The central bank made it clear over several years it thought rebuilding its capital reserves was prudent, Treasury secretary Martin Parkinson says.
Dr Parkinson, who is a member of the Reserve Bank of Australia (RBA) board, says the bank's annual reports had made it clear this should be done at the earliest opportunity.
In October, Treasurer Joe Hockey unexpectedly announced he was giving the RBA an $8.8 billion grant to replenish its reserves, although he had raised concerns earlier in the year in opposition about the central bank's reserves.
Dr Parkinson told a Senate estimates hearing on Wednesday that on coming to office, the treasurer had consulted him and RBA governor Glenn Stevens on the RBA's reserve position, noting that the board had said it was well below the level the board thought was prudent.
Mr Stevens has subsequently said the rebuilding would take quite a few years if it was left to holding on to the central bank's profits.
"The treasurer wanted the RBA to be in the strongest position as possible," Dr Parkinson said.
Dr Parkinson said there had been some misunderstanding in the media over the issue, generated by suggestions in a Treasury minute.
"We don't have the document that has been cited in the press. We have never seen the document ... they are quoting from," Dr Parkinson said.
"I want to be very clear, there is no provision under the Reserve Bank Act for the Commonwealth to make an injection into the Reserve Bank or to directly inject funds in the reserve fund."
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