Australia’s central bank does not need a “revolution,” opposition Treasury Spokesman Angus Taylor said, as the government prepares legislation to underpin an overhaul of the institution.
(Bloomberg) — Australia’s central bank does not need a “revolution,” opposition Treasury Spokesman Angus Taylor said, as the government prepares legislation to underpin an overhaul of the institution.
The Reserve Bank will set up an expert policy board, hold fewer meetings and give press conferences explaining its decisions in its first major reform since the early 1990s. This follows the recommendations of an independent review called by Treasurer Jim Chalmers that reported in April this year.
“Who is on the monetary policy board will be hugely important,” Taylor said in an interview with Bloomberg at Parliament House in Canberra.
“That’s where I think this risks becoming a process that heads in the wrong direction,” he said Thursday. “A radical change in the personnel we think would be disastrous.”
It remains unclear who will be appointed to the RBA’s two boards and how it will work. That’s fueled criticism from Australia’s longest serving Treasurer Peter Costello and former central bank chief Ian Macfarlane that the reforms could undermine the authority of the governor.
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Chalmers has pushed to make the reforms bipartisan. Support from Taylor and the Liberal-National Coalition would ensure the RBA changes could be passed through Parliament without needing the approval of the left-wing Greens party, which may want more radical changes to the legislation.
The shadow treasurer said he supported the bipartisan approach and is in regular discussions with Chalmers, but Taylor added he was worried about the signal sent by the appointment of former Fair Work Commissioner Iain Ross and AustralianSuper ex-chair Elana Rubin to the RBA board earlier this year.
“What we need in this country is a credible, capable, independent Reserve Bank,” he said. “A revolution in the Reserve Bank is not what’s needed.”
Separately Taylor said he was also worried about Australia’s efforts to contain inflation amid the threat of a wider war in the Middle East and a weakening Australian dollar.
Third-quarter inflation will be released on Wednesday and is likely to be pivotal in the RBA’s decision at its Nov. 7 meeting on whether to raise interest rates from the current 4.1% or stand pat for a fifth month.
The shadow treasurer said improvements in labor productivity were the only long-term guarantor of economic growth, but he said the drop since the center-Left Labor government took power was “unprecedented.”
“We have never seen labor productivity do what its done in the last five quarters. Nothing even close,” he said.
Productivity has been in long-term decline across the world over the past decade, including in Australia, suggesting it’s not just the government of the day responsible.
–With assistance from Swati Pandey.
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