An alliance between the Greens and Liberal parties in the Senate could force Jim Chalmers to keep a government power that allows treasurers to overrule Reserve Bank decisions on interest rates.
Chalmers announced plans to scrap the veto power in the government response to recommendations from a panel which reviewed the Reserve Bank operations and made suggestions for improvement.
But two of the most controversial changes – the removal of powers which allows the government of the day to intervene with the bank in extraordinary circumstances, and the recommendation for a second governance RBA board made up of academic economists has seen pushback from across the political spectrum.
Greens senator Nick McKim plans to move amendments in the Senate this week to force the government to retain the section 11 powers of the RBA Act which give the government its veto.
After pushback against the changes from former treasurers Paul Keating and Peter Costello, and the Reserve Bank governors who served with them, Bernie Fraser and Ian Macfarlane, the Coalition is also withholding support for key aspects of the government legislation.
The former governors and treasurers were united in believing the power needed to be retained as a “safety valve” for both the bank and the government in the “once or twice a century” case of serious disagreement between the two on how to handle an economic crisis.
With the Senate committee examining Chalmers’ RBA legislation unlikely to support removing the veto, as well as reservations over the second board proposal, the legislation is unlikely to emerge from the Senate intact.
Chalmers said on Friday he was “considering” the development and would “respond in due course”.
The RBA review legislation had been expected to pass without much fanfare, with opposition to key elements of the bill taking the government by surprise.
But with a fight looming on the government’s “help to buy” shared equity scheme, it is expected Chalmers will negotiate to amend the RBA legislation to avoid an ongoing stoush.
The Albanese government will introduce its legislation for help to buy in the coming parliament week, after working through key sticking points with the states and territories on how they would administer the scheme.
The Coalition has been consistently opposed to the scheme since before the election, leaving the government to negotiate with the Greens and the crossbench.
The Greens are prepared to step up their fight for renters’ rights in order to pass the legislation, which the government has so far refused to budge on.
That means the legislation will enter the parliament without the support it needs to pass, setting up another long battle with the Greens over a marquee housing policy.
The government will have more support for its stage-three tax cut changes which hit the Senate this week, where the legislation is expected to pass with the Coalition’s vote.
In the lead-up to next week’s Asean summit in Melbourne, the president of the Philippines, Ferdinand R Marcos Jnr, will address the Australian parliament, coming just weeks after Papua New Guinea prime minister James Marape gave his address.
The move is part of the government’s ongoing mission to restore relations with key regional partners, and comes ahead of an official upgrade of the Australia-Philippines relationship to a “strategic partnership”.
