Unions and businesses voice their support of the RBA review

The Reserve Bank of Australia review has earned widespread support from across business groups, unions and the opposition for laying out a ‘carefully specified’ and ‘measured’ approach.

ACTU secretary Sally McManus says it was positive to see the RBA shift its focus to its full employment goal rather than continuing interest rate rises to tackle rampant inflation. Picture: NCA NewsWire / Martin Ollman

The Reserve Bank of Australia review has earned widespread support from business groups, unions and the opposition for laying out a “carefully specified” and “measured” approach to strengthen governance of the RBA and placing unemployment at the core of its inflation-fighting strategy.

Australian Council of Trade Unions secretary Sally McManus said it was positive to see the RBA shift its focus to its full-employment goal rather than continuing interest rate rises to tackle rampant inflation, the underlying cause of which was “corporate profiteering” rather than wage growth.

“It’s time for the RBA to rebalance its efforts towards achieving its objective of full employment, and away from imposing higher and higher interest rates on mortgage holders,” she said.

“With this review of the RBA and the inclusion of fresh expertise on its board, we look forward to economic levers being used to support working people and make Australia’s economy and workforce stronger and more equitable.”

The review has also gained support from business groups, with Australian Chamber of Commerce and Industry chief executive Andrew McKellar voicing his support for the reforms, including the dual board structure which mirrors overseas models which will “encourage greater transparency” and bolster “public confidence”. “For the RBA to ensure price stability and full employment, it must have the legitimacy and credibility that come from having clear, carefully specified objectives, and being accountable for its outcomes,” he said.

“Business also welcomes the reaffirmed commitment to the independence of the bank and continued support for the flexible inflation targeting framework of 2 to 3 per cent.”

Australian Industry Group chief executive Innes Willox said the review presented a “measured and far from revolutionary” blueprint to strengthen the governance of the RBA, and the government’s agreement to act on all 51 recommendations was “very encouraging”.

Opposition Treasury spokesman Angus Taylor has also voiced his support for the review saying that it would strengthen the governance of the RBA, but cautioned that bringing inflation under control was not solely the responsibility of the bank.

“Can I highlight that the panel recommended a very close interaction between fiscal policy and monetary policy,” he said.

“The government needs to play its part in bringing down inflation.”

However, Greens Treasury spokesman Nick McKim said the review was a “stitch up” that merely “doubles-down on the existing system that is grinding people into poverty and cooking the planet”.

“Making price stability and full employment the dual objectives of the RBA is a three-card trick that reinforces the mistaken belief that interest rates are the best and only tool for tackling inflation,” he said.