Treasurer Jim Chalmers has confirmed legislation will be introduced this week to strengthen the Reserve Bank of Australia (RBA), which follows the central bank’s sweeping overhaul earlier this year.
According to Chalmers, the announcement comes after months of consultation with the RBA, the government, the opposition and other stakeholders.
The 294-page review of the RBA was first released in April 2023 and was described as one the largest shake-ups in the Reserve Bank of Australia’s history.
Titled An RBA Fit for the Future, it made 51 recommendations for the bank. The Albanese government “agreed in-principle” with all recommendations, Chalmers said in April.
The Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 will reinforce the RBA’s independence, clarify its role and modernise its structure.
“We want to ensure Australia’s central bank remains world-class with a monetary policy framework fit to meet our current and future economic challenges,” Chalmers explained.
The bill will introduce the review’s recommendations which require legislation. This includes:
- Mandating the RBA’s overarching objective to “promote the economic prosperity and welfare of the people of Australia, both now and into the future”.
- Confirming monetary policy should have dual objectives of price stability and contributing to full employment.
- Strengthening the RBA’s independence, including by repealing the power of the Treasurer to overrule its monetary policy decisions.
- Establishing a monetary policy board and a separate governance board.
- Clarifying the RBA’s responsibility to contribute to financial system stability.
“The RBA review’s remaining recommendations are being implemented administratively by the government and the Reserve Bank, including through a new statement on the conduct of monetary policy that we aim to finalise next month,” Chalmers added.
“These changes are part of the Albanese government’s broader efforts to reform, renew and refocus the nation’s key economic institutions so that they can help meet current and future challenges.”
On 5 November, the Treasurer announced the recently appointed RBA governor Michele Bullock will oversee the new governance board and the monetary policy board.
