Bob Edlin: How the management of monetary policy and other RBNZ activities are being steeped in Maori mythology

Acculturation – the cultural modification of an individual, group, or people by adapting to or borrowing traits from another culture or a merging of cultures – is increasingly evident in this country’s public agencies.

The Reserve Bank of New Zealand has not escaped the process.  In July 2018, soon after Adrian Orr became the governor, the Otago Daily Times reported the new  head of the country’s august central bank was planning to shift the mindset of the institution towards better embracing the rich cultural diversity of the country.

Since he had taken up the post (the ODT reported)

… phrases like tikanga Maori and te reo have begun to feature prominently on its priority list.

And:

Under his watch, the bank’s Statement of Intent, where it sets out its strategic objectives to the Government for the next four years, highlights its intent to embed  te reo and tikanga Maori into the culture of the bank.

“This is the first time we have got it up in bold lights as part of one of our key priorities,” Mr Orr explained.

“The reason we are embracing the wider tikanga Maori is simply that diversity and inclusiveness are a very, very key part of a successful organisation, and why not start with tangata whenua around thinking of diversity? At the very most basic level we have a clear obligation from the Treaty of Waitangi.”

Orr was then mulling over how to tell the story of central bank’s place in the country’s financial ecosystem “in a more holistic way”.

More particularly, he was likening the central bank to the Māori god of forests and of birds.

He sees the bank as Tane Mahuta, the tall, strong tree that separates Rangi-nui and Papa-tua-nuku, with the strong roots of its balance sheet and legislation giving it operational independence and with the money that it creates represented in the pure sap that flows through the tree. The big branches are the banks it supports with its sap.

There are many more metaphors which can be drawn out and a whole of bank working group, from the roots to the top of the tree, is looking at the Tane-mahuta example to see if it is a good fit for the central bank to communicate its story. Mr Orr says he would love it to be part of the bank’s branding in the future.”It’s early days but it is resonating very strongly. 

Orr didn’t mull for long.  A month or so later the RBNZ published The Journey of Te Pūtea Matua: Our Tāne Mahuta, written “to help broaden the understanding of the Reserve Bank’s heritage, role, and interdependencies during constant change”.  You can  download it here and learn how  …

The Reserve Bank became the Tāne Mahuta of New Zealand’s financial system, allowing the sun to shine in on the economy.

Among the metaphors –

• Tāne Mahuta’s roots were its legislation, including the new operational independence to pursue price stability.
• The Bank’s payment and settlement system functions are Tāne Mahuta’s trunk, allowing the money, the sap, to flow throughout the system. The branches are the regulated financial institutions grafted onto Tāne Mahuta, for their legitimacy and lifeblood – access to the money.
• Our tools include director and management attestations as to their firms’ soundness; disclosure of key information so that people can assess the risk; and our own regulatory tools that aim to keep Tāne Mahuta’s branches strong.
• All four Australian banks are systemically important and locally incorporated in New Zealand. These are the biggest branches grafted onto the trunk of Tāne Mahuta.

There’s no mention of the economic equivalent of myrtle rust, a disease which threatens the country’s kauri trees and several other species.

But The Journey of Te Pūtea Matua: Our Tāne Mahuta does alert us to the bank’s development of a ‘Te Ao Māori’ strategy.

Our strategy is aimed to better enable diversity of thought at the Bank, as well as enhance our understanding of the changing New Zealand financial ecosystem. The Bank must better tell the story of Aotearoa, New Zealand, and our role as ‘Te Pūtea Matua’. Our efforts to date are reflected in our notes and coins, as well as our increasing connectedness to specific Iwi that have generously allowed us to use their Taonga (treasure).

We now also want to better understand the growing Māori businesses, which are regenerating rapidly in the emerging, post-settlement, era. Māori business is growing in many ownership forms, belief sets, and long-term investment strategies. We need to incorporate this knowledge into our monetary and financial stability functions to be the Best Central Bank. We are excited and up for this challenge.

Orr incorporated Maori imagery in a speech to the Financial Services Institute of Australasia in July last year headed The evolving Reserve Bank – the view from Tāne Māhuta.

We use the Māori legend of Tāne Māhuta to tell the story of the Reserve Bank.

Tāne Māhuta – the god of the forest and birds – separated the earth mother (Papatūānuku) and the sky father (Ranginui) so that the sun could shine in and life could flourish. Thereafter, Tāne Māhuta served as the kaitiaki (guardian) of the forest ecosystem – protecting it against threats, and enhancing the wellbeing of everyone within it.

The legend helps tell the story of the Reserve Bank – founded 85 years ago to give New Zealand the flexibility and benefits of its own currency, monetary policy and financial system. Since then the Reserve Bank has had the responsibility to act as one of the guardians of the system. It is also a legend about growth.

To retain our legitimacy as New Zealand’s central bank we have to evolve along with the economy, the financial system and society. This means working closely with stakeholders. It means an ongoing conversation with New Zealanders, speaking in terms that we all recognise, quite literally in some cases.

We are developing our Te Ao Māori strategy in recognition of the increasingly important and diverse Māori economy.

More recently  Assistant Governor, Christian Hawkesby popped up at the Mana Taiao Raising Māori Investment Capability conference in Tauranga to outline how the Reserve Bank (or Te Pūtea Matua) is building and integrating a Māori world view, through cultural capability, policy and engagement.

“We are New Zealand’s central bank and Māori values are part of our national identity – how we see ourselves, and how we are viewed by the world. It is one trait that should mark the Reserve Bank of New Zealand apart as the central bank for Aotearoa.”

As well as embedding te reo and Māori tikanga into its culture, Hawkesby said the bank

 … had borrowed the story of Tāne Mahuta, with the approval of Northern hapu Te Roroa, to tell its own tale.

On policy making, Hawkesby explained how the Bank’s mandate aligned with Māori values, by taking a sustainable, long-term view of wealth and wellbeing. In particular, the spirit of kaitiakitanga aligned with the central bank as an enabler and protector, creating an environment where inflation is low and stable, the financial system is efficient and sound, and long-term issues such as the impact of climate change are addressed.

The Hawkesby speech is HERE  and the Reserve Bank’s Te Ao Maori strategy is HERE. 

But Adrian Orr and his management style have come to public attention for reasons other than his cultural embrace, as these articles attest:

• Reserve Bank board asked to investigate complaints about Governor Adrian Orr’s conduct
• Portrait of the governor as a strongman: the complicated heroics of Adrian Orr·
• A year of anger between Reserve Bank governor Adrian Orr and NZ Initiative’s Roger Partridge

The third of those articles, written by Kate MacNamara in the Sunday Star-Times,  prompted a blog post by economist Michael Reddell.  He questioned Orr’s suitability to be Governor of the Reserve Bank,

 … exercising huge public policy and regulatory power still (in large chunks of the Bank’s responsibilities, often with crisis dimensions to them) as sole decisionmaker, with few/no effective checks and balances. 

These disclosures should also raise serious questions about the judgement and diligence of the board who were primarily responsible for Orr’s appointment and are primarily responsible for holding him to account, and of the Minister of Finance who formally appointed Orr, and is responsible now for both him and for the Board 

MacNamara’s article also triggered a statement from the Taxpayers Union, headed Maori Mythology, And Governor Temper Tantrums, Have No Place At The Reserve Bank Of New Zealand

The extraordinary events reported by the Sunday Star Times yesterday about the Governor of the Reserve Bank “agitated and clearly unhappy” exchanges in a Koru lounge and airport do not reflect well on what was once a leading office in New Zealand, says the New Zealand Taxpayers’ Union.

“The Governor needs to understand that criticism is not abuse,” says Executive Director of the Taxpayers’ Union, Jordan Williams.

According to Williams, the desirability of the best and brightest graduates wanting to work for the Reserve Bank has plummeted and business leaders rank the bank among the worst-performing regulatory agencies.

The Taxpayers Union stands with the critics “who have rightly pointed out these inconvenient truths.”

“Adrian appears to also object to the widespread mockery of the adoption of Maori mythology by senior leaders at the bank. But the blame rests on him. With many countries seeing negative interest rates and having no room to cut when a recession hits, central banking is in crisis. But instead of being the adult in the room, Adrian is out there doing media interviews about altogether different crises: diversity quotas and the Bank’s Tāne Mahuta.”

“Adrian’s adoption of political sideshows and now spats in a Koru, would deeply embarrass any previous Governor. He is dragging the RBNZ’s reputation downward in the same way as Treasury’s recent leadership has damaged its reputation.”

Another critique on another tack can be found in a blog post headed An evaluation of RBNZ’s hybrid capital securities

This explores whether the RBNZ’s latest innovation on bank capital, the Redeemable Perpetual Preference Shares, contribute to more and better bank capital. The analysis casts doubt on the success of RBNZ’s attempt to help New Zealand banks to issue capital at a low cost.

The blogger says the RBNZ is a victim of its own cakeism and has created a hybrid capital security “that resembles cheap filler more than an instrument that contributes to financial stability”.

Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. This article was originally posted HERE.