Copies of text messages just released by Treasury confirm Adrian Orr was likely to be sacked if he didn’t resign as Reserve Bank Governor.
The process was so advanced, Secretary to the Treasury Iain Rennie warned Finance Minister Nicola Willis she might receive a recommendation from the Reserve Bank board to advise the Governor-General to remove Orr.
Intervention from the Ombudsman last month forced the Reserve Bank to reveal the fact Orr stepped down as Governor a week before he resigned on March 5, as the board presented him with a letter of concerns.
This suggested there was an element of Orr being pushed to resign, rather than him simply choosing to leave – as was the narrative initially presented by Reserve Bank board chairman Neil Quigley.
However, what’s come to light now is that the push element was so strong, Willis had already been told to get ready to consider pulling the trigger.
On Thursday February 27, Rennie texted Willis to say the Reserve Bank board had started an “employment process” in respect of Orr, who had just gone on leave until the process concluded.
“He has to cob [close of business] Monday to respond to board statement of concern on his conduct,” Rennie told Willis.
“Neil’s current thinking is that you could receive recommendation later next week unless decision is taken to go down voluntary exit route.”
Rennie confirmed to the Herald that the Reserve Bank board “had discussed that one possible outcome of the employment process was that they may formally recommend the governor’s removal to the minister”.
Treasury released the texts – late – further to requests the Herald and others made under the Official Information Act in March.
Willis was adamant she was right to not tell the public earlier why Orr resigned.
She said she wanted to keep her distance from the matter to uphold the Reserve Bank’s independence and avoid contravening the conditions of the exit agreement between the Reserve Bank board and Orr, which she wasn’t party to.
Willis also wanted to avoid defaming Orr, who disputed parts of the letter of concern he was presented with. Indeed, the board agreed to bin the letter when he resigned.
Last month, the Reserve Bank said the board raised concerns with Orr about the “tenor of dialogue” at two meetings in February, “whether he would be able to undertake his role with lesser funding”, and “his apparent lack of trust in the RBNZ board, Minister of Finance and Treasury”.
Orr accepted there was a lack of trust between the parties.
He was unhappy the Reserve Bank board was willing to pitch for a lesser amount of government funding over the next five years than it initially bid for, after Treasury flagged “significant value-for-money concerns” over the initial proposal.
Willis said: “I never saw the letter of complaint, I never knew what was in it, and I was never briefed as to what happened in the discussions between the governor and the board, or what his refutations were, or what was in the exit agreement.”
However, she made it known – both publicly and privately – that she disapproved of the Reserve Bank board’s management of the process.
She effectively pushed Quigley to resign on August 29, telling him his handling of the situation risked tarnishing the Reserve Bank’s reputation.
Treasury explained that it originally withheld copies of the texts between Rennie and Willis because the employment process referred to in the messages hadn’t been made public by the Reserve Bank.
However, Treasury said: “As the Reserve Bank has since made more information about the former governor’s exit public, the text messages can no longer considered to be confidential.”
Labour’s finance spokeswoman Barbara Edmonds has used Question Time in Parliament this week to put Willis under pressure for not fronting up with what she knew about Orr’s departure earlier.
Neither Orr nor Quigley have commented since their resignations.
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.