--the claim that the government "does not have a vote" on RBA pay seems misplaced. The government appoints all of the RBA Board members, and also appoints the Deputy Governor and Governor, and has a direct Board representative in the form of the Treasury Secretary. If the government wanted to make changes to the remuneration structure, it could easily do so over time;
--benchmarking RBA pay against either the Prime Minister's paltry remuneration, which, as I have argued before, is clearly non-market (the PM is, after all, a CEO managing a $1.4 trillion economy), or Ben Bernanke's nominal compensation (who receives just $200k pa), is muddle-headed. It would be like comparing the cost of a car produced in a communist country without any market mechanism with the prices set in a capitalist system. Everybody knows that the pay received by the single most important person in global financial markets--the chairman of the US Federal Reserve--is not remotely related to his/her role or responsibilities;
--the thesis that having the independent RBA Board members determine senior staff pay is the source of the current problems is wrong for at least three reasons: (1) the RBA's market-orientated compensation system is demonstrably superior to the non-market approaches elsewhere in the public sector; (2) having very experienced, and entirely independent (ie, non-conflicted), corporate executives set senior RBA pay seems like a very credible solution; and (3) Bassanese offers up no superior alternative, and, I would venture, would be hard-pressed to articulate one;
--the argument that since senior RBA staffers did not leave in the late 1980s and early 1990s (when they were junior execs) they likely face no compelling opportunity cost today is clearly incorrect;
--the recent change to the remuneration levels at the upper echelons of the RBA were justifable once-off adjustments (rather than permanent changes to the growth rates) that brought RBA pay back in line with market-competitive standards. They cannot, therefore, be compared to things like the wage cost index growth over time in order to claim that the much more rapid recent RBA pay rates undermines the Bank's credibility with respect to inflation and wages;
--I have demonstrated that, in this regard, the opportunity costs for top RBA officials is very high indeed, and has likely only increased during the last decade in lock-step with the RBA's prestige, as shown by the multi-million dollar pay received by former RBA and Treasury execs, such as Andrew Mohl (AMP), Jillian Broadbent (BT), John Fraser (UBS), and David Morgan (Westpac), to name a few;
--finally, and perhaps most importantly, we arguably want to encourage longevity within the RBA's executive ranks precisely to avoid the situation in the US where you get extreme mobility between the public and private sectors, which engenders conflicts between the long-term interests of taxpayers and those of financial institutions. Witness, for example, the criticisms associated with the unwillingness of the US bureaucracy to undertake serious, over-the-horizon reforms, which, it is often claimed, is partly related to the fact that many public servants have their eye on a private job in the near-to-medium term, or have come from the private sector and intend on returning to it.
Long story short, these look like lowest-common-denominator complaints.
