A political unity ticket for an RBA stitch-up

RBA governor Philip Lowe says the board is waiting and watching developments on inflation, the global economy and wages ahead of its next move Picture: NCA NewsWire / Gary Ramage

Labor and the Coalition may disagree on the Indigenous voice but they’re on a unity ticket on the flaws in monetary advice.

The Reserve Bank is about to be hit with a blizzard of changes, as Jim Chalmers supports in principle all 51 recommendations from the eminent three-person review panel.

Expected changes on who sits at the table, and how often, whenever decisions are made about your mortgage rates, and how the bank communicates its thinking on all things economic to reflect today’s environment and best practice.

The RBA has not been properly examined for more than four decades and so it’s well past time for a refresh.

Every institution, particularly one as fundamental to national welfare as the central bank, should welcome scrutiny and the opportunity for renewal.

We all live in hope that whatever the new operating instructions, personnel and monetary furniture, the results are superior.

Pictured at the Reserve Bank of Australia's main board room at Martin Place in Sydney is head of the RBA Governor Philip Lowe. Picture: Richard Dobson

The humans at the central bank have made mistakes, underperformed in some aspects and tended at times to groupthink, as many insular organisations are prone to.

There’ll be an unseemly scramble within the economics world to get to the front of the queue to be considered for a spot on the separate monetary policy board that is in prospect.

No doubt the Treasurer will have a star lined up or in mind to take over as governor when Philip Lowe’s term ends in September.

The report is called an RBA Fit for the Future, but there is also an element of political stitch-up in how the changes will be sold, something that suits the two major political brands.

Both sides in Canberra want to fit up the central bank, those independent folks sitting in that heritage-listed tower at the top of Sydney’s Martin Place for today’s mortgage turmoil and household stresses.

The opposition would like you to think it wasn’t the Coalition who provided way too much fiscal juice during the pandemic, which eventually burst its banks as runaway demand and price surges after Covid lockdowns ended.

Labor, of course, was just a helpful spectator back then, although many will recall it was incessant in calling for more stimulus, not less.

Those 10 successive hikes in the RBA’s cash rate have nothing to do with the Albanese government, you’ll often hear, because the first move was made during the dying days of Scott Morrison and Josh Frydenberg.

It’s the official vibe: the RBA missed the inflation blast and told people rates wouldn’t be rising until 2024 at the earliest.

Plus, because Lowe and Co have been playing catch-up ever since, the cost of living crisis is so much worse.

It’s far more complicated, of course, but politics needs villains and heroes.

The none-too-subtle idea seeping out amid this reformist theatre is the central bank now needs wholesale change because it’s no longer fit for purpose and has failed Australians.

That may be too cynical, for the spirit of revival is alive.

But as a bipartisan political kill, it’s clinical.