While in Opposition, Willis protested to then Finance Minister Grant Robertson at the reappointment of Orr for a second five-year term. She had a point, particularly as Robertson chose not to consult with her in the lead-up to the 2023 election.
Willis made some performative comments this week that don’t bear repeating, except to say she had enough sense this time not to indulge in the absurd Beehive drumrolls that accompanied prior resignations like that of KiwiRail’s former chairman David McLean. The role of a Finance Minister with regard to a central bank governor does ensure some discipline at least.
This certainly was not the skilfully managed stepdown that versatile chairs orchestrate without stretching the bounds of credulity. It was also pretty naive of Quigley to allow this to happen on the eve of the central bank’s big hurrah where substantial players, including former US Federal Reserve Ben Bernanke, were in town to take part in a major policy forum celebrating the 35th anniversary of New Zealand’s groundbreaking introduction of independent inflation targeting.
Inevitably, Orr’s departure has been seen by his critics as an exercise in petulance. This is hardly a surprise to those, including journalists, who have gone toe-to-toe with him over the years and indulged in tit-for-tat biffo, provoking what one insider termed the occasional “Vesuvius”.
Orr is undoubtedly an emotional man.
There have undoubtedly been mistakes. I’m leaving that to others to canvass but let’s face it, managing monetary policy through the Covid pandemic has not left many central bankers covered in glory.
What I do want to acknowledge is that this deeply passionate – but short-fused – central bank governor has been instrumental in three key leadership areas.
First, he is a nationalist. I recall when I came back from Canberra from interviewing former Australian Foreign Minister Alexander Downer and a bevy of influential officials and business chiefs about their plans for the initial Australia New Zealand Leadership Forum in 2004, the alarms went off.
In essence, what Downer – and the then Australian Federal Treasurer Peter Costello – had in mind was the subjugation of New Zealand’s national interests to those of Australia. Our banks should be monitored by the Australian Prudential Regulation Authority – not the Reserve Bank; the Australian Competition and Consumer Commission should be the competition czar for both countries, Qantas should be allowed to merge with Air New Zealand; there should be a common currency – so it went on.
This was a deep shock to then Reserve Bank Governor Alan Bollard, the late Wellington businessman Lloyd Morrison – who furiously drummed up support for a fightback – and the bosses of Air New Zealand and what was then Telecom: it smacked of an Aussie takeover.
They rolled the Australians back.
The temperature stepped up again when Costello, who went on to pursue a single-market agenda, was pushing the late Finance Minister Sir Michael Cullen to acquiesce on the banking regime.
There is a barely apocryphal story that Orr, who was at that stage Deputy Governor and Head of Financial Stability at the Reserve Bank, was sent in to shirtfront Costello and smack him down over his bid to get the Aussie banks’ New Zealand operations back under Australia’s banking supervision regime.
It succeeded.
Second, Orr has been criticised over a claimed inordinate focus on climate-change finance – possibly also because his speeches focused on the bank’s adoption of the legend of Tāne Mahuta. In Māori mythology, Tāne Mahuta is the god of the forest and birds.
Stripping the outrage over that assertion away, the reality is New Zealand has been a leader in climate finance disclosures. Our banks are ahead of the play, to the annoyance of some current coalition ministers who want them to keep banking the titans of the fossil fuel industry. The NZ Super Fund has also been a leader.
Third, Māori finance.
One of the downsides of the Māori economy has been the inability to appropriately leverage a collectively owned asset base. Orr has been instrumental in working with the trading banks and Māori ownership to try to find a way through so more capital can be made available for such interests to grow their businesses and build homes for their people.
We still don’t know exactly what the final provocation was that spurred Orr to walk.
But those who live in a world where realpolitik reigns should have the decency to observe that in these three areas, Orr showed leadership.
