National's finance spokeswoman Nicola Willis wouldn't go so far as to say she would show RBNZ governor Adrian Orr the door. Photo / Alex Burton
National's finance spokeswoman Nicola Willis wouldn't go so far as to say she would show RBNZ governor Adrian Orr the door. Photo / Alex Burton
National’s Nicola Willis is confident she’d be able to work alongside Reserve Bank governor Adrian Orr if she became finance minister.
“I’m a professional, Adrian Orr is a professional, and it’s actually important both of us conduct our professional duties well,” she told the Herald, stressing she respected the RBNZ’sindependence from the Government.
Willis’ comments follow her and Orr having numerous frosty, if not hostile, engagements during public Finance and Expenditure Committee meetings.
They also follow Willis, in November, saying she was “appalled” by Finance Minister Grant Robertson’s decision to re-appoint Orr as governor for another five years without first completing an independent review of the RBNZ’s performance.
Willis confirmed that if elected to govern, she would commission an external review of the RBNZ, which would focus on the Monetary Policy Committee’s (MPC) conduct and decision-making, particularly between 2020 and 2022.
Asked whether the review would be more about learning from the past, or trying to get rid of Orr, Willis said the key aim would be to learn.
“I’m certainly not going to premeditate the results of that review,” she said.
Willis reiterated she would require the MPC to only target inflation, not employment as well.
Thereafter, she said, “The results of that review would inform any additional reform that we may think could be needed at the RBNZ, including the role of the MPC, the content of the remit, the future use of alternative monetary policy tools, including the large-scale asset purchase programme.”
Reserve Bank of New Zealand Governor Adrian Orr. Photo / Mark Mitchell
Under the Reserve Bank Act, the finance minister can, with or without the advice of the RBNZ board, advise the governor-general to remove the RBNZ governor from office if there is a “just cause”.
The legislation lists several “just causes”, including, “misconduct, inability to perform the functions of office, and neglect of duty”, and “failure to adequately perform or exercise the functions of powers as chairperson of the MPC”.
Willis wouldn’t wade into whether she believed there would be sufficient legal grounds for her to dismiss Orr.
Pushed on whether a review would reveal anything new, given the RBNZ had already reviewed its policy-making, Willis said it was inadequate for the RBNZ to be left to mark its own homework.
“I think it’s right that the decision-makers involved be held to account robustly. That’s what I have worked hard to do at select committee,” she said.
“These are big, important roles. I’m sure that the RBNZ governor wouldn’t shy away from the fact that in that role, he needs to be accountable.”
Willis didn’t voice the same view as the likes of ring-wing think tank The NZ Initiative, which believes the RBNZ should stop putting resource into studying climate change and the Māori economy.
She said the bank’s focus on climate change was fine where it was consistent with its legislated roles to maintain financial and price stability.
“There are a number of factors which they [the RBNZ] need to take into account when they’re delivering on their price stability mandate and that will include extreme climatic events and the stability of the financial system,” Willis said.
As for the RBNZ’s focus on the Māori economy, including the challenges Māori face getting finance from banks hesitant to lend against collectively owned assets, Willis said, “The question for the RBNZ board should always be the same as it is for any government entity, which is: are they satisfied that their use of resources is delivering maximum impact for their statutory objectives and are they meeting New Zealanders’ expectations of them?
“I don’t want to pre-judge what a review into their conduct might find, but it has struck me that in recent years their [the RBNZ’s] forecasting has been well off. And in terms of the provisioning of resources, that’s an area where more expertise may be needed.”
Jenee 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.
