By Shane Wright
Shadow treasurer Angus Taylor has accused Jim Chalmers of trying to stack with “his mates” the new committee that will set official interest rates, threatening to block the biggest overhaul of the Reserve Bank in more than a generation.
In a breakdown between the major parties over the key recommendation out of an independent review of the RBA, Chalmers may have to do a deal with the Greens to force through changes at the bank aimed at improving the institution’s decisions around interest rates.
Taylor has accused Chalmers of trying to stack the RBA committee that will set interest rates.Credit: Alex Ellinghausen
The review, released last year, argued for the creation of a separate monetary policy committee that would – like similar committees on other central banks – focus solely on interest rate settings and their impact on the economy.
It argued the skills to set interest rates were different to those of running the bank, which has responsibilities in other areas including the nation’s money supply.
According to the review, members of the current board should be given the choice of moving to the interest rate-setting committee or remaining on the bank’s overall governance board.
This has prompted concerns within the Liberal Party that Chalmers would stack the rates committee.
The Coalition appointed all members of the RBA board up to 2022, including when then-governor Philip Lowe said in March 2021 that interest rates were unlikely to increase until at least 2024.
The Liberals want all members of the bank board, which includes six people chosen by the treasurer, to shift to the rates committee. It is unclear what that would mean for the board overseeing the bank’s operation.
Taylor said the Coalition had always been willing to work in a bipartisan manner on the RBA reforms but that this had been undermined by Chalmers.
He said the issue around the shift of RBA board members to the rates committee had been “consistently” raised with Chalmers since the issue arose.
“It is abundantly clear Jim Chalmers wants to spill the board and stack it with his mates,” Taylor said.
According to Taylor, the appointments of Iain Ross – a former head of the Fair Work Commission who worked at the ACTU in the 1980s – and Elana Rubin – chair of the Australian Business Growth Fund and non-executive director at Telstra – by Chalmers to the RBA board last year were both at odds with the independent review.
Taylor said there was nothing to prevent members of the governance board from sitting on the rates committee.
“Under the legislation, members can serve on both boards concurrently without issue. But it’s imperative the entire current RBA board is transitioned in the legislation to the monetary policy committee,” he said.
“Our Reserve Bank hasn’t always got it right. But continuity, stability and independence of interest rate setting is critical during these uncertain economic times.”
RBA governor Michele Bullock.Credit: Oscar Colman
On Tuesday, Reserve Bank governor Michele Bullock, who along with her deputy Andrew Hauser and Treasury secretary Steven Kennedy would sit on both committees, supported continuity on the two boards.
Chalmers, who wants to avoid doing a deal with the Greens on RBA reform over concerns they may make demands that undermine its independence, said Taylor was at odds with Bullock.
“The government has been clear it wants to see continuity on the new RBA boards – that means continuity on both the monetary policy board and the governance board,” a spokesperson said.
“Angus Taylor’s position puts him at odds with the comments this week by the RBA Governor and the recommendations of the independent RBA review.
“We will continue consulting with the opposition and are committed to working in a bipartisan way to pass this bill because the future of Australia’s central bank should be above politics.”
A Senate committee report into the reforms, which are likely to split the parliament on party lines, is due for release in coming days. Chalmers had hoped to have the new interest rate committee in place from the middle of this year.
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.