Jobs at the Reserve Bank could be slashed by nearly a quarter, as the hiring spree that occurred under Adrian Orr’s leadership is unwound.
The bank is working through the third and final phase of a restructure that is proposed to see a net reduction of 142 roles, including 35 vacant positions.
This will come on top of a net 15 leadership roles being reduced under prior phases of the restructure.
With 660 fulltime-equivalent roles at the bank at the end of January, the proposed cuts will only take staffing levels back to where they were in June 2023.
Staffing at the Reserve Bank surged in 2024, as the bank spent leftover funding it accumulated from previous years – a practice Finance Minister Nicola Willis in April told it to stop.
Its restructure was prompted by Willis declining its request for a substantial funding increase over the next five years.
In April, the bank and Willis agreed to a $775 million funding envelope for 2025-2030 – an 8% increase from the previous five years.
The bank initially bid for more than $1 billion. When Willis and the Treasury said this was too much, the Reserve Bank board was happy to back down – but Orr wasn’t, and quit abruptly in March.
Orr feared the Reserve Bank wouldn’t be able to do its job properly with the level of funding the Government was willing to stump up.
However, a spokesman for the bank on Tuesday said the board was confident the bank would be able to continue fulfilling its legislated objectives.
“I can confirm that no work programmes have been cut and the board remains confident that the bank will be able to deliver the work programme outlined in our Statement of Intent under the new 2025-2030 Five-Year Funding Agreement,” the spokesman said.
“Once the new structure is in place [by October 13], senior leadership will be working with our teams to ensure we work more efficiently and effectively.”
The Reserve Bank spokesman said the cuts were deeper in the “enterprise services” and “operations” parts of the organisation than the “money” and “financial stability” divisions.
It appears this means jobs directly related to the bank’s core functions – maintaining price and financial stability and running the country’s payments system – will be the least affected.
The areas covered by the two groups that will suffer shallower cuts include: financial markets, economics, payment services, money and cash, prudential policy and supervision, and enforcement and resolution.
The areas covered by the groups that will suffer deeper reductions include: strategy, stakeholder engagement, risk compliance and audit, governance and general counsel, people and culture, technology, information security, finance and data.
The restructure has occurred under the leadership of acting Governor Christian Hawkesby, who has declined to comment on whether he has applied to secure the role for a full term.
Willis, in a paper prepared for Cabinet on the Reserve Bank’s 2025-2030 funding agreement, said a considerable portion of its growth in staff numbers related to “non-legislative functions”.
“These areas saw a rise from 138 permanent staff members in the 2019/20 period to 378 fulltime equivalents by the end of January 2025,” Willis said.
Altogether, staffing levels at the Reserve Bank nearly doubled from 349 people in June 2020 to 660 by January 2025.
In this time, the Reserve Bank was legally required to bolster its regulation of financial institutions and create a depositor compensation scheme, which became operative last month.
Covid saw it use new tools (quantitative easing and a term lending facility) to effectively create $78b to suppress interest rates and support the bond market using new tools.
This, coupled with the bank progressively bolstering its ability to intervene in the currency market in the event of a crisis, saw the value of its assets increase four-fold to $104b between 2019 and 2023. This has since fallen to $72b, as the bank’s Covid-era programmes are being unwound.
The Reserve Bank also dealt with a data breach in 2020 and has been exploring ways to upgrade its vaults in the vicinity beneath its offices in central Wellington.
It has been criticised by some for looking into creating a digital currency, researching Māori access to capital, and focusing on the impact of climate change on the banks and insurers it regulates.
Jenée Tibshraeny is the Herald’s Wellington Business Editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.