00:00The Treasurer hasn't overruled the Reserve Bank in the era of the independent central
00:07bank, so we're talking about three decades here.
00:10So it would undermine confidence in the ability of the Reserve Bank to implement independent
00:15monetary policy and achieve its objectives for inflation and employment, importantly.
00:21So we haven't had a review of the Reserve Bank's monetary policy operations for more
00:26than three decades that we've been having independent monetary policy.
00:30So this is a really important, significant review that occurred.
00:34Now about half of the recommendations in the review can be implemented by the Reserve Bank
00:40and there are a bunch of others that can be implemented by the Treasury Department, by
00:45the government, without legislation, but there's a small portion that do require legislation
00:51where we're changing the RBA Act.
00:53And so the most significant of those is splitting the Reserve Bank board, creating two boards.
00:59One would be for governance and one would be for setting monetary policy.
01:03So that would be a big change because at the moment there isn't a governance board.
01:07And the aim would be to make the Reserve Bank board setting monetary policy a much more
01:12expert-based board.
01:14The concerns from the Coalition, from the opposition, have been about Labor manipulating
01:20or stacking the board with Labor people and so how that would change the influence that
01:28the government has over the Reserve Bank setting monetary policy.
01:32Now the reality is that the appointments to the Reserve Bank board in its existing stance
01:39are always made by the government of the day.
01:41And so the Coalition, when they've been in government, have appointed people and similarly
01:47for Labor.
01:48But so there is obviously some concern there from the opposition.
01:54The Greens have sort of taken a bit of a back seat on this for some time because the government
01:59was negotiating with the opposition.
02:01But now that the opposition has said that they won't go with this bill, then the Greens
02:09have come to the fore in being the other party that the government can negotiate with.
02:15And the Greens are now insisting that the Reserve Bank would have to cut interest rates
02:19for them to agree on that.
02:21And we're in a situation where inflation is the biggest problem that we have in the economy
02:26and we need high interest rates to reduce inflation.
02:29So what the Greens are asking for would actually be irresponsible economic policy.
02:34So the Governor's last policy decision was very clear that the Reserve Bank board does
02:39not expect to cut interest rates this year.
02:42Given what we see about how high inflation is, how slowly it's coming down, how much
02:48we actually already still have demand in the economy exceeding supply, that's adding to
02:53inflationary pressures.
02:55So we're not in a situation yet where we can cut interest rates.
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