RBA Restructure Closer After Treasurer Jim Chalmers Addresses Opposition's Concerns

As Australia's Treasurer Jim Chalmers agreed to the amendments from the Opposition, the Reserve Bank of Australia got closer to its restructure bid in three decades.

An independent review of the RBA last year recommended several proposals, including dividing the bank's board -- one responsible for monetary policy, which will continue to set interest rates, and the other, a Governance Board, to handle operations.

The Opposition refused to approve the reforms, as they specifically contended having six external members in the nine-member Monetary Policy Board. They claimed Labor could use it to appoint members who were aligned with the ruling party, ABC News reported.

The Opposition gave its nod after Chalmers assured his Coalition counterpart, Angus Taylor, that the existing members have been given a choice to stay in the rate-setting board. Under the proposal, all the board members will join the Monetary Policy Board, unless they request to join the Governance board.

"I want these changes to be above and beyond partisan politics. I want them to be bipartisan, and that's what's driven me at every stage," Chalmers told a press conference on Friday.

The review suggested bringing in persons with diverse skills, including experts on technical money policy, reported News.com.

Chalmers lauded RBA governor Michele Bullock for her support in the board's restructure, and added the reforms would make it more transparent and independent.

"It's such a crucial institution in our national economy, we want to make sure that it is as strong and as modern, as independent as it can be, and that's what's guided us when it comes to these Reserve Bank reforms," Chalmers said.

The Greens Party leader Adam Bandt accused Chalmers of watering down the reforms. The party has been pushing the federal government to use its powers under section 11 to intervene in lowering the interest rates.

"Jim Chalmers could be using his section 11 powers to bring some relief to homeowners and renters, but instead he's trying to water his powers down. We're concerned these reforms will weaken the Treasurer's powers to stop soaring interest rates, which would be bad news for renters and mortgage holders," Bandt said.

The review had sought the removal of the superfluous powers set in Section 11 of the Reserve Bank Act that empowers the treasurer to override RBA's decisions.

But several former RBA governors argued in favor of retaining the government's veto power. Chalmers proposed to downgrade the section instead of scrapping it.