Reserve Bank wage bill jumps - despite own advice

Alan Bollard

The Reserve Bank, which regularly exhorts workers and employers to restrain wage rises, appears to be following the maxim "do as I say, not as I do,", according to figures published in its latest annual report.

Its wage bill jumped 18 per cent in the June year to $21.8 million. Although that takes into account a rise in staff numbers to 223 full-time equivalents from 218 in 2004/5, it still represents a 15.4 per cent average rise in remuneration per employee to $96,860 from $83,944.

Redundancy payments are included in the figures although not detailed.

Governor Alan Bollard appears to have ensured his remuneration did not fall behind inflation, which for much of the year he failed to contain within the prescribed 1-3 per cent target band.

His salary was within a $500,000-$509,999 band, up 4 per cent on the $480,000 to $489,000 band last year. CPI inflation in the June year was 4 per cent.

Sixty-one of the bank's staff earned over $100,000 compared with 54 last year.

The bank had four staff in 2005/6 who earned over $300,000 against two last year, although last year 11 earned over $200,000 against 10 this year.

The bank's operating surplus was lower than budgeted, $253.9 million against an anticipated $274.6m, and last year's surplus of $272.7m.

Total operating income was down, $297.9m against a budgeted $318.9m.

This was due largely to a revaluation of some older foreign currency term debts, which increased by $73.4m.

The bank also said it continued to grow its reserves in the event it might need to intervene in the foreign exchange market.

It does not disclose whether it has or has not acted in case it is anticipated by the markets.

But it is unusual for it to act, preferring to wait until market participants become less sure about the currency's direction.

Reserve assets were substantially up on last year, totalling $5.18 billion, and were expected to rise to $5.88 billion by the end of the 2007/08 financial year.

Its total foreign currency assets were up to $11.74 billion from $8.09 billion.

Local currency assets rose to $5.05 billion from $4.97 billion.

The bank said historically it had maximised its returns from the reserves by investing in assets with high liquidity, yields and credit quality.

It had also actively managed part of the reserves and the combination had meant that the bank had maintained its "intervention capacity at a very low net cost".

- NZPA