Treasurer Jim Chalmers has rejected a Coalition demand that he appoint all existing RBA board members to the new interest-rate setting board.
Already a subscriber?Treasurer Jim Chalmers has rejected a Coalition demand that he appoint all existing RBA board members to the new interest-rate setting board, leaving Senate support for the government’s overhaul of the central bank in doubt.
was the creation of separate boards for interest rate setting and governance. While the Coalition supports the recommendation in principle, the major parties are at loggerheads over which board the six current external RBA board members should serve on. Dr Chalmers said existing RBA board members will be asked whether they would like to stay on the monetary policy board, or whether they would like to serve on the governance board.The Australian Financial Review Business Summit“My interest here is in having an element of continuity. I believe in continuity when it comes to those board members. I hope every single one of them continues to serve on one of the two boards.”Dr Chalmers needs Coalition support for the RBA reform legislation to pass the Senate, given his stated preference not to negotiate with the Greens on what he hopes will be a bipartisan package. Shadow treasurer Angus Taylor has demanded Dr Chalmers transition all six external board members to the new monetary policy board. The Coalition fears the treasurer wants to use the overhaul to shift Coalition-appointed RBA board members to the governance board in a bid to add Labor-aligned figures to the more powerful monetary policy committee., Elana Rubin and Iain Ross, to the RBA board in April 2023 justifies their fears. The Coalition is also concerned that shifting multiple board members to the governance board could change the direction of monetary policy at a pivotal moment in the most rapid tightening cycle in decades.But Dr Chalmers said continuity was just as important for the governance board as the monetary policy board.“There is a difference of opinion – let’s be upfront about it – with the opposition,” Dr Chalmers said. “They think that continuity means everyone on the current board goes on to the monetary policy board. That means zilch when it comes to continuity on the governance board. “I believe in continuity. I want to see the continuity I want everyone to serve. But I think we need an element of continuity on both new boards, not just one new board.” The RBA review found the current board members as a collective lacked the capacity to sufficiently scrutinise or challenge the central bank governor on interest rate decisions. The RBA board did not vote against a single recommendation of the RBA executive in at least the past decade. The RBA wrote in its submission to a Senate inquiry in February that it would like “a high degree of continuity of membership” on the monetary policy board during 2024 and 2025, suggesting a preference for only about one or two existing RBA board members to shift to the new governance board. Some existing RBA experience on the new governance board may also be desirable, to manage risks such asDr Chalmers has already started the process for recruiting new board members, with Treasury publicly advertising this month for additions to both the interest rate setting and governance boards. RBA board membership comes with an annual salary of $82,960, according to the independent remuneration tribunal. Aspiring RBA monetary policy board members must demonstrate “significant expertise” in either economics, the financial system or industry, according to the job advertisement. While RBA board members previously were not encouraged to publicly air their views about interest rates, members of the new monetary policy committee will need to deliver at least one speech or public engagement each year. They will also be expected to dedicate about one day per week to their responsibilities, the job advertisement says. The dual board structure will begin on the later of July 1, or three months after the successful passage of the RBA review legislation. is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS.
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