Delay to RBA overhaul ‘disappointing’

The Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 was introduced last month as part of an overhaul to the central bank, but hopes of passing it before Christmas were derailed on Thursday when the Greens and Coalition teamed up to send the legislation to committee for review.

Dr Chalmers said he was particularly disappointed given his efforts to include shadow treasurer Angus Taylor in consultation about changes concerning the RBA.

“It’s disappointing and surprising that Angus Taylor has teamed up with the Greens on the Reserve Bank legislation to cause unnecessary uncertainty,” Dr Chalmers said.

“We’ve done our best throughout to include him in briefings and discussions for more than a year now, we’ve taken his views seriously, and that’s reflected in the legislation before the parliament.”

A review of the Reserve Bank earlier this year recommended a significant overhaul of the central bank, namely creating a monetary policy board separate to a governance board, and to enshrine the RBA’s objective to promote the economic prosperity of Australians.

Such significant reforms require legislation, which Dr Chalmers said he would continue to work to get passed.

He called on Mr Taylor to “stop playing Greens politics” with the legislation and “adopt the bipartisan approach he has repeatedly and publicly committed to”.

“We remain committed to working in a bipartisan way to pass this legislation because the future of Australia’s central bank should be above politics,” Dr Chalmers said.

Mr Taylor said the Coalition made “no apologies” for sending the legislation to committee for review, noting the government’s response to the RBA review had not been subject to public consultation, nor was the draft legislation “subject to conventional exposure draft processes”.

He said he remained concerns about the plan to “spill the board”.

“The Senate process will ensure Australians can maintain confidence in the Reserve Bank at a time when more and more personally feel the impact of its decisions,” Mr Taylor said.

“The Coalition has been clear in its engagement with the government for months that it has concerns about the transition arrangements for the RBA board. These concerns have not been addressed in the current legislation.

“Spilling the entire RBA Board in the middle of an inflation crisis is bad policy, and a bad idea.

“This is Dr Chalmers’ legislation, and the choice is his: continue to deal with the Coalition in good faith on sensible and stable legislation to improve the RBA, or leave Australia’s monetary policy in the hands of the Greens.”

The political stoush comes as Dr Chalmers and the RBA Board released an updated Statement on the Conduct of Monetary Policy – the first such statement since 2016.

Dr Chalmers said the statement “reaffirms the government’s commitment to the independence of the RBA, sets out the agreed approach to meeting the Board’s legislated objectives and helps implement recommendations of the RBA Review”.

It reaffirms the inflation target remains between two and three per cent, with an aim of 2.5 per cent.

Monthly inflation was down in October, and is currently tracking at 4.9 per cent.

The statement provides detail about the central bank’s inflation and employment goals, including the flexible inflation targeting framework and the role of the board in achieving full employment.

The board has also committed to being more transparent about how it makes interest rate decisions, by publishing more information – including analysis and insights from its business and community discussions.

It will also publish an anonymous record of how the board voted on interest rate decisions, and all board members will now speak publicly at at least one engagement a year.

The delay in the passage of legislation means some of the changes outlined in the new statement won’t come into effect until the new year.