“A reminder about transparency. We know there will be a lot of eyes on us as an organisation in coming days. Our code of conduct is there to keep us all safe in these scenarios. It is really important not to talk to media.”
This is snippet of an emailsent to the Reserve Bank of New Zealand’s (RBNZ) leadership team the day after Adrian Orr resigned as Governor on March 5.
As it turned out, the RBNZ was anything but transparent when it came to Orr’s departure – its evasiveness creating a vacuum, which was filled with gossip. It’s unclear how “safe” this kept Orr.
The real issue, however, is that the RBNZ’s handling of the matter eroded public trust in the institution.
Documents released (late) under the Official Information Act on Wednesday show the RBNZ’s leadership team was briefed to say Orr’s decision to leave was “personal” and that he was leaving “on his own terms”.
The first question the Herald asked RBNZ board chairman Neil Quigley, during a rushed press conference the day Orr resigned, was about whether disagreement over Government funding for the bank led to Orr’s decision.
Quigley said: “We are working through some views about the funding of the bank. The board is in the process of finalising its submission to the minister about our next funding agreement. That conversation about funding has involved the normal challenge that you would expect and has been constructive, so the board is managing that process.”
Come June 11, the RBNZ said disagreement between Orr and the board over the amount of funding to pitch for was in fact the reason Orr quit.
Orr wanted the bank to stick to its guns and pitch for the funding he believed it needed. The board reckoned it should back down, as the Government had no appetite to cough up this sum.
Why couldn’t Quigley just say that – if not on the day Orr resigned on March 5, then after the RBNZ’s funding agreement was signed on April 9?
It was no secret Orr wanted the bank to be resourced to take a broad view of its mandate.
Even former Finance Minister Grant Robertson didn’t give him the funding top-up he wanted, with the then head of the Treasury politely reminding Orr the country was in the midst of an inflation crisis.
Finance Minister Nicola Willis also didn’t make her disagreement with Orr a secret. Shortly before he resigned, she told the Herald the bank needed to trim its expectations around funding.
Reserve Bank board chairman Neil Quigley (pictured) didn't immediately reveal the reason behind Governor Adrian Orr's resignation this year. Photo / Mark Mitchell
It isn’t ideal the RBNZ Governor and board disagreed. But this isn’t an unprecedented scenario.
The RBNZ could’ve been upfront about the fact it wasn’t tenable for Orr to remain in his role, ripped the Band-Aid off quickly and moved on.
Sure, there were lawyers involved in what could’ve been quite a nasty employment dispute.
But those party to the issue should’ve prioritised the credibility of the institution above all else.
The RBNZ has an enormous amount of power. However, for this power to be exerted, it needs the trust and confidence of the public.
The Orr-Quigley saga has been an unnecessary and resource-intensive distraction for the bank at a time the public needs it to be laser-focused on supporting the economy.
The RBNZ board was given more teeth, under a change to the Reserve Bank Act in 2021, to enable it to function more like a conventional governance board.
The idea was to enhance accountability to strengthen the institution.
However, the handling of Orr’s departure suggests the board needs to do more to uphold the credibility of the bank.
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.
