Editorial: Next Reserve Bank Governor needs to have more than just the right qualifications

Adrian Orr resigned as Reserve Bank Governor on Wednesday. Photo / Mark Mitchell

Editorial

THREE KEY FACTS

• Adrian Orr resigned as Reserve Bank Governor on Wednesday.
• He is stepping down from the central bank at the end of the month, three years ahead of his term ending.
• Orr was reappointed in November 2022 for a second five-year term, starting in March 2023.

New Zealand’s next Reserve Bank Governor will need to have much more than the right qualifications on paper.

Adrian Orr’s sudden departure on Wednesday was not only a shock but also left New Zealand in an embarrassing situation.

Yesterday, Orr was due to host an event at the Reserve Bank (RBNZ) with central bank representatives attending from all over the world, including high-profile former US Governor Dr Ben Bernanke.

But Orr was missing in action. He officially checked out of the job at lunchtime on Wednesday, according to RBNZ chairman Neil Quigley, leaving deputy Christian Hawkesby to hold the reins.

That’s highly unusual for a high-profile appointee. Most would resign and then serve out a notice period, even if they did so begrudgingly.

Finance Minister Nicola Willis wouldn’t say why Orr was leaving on Wednesday and Quigley put it down to a personal decision.

But as Herald deputy political editor Thomas Coughlan pointed out in his analysis, there had been tensions between the Government and the central bank going back to National and Act’s days in Opposition.

As Opposition finance spokeswoman, Willis was highly critical of the RBNZ’s response to Covid and was “appalled” when Orr was reappointed for a second five-year term before a review of the RBNZ’s actions during Covid had taken place.

And more recently, there had been tensions over the RBNZ’s funding and proposals by the Government to loosen bank capital requirements.

This was a touchy subject for Orr. As Coughlan has pointed out, the capital rules, first announced in 2019, put a target on Orr’s back that lasted for most of his tenure.

Just last year, Orr had a public scrap in the Herald with ANZ New Zealand chief executive Antonia Watson over the rules.

Orr often took criticism personally and was known for having a temper and holding grudges against those who questioned his decisions.

On paper, his CV looked perfect for the Governor’s role; he was a former deputy governor from 2003 to 2007 and chief manager of the economics department in an earlier stint at the RBNZ.

He also worked at the OECD and the New Zealand Treasury and had commercial acumen through roles at National Bank and Westpac, as well as his role as chief executive of the New Zealand Superannuation Fund.

But his sudden walkout on Wednesday will only add fuel to those questioning whether he had the right temperament for the highly public-facing role of RBNZ Governor.

The RBNZ board now has the task of finding his replacement. Acting governor Hawkesby would be a safe pair of hands and has a calm persona but was part of the team that made decisions during the Covid years.

Kiwibank chief economist Jarrod Kerr has suggested a new governor could be an opportunity for the RBNZ for a “fresh start and a chance to improve its communications with New Zealanders and particularly the financial market”.

Whoever gets the job will need to bring a deep knowledge of monetary policy but also take a balanced approach to steering the RBNZ even through more turbulent times.