Heather du Plessis-Allan: Reserve Bank governor needs to wake up to his role

Adrian Orr isn’t just a Reserve Bank governor. He’s also tried to make himself cool. Photo / Mark Mitchell

The debate over Adrian Orr’s job is not really about inflation. It’s really about Adrian Orr. And the Labour Government’s ideology. And woke stuff.

For a while now, Orr has been ridiculed by some as a symbol of woke.

It’s been obvious how hard he’s tried to make the Reserve Bank cool. He’s given speeches on climate change and speeches on embracing te ao Māori.

In fact, in at least its last three annual reports, the RBNZ has made more mentions of “carbon” or “climate” than “inflation” or “price stability”. Just a reminder, inflation is the bank’s job. The climate is someone else’s.

Things reached a high point for Orr - and a low point for his critics - when he gave a speech to fellow central bankers around the world back in June. In the speech, he compared the Reserve Bank to Tāne Mahuta, the tree.

“Our roots are our legislation,” he said. “[And] the money we print and circulate for New Zealand is the sap that flows through [the bank].

The comparison was so poetic it begged to be mocked. And it was. Worse, it apparently became a joke among other central bankers around the world.

Finance Minister Grant Robertson didn’t help. He also tried to make the bank cool. He appointed a board of directors who specialised in a lot of things that weren’t necessarily boring old economics. Things like “managing people” and “culture”. Critics noticed that and that was also mocked.

None of this helped when the proverbial hit the fan and our top banker actually needed to step up and do his job. Given what was at stake (our economy) he was well and truly under the spotlight.

He did an okay job, but it wasn’t perfect. He waited until October last year to start lifting interest rates. That was too late (the bank admits this now). By then inflation had broken through the 1-3 per cent target band for at least four months.

We are now all going to be hit by higher mortgage rates to pay for this error.

And naturally - given how many of us are affected by his decisions - we have scrutinised and debated this. But Orr didn’t appear to like this much. He became defensive and patronising, and even made things up.

His select committee appearance at Parliament last week might’ve been a low point. He blamed our inflation on Putin’s invasion of Ukraine, parroting a Labour Party line. He would know that the truth is our inflation was out of control at least eight months before the invasion. The invasion was in late February this year. Our inflation was 5.9 per cent by December last year. It was 3.3 per cent (outside the 1-3 per cent band) by June last year.

Unfortunately for Orr and everyone who shares his ideological commitment to getting distracted from your day job, he’s reinforced exactly what the opponents of woke stuff have long feared, which is that you can’t do your day job properly if you start getting distracted by wanting to appear cool to the users of Twitter.

It’s bad for Orr that the Reserve Bank’s review this week finally admitted that it did, in fact, make inflation worse by not acting sooner. It’s also bad for Labour because they reappointed him for another five years, even though he’s a person of ridicule suspected of not giving his very important job 100 per cent of his attention.

Fair enough if Orr and Robertson are surprised that everyone’s so interested in the Reserve Bank Governor’s job this week. People normally aren’t. But then Orr isn’t just a Reserve Bank governor. He’s also tried to make himself cool.

Heather du Plessis-Allan Drive, Newstalk ZB, 4pm-7pm, weekdays.