A Reserve Bank charter which has not been changed since 1959 lacks relevance, fails to consider a dramatically changed economic landscape, and should be reviewed so as to better take into consideration the export industries, according to AgForce Queensland.
Calling for the review, as the ’30 Issues, 30 Days’ campaign moves to day 16, the organisation said the RBA’s focus on interest rates had a heavy impact on the international competitiveness of Australian products.
AgForce Chief Executive Officer, Charles Burke, said a review was needed to ensure agricultural viability and to reduce the seesaw effect of interest rates on the export market.
“I think most people know the reserve bank sets the interest rates for the primary reason of controlling inflation, however it must go further” Mr Burke said.
“Over the years many different Reserve Bank Governors have taken a more lateral view of what their role is but essentially they are controlled by their charter to simply control inflation.
“What we would like to see is the Reserve Bank have the ability to openly and transparently be able to make sure when it makes decisions on the interest rate it takes into account some of the macroeconomic indicators that ultimately have a bearing on the way agriculture does business.”
Specifically, AgForce is calling for:
A review and broadening of the RBA charter, to include a stable and fair value exchange (as opposed to merely a stable rate);
A consideration of mechanisms to ensure the economic health of the export-based Australian economy in addition to inflation and interest rates;
The inflation target being only one in a series of goals for the charter as opposed to the primary focus.
“The RBA is such an influential piece of mechanics in the Australian economy that it needs to be given clear instructions,” Mr Burke said.
“We, as an industry which is adversely affected by some of its decisions need to know how they are going to perform and how those decisions are going to be made.
“Currently the charter only allows the Reserve Bank to use a blunt instrument to control one aspect of the economy.”
AgForce is highlighting 30 issues of critical importance to agriculture in 30 days – click here to learn more