Reserve Bank’s COVID losses hit $51 billion – and keep growing

While higher interest rates have hurt the bank’s finances, it made $1.6 billion from the global lift in gold prices over the past year. The bank holds about 6400 bars of the precious metal, now worth $9 billion, in the vaults of the Bank of England in London.

Before the pandemic, the federal government received dividend payments from the bank, which helped improve its budget. In 2020-21, it paid $2.7 billion to the then-Morrison government.

But Bullock noted the bank’s board believed it was important to restore the institution’s finances, which were unlikely to be fully repaired for another decade.

She said the board had told the government of its “strong expectation” that the bank’s future earnings be retained to offset the losses accumulated over recent years.

“Negative equity does not affect our operations or ability to perform our policy functions, but the Reserve Bank board considers it important that the RBA’s capital be restored over time,” she said.

The absence of RBA dividends has been baked into the budget, which is in a stronger position than expected a quarter of the way into the financial year.

But figures released by the Finance Department on Friday show these signs of improvement are being carried by ordinary taxpayers.

In May, Treasurer Jim Chalmers forecast a total budget deficit for the current financial year of $28.3 billion.

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On a pro rata basis, it was expected to show a deficit of $17.8 billion to the end of September. Instead, Friday’s figures showed a deficit of $14.2 billion for the first three months of 2024-25.

Total revenue was $6.7 billion better than forecast.

Much of this was due to personal income tax collections from ordinary workers, which were $2 billion more than expectations. Superannuation taxes were $900 million ahead of forecasts, as was GST.

Company tax collections, however, were almost $1 billion short of forecasts. One of the biggest shortfalls is for petroleum resource rent tax, with less than $300 million collected so far this year, rather than the $1 billion predicted in May.

Total spending is $3.2 billion higher than expected, largely due to social security payments.

In Washington for this week’s meeting of the International Monetary Fund, Chalmers said he remained committed to using the budget to put downward pressure on inflation.

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“My job is to focus on what I can control – delivering two surpluses for the first time in almost two decades, showing spending restraint, finding savings in the budget,” he told CNBC.

The report revealed the bank employed an extra 199 staff during the year, an increase of 12.6 per cent, to 1774. That followed a 147 jump in the number of employees in 2022-23.

Bullock’s base pay reached $990,206, just 1.6 per cent up on the final full-year payment to previous governor Philip Lowe. Bullock’s total remuneration, including superannuation and long service leave, reached $1.2 million.

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