Finance Minister Nicola Willis has revealed she’s fielded a complaint over Reserve Bank Governor Adrian Orr’s conduct.
Orr has made headlines in recent weeks for publicly attacking the NZ Initiative think tank, as
well as the banks that help fund it, for criticising the way the RBNZ regulates banks.
Orr responded to an opinion piece NZ Initiative chair Roger Partridge wrote for the Herald in a letter he sent to the editor and the bosses of ANZ, ASB, BNZ and Westpac.
The Governor used colourful language, saying: “The author [Partridge] lays blame for the lack of competition in the New Zealand banking sector at the feet of the Reserve Bank’s capital requirements and credit risk weights for retail banks.
“This is tired, misleading, and needs to be called out.
“I am unsure what to be most concerned about: that the retail banks who are members of the NZ Initiative believe this? Or, they don’t, but are still willing to sponsor this?”
Asked in a media stand-up whether she thought Orr’s response was appropriate, Willis noted the RBNZ’s independence from the Government. Accordingly, she said it was an issue for the RBNZ board.
She declined to comment on whether she believed the RBNZ board sufficiently held Orr to account.
Willis then revealed she and RBNZ board chair Neil Quigley received a complaint from the NZ Initiative, alleging Orr’s behaviour was in breach of the RBNZ’s code of conduct.
She found time to call Quigley during Budget week to discuss the matter.
“I have reiterated to the chair of the Reserve Bank board that it’s my expectation that the Reserve Bank board take responsibility for all employment matters,” Willis said.
“I do not view those as matters that I am responsible for.”
The Herald asked Quigley what course of action, if any, he would take in response to the complaint.
He responded, “I have received the letter and won’t be commenting on it at this stage.”
NZ Initiative executive director Oliver Hartwich told the Herald Quigley acknowledged receiving the complaint but didn’t comment further.
Hartwich didn’t think his complaint would be made public.
He defended Partridge’s opinion piece, saying the business-funded think tank wanted to debate the impact bank regulation has on the economy.
“The issue is that he [Orr] insinuates that either we don’t know what we’re talking about… or even worse, we do know and are misleading the public,” Hartwich said.
The NZ Initiative has long been a critic of the RBNZ for some of its monetary policy decisions, its focus on the impact of climate change on financial stability, its interest in the Māori economy, and its beefed-up capital rules.
The battle between banks and the RBNZ got heated, if not ugly, in the lead-up to the rules being decided upon in 2019.
The Commerce Commission’s recommendation the rules could be stymying competition between big and small banks appears to have given opponents of the rules a platform to criticise them again.
The RBNZ has suggested in won’t give in to banks, nor the Commerce Commission, which will deliver the final report for its study into competition in the banking sector in coming months.
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.
