The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, September 19, 2011

Knee-capping the Aussie central bank's independence--what Jillian Broadbent thinks

In September 2010 the longest-serving member of the Board of the superficially independent Australian central bank, the Reserve Bank of Australia (RBA), Jillian Broadbent--a former RBA economist herself and senior executive of Bankers Trust who is universally well-respected--wrote to Australia's Treasurer, Wayne Swan, expressing "serious concerns" that the Labor Government of the day would break with historical precedent and take remuneration setting powers away from the RBA's independent Board members, and shift them to a politically-controlled body. You can read her exact words below. Amongst several arguments I myself have raised, such as the need to set compensation on a market-competitive basis, Mrs Broadbent states in the strongest possible terms:

"[C]hanging current responsibilities on remuneration would jeopardise the calibre of the Reserve Bank officers and the Bank's high standing...The Board believes that the current remuneration framework for the Bank is crucial to the Bank's continuing capacity to carry out its duties to the standards required, and would see any move to unwind it as undermining the capacity of the Bank to do so."

Needless to say, the Government ignored the Board's advice, and Mrs Broadbent's decades worth of experience with listed companies, and the RBA, in relation to such matters. It was another sad day in the RBA's chequered history, and only lends further weight to the mounting anxieties about the Australian central bank's ability to maintain its independence from the polity--a feat seemingly beyond many of its developed-country peers.