Efforts to implement long-awaited reforms to the Reserve Bank of Australia (RBA) encountered a significant hurdle on Monday, as Greens lawmakers insisted that the Labor government must facilitate a reduction in interest rates to secure their support for the proposed legislation.
In a statement, the Greens declared their refusal to endorse Labor’s RBA reforms unless there is a commitment to lower interest rates. “The Reserve Bank should take action to reduce rates immediately, and if they don’t, the Treasurer should exercise his existing authority to alleviate the burden on mortgage holders,” the party asserted.
The RBA is scheduled to announce its next policy decision on Tuesday, having maintained interest rates at 4.35% since November. With inflation proving persistent, policymakers have nearly dismissed the possibility of a rate cut this year, much to the frustration of borrowers.
These reforms, suggested by an independent review last year, propose the establishment of a separate governance board to work alongside the current monetary policy board. This proposed nine-member board would still consist of six external members, a point of contention for the Liberal-National opposition, which fears this could allow the ruling Labor Party to appoint allies.
Only two weeks prior, the Liberal-National coalition expressed opposition to the reforms, meaning Treasurer Jim Chalmers would require support from the Greens or independent lawmakers to push the changes through Parliament.
Finance Minister Katy Gallagher criticized the Greens, stating they were “out of control.” She further emphasized, “We won’t engage with that approach, as it is economically irresponsible.”
As a result of these political tensions, the reform legislation remains stalled, leaving the current structure of the policy-setting board unchanged. The RBA has already implemented some recommendations from the review, such as reducing the frequency of meetings while extending their duration, and committing to hold press conferences following each decision. However, deliberations on other proposals, including regular public appearances by board members to discuss policy considerations, are still pending.
Related topics:
