Reserve Bank of Australia Annual Report – 2007 Governance

The Reserve Bank Board

The Reserve Bank Board comprises the Governor (Chairman), Deputy Governor (Deputy Chairman), Secretary to the Treasury and six external members, appointed by the Treasurer – a total of nine. Current members are shown on pages 10 and 11; at the time of printing, there was one vacancy on the Board.

The Board meets eleven times a year, on the first Tuesday of each month except in January. Five members form a quorum.

Most meetings are held at the Head Office in Sydney. By custom, one meeting each year is held in Melbourne, usually in the first half of the year, and from time to time the Board also meets in other Australian capitals.

Board Meetings in 2006–07
Attendance by Members(a)
Ian Macfarlane(b) 3 −3
Glenn Stevens(c) 11 −11
Ric Battellino(d) 4 −4
Ken Henry 11 −11
Jillian Broadbent 10 −11
Roger Corbett 10 −11
Graham Kraehe(e) 3 −4
Donald McGauchie 10 −11
Warwick McKibbin 10 −11
Hugh Morgan 11 −11
(a) Figures in brackets show the number of meetings each member was eligible to attend.
(b) Ian Macfarlane's term as Governor ended on 17 September 2006.
(c) Glenn Stevens was Deputy Governor until 17 September 2006 and Governor from 18 September 2006.
(d) Ric Battellino was appointed Deputy Governor on 14 February 2007.
(e) Graham Kraehe was appointed to the Board on 14 February 2007.

Conduct of Reserve Bank Board Members

On appointment to the Reserve Bank Board, each member is required under the Reserve Bank Act 1959 to sign a declaration to maintain secrecy in relation to the affairs of the Board and the Reserve Bank. Further, by law, members must meet the general obligations of directors of statutory authorities, as set out in the Commonwealth Authorities and Companies Act 1997 (CAC Act). The CAC Act sets standards of conduct for directors and officers of Commonwealth authorities. Directors must:

  • discharge their duties with care and diligence;
  • act in good faith, and in the best interests of the Reserve Bank;
  • not use their position to benefit themselves or any other person, or to cause detriment to the Reserve Bank or any person;
  • not use any information obtained by virtue of their position to benefit themselves or any other person, or to cause detriment to the Reserve Bank or any person; and
  • declare any material personal interest where a conflict arises with the interests of the Reserve Bank.

Over and above these legislated requirements, members recognise their responsibility for maintaining a reputation for integrity and propriety on the part of the Board and the Reserve Bank in all respects. Members have adopted a Code of Conduct that provides a number of general principles as a guide for their conduct in fulfilling their duties and responsibilities as members of the Board; a copy of the Code is on the Reserve Bank's website.

Remuneration and Indemnities

Fees of the non-executive members of the Reserve Bank Board are determined by the Remuneration Tribunal.

A committee of the non-executive Reserve Bank Board members reviews annually the remuneration of the Governor and Deputy Governor in terms of section 24A of the Reserve Bank Act 1959.

Under the provisions of section 27 of the CAC Act and pursuant to a Board resolution on 3 November 1998, members of the Reserve Bank Board have been indemnified against liabilities incurred arising out of the proper discharge of their responsibilities, provided that any such liability does not arise from conduct involving a lack of good faith. This indemnity does not extend to claims by the Reserve Bank itself or any subsidiary of the Bank. A similar indemnity was extended to the members of the Payments System Board, pursuant to a resolution by the Reserve Bank Board on 3 November 1998.

Audit Committee

The objectives of the Audit Committee of the Reserve Bank Board are to:

  • ensure a high-quality, independent and effective audit process;
  • assist the Governor and the Reserve Bank Board in fulfilling their obligations relating to financial reporting, compliance with laws and regulations, internal control and risk assessment, employee conflicts of interest, business ethics and prevention of fraud; and
  • enhance contact between management and Audit Department.

The Committee also acts, at the request of the Board of Note Printing Australia Limited (NPA), as NPA's Audit Committee.

Members of the Audit Committee are the Deputy Governor (Chairman), a non-executive member of the Reserve Bank Board, Jillian Broadbent, and an external member, George Bennett, company director and former National Executive Chairman of KPMG Peat Marwick. During 2006/07, the Committee met on five occasions; all members attended each of these meetings. The two external members of the Audit Committee also meet with the external auditors, in the absence of management, annually. At its July 2007 meeting, the Committee considered the draft financial statements for the year ended 30 June 2007 and agreed that the statements be presented to the Reserve Bank Board with its endorsement.