Most senior jobs in the Commonwealth public sector - including judges, politicians, public servants, the military - are set by the Remuneration Tribunal. The Reserve Bank is an exception. Its tame Board, which meets once a month for a chat over lunch and wine, sets the remuneration packages for the Governor and Deputy Governor.
The Reserve Bank is not on Budget. It makes money through seigniorage - its monopoly right to print money - and foreign exchange transactions, subtracts its expenses and remits a dividend to the government.
There is no particular reason why the RBA should not be on Budget, with its costs under some control just like the High Court and the rest of the judiciary. Reserve Bank independence does not require that the organisation remain off Budget. The separation of powers doctrine for the judiciary is fundamental, yet the High Court is on budget and judges remuneration is set by the Remuneration Tribunal.
As an example of its tame behaviour, a few years back the RBA Board agreed to increase the indexation of RBA superannuation (retrospectively) to the higher of Consumer Price Index and Average Weekly Ordinary Time Earnings when it had previously been just CPI. So all existing and former RBA employees (including widows of RBA employees) enjoyed an increase in their superannuation. All at a cost to the taxpayer, since by definition it reduced the dividend payable to the Commonwealth thenceforth.
A comparison of the RBA Governor’s salary with that of his counterparts at the European Central Bank and the US Federal Reserve shows that it is considerably higher already.
Yet Broadbent asserts that the higher salaries were "instrumental" to the RBA’s international standing.
Rubbish – the RBA’s standing is due entirely to the quality of its work and output not the salaries of its staff.
As for the argument that the RBA is competing with the financial sector, that is falsified when one considers that both Stevens and Battellino are career staffers at the RBA. They have accepted the remuneration packages previously offered.
Presumably, too, there is an inherent status attached to being an RBA Governor – this provides utility to the Governor (and the RBA staff) not available elsewhere in the financial sector.
So too, the salaries of the US President and Chairman of the Federal Reserve are considerably below that of the financial sector in the US. Yet there are plenty of good candidates for these positions.
Whatever happened to good old public service – acting in the interests of the taxpayer without trying to screw every cent?
Public sector salaries should be below the private sector, and if someone doesn’t like that, they can go and work in the private sector. The worst effect of having high salaries in public sector, such as for the RBA Governor, is that it will lead to a further inflation in public sector salaries elsewhere.
We want Australian graduates to move to the private sector and generate wealth for Australia, not to aspire on a mercenary basis for a public sector career.
I should add – the Reserve Bank Governor’s job is hardly one of the most difficult.