RBA Reform Revived as Albanese Sends Wall of Bills to Senate

(Bloomberg) -- Australia’s plans to overhaul the Reserve Bank, including splitting the board in two, may be back on the agenda as the Labor government presses to pass dozens of bills through the Senate in the final 24 hours of sitting this year.

The government and minority Greens Party began last minute talks to revive the stalled legislation in a surprise move after earlier negotiations broke down. The Greens had been demanding Treasurer Jim Chalmers compel the RBA to immediately cut interest rates, a move that would undermine its independence. 

Chalmers had originally sought a deal on the RBA amendments with the center-right Liberal-National opposition, however those negotiations collapsed.

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Finance Minister Katy Gallagher said Thursday there were ongoing talks between the government and the Greens, which hold a large number of seats in the Senate, the upper house of Parliament. 

Gallagher suggested the government was open to one of the Greens’ key demands: that the treasurer retain the right to override a policy decision, as set out under Section 11 of the RBA Act.

An independent review of the central bank released last year had recommended scrapping Section 11, a power never used since the RBA was established in 1960. However, former treasurers and RBA governors later came out to say the government should retain this override as it’s important for elected representatives to maintain ultimate power over the bank.

“We would like that bill through, the Coalition have locked themselves out,” Gallagher told Australian Broadcasting Corp. “That leaves us no alternative but to work with other parties in the Senate.”

The RBA amendments are among dozens of bills that the Labor government is looking to push through the Senate over the next 24 hours in what could be the last sitting day before an election next year. 

Speaking to Bloomberg this week, some lawmakers said they weren’t expecting to return to Parliament before the election due by May. That makes Thursday the last chance for Prime Minister Anthony Albanese to get as much of his agenda through both houses as possible before he heads to the polls.

The prime minister can call a five-week election campaign at any point ahead of May 17, and with the economy struggling under the weight of high rates and the budget set to slide back into deficit, expectations are mounting that Albanese will move fast to avoid a further possible drop in support for Labor.

Among the bills which the government was hoping to pass on Thursday are the RBA reforms, the social media ban for children under the age of 16 and Albanese’s signature Future Made in Australia green economy initiatives.

Leader of the Opposition in the Senate Simon Birmingham described the process as “chaotic” as the government also tried to pass motions limiting debate time, enabling the upper house to progress as many laws as possible before the end of the sitting day.

RBA Reforms

Under the proposed amendments, the government would split the RBA’s board into two bodies, a monetary policy committee and a board that manages the day-to-day running of the central bank.

While some of the review recommendations have already been enacted, including Governor Michele Bullock holding post-meeting press conferences and fewer policy meetings, the splitting of the board required legislative change. 

A deal with the Liberal-National opposition fell apart in September after Shadow Treasurer Angus Taylor said he was concerned the government would stack the new monetary policy committee with Labor party supporters.

(Updates with more information on Senate bills)

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