10 August 2010

The public inputs we received about this Bill, both in respect of what it does and what it fails to do, were all negative. In apparent desperation the Treasury resorted to summoning Nedlac to give a benign input on a Bill, which was not even tabled before it and which they did not seem to have studied.

The Reserve Bank was supposed to answer public inputs, but merely made unresponsive statements recommitting itself to transparency while, in disregard of the Rules of the House, expecting the documentation submitted before us to be kept secret, thereby proving its undying devotion to its entrenched culture of secrecy.

In a salient showing of the limits of democracy, this Bill does just the opposite of what it purports to achieve, a fact clearly highlighted in all public inputs but ignored by media and commentators who appeared too busy reporting on the Governor's showmanship to actually study the Bill.  

The Bill increases the composition of Board with people of no specialized relevant experience, but takes all powers of management away from such bloated Board to place them exclusively in the hands of the Governor and the Bank's inner and secretive circle. The Bill does nothing to deal with private profits on the bank's shares, the very reason given for its introduction. 

It does nothing to increase transparency, representations and accountability where it matters, which is in the monetary policy committee which creates and destroys money at will, without any public official or public representative involved in it. Effectively, this Bill is an internal coup d'état to concentrate even more power away from public accountability and transparency. It excludes and silences the individual shareholders who, warts and all, are the only existing public watchdog within the Bank. 

The Bill leaves unaddressed fundamental issues. Who does the Reserve Bank serve: the country or the banking community?  Its constitutionally required independence is more threatened by the incestuous embrace of the banking community than the ineffective and tenuous liaison with our government.  

The secretive black box within which the operations of the Reserve Bank take place has remained unaffected.  The Bank can do as it wishes in creating and destroying fiat money for as long as some broad inflation targets are achieved, and in so doing partakes in the broader process through which central banks generate recessions and economic booms at the time they deem best.

Neither the Minister nor this Parliament have the statutory powers or in house skill base to check on what goes on in that black box and answer the allegations we heard during public comments, such as that the gold reserves of South Africa have been moved to England, that the huge losses posted by the Reserve Bank this year are really losses of the banking system transferred to the Reserve Bank by shifting reserve requirements and titular ownership, and that there are preferential tracks for application under the Exchange Control Acts which is said to be applied differently depending on who the client is. Even the Minster has no power to pierce light into the black box.

The Reserve Bank has been promising to be accountable and transparent exactly because this Bill does not create any legal obligation for it to be so, and we must rely on promises.

So much was the rush to pass this abomination, that it had to be done even before any party could hold caucus on Thursday.   

Across the Western world and throughout the past century and a half, the limits of democracy are revealed as legislation dealing with central banks bears a common hallmark: it is process at an unseemly speed, with poor or absent understanding on the side of the legislators and right before or immediately after a major recess period.  This Bill follows this pattern.   

There is nothing urgent about this Bill. Yet, it has been processed in record time. The committee concentrated its deliberations and processed this Bill in a single morning on July 20, in a week of recess in which no other committee met. 

This in spite of the committee having no meeting scheduled for the following week when other committees met and effectively the committee work of Parliament resumed after one of our longest recesses. Both the Hon. George and I were abroad and had long given prior notice of this fact, so that predictably it was to little avail for us to receive a 48 hours notice in our unattended pigeon holes or in our closed cell phones. 

Under these conditions, we cannot but oppose this Bill.