When Grant Robertson was Finance Minister, he clashed with Reserve Bank Governor Adrian Orr on one memorable occasion, he has revealed in his new book.
The clash occurred shortly after Labour had won a second term with a majority in the 2020 election, Robertson wrote in “Anything Could Happen” (Allen & Unwin).
“It was the only time in my term as Finance Minister that I clashed with Adrian Orr as Governor,” Robertson said.
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The incident happened when Robertson wanted to make changes to the Reserve Bank’s Monetary Policy Committee remit - to take into account Government policy relating to sustainable moderation in house prices when working towards its objectives.
“We had been joined at the hip on the Covid response, and I admired greatly the way he had helped navigate us through the crisis. But I believed we needed to put all the tools to work to burst the housing bubble,” Robertson wrote.
The record shows Treasury supported the Reserve Bank in suggesting other ways that could be better achieved, but Robertson won the day, and a new remit took effect on March 1, 2021.
Orr had been appointed in 2018 and was reappointed by Robertson for another five years, effective from March 2023, but resigned earlier this year after clashes with the Reserve Bank Board and Finance Minister Nicola Willis over funding for the bank.
Labour’s handling of the Covid-19 response continues to be relitigated most days in Parliament. Only last week, National minister Chris Bishop referred to “Grant Robertson’s profligate reign of fiscal terror” and pointed to 36% of Covid response spending having taken place after June 2021.
But in the book, Robertson quips that a new branch of economics sprang out of Covid: Hindsight Economics.
“Looking back from 2025, it is easy to see ways we could have acted differently if only we had been able to predict the future. In the moment, we wanted to look after people and support them through the shock of their lifetimes. And, fundamentally, to keep them alive.”
Over two years, the Government spent $58.4 billion in the Covid Response and Recovery Fund, including $19 billion in the wage subsidy scheme that kept a million people in their jobs.
“New Zealand had been one of the very few countries to have a credit rating upgrade from the international ratings agencies during Covid.”
But before long, the rising cost of living began to dominate every conversation. Interest rate hikes were eating up disposable income, and people stopped spending in shops, cafes and bars, hampering recovery by other sectors.
“It was a toxic economic and political cocktail.”
The Government responded with subsidies for public transport fares and moves to limit petrol price increases.
In 2022, it also came up with a direct payment to low and middle-income earners, a payment administered by Inland Revenue, but the damage was done when some payments were made to people no longer living in New Zealand.
Between then and the election-year Budget in 2023, Jacinda Ardern had stepped down as Prime Minister and Chris Hipkins had stepped up. The Cabinet and party were facing questions about tax policy for the Budget and for the campaign.
Robertson said Hipkins seemed “genuinely open-minded” about weighing a wealth tax, which Revenue Minister David Parker had been working on, against a capital gains tax, which Ardern had ruled out while she was Prime Minister.”
Robertson’s plan was to put proposals for a wealth tax in the 2023 Budget and legislate for them to take effect after the election. It would have seen couples pay a 1.5% levy on assets over $10 million, and raise an estimated $3.4 billion from 46,000 people. That would have funded a $20 a week tax cut for wage and salary earners.
Hipkins initially thought the policy should be used as an election policy rather than putting it into the Budget.
“I thought this was a mistake. My view of the election was that we were in trouble and we needed a circuit breaker.”
But Robertson added that, in fairness, such an idea needed more time to be sold.
“The public would have had to undertake a crash course in taxation policy that would have had a high chance of failure. There was no operational wealth tax anywhere in the world, and those who had tried it had encountered significant implementation issues.”
After weeks of wrangling, Hipkins ruled out the wealth tax not only for the 2023 Budget but for the campaign as a whole.
“I was gutted – but I also knew that I was the one who had stepped away from the leadership and Chippy was the one who stepped up, and I had to support his decision.”
David Parker resigned as Revenue Minister as a result, and the party is currently undergoing a tax policy review. Robertson doesn’t offer a view, but a capital gains tax policy is expected to be confirmed later this year.
Robertson concludes that while Labour could have run a better campaign and had a stronger tax policy, “it would not have made the difference”.
“Along with the cost-of-living issues, we had endured a series of ministerial scandals and resignations. We began looking ragged and unfocused. At most elections, the public vote out a Government rather than vote another one in. This was the case in 2023.”
Robertson recounted a flight he took during the campaign when he sat behind three women flying to Wellington for the World of Wearable Art event.
At the end of the flight, one of them said they each ran a small business and how grateful they were that he and Ardern had looked after them through Covid, and they would not have made it without them.
She had continued: “But we are not going to vote for you this time, sorry.”
He also recounted door-knocking in Wellington Central for candidate Ibrahim Omer when one householder told him she was not voting for Labour because nine years in office was long enough for any Government – it had been only six.
“We had been so deeply in people’s lives during Covid, it felt like we had been around forever.
”But ultimately this was a cost-of-living election, and we lost because people, however grateful they were, had moved on.”
“Anything Could Happen,” by Grant Robertson is published by Allen & Unwin, RRP $39.99.
Audrey Young is the NZ Herald’s senior political correspondent. She was Political Journalist of the Year at the Voyager Media Awards in 2023, 2020 and 2018. She was political editor from 2003 to 2021.
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