Unions push for ‘workers’ representative’ on Reserve Bank board

Union leaders are calling for a ‘workers’ representative’ to be put on the Reserve Bank board, ahead of Jim Chalmers’ wide-­ranging review of the central bank.

ACTU Secretary Sally McManus rubbished the RBA governor’s warning. Picture: Brendan Beckett

Union leaders are calling for a “workers’ representative” to be put on the Reserve Bank board, ahead of Jim Chalmers’ wide-­ranging review of the central bank and as the sudden return of inflation reignites fears of a 1970s-style wage-price spiral.

RBA governor Philip Lowe invited a storm of criticism this week when he warned against wages growth “responding mechanically to the higher inflation rate”, and said broadbased pay rises of 5 per cent or more would mean higher rates and require a downturn to regain control of consumer price growth.

With inflation heading towards 7 per cent and as some unions push for pay increases of as much as 6 per cent, ACTU secretary Sally McManus on Thursday rubbished the governor’s warning, accusing him of being out of touch with how wages are set. “To think somehow that the system is going to deliver across-the-board pay increases of 5 or 7 per cent is boomer fantasy land, not realising that the whole system would be incapable of delivering that,” Ms McManus said.

Reserve Bank governor Philip Lowe. Picture: AAP Image/Dan Himbrechts

Opposition Leader Peter Dutton accused Ms McManus of angling for a spot on the RBA board, saying unions already had “enormous influence over the federal government” and that their inclusion would jeopardise the central bank’s independence.

“I just don’t think we need a union leader without the requisite skills sitting on the Reserve Bank board,” Mr Dutton said.

“The unions have enormous influence over the federal government. We don’t want political interference in decisions made by the RBA.”

But AWU national secretary Daniel Walton said “there should absolutely be a workers’ representative on the RBA board ­because diversity of experience delivers value to boards”.

“ACTU leaders like Bob Hawke and Bill Kelty sat on the RBA board in the past and there are abundant options to choose from today,” Mr Walton said.

“As industry superannuation funds have shown, boards with workers’ representatives tend to outperform boards without such representatives,” he said.

While the terms of reference for the RBA review are yet to be determined, The Weekend Australian understands that the Treasurer considers the composition of the board to be a key part of that review.

The RBA board consists of nine members, including the governor, deputy governor and Treasury secretary, alongside six directors appointed by the Treasurer. Those six directors have mostly been drawn from a pool of company directors.

Former ACTU secretary Bill Kelty. Picture: AAP Image/Kelly Barnes

Former union leader Bill Kelty, who was an RBA board member from 1987 to 1996, agreed board directors should be drawn from a wider group than just big business and economists. “Why it helps to have someone from the labour market side is they give you a better understanding of what is happening on wages, industrial relations and the workplace,” Mr Kelty told The Weekend Australian.

“It would be silly excluding people from unions, as it would be to exclude people from business,” he said. Mr Kelty said Dr Lowe’s warning of a repeat of the 1970s was not “ideological”, but a reflection of what has happened in the past during times of high inflation. “It would be lunacy if we institutionalised high and increa­sing levels of inflation” by automatically matching wage rises to cost of living, but he said “there’s absolutely no reason for this to happen – we’ve got to guard against it, but we don’t need to panic, just to be vigilant”.

Mr Kelty, who is a director of trucking firm Linfox, said there wasn’t such a thing as a “representative” on the RBA board.