RBA brings in PwC to sort out staff underpayment issues
Already under fire on a number of fronts for its continuous rate-hike response to runaway inflation, the Reserve Bank of Australia has now admitted to underpaying former staff over the past seven years.
In what is a rather unfortunate embarrassment amid intense current scrutiny, the Australian Financial Review has revealed that the Reserve Bank of Australia, the nation’s guiding economic hand, has messed up its sums and underpaid a number of current and former staff over the past seven years, with PwC brought in to help clean up the debacle.
The news follows Deloitte’s public swipe of the RBA for fiscal mismanagement over ongoing rate hikes.
According to AFR reporter Michael Read, a member of the Canberra press gallery and former economist with the RBA, the central bank recently notified ex-employees by email that it had identified historic issues related to annual leave, long service leave, and RDO payments, as understood to have first been uncovered by the Finance Sector Union (FSU). The discrepancy affects those who had cashed out their entitlements on departing the bank.
“We take paying our people correctly very seriously, and we are sorry that these issues have occurred,” the bank stated in the email, with RBA deputy governor Michele Bullock adding that the underpayments were the result of “the complicated nature of our industrial arrangements and their interpretation”, and that the RBA is currently “undertaking a comprehensive review to address them, and to simplify our practices going forward.”
PwC assisting the assessment
In terms of the number of former and current employees potentially impacted by the accounting oversight and a ballpark figure for the cost of back-payments, an RBA spokesman told the AFR that it was currently conducting a compressive review, with PwC since brought in to assist with the assessment. “The work is still ongoing and therefore we are unable to provide the specific details requested at this time,” the spokesman stated.
FSU national secretary Julia Angrisano was less equivocal in his response, stating that it “beggars belief that the steward of the national economy was unable to competently navigate its own enterprise agreement.”
He told the AFR, “The RBA has an obligation to ensure legal compliance with its workplace agreements and any attempt to water down that agreement at the upcoming negotiations to get around these obligations will be actively resisted.”
The news comes as the RBA is feeling the heat on a number of fronts, including from the federal government, for its series of interest rate rises in an effort to combat rampant inflation, dating back to Bullock’s frosty reception at an earlier Senate committee hearing on the matter and growing via a number of bumbling responses since. Adding fuel to that fire was Deloitte’s somewhat uncharacteristic public criticism of the RBA this past week.
While the RBA may have temporarily paused its program of ten consecutive rate rises following its last meeting, Deloitte Access Economics partner Stephen Smith has swung the bat, giving his opinion that the past two rises were wholly unnecessary and that the central bank is tempting fate and putting the economy on a “knife edge” by inviting potentially the weakest rate of economic growth since the early 90s recession that Australia infamously “had to have.”
“The additional 50 basis points of increases earlier this year were unnecessary, and have prompted a further downgrade in Australia’s growth outlook. A ‘consumer recession’ is now forecast in 2023,” Smith stated in the firm’s latest report. “At a cash rate of 3.6 per cent, most Australians will be just fine. Many, however, will not. In just ten months, the cost of servicing an average $600,000 mortgage will have risen by more than $14,000 per year.”
