Coalition torpedoes bipartisan deal on Reserve Bank monetary policy board

Written by: Michelle Grattan, Professorial Fellow, University of Canberra

The federal opposition has torpedoed Treasurer Jim Chalmers’ attempt to get a bipartisan deal to install a specialist monetary policy board in the Reserve Bank, claiming the reform would enable the treasurer to “stack” the new board.

Chalmers said shadow treasurer Angus Taylor had been “rolled again” by his colleagues.

Negotiations for an agreement have been underway for months. Chalmers recently said agreement was close ^[1] and he hoped to have the new structure operation at the start of next year.

He will now explore a deal with the Greens, who will hold out for their own concessions.

The change, recommended by the independent review of the bank ^[2], said there should be two boards instead of the present one. The second would oversee the bank’s general administration.

The opposition has used last week’s controversy over Chalmers’ comment that interest rate rises were “smashing” the economy to justify withdrawing from negotiating a bipartisan agreement.

Taylor said “we don’t want a sack and stack strategy”.

Chalmers released a detailed timeline of the extensive talks he had had with Taylor. During the negotiations Chalmers gave considerable ground to the opposition.

Chalmers said Taylor had raised six issues and he had accommodated all of them.

“He wanted the chair of the governance board to be the governor, and I facilitated that.

"He wanted flexibility in term limits, and I’ve facilitated that as well.

"He wanted senior RBA executives to have oversight of the operation. I made sure that the deputy governor was a member of the governance board.

"He wanted to ensure that the dual mandate should exclude references to equal weight, and so I made sure that the legislation and the Statement on Conduct don’t mention equal weight for the dual mandate.

"He asked that Section 11 ^[3] [that allows the treasurer to override the board] be retained. I’m proposing that we retain section 11 and focus it more appropriately.

"He asked that all current members of the RBA board should move to the monetary policy board, and I proposed an amendment so that all current board members move to the monetary policy board unless they don’t want to.”

Chalmers said he had even started to consult Taylor on possible appointments to the board. “So he knows I have absolutely no intention of making political appointments to these boards.”

Chalmers said Reserve Bank Governor Michele Bullock supported the reform.

“This shows the Coalition were never serious on Reserve Bank reform.”

On another front, the Coalition is continuing to string out negotiations on the government’s aged care proposals, seeking further points and clarifications. The government had hoped that the plan would go to the Coalition party room on Tuesday but it did not.