RBA meets for rate decision amid transparency concerns

The Reserve Bank of Australia is expected to leave the national interest rate at the historic low of 0.1 per cent at today’s board meeting, but amid the may delay the tapering (reducing its weekly bond buying program) beyond September.

The rosy economic outlook has turned on its head since the last meeting as Australian states are now struggling to keep daily COVID-19 infections under control and continue extending lockdowns affecting all businesses.

Because the RBA is reluctant to reduce the interest rate any further, it is likely that bond purchases may actually be extended to minimize a fast deteriorating economy.

Bond purchase under the unconventional policy of quantitative easing, or QE is all about manipulating interest rates which acts in a similar way to interest cuts without actually reducing the nominal rate.

When the RBA buys government bonds, money is flowing from the central bank to individual banks in the economy, increasing the supply of money in circulation.

Thats why it is sometimes called printing money to intentionally increase prices when inflation is “considered” low (RBA governor Philip Lowe’s outdated view and obsession with inflation is not a secret).

Who makes the decision? Is the process transparent?

The Reserve Bank Board consisting of nine members meets eleven times each year, on the first Tuesday of each month, except January to review the current monetary setting and make a decision.

Meetings commence at 9.00 am and generally run for around three and half hours, and usually conclude with a light lunch.

Monetary policy decisions, including setting the key interest rate  directly and indirectly affect a range of market, retail and institutional interest rates, including home loans and property prices.

The current record low interest rates and money-printing have been blamed for the fastest-growing house prices and homelessness around the nation.

So, the RBA board’s accountability and transparency has never been more important.

Back in April, we published how Australia’s federal politicians charged with tackling the thorny issue of soaring house prices are keen property investors themselves which obviously raised the question just how willing they are to address the current housing affordability crisis.

On April 15, we formally filed a Freedom of Information (FOI) request with the RBA to obtain “information about … the real estate ownership by members of the Reserve Bank Board, including the Governor and Deputy Governor”.

Eventually after many followups, the RBA had to make public disclosures about Governor Philip William Lowe and Deputy Governor Guy Debelle on April 30 (funnily, the RBA called it voluntary routine disclosure ) but has since refused to disclose the information about the other seven board members.

As if it wasn’t enough to run a cheap political campaign to mislead the public with “voluntary” and “routine” declarations,  the RBA and Treasury still refuse to respond to our requests to release the other board members’ declarations.

It is not only weird but also makes no sense they are going to all the hassle of hiding the declarations of 7 other board members without any explanation, even though they are aware that this might be in contravention of the FOI Act.

The Freedom of Information Act 1982 (FOI Act) provides a general right of access to information held by the government and other Commonwealth agencies.

The standard timeframe to process an FOI request is 30 days, and agencies must comply with the statutory timeframes for processing FOI requests.

The FOI Act contains a number of extension of time provisions which require informing the applicant that they need more time to process it. This can be another 30 days or a specified timeframe.

We have not been informed of any extension needed in the past 115 days.

We have also in writing requested an internal investigation and received no response.

Not being able to extract information from government entities which talk about transparency and accountability is as tragicomic as the fact that the world’s most sparsely populated nation has the most expensive housing and land on the planet.  

On the positive side, we are still optimistic that other board members will at least make “voluntary” declarations soon.

At the end of the day, they don’t have anything to hide, do they?