Richardson to face her own rules at bank

By Richard Braddell

WELLINGTON - It's full circle for the former Minister of Finance and now Act stalwart, Ruth Richardson, who yesterday took up a seat on the Reserve Bank board.

Ruth Richardson, who fills a vacancy created by outgoing chairman Sir Peter Elworthy, said it was 10 years since she sat on the Finance and Expenditure Committee as the Opposition's shadow Minister of Finance, playing a substantial role in the policy debate and drafting of the Reserve Bank Act 1989 which set the scene for an independent central bank.

"It's interesting, it was championed by the then Labour Government but became very much a product of the select committee," she said.

"History will record that there was unanimous support for the legislation in the House.

"It's a great honour [to be appointed] 10 years later when much of the promise of that act and hopes and expectations of the dedicated followers of independent central banks have been largely fulfilled."

Ruth Richardson said her philosophical beliefs had not changed over a career which included her ascent to Minister of Finance in the National Government, her championing of the Fiscal Responsibility Act and her change in political allegiance to Act.

The Act leader, Richard Prebble, said the party had hoped she would take a position on its board this year but that was no longer appropriate.

"But our loss is the country's gain."

Ruth Richardson said her role with the Reserve Bank would be heavily proscribed by the clear division of responsibilities that she played a part in creating.

Central among them were the Government's continued sovereignty over general economic policy setting and the operational autonomy of the central bank.

"This is not a board like some other central bank boards where the board itself has some executive power. In our separation of responsibilities, it's the central bank governor himself who has the constitutional responsibility to manage monetary policy and the board is simply a sounding board."

But while being part of a sounding board may be a backroom job, Ruth Richardson said it was an important one.

She would bring to bear considerable experience derived from numerous other directorships and business consultancy work.

Consultancy work also involves preaching the virtues of independent central banks to other countries.

Ruth Richardson has just returned from Switzerland where the central bank is structured on an independent model, and she will be making presentations to Mexico's central bank next month.

"I suppose the most famous instant conversion was the new chancellor in the United Kingdom, who took 48 hours from assuming his role to announcing he would adopt that."

She had for some time been telling the Bank of England it should do that.

"It's ironic it was a Labour Government that picked that up."

The Reserve Bank board has still to elect a new chairman to replace Sir Peter.