Recommendations from a review of the Reserve Bank of Australia in 2023 included ditching the veto on rates, a mechanism that has never been used, but a lack of coalition and Greens support left the changes in limbo.
Under an offer put to the coalition by Treasurer Jim Chalmers, the parliament will maintain the override power it already has but "limit it to emergency circumstances and not just differences of opinion".
Treasurer Jim Chalmers says the ball is now in the opposition's court on reform of the central bank. (Darren England/AAP PHOTOS)
Concessions have also been made on the dual-board structure, one for setting interest rates and a separate one for governance, Dr Chalmers confirmed on Friday.
All current members of the RBA board will go onto the interest rate setting board, Dr Chalmers said, unless those individuals indicated a willingness to go on the governance board instead.
Shadow treasurer Angus Taylor said he was worried the government would stack the new monetary board with Labor appointees.
Mr Taylor said he was still working through the detail of the proposal after receiving correspondence from the treasurer on Thursday.
"As always, we will approach these negotiations in good faith and in confidence," he said.
The federal treasurer was hopeful the accommodations on "line-ball calls" would attract opposition support, so the long-delayed changes could be legislated by the end of 2024.
"Our reforms are all about modernising and strengthening the Reserve Bank for the future," Dr Chalmers told reporters on Friday.
"The ball is now in the shadow treasurer's court."
Coalition members of a parliamentary committee were opposed to scrapping the veto rule to override interest rate decisions, as were a host of former central bank governors, several economists and the Greens.
Former RBA governor Bernie Fraser told a parliamentary hearing earlier in 2024 it served as an important "safety valve", and ditching it could open the door to other processes aimed at clipping the bank's independence.
The reviewers in favour of dumping the power argued it had never been used, removing it would strengthen the RBA's independence, and it was not a common feature internationally.
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