Reserve Bank warns its maximum-security cash vault urgently needs refurbishing

Reserve Bank Governor Adrian Orr telling Parliament's Finance and Expenditure Committee about the demands on the central bank's purse. Photo / Mark Mitchell

Water pipes, ferries and roads aren’t the country’s only pieces of infrastructure in desperate need of an upgrade.

The Reserve Bank (RBNZ) warns it needs to refurbish the maximum-security vault it stores cash in, somewhere beneath its offices by the Beehive in Wellington.

The central bank has been flagging the need to upgrade the vault and its cash processing system for more than a decade now - an added complication being that there is asbestos in the building.

“The project is brought to your attention because it is of national significance, and despite being a sensitive project with a security classification of Restricted, may attract public and media attention,” the RBNZ told the former finance minister in November 2022.

It went on to warn the Treasury, “Delays to this work unnecessarily prolongs significant operational and reputation risks.”

Fast-forward to November 2023: the RBNZ explained in a briefing to Finance Minister Nicola Willis how new financial arrangements would need to be made for it to carry out the refurbishment.

The issue is, the RBNZ doesn’t get government funding through the regular budget process.

Rather, it uses the income it earns from its investments to cover its day-to-day operating costs. The amount it’s allowed to use is specified in a five-yearly funding agreement it has with the Finance Minister.

To date, funding agreements have only covered operational expenditure. However, from July 1, 2025, they’ll also include capital expenditure.

The RBNZ and Treasury are still figuring out exactly how this will work.

“Our capital structure, balance sheet, crown indemnities and dividend policy are potentially relevant considerations for this discussion,” the RBNZ told Willis.

In the meantime, the RBNZ wants to push on with refurbishing its vault and cash processing system - work it refers to as “Project Waitoa”.

It told Willis it would make a request to spend money on this in the year to June 30, 2025.

Because large portions of publicly available documents on the project have been blacked out, it’s unclear exactly how much the project will cost.

Nonetheless, the RBNZ said the “significant programme of work” was large enough that it would need to be rolled into the new funding agreement, which will take effect on July 1, 2025.

The RBNZ declined the Herald’s request to get a tour of the vault, due to security.

It also declined a request for an interview with the person leading Project Waitoa, citing commercial sensitivity.

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.