Footnotes

Chapter 1 - Introduction

[1]        Joint Media Release of the Prime Minister of Australia and the Treasurer, the Hon Wayne Swan MP, 'Rudd Government announces new era of independence for RBA', 6 December 2007.

Chapter 2 - Central bank independence

[1]        The consensus is that central banks should have instrument independence (sometimes called 'economic independence') but not goal independence. This means that the government sets the (inflation) target for the central bank but allows the central bank to adjust interest rates (and other instruments) as they see fit to achieve this target. An important aspect of central bank independence is that the central bank does not need to approach the government for its funding. This is true of the Reserve Bank of Australia and this bill does not alter that.

[2]        Professor Sinclair Davidson, Proof Committee Hansard, p.2.

[3]        Bernie Fraser, 'Reserve Bank Independence', talk to the National Press Club, 15 August 1996, reprinted in Reserve Bank Bulletin, September 1996, pp 14–20.

[4]        Mr Saul Eslake, Submission 1, p. 2.

[5]        Mr Saul Eslake, Submission 1, p. 2.

[6]        Associate Professor Steve Keen, Submission 3.

[7]        There are admittedly a minority of studies that question whether there is any correlation. Ahsan, A., Skully, Prof. M., Wickramanayake, J., Department of Accounting and Finance, Monash University, Central Bank Independence and Governance and Inflation in Asia Pacific, http://www.melbournecentre.com.au/Finsia_MCFS/2007/AhsanA.pdf, p. 5.

[8]        For example, hyperinflation in the Weimar republic fuelled the rise of Nazism and left Germans particularly averse to inflation. This might be why they both gave substantial independence to the Bundesbank (central bank) and ran sufficiently tight macroeconomic policies to keep inflation low.

[9]        Marco Arnone, Bernard J. Laurens, Jean-François Segalotto, and Martin Sommer, 'Central Bank Autonomy: Lessons from Global Trends', IMF Working papers, no 07/88, April 2007.

[10]      Eijffinger, S. and De Haan, J., 'The Political Economy of Central-Bank Independence', Special Papers in International Economics No. 19, May 1996, International Finance Section, Department of Economics, Princeton University, Princeton New Jersey, p. 23.

[11]      Frielal, L., Roszbach, K., Spagnolo, G., Sveriges Riksbank, 'Governing the Governors: a clinical study of central banks', Sveriges Riksbank Working Paper Series 221, Figure 14, p. 22.

[12]      Frielal, Roszbach and Spagnolo (2008) Figure 15, p. 22.

[13]      Frielal., Roszbach and Spagnolo (2008) Figure 16, p. 23.

[14]      Cited by William Coleman, 'How the Bank got its groove back', Agenda, vol 12, no. 1, 2005.

[15]      Bernie Fraser, 'Reserve Bank Independence', talk to the National Press Club, 15 August 1996, reprinted in Reserve Bank Bulletin, September 1996, pp 14–20.

[16]      See, for example, Hon Malcolm Turnbull, MHR, House Hansard, 14 May 2008, p. 2773.

[17]      Statement on the conduct of monetary policy, by the Treasurer and the Governor of the Reserve Bank of Australia, 6 December 2007 on RBA website, www.rba.gov.au.

Chapter 3 - Provisions of the bill

[1]        Diane Spooner, 'Reserve Bank Amendment (Enhanced Independence) Bill 2008', Bills Digest, No 97, Parliamentary Library Canberra, 2007-08, 29 April 2008, pp 3–4.

[2]        Institute of Public Affairs, Submission 4, p. 8.

[3]        Professor Stephen Bell, Submission 2, p. 1.

[4]        Dr Stephen Kirchner, 'A new era for the reserve bank', Policy, Vol.24 No.1, Autumn 2008, p. 2.

[5]        Associate Professor Steve Keen, Proof Committee Hansard, p.12.

[6]        Senator Andrew Murray, Proof Committee Hansard, pp 6–8.

[7]        Mr Tony McDonald, Proof Committee Hansard, p. 26.

[8]        A point made by Professor Stephen Bell, Submission 2, p. 1.

[9]        Associate Professor Steve Keen, Submission 3, p. 10.

[10]      Hon. Wayne Swan MHR, House Hansard, 20 March 2008, p. 2381.

[11]      The Hon. Malcolm Turnbull, MHR, 'The risk of creating an untouchable', Sydney Morning Herald, 28 May 2008, p. 11. Mr Turnbull draws an analogy with the Italian central bank governor who refused to resign after being improperly involved in a takeover of a commercial bank. The article summarises arguments in House of Representatives Hansard, 14 May 2008, pp 96-100.

[12]      Professor Steven Bell, Submission 2, p. 1.

[13]      Senator the Hon. George Brandis, Proof Committee Hansard, p. 20. He drew an analogy with the drawn-out proceedings involving a dismissal of the head of the Department of Defence.

[14]      Mr Tony McDonald, Treasury, Proof Committee Hansard, p. 21.

[15]      Mr Saul Eslake, Submission 1, p. 4.

[16]      Mr Saul Eslake, Submission 1, p. 4.

[17]      The UK, Canada and Japan have similar provisions in their central banking legislation but many countries do not. Such provisions are more common in central banks whose legislation dates from an era before central banks had clearly defined objectives.

[18]      Associate Professor Steve Keen, Submission 3, p. 10.

[19]      Professor Sinclair Davidson, Proof Committee Hansard, p. 3.

[20]      Professor Sinclair Davidson, Proof Committee Hansard, p. 8.

[21]      Dr Stephen Kirchner, 'Independence:2 accountability:0', The Age, 27 March 2008, p. 12.

[22]      Professor Stephen Bell, Submission 2, p. 1.

[23]      Senator George Brandis, Proof Committee Hansard, p. 24.

[24]      The Daily Telegraph, 5 April 2008, splashed across its front page an unflattering picture of Governor Stevens and a large headline ‘Is this the most useless man in Australia’.

[25]      Professor Sinclair Davidson, Proof Committee Hansard, p. 3.

[26]      Dr Stephen Kirchner, 'A new era for the reserve bank', Policy, Vol.24 No.1, Autumn 2008, p. 1.

[27]      Statement on the conduct of monetary policy, by the Treasurer and the Governor of the Reserve Bank of Australia, 6 December 2007 on RBA website, www.rba.gov.au.

[28]      Associate Professor Steve Keen, Submission 3a.

[29]      H C 'Nugget' Coombs, long-term governor of the Reserve Bank, in his autobiography, Trial Balance, p. 141.

[30]      Hon Malcolm Turnbull, House Hansard, 14 May 2008, p. 2774.

[31]      Mr Glenn Stevens, House Economics Committee Hansard, Friday 4 April, p. 36.

[32]      Mr Saul Eslake, Submission 1, p. 6.

Coalition Senators’ Dissenting Report

[1] Proposed clause 25(8) of the Bill.  To simplify further reference to these three conditions, the Report will use the terms: permanently incapacitated, in outside paid employment and bankrupt.

[2] Australian Government Solicitor advice to the Treasury of 28 May 2008, page 2.

[3] Testimony to the Committee, 30 May 2008, page E.25.

[4] Testimony to the Committee, 30 May 2008, page E.23.

[5] Testimony to the Committee, 30 May 2008, page E.23.

[6] Committee Transcript, 30 May 2008, page E.21.

[7] Committee Transcript, 30 May 2008, page E.24.

[8] Testimony to the Committee, 30 May 2008, page E.14.

[9] Committee Transcript, 30 May 2008, page E.5.