Ensuring Australians have jobs will be given equal billing to keeping a lid on prices under a major shake-up of the way the Reserve Bank operates.
The federal government on Thursday released the first external review of Australia's central bank and the operation of monetary policy in four decades.
With the Greens arguing the changes are a "backwards step", Labor will work with the coalition to legislate the review's proposals with the aim of getting new settings in place to start on July 1, 2024.
A key recommendation was ensuring the central bank gives equal consideration to the objectives of price stability and full employment.
"The economic prosperity and welfare of Australians now and in the future should be an overall purpose for the institution," the review said.
As well, the RBA will have two boards instead of one.
A monetary policy board with greater economic expertise would meet eight times a year instead of monthly to allow more time to consider issues and data.
There would be a media conference after each meeting to be more transparent and board members would speak more regularly about their work.
A governance board with an external chair would be appointed to oversee the bank's organisational strategy, finances, staff planning and risk management, with no role in monetary or payments policy or financial stability.
The review called for the inflation target of two to three per cent to be retained, despite other central banks around the world having lower targets.
The government plans to introduce laws to parliament by the end of the year to reinforce the independence of the RBA by removing the government's right to veto its decisions.
The laws would also create the monetary policy and governance boards and clarify the dual objectives of keeping inflation down and full employment.
Treasurer Jim Chalmers on Thursday named former Fair Work Commission president Iain Ross and businesswoman Elana Rubin as new board members, in a bid to diversify the RBA's range of expertise.
Opposition treasury spokesman Angus Taylor said the coalition was disappointed with the appointments, and said intellectual diversity was needed on the board.
"The review laid that out plainly and I endorsed the need for that," he told ABC News on Friday.
"There is a clear process, a rigorous merit-based process that is laid out ... and the government hasn't followed it with its first two appointments."
Dr Chalmers plans to release a new statement on the conduct of monetary policy before the end of 2023, which would reaffirm the bank's independence, support the inflation target and set out commitments on transparency and accountability.
