Australian Council of Social Service (ACOSS) Media Release

ACOSS welcomes the changes to the way the Reserve Bank sets interest rates as part of the RBA Reform Bill that passed into law last week.

The new rules entrench a ‘dual mandate’ for the RBA – to contribute to full employment and price stability – without giving priority to one over the other.  The reforms herald the first major changes in the RBA’s 70 years history.

“These ground-breaking changes to the Reserve Bank mean the Bank must work to keep both inflation and unemployment under control. Both goals are of equal importance,” said ACOSS CEO Dr Cassandra Goldie AO.

“ACOSS worked closely with and supported proposals from Senator David Pocock to amend the Bill so that full employment and controlling inflation should have ‘equal consideration’, as the RBA Review recommended.

“Had this amendment passed, it would have been crystal clear that the Bank must avoid triggering a serious economic downturn in its efforts to curb inflation.

“Unfortunately, this has not always been the Bank’s practice. Recessions have been triggered and lives impacted when the RBA held interest rates too high for too long. With almost a million people already forced to live on poverty-inducing Jobseeker Payments, it’s a mistake the RBA must not repeat.

“We welcome statements from RBA Governor Bullock that the Bank aims to preserve the employment gains of recent years, but there’s still a risk that high official interest rates will trigger large scale job losses as long as we have a target for reducing inflation but none for reducing unemployment and under-employment.

“We call on the government to set targets and report on progress to reduce unemployment and underemployment and to ensure the new Monetary Policy Board has expertise on the impact of unemployment and inflation on people with the lowest incomes.

“ACOSS has consistently argued there are better ways to control inflation than keeping interest rates high, including capping rent increases, reducing out of pocket costs for essential government funded services like health, aged care and child care, and promoting competition in private markets dominated by a few large companies.”