The Case for a Free Market University

When I hear the words “fee deregulation,” I can imagine what comes next. It is usually an arts student from Sydney University who paints the picture of an education factory. They argue that neoliberalism is taking over the world and is now extending its claws into university. We will all become chained to markets and slaves to capitalism, the doomsayers say. This is quite a compelling case; I must admit, even I believed it for a while. However, the question of equity, beyond slogans and fearmongering reveals a very different picture. It challenges the plethora of student voices who either oppose the government’s policies or are afraid of it. The former are a very vocal and sometimes violent minority. The latter are the majority of students who want universities and government to remain in a complicated relationship. Neither approach understands what a free market university actually is. My article puts forward three propositions that are usually overlooked in the deregulation debate. Firstly, student equity is not diminished under free markets. Secondly, equity for broader society only occurs under deregulation. Thirdly, contrary to various assumptions, student equity itself is only possible with full privatization. True equity is when the students who receive the exponential benefits of a degree are liable to its inevitable costs. There is no getting away from the radical bourgeois idea that a person who makes a highly profitable investment should be the same person who pays for it.

There is an intoxicating belief that deregulation will harm the rights of students. It is an often heard maxim of the left that “education is a basic human right” and that it “should be accessible to everyone.” These are all excellent ideals for an educated society. However, they would be better served by looking beyond monetary solutions to wider social problems. Student equity is not diminished when students are liable to pay the full amount of their education.

In the past, one did not have to go to university to have a career with a high income. Today, the best paying careers require a degree. As of 2010, a female who graduates earns $800,000 more than a female who doesn’t go to university. For males, this gap is even wider, stretching over $1,000,000 in a lifetime. This means that poorer students get greater benefits in entering university than the middle classes who can depend on other sources of wealth. Until 2004, Britain had a subsidized fee structure that did not see substantial enrolments from students of lower socio – economic background. A degree was not as profitable then as it is now. Between 2004 and 2014, the government decided to deregulate the prices of university to cover the costs of university funding. Many believed this policy would hurt economically disadvantaged students the most. It has not turned out to be true. 70% of university enrolments during these years came from students with lower socio – economic backgrounds. The relatively higher costs of a degree have not offset its overall return. In consideration of its lifetime benefits, it is understandable that there is an increasing demand for tertiary education amongst less well-off students. Privatization is nothing more than a true reflection of the monetary value of a degree. It does not hinder the entry of students without an alternate sources of income.

There will still be those who say deregulation continues to hurt poor students, even though it doesn’t hurt as much as they’d like to believe. Let’s put this into reverse perspective. Does social mobility increase when students are not charged for tuition fees? The historical answer is no. Whitlam’s free education policy in the 1970s led to almost no changes in accessibility for disadvantaged students. Of the 276, 339 new enrolments in 1975, 80% were made up of students who already came from privileged backgrounds. Whilst a policy may be imbued with good intentions, it is only successful if its leads to positive outcomes. The only good outcome of Whitlam’s policy is the proof that free education does not increase accessibility. Sadly, this fact is largely ignored in the deregulation debate today. This not only distorts the historical facts but ignores the real challenges in education. Ascribing monetary value to a university education is the first step to realizing that money is neither the problem nor the solution to student equity. The greatest factor to determine accessibility amongst all backgrounds is previous school performance. This is where all sides of the debate should be focused, if bridging the socio – economic divide amongst poorer students is their main concern.

I will now show how deregulation is actually the only way to make equity possible. When I say “equity,” I refer not only to the welfare of students. I’m also referring to equity in terms of the entire Australian population. This the missing part of the equation when protestors against deregulation refer to role of government. The monetary benefits of a degree evidently set university students apart from the rest of society. Some students will say that while this is true, federal funds should still be allocated to subsidize tuition fees. They either do not consider, or are unaware of, where government funds come from. Taxes, and increasingly income taxes, are the main sources of revenue for the government. It is this money that turns into the discounted fees for university students, who are essentially living off a million dollar privilege. Nothing spoils true equity than working classes having to subsidize individuals with a profitable degree. Fortunately there has been mounting electoral pressure to cut university funding so as to get off the backs of the poor. Indeed, giving money to universities has reduced and continues to reduce for this very reason. Since 1989, public universities have raised their own income to the point where no more than 25% is provided by government funds. Both as a matter of principle and practicality, governments should not be funding tertiary education. A fully privatized university is one step closer towards the government’s ability to attend to more pressing concerns – like lowering the budget deficit.

Deregulation facilitates equity not only on a societal level, but for the students themselves. This may be hard to believe, but deregulation is necessary for two reasons. Firstly, it is the only way to sustainably ensure that all students who deserve to go to university can. Secondly, it is fast becoming the sole means by which universities can continue to deliver quality services.

When the HECS system was introduced, it was an efficient solution to student equity and university funding. Just as there were caps on student fees, HECS began in the knowledge that there would be a limit to student entry. The Gillard government however, dismantled this in 2012. They established the demand-driven system which allowed unlimited student admission. This was an excellent idea in increasing accessibility, but makes little economic sense when not followed by an increase in tuition fees. In other words, Gillard established the benefits of a free market university without following through on its inevitable cost. Demand must be paid for if it is to be sustained. The NTEU noted that the strain on teaching staff and the lower quality of education would follow Gillard’s proposal. Indeed, this has been the case where the increase in student entry has not supported by the funds to accommodate it. Full deregulation completes the market process under the Gillard government. It is indeed an applauded goal to allow unlimited demand in university. This is what equity is all about. No student who deserves a place should be barred from entering because of a government cap. At the same time, this policy goal cannot be sustained when the demand does not cover the costs of running a university.

Deregulation is the only way to cover university costs when government funds are declining. It is no surprise that Vice Chancellors have championed it for a long time. Many students protest directly against these authorities, claiming they are solely interested in the bottom line of profits. I find this amusing, considering universities would go bankrupt if Chancellors didn’t take profits seriously. One Chancellor however, strikes me as particularly useful in the case for deregulation. Greg Craven may be the head of Australian Catholic University but he considers himself “a pinko academic.” He supports deregulation, not because he supports the Liberal government but because it makes economic sense. Craven points out that if universities cannot set their own prices, vital research will suffer, quality teaching will decline and international competitiveness will go down. This comes from a university that caters for only 20,000 students. Imagine how much more relevant for Macquarie University with 30,000 students and Sydney University with more than 40,000 students locally. Craven makes the case that there is no other way to funnel resources into the university system. Whether you wish for government intervention within education or not, the reality is that it’s declining. The only way for universities to thrive is to deregulate.

A university that creates unbridled economic opportunities for students. A university that does not impinge on its financially disadvantaged. A university that does not punish those who take a different career path. A university that is accessible to all who earn a place. A university whose quality is superb and competitive. This is the free market university – whose prices I am indeed willing to pay.

The case for fee deregulation: a lesson in real sustainability

unnamedFee deregulation will allow universities to capitalise on their strengths and become vibrant and dynamic institutions of learning, writes AlexBedwany:

The past few years have seen left wing students around the country engage in intimidating, disruptive and sometimes violent action in protest of the Government’s attempts to reform the tertiary system.

It seems romantic doesn’t it; rallying students to fight in the trenches against perceived injustices towards them? The issue seems so black and white: a Government hell bent on narrowing opportunity to the rich and shutting out the poor. Of course, as with most policy issues, it isn’t as black and white as it seems.

Unfortunately, the government has failed to prosecute its case with the gusto it deserves. So the issue has been roundly seized upon by those who are intent on destroying any chance of the senate passing any meaningful reform.

The fact is that, under the Education Minister’s proposal, students will be secure in their pursuit of higher education. Their fees will still be subsidised heavily and the costs deferred until they earn a wage fitting of their effort. This is the line that has been pushed by the Abbott Government, albeit unconvincingly in the face a misinformation presented by those too blind to see the already proven benefits of reform.

Reason for Deregulation: Credit Bites Back

What leftist proponents of ‘heavily subsidised education at all costs’ don’t realise is, the tuition incurred over the course of a student’s time at university will be paid, in full, long after they have retired their HECS debt. Nothing is free. As taxpayers, the graduates will eventually be paying for the subsidies received by the succeeding generations. Some may not take issue with this “left hand owes it to the right” mentality, but several problems arise.

The first is fiscal sustainability. When differences occur across generations, such as an ageing population or a rise in the number of claimants on a program, the burden becomes fiscally unsustainable. This is not a ‘slight’ risk in the case of Commonwealth Supported Places, it is a guarantee. Continue reading

Anti-Deregulation Campaign Forces Cuts to Arts Majors

resized UWA Student Rebecca Lawrence explains how the recent cuts to Arts Majors are a product of the very system that left-wing students fought to protect:

Despite a number of student protests, yesterday’s UWA Academic Council meeting confirmed the decision of the UWA Arts Faculty to discontinue its Gender Studies, European Studies and Medieval & Modern Studies Majors, effective as of 2016. The reasoning given by the Arts Faculty was simple: the majors were cut to save money.

The Faculty argued that the Majors were not popular enough to warrant continuing – that small class sizes meant that many of the core units were running at a loss to the University. This was because, even though these classes would frequently only attract enrolments of less than 10 students, the Faculty would still be required to cover the fixed costs of running a unit, including room allocation, administrative staff, lecturer’s salary, physical and online resources, and tutoring fees.

In a logical system, UWA would be able to solve this problem by adjusting the student fees for these courses to reflect the higher per-student running costs. In a logical system, students who really wanted an education in a specific field of the Arts would be able to pay their world-class University to deliver this education. In a logical system, UWA would be able to charge students what their top-100 degrees are worth, and students who valued this education would be allowed to pay the University to deliver it.

UWA, however, does not operate within a logical higher education system. Instead, UWA exists within a system of strict price regulation which places an upper limit on the amount that it can charge in student fees. In this case, the limit on what UWA is able to charge students to complete a Bachelor of Arts Major is far below the cost of actually running the Gender Studies, European Studies and Medieval & Modern Studies Majors. Because of this, these majors will cease to exist. Continue reading

Take A Stand For Academic Freedom

 

Academic Freedom in Australia is in grave danger – and we need to act now before it is too late.
Last week, cowed by a shrill vocal minority of far-left activists, the University of Western Australia cancelled its contract with internationationally renown academic Bjørn Lomborg to establish a leading research centre to apply cost-benefit analysis to development projects .

For daring to apply evidence to public policy, Bjørn Lomborg was hounded out of our universities.

What have we become?

Academic freedom is at the heart of any university. To expose students to new ideas, to teach them to think critically, to challenge accepted wisdom – this is what a university should be about. And it is this fundamental principle that is now in grave danger.

By giving in to a few shrill online protests, the University of Western Australia has admitted that it is a closed shop. That it is shut to ideas. That challenging the accepted left-orthodoxy is not permitted.

Is this what we want our education system to be?  Run not by evidence or ideas, but by what the mob wants?

I think we are better than this. I want our universities to be world-class. But that means we need to take a stand now.

This is why I am calling on you to join our campaign in support of academic freedom:  We need to send a loud message that can not be ignored- academic Censorship will NOT be tolerated!

The Australian Taxpayers’ Alliance will be running an open letter in full-page newspaper advertisements proudly supporting academic freedom.

By joining our campaign, you will be publicly stating your opposition to this disgraceful attempt at academic censorship, and putting your commitment to intellectual freedom on the record.  Continue reading

“National” Union of Students: A National Disgrace

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University of Western Australia Student Rebecca Lawrence discusses how the Australian National Union of Students fails students – and is in the process of destroying itself:

I have always been outspoken about my views on the National Union of Students. The organisation is neither national nor united, and certainly doesn’t represent the best interests of students. It is no secret that I, along with most ordinary students in this country, believe that university student unionists have no right pay tens of thousands of other students’ dollars to the NUS every year in affiliation fees, much less pay for their own flights and accommodation on junkets several times a year. Yet, year after year, our voices go seemingly unheard and the NUS marches forward, as deaf to the concerns of ordinary students as ever, just as lefty-charged and anti-democracy as its predecessor was until the day it died (the Australian Union of Students, which dissolved under the leadership of 1983 President Julia Gillard due to uncontrollable levels of debt, disunity and corruption).

Or does it? Despite what one would expect from a NATIONAL Union of Students, the NUS only managed to achieve an affiliation rate of around 50% this year – of Australia’s 39 universities, only 20 affiliated to NUS in 2014 (not one university in Queensland affiliated). As the NUS’ income is almost solely dependent upon the money it collects in affiliation fees, this meant that the Union racked up a deficit of over $95,000 over the last 12 months. A leaked audit shows that the deficit over the last three years amounted to $366,360. Unsurprising as this is (the Union is run by Labor students), this fact should come as a grave concern to all students, who are forced to pay for the NUS’ spending through their compulsory student union fees (the Student Services and Amenities Fee, or SSAF – around $280 per year, per student). Continue reading

Students Shouldn’t Fear the Federal Budget

Luke HughesStudent Luke Hughes argues the Federal Budget improves competition, accessibility, and equity within higher education:

In their 2014-15 Budget, the Federal Government has committed to significant changes to higher education funding. The most controversial of these include a 20% decrease in contributions to students’ university fees, the deregulation of fees, and pegging HECS-HELP interest to the 10-year government bond rate.

The Government’s political opponents have interpreted these changes as attacks on students, and have responded with violent protests, marches, and rallies around the country. These groups claim student debt will soar to unknown levels as university fees skyrocket; leaving tertiary education as “the preserve of the rich”, while “poorer students are priced out of the education they deserve.”

Budget Papers foreshadow a different reality: one of increased competition, accessibility, and equity. Continue reading

The Winter of Discontent

MugshotMitchell Cutting discusses the unacceptable tactics employed by the left in their protests against the Government across the last week, and examines the frightening pattern of brutish behaviour which is emerging:

The recent spate of attacks on women at University Campuses by a group of Left-wing activists has provided us all with a glimpse of their mindset. They mistakenly believe that these incidents are acceptable in our community. These actions are an unnerving indication of the willingness of a new generation of socialist activists to cross lines of common decency which had previously remained untraversed.

Scenes of the minister for Foreign Affairs, the Hon. Julie Bishop MP, being assaulted by a group of students at the University of Sydney on the 16th May are concerning as an isolated event. More concerning is the assault of former Federal MP Sophie Mirabella at the University of Melbourne on the 19th May, indicating that a pattern of this type of brutish behaviour may be developing.

Most Australians do not consider this type of behaviour to be normal. It is as though these people never learned principles of common decency or courtesy. When in our history has it been acceptable to assault anyone, male or female, politician or otherwise? Everyday Australians do not identify with this behaviour.

The same left-wing activists who assaulted Julie Bishop have appeared in youtube footage, shot on the same day as the assault.  The footage shows a rally where several people address the crowd, one crying  ‘how dare they come on to this campus today!’ The argument that Government Ministers should avoid Universities because some students may be upset is absolutely absurd. Understandably, when the gravy train leaves the station, those left behind are going to be unhappy. This does not discount the act that regardless of their political views, citizens deserve to be treated with dignity and respect. Continue reading

The Left’s War On Women: It’s Not Ok

1532132_10152012329686853_2699105403218164199_aViolence against women is never acceptable, writes Anneliese Franklin in condemning the attacks on Julie Bishop and Sophie Mirabella:

Campus violence is, and has always been, unacceptable.  With the flourishing of campaigns such as the White Ribbon Pledge, opposition to violence against women, domestic violence and sexual violence is at a crescendo in our public arena. As a society we understand that to attack anyone is utterly repugnant behavior, and to attack women is an unacceptable perpetuation of hundreds of years of exploitation and harassment.  There is no excuse.  None.  This should cross all political allegiances and boundaries.

It was against this background that the “tolerant” Political Left, in this case the Socialist Alliance, the Education Action Group and Greens members, revealed their true hypocritical nature on Friday. Angered by the recent budget, they greeted Foreign Minister Julie Bishop with mobbing, violent shoves, and a heavy physical blockade at Sydney University.

Not satisfied with one ferocious assault, student socialists set their sights on Public Policy Fellow and former Liberal Party MP Sophie Mirabella on Monday, interrupting her lecture at Melbourne University with megaphones, shrieks and physical intimidation.  Staff were forced to suspend the seminar while police fought to safely escort Ms Mirabella out of the crush. Continue reading

How to impress like Clive Hamilton

Don't miss this excellent read:

Journalist
Tony Thomas is a regular contributor to Quadrant Online Magazine and has penned
a crackerjack article exposing a "qualification" used by Clive Hamilton AM FRSA, the shrill, leftie academic with a dangerous notion of democracy.

During the
recent Global Warming oppression where anything but absolute submission to the
mantra from academia avowing earthly destruction, Clive Hamilton AM FRSA had
much to say. His scholarly pedigree duped many who knew little about this
trusted inculcator of student adulators.

Recall the matter in 2011 when Australia's leading climate
change scientists were targeted by the supposed vicious, unrelenting email
campaign that triggered  “police
investigations of death threats”? Although a lie, many believed it.

Conservatives were surprised at the bile spewed forth by those whose
professional lives aspired to creating auras of intellectual respectability.
However, angered beyond reason by deniers the warmistas took leave of their
senses, if that was possible, and flaunted their true colours—bright red!

The troops
rallied. Fairfax columnist Richard Glover called for deniers to have their
views forcibly tattooed across their arms or chest. Ex-News Ltd columnist Jill
Singer suggested deniers be gassed with carbon monoxide. Good Lord!

Such idiocy would be funny if one of the clowns was
not Clive Hamilton AM FRSA, “Business
and Professional Ethics
Justice and the Human Good,” a then appointed Professor of
Public Ethics at the Centre for Applied Philosophy and Public Ethics. Clive advocated a “suspension of democracy” was warranted to silence Global-Warming
skeptics.

The “ethicist” played a role in the Gillard
puppet-show staring, Ross Garnaut, Tim Flannery, and a full cast of lousy
performers who put their reputations on the line and swore we faced eternal
damnation. GC.Ed.@L.

Tony’s excellent piece probes flaws in a pillar of perceived
social reverence.

by Tony Thomas. (Reprinted with permission.)

A bit of a loser myself, I like perving on the credentials of my betters. For example, I noticed last year that the official biography of the chair of the Intergovernmental Panel on Climate Change (IPCC) said that he “obtained…a Ph.D. in industrial engineering and a Ph.D. in economics.”

Wow, I thought, not one but two Ph.D’s, both from North Carolina State University, and both in 1974! I emailed the university to check, and got a prompt reply saying, “Yes, he earned two Ph.D’s.” Silly me, to have doubted it.

But 24 hours later, I got a follow-up from the uni press officer, obviously a decent chap, saying that he had checked more closely and his first reply was wrong . In fact Dr Pachauri was awarded only one Ph.D., for combined study in industrial engineering and economics, he said.

I alerted the IPCC about its misleading claim that Pachauri earned two Ph.D’s but the IPCC has, 18 months later, still not got around to correcting it. Busy people, I guess.

My next foray into credentialism involved everyone’s favorite guru, Dr Clive Hamilton AM FRSA.

Dr Clive AM FRSA is an Australian public intellectual, according to his own website and a host of other sources, including his publisher Allen & Unwin.

As a global warming alarmist, he is part of the Weber-barbecue-like tripod of Australian public intellectuals, the other two kettle legs being of course Dr Tim Flannery and Professor Robert Manne. I wondered, re Clive, who ‘public intellectuals’ were. I guess Jean Paul Sartre’s definition, “the moral conscience of their age” seems the best fit. After all, Clive stood for the Greens in 2009 and his “AM” is a clear-cut 2009 honor for his service to the Left on climate-change policy, sustainability and societal trends.

But what’s with that “FRSA”? It looks a bit like that top science gong, “Fellow of the Royal Society” but actually stands for “Fellow of the Royal Society of the Arts”, a different UK body. Being an FRSA seems like something special, since it always seems to be tagged to Clive’s profiles.

However, FRSA is a title you can actually buy on-line. About 27,000 people have done this, the current fee being $A123 as a one-off and $A255 a year.

Last March I put in a test application for an FRSA, for convenience using the name Kim Jong Un, of Pyongyang. The RSA website promised a confirmation within 12 working days.

I got emailed back a form from a Michael Ambjorn, Head of Fellowship at the RSA London headquarters, saying “Although we don’t contact all referees, some may be contacted for a character reference request.” I nominated Clive, his bestie Robert Manne and Ray Finkelstein QC, without knowing of course whether they would support or criticise Mr Kim’s application. “Watch this space”, I told Quadrant Online readers.

“So then what happened?” I hear you cry.

I’m afraid I baulked at the first hurdle, which was remitting the required $378 (Quadrant Online tends to be dismissive of its contributors’ expense claims).

The RSA however remained keen to get the money, and after a pause, I got a pleading letter from its Fellowship Development Coordinator Mark Hall:

“Dear Mr Jong Un,

We noted that you downloaded an application form to become a Fellow of the RSA, and I am just following up to find out if there is anything we can do to help you with your application.

I have included a reminder about the RSA below, but please do not hesitate to contact me to discuss Fellowship in more detail… “

There followed some hard-sell for Mr Jong Un about the advantages of meeting the other 27,000 Fellows, sharing skills for charity, generating ideas “that aim to have a positive social impact”, and so on. Again, I baulked at remitting the $378.

Then I got a further RSA begging letter for Mr Jong Un, “just following up”, as Mark Hall put it. He invited Mr Jong Un to connect with recent Fellows such as Antoinette Saxer FRSA, who is “currently working on the upcoming Good Fashion Show which focuses on eco-ethical and responsible fashion. She talks about why eco-fashion inspires her and what she would like to connect to other Fellows.”

Well, OK, Mr Jong Un is a bit of a fashion icon with his funky, centre-parted hair-do, and he did star in a production of Grease when a teen at Berne International School. He would doubtless appreciate my signing him up as a FRSA, but I felt guilty about further wasting Mark Hall’s time. I sent Mark a reply:

“Hi, Mark,

Thanks for your reminder. I have decided not to join your RSA after all as I am very busy smiting the double-dealing imperialist running-dog lackeys in the United States.

Cheers

Kim Jong-un, Dear Leader of the People’s Democratic Republic of Korea.”

As Hamlet put it, the rest was silence.

Tony Thomas is a smart-aleck. He blogs at tthomas061.wordpress.com

Let’s open up the books at the Reserve Bank

Henry Ford, the American automobile manufacturer, once said that “It is well enough that the people of the nation do not understand our banking and monetary system for, if they did, I believe there would be a revolution before tomorrow morning”, writes Sukrit Sabhlok.

Indeed, if there’s one thing central bankers have been successful at, it’s using obfuscation and jargon so the public finds it difficult to understand what exactly it is they do.

Even when experts try and figure out what central bankers do, a range of legal barriers prevent a complete accounting of their activities. When former Congressman Ron Paul tried to audit the US Federal Reserve System a few years ago, for example, he faced opposition from a range of economists and politicians keen on preserving the Fed’s secrecy.

In Australia, the opaqueness of the Reserve Bank’s discretion doesn’t seem to trouble many people. But it should, because the RBA wields a significant power that influences the level of prices in the economy and consequently affects the hip pocket. The inflation it creates hurts the poor – and if more people knew the RBA was the culprit behind rising prices, and that much of the erosion in purchasing power we have seen over the past 100 years was unnecessary, there is little doubt that there would be protests on the streets.

The RBA’s aversion to scrutiny can be seen in the way that it shies away from the media spotlight, preferring instead to stage-manage the appearances of its officials in carefully scripted testimonies before parliamentary committees. The agency also enjoys significant exemptions from freedom of information legislation, and furthermore, doesn’t provide reasons for its decisions in a way that allows the public hold individual board members accountable for their views (one can contrast this to the Bank of Japan where individual board members’ votes are recorded).

Perhaps most troubling is the Reserve Bank’s budgetary processes, which are ‘off-the-books’ in the sense that the Bank just prints the money it needs to carry out its functions without needing to seek parliamentary authorisation for its spending. Although legislation does specify that the RBA is to return profits to the Treasury, the process is removed from other departments or agencies of the state.

How does the RBA justify its lack of accountability? The organization’s defenders have typically pointed to the doctrine of ‘central bank independence’ which rose to popularity in the 1990s. The doctrine aims to remove political considerations from central banking by insulating the technocrats at the RBA from transparency so they can carry out their work in the ‘best interests of the community’.

But a degree of latitude from intervention by politicians, while a noble objective, has become a code-word for secrecy. The need for free and frank discussion outside of the democratic realm is cited by central bankers as a reason for not releasing transcripts of the open market committee or for keeping hidden agreements with foreign central banks and governments.

This should be viewed as the self-serving tripe it is. The High Court as the nation’s highest court exercises equally important responsibilities yet its judges provide detailed reasons for their decisions so the public can hold them accountable for their views, and also has a budget authorized through the parliamentary process. It is doubtful that the RBA, as the custodian of the nation’s money supply, is so special that its individual board members should not have to justify every cash rate decision made.

In practice, the much vaunted ‘independence’ of the RBA is greatly exaggerated, so the doctrine of central bank independence fails to persuade in any case. Appointments to the board, which are made by the Treasurer, have been politicised, undermining its so-called independence. It makes sense that Treasurers would take into account more than just merit when making appointments: they are likely to select someone that already agrees with Cabinet’s own policy preferences. A blatant example of this was the appointment of Robert Gerard – a donor to the Liberal Party who had contributed $1 million to its coffers and was said to be a supporter of low interest rates – by Peter Costello.

The board itself is a coalition of vested interests populated with representatives from lobby groups and commercial entities who are heroically asked to set aside their sectional interests and prioritise the ‘public good’. The current board comprises powerbrokers with links to Walmart, Origin Energy and other major firms. Even the only academic member of the board, Professor John Edwards, was formerly employed by HSBC Bank and was an advisor to Prime Minister Paul Keating – a detail that would’ve been looked upon favourably by the Labor government that appointed him.

Consider also, that the RBA seems to accommodate its political masters through its reluctance to raise interest rates before elections. Ian McFarlane himself admitted in Australia’s Money Mandarins that "[the 2001 election] did have some small weight in our decision. If there was a really strong case to do something, we would always do it regardless of the election campaign. But it would have to be a pretty strong case". Since it gained ‘independence’, the Bank has only raised rates once before an election, and that was during the 2007 campaign.

It’s little wonder, then, that between 1991 and 2007 Australia was a high inflation country. Investor Chris Leithner points out that monetary aggregates rose at a rapid rate: M1 increased 404%, at an annualised compound rate of 10.2%. Naturally, this has significantly devalued the currency in Australians’ pockets and reduced standards of living – and all the while the Bank has continued to keep a lid on information that could be crucial in evaluating its performance.

Although it has been argued by central bankers that their role requires secrecy, they are overstating their case. To the contrary, when markets get more information, this can be expected to reduce uncertainty, bolster confidence and improve economic outcomes. Economic historian Robert Higgs, for instance, has shown how lack of investor knowledge about the government’s expected policy actions delayed recovery during the Great Depression. Similarly, studies have shown that greater transparency is often associated with less inflation variability.

A monetary system consistent with the rule of law – where accountability and transparency is the norm rather than the exception – demands opening up the books at the RBA. The public deserves to know.  

Sukrit Sabhlok is a Masters candidate at Monash University and editor of the Journal of Peace, Prosperity and Freedom