Preliminary Pages

Chair’s foreword

On 4 February 2009 the Reserve Bank of Australia (RBA) announced a 100 basis point reduction in the official cash rate bringing it down to 3.25 per cent. The RBA Board decided to reduce the cash rate when it became apparent that the global economic outlook was worsening. The collapse of the global financial services firm Lehman Brothers in September of last year was the catalyst that prompted a massive reassessment of risk globally.

The RBA took quick and decisive action over this time to reduce the official cash rate. Between September 2008 and February 2009 the official cash rate was reduced five times, a total decrease of 400 basis points since 3 September 2008.

In January, the International Monetary Fund took the unprecedented step of calling on governments of advanced and emerging economies to implement fiscal stimulus in order to support world growth.

Governments around the world have taken steps to bolster their financial systems with a number of domestic and international measures.

The Governor of the RBA in his statement announcing the 4 February rate cut noted the significant deterioration in world economic conditions late in 2008 and that substantial falls in commodity prices has had a significant dampening effect on confidence.

Australia’s economy has been impacted by the deterioration in international economic conditions which has substantially slowed growth. While Australia’s economy has slowed, comparatively the economic downturn has not been as severe as in other advanced economies.

These are the worst global economic conditions seen for some time and there is still considerable uncertainty about the economic outlook.  It is therefore more critical than ever for the committee to scrutinise the RBA on its key forecasts for economic growth, inflation and employment.

On behalf of the committee, I would like to thank the Governor of the Reserve Bank, Mr Glenn Stevens and other representatives of the RBA for appearing at the hearing on 20 February. The next hearing will be held on 14 August 2009 in Sydney.

 

Craig Thomson MP

Chair

 

Membership of the Committee

 

Chair	Mr Craig Thomson MP
Deputy Chair	Hon Kevin Andrews MP
Members	Mr David Bradbury MP	Mr Richard Marles MP
	Hon Julie Bishop MP (to 25/2/09)	Ms Julie Owens MP
	Mr Jamie Briggs MP (from 25/2/09)	Hon Tony Smith MP
	Hon Joe Hockey MP	Mr Jim Turnour MP
	Ms Sharryn Jackson MP

 

Committee Secretariat

 

Secretary	Mr Stephen Boyd
Inquiry Secretary	Mr Paul Zinkel
Administrative Officers	Ms Natasha Petrovic
	Ms Renee van der Hoek

 

Terms of reference

 

The House of Representatives Standing Committee on Economics is empowered to inquire into, and report on the annual reports of government departments and authorities tabled in the House that stand referred to the Committee for any inquiry the Committee may wish to make. The reports stand referred in accordance with the schedule tabled by the Speaker to record the areas of responsibility of the Committee.

 

List of abbreviations

 

ATM	Automatic Teller Machine
BCDC	Business Cycle Dating Committee of the US National Bureau of Economic Research
CPI	Consumer Price Index
The Fed	US Federal Reserve
FHOG	First Home Owner Grant
G7	Canada, France, Germany, Italy, Japan, UK, and US
GDP	Gross Domestic Product
IMF	International Monetary Fund
RBA	Reserve Bank of Australia
UK	United Kingdom
US	United States of America
WEO	World Economic Outlook