Treasurer Jim Chalmers has dropped plans to make changes to his planned overhaul of the Reserve Bank board that were aimed at winning support from the Coalition.
Instead, the treasurer has revealed any amendments to his proposals will effectively depend on negotiations in the Senate and with the Greens.
This week, shadow treasurer Angus Taylor revealed the Coalition would not back the reforms, the most important of which is the creation of a specialist interest rate setting committee.
Treasurer Jim Chalmers.Credit: Alex Ellinghausen
The committee, recommended by an independent review of the RBA, would bring the bank into line with other central banks around the world. The review found the current structure had contributed to “short-comings” to its decisions, with senior staff unable to be challenged by part-time board members.
Taylor accused Chalmers of trying to “sack and stack” the monetary policy committee and ruled out supporting the reforms even if all concessions demanded by the Coalition were supported.
Chalmers told the House of Representatives that while he still believed a bipartisan approach to the RBA was the best outcome, he would not amend his proposals in line with what he had previously indicated to the Coalition.
“Instead, we are considering our options and considering next steps,” he said.
Chalmers also confirmed that working with the Greens may be the only way to get the reforms through the parliament.
“We anticipate that we will have to move amendments in the Senate to secure further support,” he said.
“It is not our preference to accommodate the Greens but the Coalition may force our hand.
“The government is committed to strengthening the independent Reserve Bank in an increasingly complex and changing world.”
The Greens have indicated support for two key changes – retention of the power of the government of the day to overrule Reserve Bank decisions and an obscure power that allows the bank to direct the use of credit.
Both powers, in place since 1959, have never been used. Chalmers had already agreed to retain the overrule power as part of his negotiations with the Coalition.
