(Bloomberg) — Australian Treasurer Jim Chalmers said he was disappointed but not surprised that the Liberal-National opposition had rejected his compromise offer on Reserve Bank reforms, and may now have to turn to minority parties in search of a deal.
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“We’ll consider the next steps,” Chalmers told a press conference at Parliament House in Canberra on Tuesday. “All options are on the table, but my preference hasn’t changed. I prefer a bipartisan outcome in the senate.”
The treasurer said he would rather negotiate with the minority Greens party than abandon the proposed changes to the central bank altogether.
The overhaul of the RBA includes splitting its board into a new monetary policy committee and governance board and requires amendments to the RBA Act. Chalmers has sought the backing of the opposition to pass the bills in order to avoid dealing with minority parties that might seek more radical changes.
The opposition has demanded all current board members be transferred to the monetary policy committee to avoid giving Chalmers the opportunity to make a lot of new appointments. The treasurer, in contrast, wanted current directors to have the option of joining either the committee or the governance board.
Chalmers last month announced a compromise under which the government would allow everyone on the current RBA board to go on the monetary policy committee unless they indicated in writing a willingness to switch to the governance board.
‘Deep Concerns’
However, Shadow Treasurer Angus Taylor said Tuesday he would be opposing the bill despite the concessions, citing “deep concerns about the motives of the government” on appointments to the interest rate-setting board.
“The government’s amendments leave open the option for a stitch up of the Reserve Bank board,” Taylor said in a statement. “Recent public comments from not only the treasurer, but other senior Labor figures in an attempt to blame the RBA for their own economic failures, are deeply unsettling.”
In the past week, Chalmers blamed RBA rate increases for Australia’s anemic growth, saying the hikes were “smashing the economy.” That was followed by Labor party president and former Treasurer Wayne Swan accusing the central bank of “putting economic dogma over rational decision-making.”
Governor Michele Bullock has said the RBA sees little prospect of a rate cut this year and hasn’t ruled out another hike as it struggles to control inflation.
The RBA’s dual board framework was originally intended to be in place by mid-2024, but differences between the Labor government and center-right opposition delayed passage of the bills.
The left-wing Greens party said its primary concern around the legislation was the need to retain the treasurer’s right to override decisions from the RBA. Chalmers has already largely agreed to that demand as part of his negotiations with the Coalition.
Governor Bullock has basically sided with the government in the debate, telling a parliamentary panel last month that she’d prefer some degree of “continuity” on both boards.
“Personally, I think if we can achieve continuity by some people going on to the monetary policy board and one or two going across to the governance board, that would be my best-case scenario.”
–With assistance from Swati Pandey.
(Updates with shadow treasurer’s comments.)
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