Chalmers ‘open to union rep on board of RBA’

Jim Chalmers says he is open to the idea of adding a union official to an expanded Reserve Bank board.

Treasurer Jim Chalmers is open to a union official being on an expanded Reserve Bank board. Picture: NCA NewsWire/Andrew Taylor

Jim Chalmers says he is open to the idea of adding a union official to an expanded Reserve Bank board, saying a “focus” for the upcoming review into the central bank would be on whether the board membership was “broad enough, representative enough, (and) the right size”.

The Treasurer on Sunday also said he expected inflation would climb “significantly higher” than predicted in the March budget, and Treasury’s updated consumer price growth forecasts – due to be revealed as part of an economic update when parliament returns in late July – would not differ “wildly” from the RBA’s prediction that inflation would peak at 7 per cent inflation by the end of the year.

ACTU secretary Sally McManus last week slammed RBA governor Philip Lowe for being out of touch after Dr Lowe warned of the risk of a 1970s-style wage-price spiral if pay increases of 5 per cent or more became “common”.

That triggered accusations from Peter Dutton that Ms McManus was angling to become a director herself, something the Opposition Leader said would be unwelcome as it would amplify the power of the unions over the Albanese government.

Opposition Leader Peter Dutton is against a union representative on the RBA board as it would amplify the power of the unions over the government. Picture: Jonathan Ng

Unions have not had a representative on the RBA board since former ACTU leader Bill Kelty resigned in 1996.

Dr Chalmers on Sunday said he had “an open mind to make sure workers are represented”.

“It wouldn’t be unprecedented to have somebody from that side of the conversation represented on the board. I don’t believe in standing positions on the Reserve Bank board, but on a case by case basis, I do have an open mind to making sure workers are represented. This is one of the things that I want the Reserve Bank review to have a look at,” he said.

“We want the Reserve Bank board to be comprised of people representing all parts of the country, all parts of the economy,” he said, and there had been a “welcome conversation” on whether the board was “the right size”.

Labor during the election campaign promised to look at the RBA’s operations, performance and governance. The terms of reference and external review panel are to be set.

The final report is tentatively due for mid-2023.

Dr Lowe has come under criticism this year after abandoning a well-established view that the cash rate would likely not need to rise from its historic low of 0.1 per cent until 2024.

Instead, a surge in inflation that took consumer price growth to 5.1 per cent over the year to March and its highest level in decades triggered back-to-back rate rises in May and June to 0.85 per cent.

Economists anticipate a 0.5-percentage-point hike when the RBA board meets on July 5, and that the key policy rate will climb above 2 per cent by year’s end.

Dr Chalmers again refused to criticise Dr Lowe. “I think over a long period of time we’ve been well served by our economic institutions, whether it’s the Reserve Bank, the Treasury, the regulators, and others,” he said.

“I’m not going to take shots at the Reserve Bank. I’ve got a mountain of respect for Phil Lowe in particular. My objective with this review is not to take shots at the bank, or … at the governor, but to make sure we’ve got the right monetary policy settings, that we’re drawing on best practice from around the world.”