Reserve Bank Governor Adrian Orr grilled by MPs over senior staff departures

Reserve Bank of New Zealand Governor Adrian Orr. Photo / Mike Scott

The head of the Reserve Bank has defended workplace relations and his leadership style in a fiery select committee meeting after a series of recent senior staff resignations.

Governor Adrian Orr faced a grilling from Opposition MPs before the Finance and Expenditure Committee after the recent announced departures of four long-serving staff, as the central bank goes through a restructuring.

Opening the meeting Orr warned MPs the bank expected inflation, currently at 4.9 per cent and the highest since 2011, to go above 5 per cent "in the near future".

He also said employment was above unsustainable levels - a near record low of 3.4 per cent unemployment - and the official cash rate would need to be hiked to above the "neutral rate".

National Party finance spokesman Simon Bridges then cut straight to staffing issues.

He said in the last six months among the top tiers the bank had lost "18 out of 25, that's 40 per cent of your best people".

"Since you've been there, your top 12, there's only two of you left, you've lost half of your financial stability committee.

"There's a saying to lose one's bad luck, two is careless. This looks reckless."

Orr said there was a third option: "Planned".

He rejected the numbers of staff departed, and said the senior leadership team had grown from six to eight as part of an overall operational and strategic growth.

Overall full-time staff had increased from 274 in 2019 to 411 this year.

Staff turnover had dropped 19.3 per cent when Orr came on board and now sat at 13.5 per cent.

The bank announced yesterday its head of supervision Andy Wood, with the institution since 2008, and head of financial system policy analysis Toby Fiennes, with the bank since 2005, would be departing.

Their departures followed those of Deputy Governor Geoff Bascand, and chief economist Yuong Ha.

Orr said those departures were "individual choices".

Bridges said these senior staff, some of the "most long-serving", were being replaced with junior roles.

"Is it people who agree with you?" Bridges asked.

"Many people in the financial sector make it quite clear they don't like what you are doing and the way you are shuffling people out."

Act Party leader David Seymour said there were claims 10 staff in senior tiers out of 25 had left in the past six months, and asked if he was confident people were not leaving because of his leadership.

He also questioned Orr on if over the past 18 months they had "overcooked the monetary stimulus".

Orr said he was "extremely confident" people were not leaving because of his leadership.

On the economy, Orr said the country had got through an "incredibly unprecedented economic shock in a very strong position".

The alternatives were of "extremely high unemployment or deflation, for financial instability, the opportunity costs that are being missed".

Orr declined to answer questions from media after the meeting.

Speaking after the meeting Bridges said he was not asking Orr to go, but asking "serious questions" about people with significant experience leaving the bank at a time when inflation was at 4.9 per cent and increasing.

"We're talking about people with huge institutional knowledge. Their roles were disestablished. They are not going back into their roles.

"This matters. When petrol is going up, food prices going up, you're worried about house inflation, it's people like this the best and the brightest that you want."