The government will this week introduce legislation to Parliament to reform the Reserve Bank of Australia by reinforcing its independence, clarify its role and modernise its structure.

In a media release from the office of Treasurer Jim Chalmers, it said this follows months of consultation, including with the RBA, the opposition and other stakeholders, since the release of the RBA Review in April 2023.

The review itself was the product of extensive consultation that included current and former RBA board members and staff, international experts and academics.

The bill implements the recommendations of the RBA review that require legislation, including to:

  • Mandate that the RBA’s overarching objective is to “promote the economic prosperity and welfare of the people of Australia, both now and into the future”
  • Confirm that monetary policy should have dual objectives of price stability and contributing to full employment
  • Reinforce the RBA’s independence, including by repealing the power of the Treasurer to overrule its monetary policy decisions
  • Establish a monetary policy board and a separate governance board, and
  • Clarify the RBA’s responsibility to contribute to financial system stability.

The Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 legislation will also establishes robust governance arrangements for the RBA.

The RBA review’s remaining recommendations are being implemented administratively by the government and the RBA, including through a new Statement on the Conduct of Monetary Policy the government aims to finalise next month.