RBA ball in Coalition’s court, says Jim Chalmers

Jim Chalmers says ‘the ball is now in the shadow treasurer’s court’ to progress Labor’s overhaul of the Reserve Bank.

Treasurer Jim Chalmers speaking in Brisbane on Friday. Picture: NewsWire / John Gass

Jim Chalmers says “the ball is now in the shadow treasurer’s court” to progress Labor’s overhaul of the Reserve Bank, with the Treasurer hopeful of establishing a dual board structure by early next year.

The Albanese government is yet to secure the opposition’s support for its RBA shake-up ­despite offering to automatically transfer all current board members to the proposed interest rate setting board. It is understood there is a preference among some of the six external board members to instead sit on a separate governance board, which would be allowed under Dr Chalmers’ revised ­reforms, thus threatening to sink a deal.

The Coalition remains concerned that Dr Chalmers could use the restructure to “stack” the monetary policy committee with Labor-aligned appointees, a fear fuelled by his installation of two former union officials to the current board in April last year.

However, Dr Chalmers would still be required to appoint new members to the specialist monetary policy board if existing members opted to sit on the new governance board. That would deliver on the desires of RBA governor Michele Bullock, who has previously stated she would like at least one current board member to serve on the governance board.

Speaking on Friday, Dr Chalmers said he had advanced the compromise offer in “good faith” and called on his opposition counterpart Angus Taylor to “carry his colleagues” in order to reach a deal. “It has dragged on too long and we want to get cracking,” the Treasurer said in Brisbane.

However, Dr Chalmers refused to be drawn on where he expected current board members would prefer to serve under the dual board structure – a key recommendation of a review into the RBA – after requesting such information earlier this year.

“I don’t really want to go into the nature of those private conversations,” he said.

Mr Taylor, however, remains coy on the Coalition’s position, and on Friday said the ­Coalition would take its time to ensure its concerns were resolved.

“While it is disappointing to see these discussions unfold in the media, the Coalition is committed to continuing these negotiations in good faith and in confidence,” Mr Taylor said.

“It is clear from the correspondence received yesterday that the Treasurer has realised his previous positions were untenable.”

Centre for Independent Studies chief economist Peter Tulip said the Coalitions’ concerns over Labor-aligned appointments to the monetary policy committee were legitimate. “There is nothing in the legislation to prevent the board being stacked with ALP mates and what Jim Chalmers is proposing will delay that, but otherwise do nothing to prevent it,” the ex-RBA official said.

“Even worse, what Chalmers is proposing is reappointing board members with an amply documented record of failure.”

The RBA review found that the board lacked the capacity to effectively scrutinise recommendations of the governor.

Despite his concerns, Dr Tulip said Dr Chalmers’ proposal should be passed. “Even though it’s not perfect, getting it in place is a very high priority.”

In a further attempt to get the Coalition onside, Dr Chalmers also proposed to retain the ­government’s power to override the RBA’s interest rate decisions – which has never been used – but will narrow the circumstances in which it can be exercised.

Dr Chalmers said the veto would only be used in ­“genuine emergency circumstances” where there had been a “total breakdown” in the decision-making ­capacity of the central bank.