Thursday, September 15, 2011

Reserve Bank stripped of powers to strike independent pay deals with top executives

The Reserve Bank has been stripped of its power to independently set the salary deals of its governor, board and top executives.

The decision follows a decision by the central bank's remumeration committee to approve a $234,000 paying increase for RBA governor Glenn Stevens, taking his total package $1.05 million.

The increase angered the Treasurer Wayne Swan earlier this year after revelations that Mr Stevens would be paid significantly more than the chairman of the US Federal Reserve Ben Bernanke ($199,700) and the president of the European Central Bank Jean-Claude Trichet ($504,900).

However, Mr Swan handed the RBA's salary setting powers to the Reumuneration Tribunal which sets pay, entitlement and allowance for other top public servants such department heads, judges and the chairmen of the Australian Competition & Consumer Commission (ACCC) and the Australian Securities & Investments Commission (ASIC).

In an interview with the Bloomberg wire service, Mr Swan said: "I've put in place a set of arrangements that mean that future decisions taken about those salaries will be in the context of other salaries paid to comparable people in the public sector.

"I have taken that action so that when the board takes its decision, it takes its decision within a framework set by government."

Mr Swan was unavailable for an interview with the ABC, but his office said the changes had been gazetted a month ago.

A spokeswoman for the Reserve Bank confirmed the gazetted change, and referred the ABC to the Remuneration Tribunal website.

The move culminates debate about the RBA governor's remuneration, amid criticism that the increase was out of line with community expectations in light of the global financial crisis.

However, some economists argue that Mr Stevens' salary is appropriate given the smooth operation of Australia's central bank and how it steered the economy clear of falling into a recession that engulfed much of the developed world.

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