Former RBA boss backs Glenn Stevens' million dollar pay deal; says excessive private sector salaries should be scrutinised

Former Reserve Bank governor Bernie Fraser says the Federal Treasurer should be examining excessive private sector salaries when considering the remuneration package for the head of the Reserve Bank.

Mr Fraser made the comments when I spoke with him in this story aired on The World Today.

The Treasurer Wayne Swan has moved to strip the RBA of its ability to set its own pay rates for board members and executives.

It comes in the wake of the RBA remuneration committee's decision to approve a $234,000 pay increase for governor Glenn Stevens, taking his total pay package to $1.05 million - almost triple what Prime Minister Julia Gillard earns.

The RBA will now come under the Remuneration Tribunal, which also determines politicians' pay.