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BFCSA: Incestuous Jobs for the Big Boys - Ex Public Servants flock to Big Banks for Big Bucks!!!

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Senior public servants shouldn't be allowed to go work for the big banks

By Mark Melatos

Updated Thu at 8:37pm Thu 2 Nov 2017, 8:37pm



Glenn Stevens addresses committee 

Photo: Former RBA Governor Glenn Stevens, pictured in 2015, has joined the boards of Macquarie Group and Macquarie Bank (AAP: Dean Lewins)

Related Story: Former RBA governor Stevens joins Macquarie board


For the fourth time in recent years, a recently retired Treasury Secretary or RBA Governor has accepted a directorship at a private bank.

Glenn Stevens, who only last year completed his 10-year tenure as the Reserve Bank of Australia's governor, has joined the boards of Macquarie Group and Macquarie Bank.

Before him, Ian McFarlane joined the board of the ANZ Bank in 2007, less than a year after completing his own 10-year tenure heading Australia's central bank.

And two recent secretaries of the Treasury — Ken Henry and Ted Evans — joined the boards of the NAB and Westpac respectively within a year of retiring from public service.

In Henry's case, he was also appointed to the board of the Australian Stock Exchange.

Treasury, RBA control banks

While APRA and ASIC directly regulate the banking sector, RBA and Treasury decisions significantly impact the operations and profitability of private banks.

Former Treasury secretary Ken Henry in 2012

Photo: Former treasury secretary Dr Ken Henry joined the board of NAB. (AAP/Alan Porritt)

In particular, since the GFC, the largest banks have benefitted greatly from an explicit Government guarantee on their operations and accommodating monetary policy that has turbo-charged their home-lending activities.

In short, transitions from regulator leadership to banking leadership should be discouraged. The optics are not kind.

There is no doubt that those mentioned above have given loyal and successful service to the Government and, by extension, to taxpayers.

They are highly qualified and experienced individuals who can make significant and profitable contributions in private sector finance.

And this is why the law should be changed to prevent senior public servants working for private sector firms that they previously had any role in overseeing.

At the very least, transitions from the upper echelons of the regulatory complex to the upper echelons of private finance should be delayed by a minimum of five years.

After all, the private sector imposes non-compete clauses on departing executives, so why not the public service?

Consider the uncanny symmetry of the appointments I've mentioned above.

Where have four of the last five Treasury Secretaries and RBA Governors moved to, on retirement from the public sector?  To three of the four big banks — and Macquarie Bank.

Reserve Bank 

Photo: Several RBA leaders have switched to powerful positions with big banks. (AAP)

We asked if you thought senior public servants be allowed to work in the big banks.

Why does it matter?

We need to be confident that the decisions of senior unelected regulators and public servants are taken in the best interests of taxpayers, not with an eye to cultivating favour among potential future private sector employers. This is especially true in the finance sector.

The people who set monetary policy and supervise banks wield enormous power and influence. To maintain our confidence in the economy and how they manage it, they must not just be independent but be seen to be so.

Obviously, no one could seriously argue that the senior public servants mentioned have done anything other than make policy decisions with the best interests of the country at heart. By the same token, no one can say for certain that, in future, everyone in their position will do the same.

Such appointments could unnecessarily complicate the task of current and future treasury secretaries and RBA governors. Will we now have to investigate every regulatory and RBA decision to guess its potential impact on the decision-maker's future private sector employment prospects?

It used to be that people went into public service for the sole reason of serving the taxpayer.  We shouldn't need the promise of future private sector riches or status to attract well-qualified individuals for important public sector roles, even in finance.

Just as foxes have no place in the henhouse, so too hens should be discouraged from taking up residence in the fox-house.


Mark Melatos is an Associate Professor at the University of Sydney's School of Economics.

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