Anne Stanley (Werriwa, Australian Labor Party) Share this | Hansard source

Prior to the 2022 election, Labor committed to conducting an independent review of the RBA. The matter before us today is yet another example of the Albanese Labor government fulfilling its election commitments. The Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 addresses those aspects of the RBA review requiring legislation. It should be noted that not all recommendations of the review are covered by the bill before us. Some are being dealt with administratively by both the RBA and the government and partially through the Statement on the conduct of monetary policy, while other recommendations are progressed by the Council of Financial Regulators.

More than ever before, Australia needs a strong monetary policy and framework, and, more than ever, Australia needs a strong, high-performance central bank. The government knows these are challenging times, and we know the struggles that Australians are facing. It is timely that this bill is before us today because the legislation is central to ensuring that we have the best and strongest monetary policy possible to meet both the challenges of today and those of tomorrow.

Firstly, the legislation before us reinforces the independence of the RBA in the operation of monetary policy. The corollary of this is removing the government's power to override monetary decisions. Interestingly, this override has never actually been used, but formalising it is nonetheless important if we're going to have a genuinely independent operation of monetary policy.

Secondly, the bill mandates the RBA's overarching objective to promote the economic prosperity and welfare of the people of Australia now and into the future. This statement of intent is important to ensure that the RBA stays on track to serve the people it is meant to—all Australians.

Next, the bill confirms that monetary policy should have the dual objectives of price stability and contributing to full employment. The dual mandate is consistent with how the RBA interpreted its mandate for many years. Both of these mandates will ensure that inflation and its destructive effects are addressed as well.

Fourthly, two new boards will be created. One will be focused on monetary policy, and the other will be focused on the management of the RBA. The Monetary Policy Board will be responsible for the monetary and financial system stability policies. It will be chaired by the governor. The Governance Board will determine the policy of the RBA not in the remit of the Monetary Policy Board or the Payments System Board and will be the accountable authority of the bank. The Payments System Board will continue to set the RBA's payments system policy. This governance model minimises the potential for confusion or conflict by clearly delineating the responsibilities of each board and establishing a mechanism to facilitate consultation in the event of an overlap. Importantly, the governor is set to be a member of all three boards and will therefore be charged with resolving any disagreements between them.

Fifthly, this bill clarifies the RBA's responsibility to contribute to the financial system stability.

Finally, the bill repeals the RBA's power to direct the lending activity of private or commercial banks, a function that was transferred to the Australian Prudential Regulation Authority back in 1998.

The RBA has been in existence since 1960. Since that time, as a nation we've faced any number of challenging economic circumstances, not least the GFC. The current times present their own unique set of challenges and difficulties. The task for this parliament is to ensure that our institutions, not least our central bank, are up to speed and fit for purpose to meet these challenges. This bill does that. I commend the bill to the House.

See this speech in context