RBA on the Dole too

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    Within a month of Joe Hockey becoming Treasurer he gave the Reserve Bank $8.8
    billion so that Mr Stevens could short the AUD to complement his jawboning.
    Instead Mr Stevens should have simply reduced interest rates and we would be
    in a much better position today

    "The trouble with bolstering the RBA's reserves
    by STEPHEN KOUKOULAS 25 OCT 2013, 7:07 AM 64
    Yesterday’s release of the Reserve Bank of Australia annual report shed some light on the controversial $8.8 billion cash injection to the Bank that Treasurer Joe Hockey announced earlier this week.
    It was an odd decision to give the RBA such a large amount of money given the annual report expressed no concerns about the existing level of reserves nor have the financial markets viewed those reserves as anything other than a curious accounting issue. It was odd too because the $8.8 billion is being borrowed by the government and the interest paid on that debt will amount to an annual cost of around $350 million, based on the current 10 year government bond yield.
    That cost aside, page 77 of the RBA Annual Report included a table that summarised the dividends paid by the Bank to the government since 1997-98.
    That table shows that under the Howard Coalition government, the RBA paid a total of $20.2 billion in dividends. This was $1.83 billion a year. In today’s dollar terms, the total amount paid by the RBA was in excess of $30 billion or almost $3 billion per annum.
    Under Labor, the RBA paid a total of $7.9 billion in dividends or around $1.3 billion a year, on average. In today’s dollar terms, this total approximately $9 billion or an average of around $1.5 billion per annum. In the last three Labor budgets, the average dividend was a tiny $410 million a year."
    (source: business spectator.com.au)

    Then Mr Hockey started his whinging about the budget deficit and why expenditure had to be clipped
    from welfare while the RBA is on bank welfare.

    Had the RBA continued to pay Treasury dividends rather than borrowing, the Treasury would be
    $11.8 billion better off today ($8.8 billion + $3 billion dividend)

    Perhaps Joe is squirrelling this cashbox away to cover election promises in 18 months time.
    Is this responsible Budget management ? Your call.
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