The Australian Senate approved an overhaul of the Reserve Bank on Thursday (Wednesday GMT) after the Albanese government came to an agreement with the Greens and the Senate crossbench.
The reforms will see the greatest changes to the central bank in decades, including the creation of a second RBA board, tasked with interest rate-setting policy.
This means there will be two separate committees for monetary policy and governance and gives Treasurer Jim Chalmers the opportunity to appoint several figures ahead of next year’s federal election.
One board will be responsible for monetary policy while the other will manage the day-to-day running of the central bank.
“These laws will reinforce the Reserve Bank’s independence, clarify its mandate, and modernise its structures,” Chalmers said in a statement Thursday.
The Coalition is opposing such moves after saying the government is trying to “stack” the RBA with Labor-aligned appointees.
In what was the final parliamentary sitting day of the year, the Labor government pushed to pass as much of its legislative agenda as possible.
The RBA bill negotiations between the Government and the Greens had previously broken down after the Greens were demanding the Treasurer compel the RBA to immediately cut interest rates, effectively undermining the central bank’s independence.
Greens Treasury spokesman Nick McKim said the Government had agreed under Section 11 of the RBA Act to retain the right for the Treasurer to override a rate decision.
“We now urge Labor to actually use that power to bring down mortgages and provide some relief for mortgage holders in Australia,” McKim told reporters in Canberra.
As the Greens hold a large number of seats in the Senate, their support is fundamental for Labor to pass most major pieces of legislation.
After last year’s independent review of the central bank recommended eliminating Section 11, a power which has never been used since the RBA was established in 1960, it was former treasurers and RBA governors that declared the government should retain ultimate power over the bank.