The rising cost of the Reserve Bank of Australia

Fun fact and public interest scorecard

Cost comparison 2020–21 to 2024–25 | Prepared 2 November 2026

The Reserve Bank of Australia is responsible for monetary policy, financial stability, payments infrastructure and banknotes. Across five financial years, its year-end workforce increased 47.8%, staff costs rose 62.4%, and general operating costs increased 81.7%. These increases occurred during a period in which inflation moved well above target and major operational reforms were required. [1] [2]

Five year cost comparison

Financial year	Employees at 30 June	Staff costs	General operating costs
2020–21	1,380	$243.2m	$412.7m
2021–22	1,428	$256.3m	$429.8m
2022–23	1,575	$299.7m	$500.9m
2023–24	1,774	$334.5m	$607.6m
2024–25	2,039	$394.9m	$749.7m
Change across period	659	$151.7m	$337.0m
Percentage increase	47.8%	62.4%	81.7%

Employees are measured at 30 June. Staff and operating costs cover the full financial year and are nominal, not adjusted for inflation. Staff costs are included in general operating costs. The RBA’s cost definitions are retained. [1] [2]

General operating costs are $337.0 million higher each year than in 2020–21, equivalent to approximately $28.1 million more a month.

The RBA attributes higher costs to technology resilience, cyber security, payments infrastructure, policy capability, workplace costs and strategic projects. These may be necessary investments, but the scale of the increase makes transparent productivity and service measures essential.

Governor and remuneration

Michele Bullock has served as Governor since 18 September 2023. Her total remuneration reported for 2025–26 was approximately $1.22 million, including base salary of approximately $1.01 million. This is total reported remuneration, not cash base salary alone. [2] [3]

Staff wage dispute and the productivity question

RBA employees rejected a proposed 9.5% wage increase over three years in July 2026. The offer comprised increases spread across the three-year agreement and was later put forward again in substantially similar form. The Finance Sector Union’s current RBA claim is 11% over three years plus protection if inflation exceeds the agreed increases. A separate 15% claim relates to broader Australian Public Service union bargaining, rather than the current RBA staff claim. [10]

Whichever wage outcome is ultimately agreed, the additional cost is borne through the RBA’s operations and therefore ultimately by the public balance sheet. The issue is not whether employees deserve fair remuneration. It is whether higher recurring employment costs are accompanied by measurable productivity, improved forecasting, stronger payments reliability, better cyber resilience or more efficient service delivery.

The publicly reported bargaining positions focus on wage percentages, inflation protection, retention and employment conditions. They do not identify a clear, quantified productivity trade-off. That absence matters when the Bank repeatedly argues that sustainable real wage growth across the economy must be supported by productivity growth.

Without a measurable productivity commitment, the position risks appearing to taxpayers as “do as I say, not as I do”: the RBA warns that wage growth unsupported by productivity can add to inflation, while its own wage negotiations are debated primarily around compensation and cost of living rather than additional output or efficiency.

Public charter and taxpayer expectations

The RBA’s overarching objective is to promote the economic prosperity and welfare of Australians. Its Monetary Policy Board must determine policy in a way that best contributes to price stability and full employment, while the Bank also supports financial stability, efficient payments and secure banknotes. Independence requires strong accountability. [4] [5]

Price stability: Return inflation sustainably to the 2–3% target range and toward the 2.5% midpoint over an appropriate timeframe.

Sustainable full employment: Support the highest level of employment consistent with price stability.

Financial stability: Maintain liquidity and resilience while identifying emerging financial risks.

Payments and banknotes: Operate reliable settlement systems, promote efficient and competitive payments, and issue secure banknotes.

Transparency and operational efficiency: Explain decisions and forecast errors clearly, and demonstrate value from the Bank’s rapidly rising cost base.

Second largest annual loss and negative equity

The RBA recorded an accounting loss of $8.465 billion in 2025–26, the second-largest annual loss in its history after the $36.7 billion loss recorded in 2021–22. Its balance sheet ended 30 June 2026 with negative equity of $11.288 billion, compared with negative equity of $5.3 billion a year earlier. [2] [11]

The result comprised underlying earnings of negative $1.7 billion and unrealised valuation losses of approximately $9.9 billion, partly offset by realised valuation gains. Higher domestic bond yields reduced the market value of government bonds purchased during the pandemic, while the higher Australian dollar affected the value of foreign assets. The low fixed returns on pandemic-era assets also sit against variable interest paid on Exchange Settlement balances, creating a continuing earnings mismatch.

This is not the same as an $8.465 billion cash operating expense or an immediate taxpayer bailout. A central bank can continue operating with negative equity, and the RBA states that its policy functions are not impaired. However, there is a real public cost: future profits are expected to be retained to rebuild capital rather than paid to the Australian Government as dividends. The RBA says a return to the Reserve Bank Reserve Fund target is probably more than a decade away.

The loss is the long financial tail of pandemic-era bond purchases. Those decisions were made for policy reasons, but the scale of the outcome strengthens the case for transparent reporting of risk, scenario analysis and accountability for unconventional monetary policy.

Public interest scorecard

Assessment covering January 2021 to 30 September 2026. Scores and weights are editorial judgements informed by the evidence cited. They are not official RBA, government or ANAO ratings.

Responsibility	Score	Result	Assessment
Price stability and purchasing power	5/25	Poor	Inflation surged well above target after 2021 and remained above target in 2026. The delay reduced household purchasing power and required materially higher interest rates. [4] [6]
Sustainable full employment	15/20	Good	Employment remained resilient for much of the period, although unemployment increased during 2026 and the balance between inflation and employment became more difficult. [6]
Financial stability and liquidity	16/20	Good	Australian banks remained well capitalised and the financial system resilient. Geopolitical, credit, cyber and operational risks remain; responsibility is shared with other regulators. [2] [7]
Forecast accuracy and policy calibration	3/15	Poor	The inflation surge was materially underestimated and policy guidance was too confident. Later tightening addressed persistent inflation, but only after substantial forecast errors. [6] [8]
Transparency and public communication	6/10	Mixed	The Bank has improved explanations, forecasts and post-meeting communication. Earlier forward guidance was widely interpreted as a promise and damaged credibility. [5] [8]
Payments banknotes and operational reform	4/10	Mixed	Banknotes remain secure and payment systems are critical, but settlement disruptions and the cost of major reforms require stronger reliability and value reporting. [2] [9]

Indicative overall result 49 out of 100 — mixed and below expectations

Weights total 100. Ratings reflect the percentage of available points: below 40% Poor; 40–69% Mixed; 70–89% Good; 90–100% Excellent. Global supply shocks, fiscal policy and private-sector behaviour also affected inflation and employment. The score is not solely a judgement on interest-rate decisions.

Independence accountability and external constraints

The RBA controls monetary policy, not government spending, tax policy, housing supply, energy policy or productivity reform. Inflation outcomes reflect all of these forces, as well as global shocks. It would be unreasonable to attribute every inflation miss to the Bank.

Independence nevertheless creates a higher obligation to explain forecast errors, decision lags and trade-offs. When guidance affects mortgages, asset prices and business decisions, communication must distinguish a central forecast from a commitment and clearly describe what could change the outlook.

What full accountability should show

The RBA should publish consistent measures of forecast accuracy, policy implementation, settlement reliability, project delivery and cost productivity. Major technology and payments investments should be linked to measurable improvements in resilience, service quality and risk reduction.

A central bank asking households and businesses to absorb tighter financial conditions should demonstrate discipline and measurable value in its own expanding operations.

Key conclusion

The RBA remains a vital and credible institution. Financial stability has been maintained, the banking system has remained resilient, and the Bank has strengthened its governance, communication and policy framework following the independent review.

The record on price stability and forecasting is less convincing. Inflation moved far above target, earlier guidance proved unreliable, and households ultimately faced a sharp increase in borrowing costs. External shocks and fiscal policy contributed, but they do not remove the need for clearer forecasting and calibration.

The cost base also requires scrutiny. An additional 659 employees, $151.7 million in annual staff costs and $337.0 million in annual operating costs should produce visible improvements in forecasting, payments reliability, cyber resilience and public communication. Any further enterprise-agreement cost should be reported alongside a clear productivity and service-improvement commitment.

The standard should be stable prices, credible forecasts, reliable critical infrastructure and independently verifiable improvements in operational performance—not higher expenditure presented as evidence of institutional strength.

My thoughts