Nicola Willis and David Seymour confident in call to reappoint Reserve Bank chairman despite previous criticisms

Reserve Bank chairman Neil Quigley during an appearance before the finance and expenditure select committee. Photo / Mark Mitchell

Finance Minister Nicola Willis is confident in her decision to reappoint Neil Quigley Reserve Bank (RBNZ) Chairman, despite taking aim at the RBNZ when in opposition.

“I was very genuine in my criticism, and I’ll say it again today: I think they printed too much money after Covid and they kept interest rates too low for too long,” Willis said.

Inflation has been above the RBNZ’s target for three years now.

In November 2022, Willis criticised then-Finance Minister Grant Robertson for reappointing Adrian Orr RBNZ Governor - on Quigley’s recommendation - without first completing an independent review of the bank’s performance.

“It would be reckless for the current government to proceed with this appointment without the support of the Opposition,” Willis told Robertson.

With the 2023 election nearly a year away, Willis proposed a temporary appointment be made “so that the incoming government has the opportunity to endorse a governor that they have confidence in”.

At the time, Quigley assured Robertson Orr had the unanimous support of both the outgoing and incoming RBNZ boards.

He described Orr as an “intuitive leader who has demonstrated his ability to drive change”.

Quigley also said Orr would “model the highest standards of behaviour”, promote “a safe environment for debate” and be respectful of those with differing views to his own.

Despite having numerous frosty engagements with Orr during select committee meetings when in opposition, and voluntarily telling the Herald last month that she’d received a complaint about Orr’s conduct, Willis said she trusted Quigley’s judgement.

Associate Finance Minister David Seymour, who was more strident in his opposition to Orr’s reappointment, likewise expressed confidence in Quigley.

Seymour said beyond supporting Orr’s reappointment, Quigley “appears to have done a good job and, behind the scenes, worked hard to protect the integrity of the bank”.

Seymour credited Quigley for “correcting some of the less desirable behaviour we’ve seen over the years”.

Seymour pointed to a restructure in 2021 that saw 10 of the RBNZ’s 26 most senior staff leave.

The resignation of Deputy Governor Geoff Bascand was brought forward after he was found to have shared information about the controversial restructure with a third party.

Seymour said, “It’s not always the chair that’s responsible for everything that happens. We don’t believe that the challenges the Reserve Bank faces are caused by the chair.”

“We also have to consider the world is watching our monetary policy institutions. If we chop and change too frequently, that actually has an impact on people’s faith in New Zealand…” he added.

“Unless you’re absolutely sure that this guy [Quigley] has been causing a big problem, then continuity has a value in itself.”

Willis noted Quigley played a key role in establishing the RBNZ’s new governance board in 2022, on the back of a refresh of the Reserve Bank Act.

The new board has more teeth than the old board, particularly when it comes to overseeing the way the RBNZ regulates financial institutions.

Nonetheless, the process of appointing board members, which Robertson and Quigley were involved in, had its issues.

A couple of members resigned from the positions they had at institutions closely linked to those regulated by the RBNZ after the Herald highlighted the existence of perceived conflicts of interest.

The appointment of members to the Monetary Policy Committee also made headlines, as there was some confusion over whether monetary policy researchers were excluded from consideration.

The committee’s decisions to keep interest rates as low for as long as it did contributed towards high inflation. The way it did its Covid-era quantitative easing programme, which helped stimulate the economy, is also coming at a direct cost to taxpayers of around $11 billion.

Quigley has been reappointed Chairman for two years, to June 30, 2026.

The expiry of his term will coincide with that of a new “future director” appointed to the RBNZ board: Philip Vermeulen.

A University of Canterbury economics professor with extensive experience at the European Central Bank, Vermeulen will be an observer on the board - contributing to discussions, but not making decisions.

The idea behind the appointment is to help build a pipeline of directors.

Quigley’s other role is Vice-Chancellor of the University of Waikato.

The Auditor-General, in May, criticised the university for contracting the advisory services of former National Party Finance Minister Steven Joyce without using a competitive procurement process.

The Auditor-General’s open letter followed Quigley working closely with National ahead of the 2023 election on the party’s policy to set up a medical school at the university.

Quigley pitching the school as a “present” to a future National government raised some eyebrows.

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.