Coalition push to amend legislation to split Reserve Bank board into two new boards

A political stoush over the future governance of the Reserve Bank of Australia is erupting after Shadow Treasurer Angus Taylor announced the Opposition would look to amend proposed legislation dividing the central bank’s board into two.

The Reserve Bank review handed down last year recommended two separate boards be created to govern the RBA — one to determine interest rates, looking after monetary policy, and another for governance of the bank itself.

The review panel made this recommendation after finding the existing board’s experience was lacking and many opinions had been unchallenged. The proposal has been contentious, with previous RBA governors Bernie Fraser and Ian Macfarlane saying it is not necessary.

The review proposed current board members would have a choice of which board they would roll onto, with expectations the new structure would be in place mid-year. But the changes require amendments to the RBA’s governing act.

Mr Taylor on Wednesday wrote to Treasurer Jim Chalmers to say the Coalition would push for an amendment to the bill that current RBA board members would all move to the new monetary policy board. He says the Government and Dr Chalmers are trying to stack boards with “mates”.

A report on the bill from the Senate economics committee is due on Friday.

The Government for its part says it is seeking continuity on both boards, requiring some members of the current board to move to the governance board.

Mr Taylor said the Treasury department had already advertised this month — before legislation was put before Parliament — for members of both new boards.

“Under the legislation, members can serve on both boards concurrently without issue. But it’s imperative the entire current RBA Board is transitioned in the legislation to the Monetary Policy Committee,” he said.

“Our Reserve Bank hasn’t always got it right. But continuity, stability and independence of interest rate setting is critical during these uncertain economic times.

“It is abundantly clear Jim Chalmers wants to spill the board and stack it with his mates.”

Asked on Tuesday at her post-interest rates decision press conference about the issue, RBA governor Michele Bullock said: “Continuity for me means continuity . . . with respect to both boards. I have no particular firm view on numbers (of members on boards).”

The Government announced in-principle support for all of the review’s recommendations after it was released in April last year.

“Angus Taylor’s position puts him at odds with the comments this week by the RBA Governor and the recommendations of the independent RBA review,” a spokesman for the Treasurer said.

“We will continue consulting with the opposition and are committed to working in a bipartisan way to pass this bill because the future of Australia’s central bank should be above politics.”

Dr Chalmers last year appointed former Fair Work Commission boss Iain Ross and former AustralianSuper chair Elana Rubin to the RBA board. Ms Rubin is also a board director at Telstra, while other RBA board members are also on major company boards, including Alison Watkins (CSL and Wesfarmers) and Carolyn Hewson (CSL).

Also on the RBA board are renowned economist and former Melbourne Business School dean Ian Harper and philanthropist and former company director Carol Schwartz, as well as Treasury secretary Stephen Kennedy, Ms Bullock and her new deputy, Andrew Hauser.