The Albanese Government will this week introduce legislation to Parliament to reform, strengthen and modernise the Reserve Bank of Australia (RBA).
It 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 Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 will reinforce the RBA’s independence, clarify its role and modernise its structure.
We want to ensure Australia’s central bank remains world class with a monetary policy framework fit to meet our current and future economic challenges.
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 legislation also establishes robust governance arrangements for the RBA.
The RBA Review’s remaining recommendations are being implemented administratively by the Government and the Reserve Bank, including through a new Statement on the Conduct of Monetary Policy that we aim to finalise next month.
These changes are part of the Albanese Government’s broader efforts to reform, renew and refocus the nation’s key economic institutions so that they can help meet current and future challenges.