over that period?

The RBA’s responses to all 19 questions are available as a single document:

(PDF 3,700KB) 

Attachments relating to specific questions are detailed below.

QW2 Wilson

The RBA has flagged the possibility of unconventional monetary policy, including quantitative easing. Can you please advise:

a. The different options the RBA believes are available to it for unconventional monetary policy?

b. If unconventional monetary policy options are being considered outside of quantitative easing?

c. If so, what are the details of these other options?

d. What options for quantitative easing the RBA are currently considering for implementation should economic circumstances seemingly justify?

e. What options for quantitative easing the RBA are not currently considering for implementation should economic circumstances seemingly justify?

f. How they would practically apply?

g. And the volume?
QW3 Wilson

In response to questions about the December Quarter 2012 Bulletin Households’ Interest-bearing assets you outlined that you have not conducted any modelling on the consequences of changing impacts from monetary easing resulting from an ageing population.

a. Can you clarify whether you intend to do so?

b. If so, by what date?

c. If not, why not when the RBA’s own research highlights it may diminish the economic impact of lowering interest rates?

Attachment 1
(PDF 320KB)

Attachment 2
(PDF 304KB)

QW4 Wilson

In reference to the previous question, are you aware of any research or modelling that assess the changing impact of monetary policy based on an ageing population?

a. And if so, what is the research?

b. If none exists to the best of the RBA’s knowledge, does the RBA intend to commission any research or modelling into this area?

c. If not, why?
Attachment 1
(PDF 191KB)
QW5 Wilson

Has the RBA completed any modelling or research on the impact of different interest rate scenarios on those without significant assets (such as home ownership) and/or younger Australians?

a. If so, can you please supply a copy?

b. If it is currently being completed, what date will it be available?

c. If not, do you intend to do so?

d. If no, can you outline why?
QW6 Wilson

Has the RBA completed any modelling or research on the impact of different interest rate scenarios on those with significant assets (such as home ownership) and/or older Australians?

a. If so, can you please supply a copy?

b. If it is currently being completed, what date will it be available?

c. If not, do you intend to do so?

d. If no, can you outline why?
 
QW7 Wilson

In December 2018 Guy Debelle delivered a speech Lessons and Questions from the GFC that “QE [Quantitative Easing] is a policy option in Australia, should it be required”. Please advise:

a. What were the approvals for this speech within the RBA before its delivery?

b. To what extent, if any, was there discussion within the RBA of a representative of the RBA discussing options for QE as a policy option?

c. To whom was this speech circulated prior to its finalisation?

d. To whom was this speech circulated prior to its delivery?

e. Whether any modelling of QE had been completed by the date of delivery over the past decade?

f. If so, can you supply copies of this modelling?
 
QW8 Wilson At the hearing the Governor was asked “We have discussed already today the enthusiasm to have higher wages and wage growth for the economy. What effect do you believe that continuing to increase the super guarantee to 12 per cent will have on workers' disposable income?” In response the Governor answered “I don't have any comment on that. I haven't studied it carefully enough, so I would rather avoid commenting, if you don't mind”. As the RBA has now had time to consider the matter, could it please provide a response?
QW9 Wilson Can the RBA advise what the impact on wages would be from the legislated increase in the compulsory superannuation guarantee?
QW10 Wilson The RBA Governor has argued that low interest rates are not primarily responsible for house prices, while the RBA’s own internal modelling, A Model of the Australian Housing Market, concludes otherwise. Respecting there is a diversity of views within the RBA, what is the data that the Governor is relying on for his conclusions?
QW11 Wilson

The RBA’s 2016 payments survey found 3 per cent of Australians maintain hard cash reserves outside of their wallet over $1,000. Does the RBA have any more recent data on the number of Australians holding significant cash reserves?

a. Could the RBA provide additional information on why Australians keep significant cash reserves?

b. Does the RBA intend to complete another Consumer Payments Survey?

c. If so, when?

d. If not, why not?

If it is currently being completed, when will it be available?

 
QW12 Wilson What are the resource allocation implications behind zero (or near zero) interest rates?

 

QW13 Wilson In reference to the previous question, many claim they result in a gross misallocation of capital in the economy since projects that are not viable proceed. Do you agree?

 

QW14 Wilson At the last hearing the RBA Governor stated “At the moment, there are some capacity constraints in parts of the infrastructure sector, but these should not prevent us from looking for further opportunities to boost the economy's productive capacity and support domestic demand, and there's no shortage of finance to do this, with interest rates today the lowest they've ever been”. What data, if any, is the RBA using to justify “capacity constraints”?
QW15  Wilson

When retail banks reduce their interest rates the benefit of the rate cut is often passed through to interest-only investors through reduced monthly payments, while many homeowners with principal and interest loans often see no reduction in their overall repayment with any gap from reduced rates taken as an additional payment off the principal of the loan. Therefore, has the RBA completed any modelling on the diminished stimulatory effect of interest rate cuts when there may be less benefit for home owners?

a. If so, can you please supply a copy?

b. If it is currently being completed, what date will it be available? If not, do you intend to do so?

c. If no, could you outline why?
 
QW16 Wilson

In reference to the previous question, has there been any modelling on the comparable stimulatory impact of reduced interest rates on Australians without a mortgage compared to those that have a mortgage?

a. If so, can you please supply a copy?

b. If it is currently being completed, what date will it be available?

c. If not, do you intend to do so?

d. If no, could you outline why?

 

QW17 Wilson The 2018 Bulletin, Perceptions of Job Security in Australia, referenced the recent view that low job security is constraining wage growth across a number of advanced economies, including Australia. The bulletin concludes by stating that “the recent decline in perceived job security has been broad based across industries, occupations, job structure and personal characteristics”. Given the trend in unemployment since 2014, could the RBA provide additional analysis to why job security across the economy has not improved?

Attachment 1
(PDF 324KB)

QW18 Wilson

In the hearings the following exchange occurred:

 

Dr Ellis: … Very few people have large enough balances that that would form a significant fraction of their income. So, as the governor mentioned, the share of people who have debt and who have a positive effect on their cash flows when interest rates fall more than outweighs the effect on consumption from the people whose incomes have been reduced somewhat.

 

CHAIR: But you haven't modelled that?

 

Dr Ellis: Yes, we have. There is data that shows—firstly, there is modelling about the cash flow effect. I can't, off the top of my head, tell you all of the authors, but I know Gianni La Cava was one of them. It was Gianni La Cava and some co-authors; I would have to look it up to give you the other co-authors. So there is a recent paper on the cash flow effect. There is also some of our internal work; we look at the data, and there is more than one dataset that shows this. You can like at the HILDA dataset and some of the ABS household surveys that show you, for the people who get interest income, what fraction of income it is. There are certainly people for whom interest income is a significant fraction of their income, but in the older age group category the bulk of income comes from pensions, superannuation fund income, dividends and, increasingly, increased participation in the labour market”.

 

Therefore, can you please provide a copy of the cited:

a. “modelling”?

b. “recent paper on cash flow effect”?

c. “internal work”?

 

QW19 Wilson

Has the RBA completed any analysis or modelling on the wealth transfer effects of quantitative easing between either the young or the old and/or those with assets and those without assets?

a. If so, can you please supply a copy?

b. If it is currently being completed, what date will it be available?

c. If not, do you intend to do so?

d. If no, could you outline why?
 

Committee Secretariat contact:

Committee Secretary
Standing Committee on Economics
PO Box 6021
Parliament House
Canberra ACT 2600

Phone: (02) 6277 4587
Fax: (02) 6277 4774
economics.reps@aph.gov.au

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