(Bloomberg) -- A planned overhaul of Australia’s central bank will dramatically dilute the governor’s authority and put the institution’s future at “huge risk,” former Reserve Bank chief Ian Macfarlane told The Australian newspaper.
Macfarlane, who helmed the RBA from 1996-2006, said the changes would see the governor’s stature “reduced out of all proportion to what any other central bank has done,” the newspaper reported Wednesday. “No other central bank puts the governor in such a weak position.”
Macfarlane said it was a “disgrace” that Treasurer Jim Chalmers had opted against putting the recommendations of an independent review of the RBA released in April out for public consultation and debate.
The comments are Macfarlane’s strongest since he began campaigning in recent days against the proposed changes. His concern is that under a new monetary policy board, the six non-RBA directors could outvote Governor Michele Bullock and her deputy in rate decisions.
Chalmers’ office rejected the arguments, saying the revamp “strengthen the board’s decision making, accountability and expertise.” It maintains there is no major change to how the board will operate. The RBA declined to comment.
While the new structure is almost the same as the current one, it’s unclear who the six independent board members will be and how will they be appointed. The review also recommends that unattributed votes on rate decisions be published. The changes are due to begin from 2024.
Macfarlane said the new structure would transform the board from an “advisory” role to one that “proactively shapes policy decisions.”
Bullock, who took charge last week, has said one of her main priorities is to bed down the review’s recommendations. Her predecessor Philip Lowe said earlier this month he was “very supportive” of the new monetary policy board structure, adding it’s “exactly the same as the model we’ve had for 60 years.”
--With assistance from Ben Westcott.
©2023 Bloomberg L.P.