Australia’s Central Bank Reforms Uncertain Due to Political Interference – Reuters

SYDNEY (Reuters) – Proposed reforms to the Reserve Bank of Australia (RBA) face significant challenges after the Liberal National opposition announced its intention to reject them in parliament, according to Treasurer Jim Chalmers.

Chalmers informed reporters that despite agreeing to six modifications suggested by Shadow Treasurer Angus Taylor, the opposition has confirmed it will oppose the reform package, complicating the prospects for its passage into law.

The reforms, which stemmed from an independent review conducted last year, include the establishment of a dedicated governance board to work alongside the existing monetary policy board.

This nine-member rate-setting board would comprise six external members, a factor that the opposition argues could allow the ruling Labor Party to appoint individuals sympathetic to its agenda.

In an effort to gain support, Chalmers also proposed modifying a plan to eliminate the government’s veto over the RBA’s interest rate decisions, which faced opposition from both the Liberal National party and the Greens. The suggested compromise would permit government intervention in the central bank’s decisions but only during emergencies.

Chalmers expressed his intention to explore alternative strategies to pass the legislation, which would likely involve seeking backing from the Greens or various independent lawmakers.

Some recommendations from the review have already been implemented by the RBA, such as reducing the frequency of policy meetings while extending their duration, along with conducting a press conference following each decision.

However, the RBA has not yet decided on other recommendations, including the necessity for all board members to regularly discuss their policy perspectives.

Legislation regarding the composition of the RBA board was set to take effect on July 1 but is currently in limbo due to the lack of opposition support.