Coalition bails on RBA reforms
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Treasurer Jim Chalmers is looking at new options after the Coalition pulled out of RBA reform talks.
Proposed reforms of the Reserve Bank of Australia (RBA) have faced a setback, with the Coalition declaring it would no longer support the changes after concession were made to appease the opposition’s concerns.
Shadow Treasurer Angus Taylor confirmed this week that the Coalition would offer its own RBA policy at the next election.
Taylor accused Chalmers of “blame-shifting” after the Treasurer claimed rising interest rates were “smashing” the economy.
“This is not how you conduct a negotiation,” Taylor said, upset at the government’s approach of publicly criticising the RBA before tabling its reform proposals.
Taylor also expressed concerns about the timing of the reforms, given the current economic climate.
“It needs stability, it needs certainty,” he said.
“Now is not the time to be pursuing these reforms, given what we've seen from the government over recent times.”
The proposed overhaul, which would introduce two boards - one to manage interest rate decisions and another for governance - has sparked fairly intense debate.
Despite months of negotiation, Taylor said Chalmers had failed to meet his demands, particularly regarding the retention of the government's ability to override RBA decisions.
Although Chalmers had agreed to limit this power to emergency situations, it was not enough to win the Coalition’s backing.
Chalmers criticised the Coalition for walking away from the negotiations, stating that Taylor had been “rolled once again” by his party.
“The position that has been reported from the Coalition is irresponsible, it’s disappointing, but it’s not especially surprising,” Chalmers said.
He noted that the reforms had the support of the RBA Governor, Michele Bullock, who had urged the government to pass the legislation.
The Treasurer downplayed Taylor’s concerns about political appointments to the proposed boards.
“I have absolutely no intention of making political appointments to these boards,” he said. “[Michele Bullock] has made it very clear that she would like to see the legislation passed, and obviously the Coalition has not taken her view on board.”
Chalmers’ reforms are based on an independent review aimed at modernising the RBA, but the breakdown in bipartisan support means the Treasurer may now have to seek cooperation from the Greens.
Greens Senator Nick McKim expressed openness to collaboration, on the condition that key veto powers over RBA decisions are retained.
“Dr Chalmers should use that power now to reduce interest rates and retain it so it can be used in the future,” McKim said, calling for Section 11 of the RBA Act to remain.
McKim also proposed that the RBA be allowed to direct bank lending towards productive sectors, such as clean energy, instead of housing speculation.
The Greens’ position adds further complexity to Chalmers' efforts, as he now must consider their demands to salvage the reform agenda.
As the debate intensifies, Chalmers says he remains committed to pushing through the changes, accusing the Coalition of “never being serious on Reserve Bank reform”.