Wayne Swan is the first Commonwealth Treasurer in a newly-elected government in over three decades not to declare, in his first public announcement after taking office, that his immediate predecessors had misled the public about the condition of the nation’s finances, that the fiscal situation was worse than he or the public had been led to believe, and that as a result he couldn’t possibly keep all of the promises that his party had made during the recent election campaign. The “Charter of Budget Honesty” introduced by Mr Swan’s predecessor, Peter Costello, which requires regular updates on the condition of the budget, including once an election has been called, put an end to that particular piece of political theatre.

Nevertheless, between them Mr Swan and Reserve Bank Governor Glenn Stevens were able to mark the installation of a new Government with some noteworthy and unexpected changes to the way in which decisions about monetary policy are communicated to the public, and the procedures for appointing the Board and most senior officials of the Reserve Bank. Although these changes are evolutionary rather than revolutionary, they are no less important for that.

Apart from ruining Melbourne Cup Day for those economists and market participants who prefer to attend that event or, like me, take it as a day off, the change to the timing of the announcement following each Board meeting to 2:30pm on the afternoon of the meeting itself from 9:30 the following morning is of little practical significance.

But the commitment to provide an explanation of the outcome of each Board meeting, even if that is to leave interest rates unchanged (compared with the practice since the Reserve Bank first began explicitly announcing changes in monetary policy in 1990 of making a statement only when rates were actually raised or lowered) is important. The Bank’s thinking on this may have been heightened by contemplating what the market’s reaction might have been had the Board decided to leave rates unchanged at its November meeting in the absence of any explanation as to the reasons for doing so. Inevitably, markets would have concluded, rightly or wrongly, that the Bank had been influenced by political considerations, especially given that the case for raising rates in November was so compelling.

It remains to be seen how much additional light will be shed on the Bank’s thinking by the decision to release, with a lag of about two weeks, the minutes of each Board meeting. It was interesting to see from the minutes of the November meeting that the Board took explicit notice of the impact on the stance of fiscal policy of all of the promises made up to that point during the election campaign (in contrast to the assiduous silence which the Bank’s previous statements have observed on such issues over the past decade). But the relevant paragraph was written in such a way as to avoid conveying anything about whether that had any bearing on the decision to lift interest rates at that meeting. Beyond that, there was little in the minutes that wasn’t also in the Statement on Monetary Policy released six days after that meeting – and that shouldn’t come as a surprise to anyone.

By and large, these changes bring the Reserve Bank’s communications protocols into line with contemporary central banking practice, rather than breaking any new ground. I’m not personally perturbed by the absence of any attribution of particular views to particular Board members, or of details as to how individual members of the Board voted (if indeed any issues were actually put to a formal vote), notwithstanding that this sort of information is provided in the minutes of the policy-making meetings of other central banks such as the US Federal Reserve, the Bank of Japan and the Bank of England.

The members of those bodies are, for the most part, professional economists or bankers, chosen for their expertise in monetary policy; they regularly make public comments on monetary policy; and they typically don’t have jobs apart from those which provide them with their seats at these tables. It’s therefore useful to know how they vote at meetings, because that allows analysts to interpret what they say in between meetings. For example, if someone who has a track record of dissenting from decisions to lift interest rates expresses concern about rising inflation, that is much more significant than a similar expression of concern by someone who has a more hawkish voting record.

In Australia, by contrast, Reserve Bank Board members are typically chosen for the knowledge and understanding of conditions in a range of sectors of the economy that they can bring to the Board’s deliberations, and they generally don’t make public comments on monetary policy issues. They would be on a hiding to nothing if their individual views or their voting record were to become a matter of public record. If Roger Corbett, a Board member who is also the CEO of Woolworths, were to vote in favour of cutting rates or to dissent from a decision to lift rates, he could be accused by some of putting his company’s interests above those of the broader economy; if he voted the other way, he might be accused, perhaps by his own shareholders, or by competitors, of ignoring his company’s or his industry’s interests.

Likewise the Secretary of the Treasury, who, somewhat unusually compared with his counterparts in most other countries, is a member of the RBA Board, would be put in a very difficult position if for example he voted in favour of an increase in interest rates at a time when his political master had been publicly arguing against such a move (as could well have occurred, more than once, in recent years).

With these changes to the Reserve Bank’s communications protocols, it will now make at least 28 public statements on monetary policy each year: statements at the conclusion of each of its 11 meetings, minutes of the Board meeting about two weeks later, four detailed Statements on Monetary Policy in the middle month of each quarter, and two prepared statements before the House of Representatives Standing Committee on Economics, Finance and Public Administration. There will also be speeches touching on monetary policy which the Governor, his Deputy and other senior officials choose to make. There is perhaps some danger of information overload here, or of analysts descending into minute parsing and deconstruction of each statement searching for finely nuanced differences in wording or meaning from one pronouncement to the next – as happens to some extent in the United States.

The elevation of the statutory independence of the Governor and Deputy Governor of the Reserve Bank to the equivalent of that attaching to posts such as the Commissioner of Taxation or the Australian Statistician – so that they can be removed from office only by a vote of both Houses of Parliament – is probably better seen as an attestation of the new Government’s good intentions regarding the Bank’s independence, than as a safeguard against anything that was ever likely to happen.

To the best of my knowledge, however frustrated previous Treasurers or Governments may have been by the way in which Reserve Bank Governors or Deputy Governors have conducted by monetary policy, they’ve never sought to procure their dismissals. (If only the same could be said of previous Treasurers’ attitudes to market economists, or economic journalists!).

Mr Swan’s decision to restrict the field from which future Reserve Bank Board members are to be chosen to a list of “eminent candidates of the highest integrity” does reduce the potential for people to be appointed to the Board on the basis of their political affiliations – although having political affiliations shouldn’t disqualify someone from being considered to be “eminent” or “of the highest integrity”. And these days it would be considered a little odd, in the corporate world, for a CEO to be as intimately involved in searching for members of his Board as Glenn Stevens is now expected to be. Nonetheless, Mr Swan’s intentions appear honourable.

Notably, in last Thursday’s joint statement from the Treasurer and the Governor, Mr Swan reserved on behalf of the Government “the right to comment on monetary policy from time to time”. This was a right which his predecessor and some of his colleagues exercised fairly frequently, usually to argue that the Bank shouldn’t raise, or shouldn’t have raised, interest rates. I hope Mr Swan will exercise this right less frequently and more constructively. To the best of my knowledge, there has been no country with an independent central bank where Ministers with economic policy responsibilities commented as frequently on monetary policy as occurred in Australia during the life of the Howard Government, and it can hardly have helped public or market perceptions of the Reserve Bank’s independence.

Mr Swan (and Mr Rudd) have also commendably indicated a greater willingness to listen to Treasury advice, and to seek that advice across a broader range of policy issues, than appeared to be the case under the Howard Government. In his now-notorious speech to staff of his department in March this year, Treasury Secretary Dr Ken Henry listed a wide range of issues on which Treasury was well-placed to offer advice, including “the impact on workforce participation [of] the tax system with the welfare system; the severe capability deprivation suffered by most Indigenous Australians; widespread environmental degradation; and water rationing”, and bemoaned the fact that in at least one of these areas (water), Treasury’s input had been neither sought nor heard by the previous Government.

It seems to be the fate of Treasuries that their voices are more heeded in the initial period of a Government’s tenure than towards the end of it, when the exigencies of prolonging an extended period in office tend to overwhelm the appetite for good public policy (as Australia’s experience over many decades amply demonstrates). The test of the Rudd Government’s undoubtedly good intentions will thus likely come in their second and subsequent terms (if they get them), rather than in this one.