Background
1.1
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.
1.2
The Standing Orders of the House of Representatives provide for the referral of annual reports of government departments and authorities tabled in the House to committees in accordance with the Speaker’s Schedule. The RBA’s annual reports stand referred to the committee under this Schedule. On 9 August 2022, the committee resolved to conduct an inquiry into the Reserve Bank of Australia Annual Report 2021.
1.3
The RBA’s appearances also provide an important mechanism for promoting the central bank’s transparency and accountability and are supported by the RBA’s accountability framework. This framework was first established in the 1996 Statement on the Conduct of Monetary Policy, which clarified the relationship between the Australian Government and the RBA and ‘provided for increased accountability through half-yearly reports on monetary policy and appearances by the Governor before a Parliamentary committee’. The most recent statement on the conduct of monetary policy reiterates this approach:
In addition, the Governor will continue to be available to report twice a year to the House of Representatives Standing Committee on Economics, and to other Parliamentary committees as appropriate.
The Treasurer expresses support for the continuation of these arrangements, which reflect international best practice and enhance the public's confidence in the independence and integrity of the monetary policy process.
Scope of the Review
1.4
The RBA appeared before the committee on 16 September 2022. The hearing was open to the public and broadcast on the Parliament’s website, allowing interested parties the opportunity to view proceedings. The transcript of the hearing is available on the committee’s website.
1.5
A list of RBA representatives who appeared before the committee can be found at Appendix A. The RBA’s responses to questions taken on notice during the hearing, and questions in writing following the hearing, are available on the committee’s website.
1.6
Prior to the hearing, the committee received a private briefing from prominent economist Dr Shane Oliver. The briefing provided valuable background information and expert insight to the committee, aiding in its discussions with the RBA at the public hearing. The committee extends its thanks to Dr Oliver for his assistance.
1.7
This report highlights key matters raised during the public hearing and elaborates on issues raised in the RBA’s recent statements on monetary policy and its 2021 annual report. These statements and the annual report can be viewed on the RBA’s website.
1.8
The COVID-19 pandemic has been the defining issue affecting Australia’s economic performance over the last two years. The RBA’s monetary policy response to the pandemic and the now high inflationary environment, and to Australia’s broader economic trajectory in the context of current global uncertainties, is the focus of this report.