Working Papers

The Deputy-less Reserve Bank

It seems Treasurer Costello has been so busy solving the world’s problems at the G20, he has neglected his portfolio responsibilities:

TREASURER Peter Costello is in no hurry to appoint a deputy to the Reserve Bank’s governor, Glenn Stevens.  With the delay now stretching into its ninth week, Mr Costello told the Herald he “may” fill the position by Christmas…

Yet the Reserve Bank Act empowers only a deputy governor to run the bank in the governor’s absence - raising questions about who could make crucial decisions if a financial shock hit while Mr Stevens was on a plane or otherwise uncontactable.

When asked whether he has a shortlist of candidates, Mr Costello said: “When I’ve got some news for you I’ll let you know.”

Asked whether the position would be filled by Christmas, he said: “It may be, yep.”

The position has been vacant since September, but the vacancy has been expected since July 2003, when the former governor, Ian Macfarlane, was appointed for a shortened second term.

A recruitment firm engaged by Mr Costello was making initial contacts with potential candidates in September.

Observers speculated that Mr Costello does not see the appointment as a priority.

Mr Costello is also yet to fill a board vacancy that has been open since December.

The bank’s separate payments system board has had a seat unfilled since its creation in 1998 - and two vacancies since July.

The Australian recently highlighted last minute re-appointment of Warwick McKibbin to the RBA Board in July.

The government’s Mid-Year Economic and Fiscal Outlook will be released in coming weeks, but as usual, the government will not commit to a release date and time.  The MYEFO is usually flung out at the Treasurer’s convenience, sometimes with as little as a few hours notice, yet the Treasury likes to lecture the rest of the world on transparency.

posted on 15 November 2006 by skirchner in Economics, Financial Markets

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