Treasurer Jim Chalmers’ plans to reform the Reserve Bank of Australia (RBA) have hit another roadblock. The Greens party is demanding the government compel the central bank to lower interest rates.
Greens economic spokesman Nick McKim stated that the party would withhold support for the legislation until interest rates are reduced. He called for Chalmers to use the government’s reserve powers to enforce a reduction if the RBA board does not cut rates.
The RBA is expected to announce interest rates on Sept. 24. The demand to slash interest rates gained momentum after the U.S. Federal Reserve decided to cut them by half a percentage point on Sept. 18. In addition to the United States, around 10 key central banks, including those in Canada, the UK, the EU, and New Zealand, have been reducing their official interest rates since last year.
In a response to the Greens’ statement, Finance Minister Katy Gallagher said the party has gone “out of control.” She also described the proposal as economically irresponsible.
“Well, I just think the Greens are out of control at the moment, full of self-importance and seeking a populist approach to everything,” Gallagher told ABC Radio.
McKim responded, saying it is not the Greens but the housing crisis in Australia that has gone “out of control.”
Earlier in the day, the Greens claimed that a proposed cut of 25 basis points could reduce monthly repayments on an average mortgage of $641,000 by around $100 (US$68), equating to savings of $1,200 annually.
The Greens asserted that the RBA’s decisions are inherently political, impacting all Australians.
“Part of this modernisation of the Reserve Bank requires ending the pretence that the RBA is independent and ‘above politics.’ Members of Parliament, including the treasurer and shadow treasurer, should be able to debate, criticise, oppose, or support the actions of the RBA,” read the statement released by the Greens.
It further claimed that if interest rates are reduced, the Greens will support the treasurer’s legislation to restructure the RBA, provided two key provisions remain intact: the ability for the treasurer to override RBA decisions and the RBA’s authority to direct funds to productive economic sectors.
In a press conference on Sept. 9, Chalmers said he is open to negotiating with the Greens to get the RBA reforms passed through the Senate after the Coalition refused to back the bill over board stacking concerns.
Chalmers stated that he still prefers to pass the legislation with bipartisan support but is now open to exploring all possibilities.
“We’ll consider the next steps. All options are on the table, but my preference hasn’t changed. I’d prefer a bipartisan outcome in the Senate.”
