There have been many specific points over the years. Some are quite complex to explain, and many get lost in longer posts. But on 20 February there had been a very specific, easy to explain, readily verifiable, factual claim.
“We were one of the first central banks in the world to be tightening; we were one of the first central banks in the world to be easing” said the Governor.
He’d made versions of the first bit of it previously (many times) but the second claim seemed new.
So I thought it might be useful to devote a single post just to rebutting those two specific claims. It would be easy to refer people to in future (and to find myself). It was headed, plaintively, Why is such rank dishonesty tolerated?
I didn’t give it much more thought. But someone else who is equally frustrated by Orr’s record of playing fast and loose with the facts got in touch suggesting that it might be worth raising the matter with the Finance and Expenditure Committee. I don’t have much confidence in any of our institutions these days, but the person who contacted me tends to be a bit more optimistic about things. Reflecting on the suggestion a bit more I decided it couldn’t really do any harm. There was, after all, a new chair of FEC, and it was possible he was neither aware of the extent to which his committee hearing had been misled, or of past form.
And so I wrote to Cameron Brewer, the National MP newly appointed to chair the committee, copied to Labour’s finance spokesperson Barbara Edmonds.
Click to view
I heard nothing at all from Edmonds (perhaps Oppositions don’t bother with scrutiny of government agencies these days?). There was an automated reply from Brewer which assured correspondents that
More than five business days have now passed, and not even the courtesy of a reply.
Now, in a sense some of the specific concern has been overtaken by events. The Governor has resigned, effective from 31 March, and disappeared on leave for the rest of month with no explanations. But a) Orr is still a public official, and b) his two colleagues who sat alongside him while he made these claims are still in office (both statutory officeholders on the MPC). The chief economist at least must have known his boss was simply making stuff up, but did nothing to clarify things for the committee members.
Is Parliament, is FEC specifically, really so unbothered about being misled by such senior officials? Revealed behaviour over the years suggests so, but there is always (idle?) hope when a new person takes over. Perhaps some might take Parliament and its committees seriously as more than just a chance for performative display and bonhomie, and with an expectation that senior public officials, exercising a huge amount of power, might account for themselves in an honest, transparent, and positively helpful manner. It is what we should expect from members of Parliament – our representatives – and from the public officials. Too often it isn’t what we get.
Perhaps if someone in power had called Orr out previously we might never have got to Wednesday’s very messy departure, that seems to diminish both him, the Bank, and those (Board, minister, MPs) paid to hold him to account.
Appendix:
In case people have trouble reading the photo of the letter above, here is the body of the text:
Dear Mr Brewer,
I am writing to you in your capacity as chair of Parliament’s Finance and Expenditure Committee (cc’ed to the senior Labour Party member of the committee).
At your hearing on Thursday 20 February on the Reserve Bank’s latest Monetary Policy Statement, the Governor, Adrian Orr, in response to a question from Dan Bidois stated of the Bank and MPC
“We were one of the first central banks in the world to be tightening; we were one of the first central banks in the world to be easing”
This was simply not so, on either count (tightening or loosening). Moreover, it is not the first time that he has made similar claims to FEC, particularly in respect of the tightenings that began in late 2021.
I am a former senior Reserve Bank official, served formerly on the board of the International Monetary Fund (and serve now as a director of the central bank of Papua New Guinea). Among other topics, my economics blog devotes considerable space to monetary policy and central bank governance issues. In a post yesterday, I documented again how indefensible the Governor’s claims around 2021 were, and that the claim about being “one of the first to ease” (a new claim from him) was even less defensible. In fact, in both episodes the Bank acted around the middle of the pack of OECD central banks (having allowed the economy first to become materially more overheated than most of their peers had).
Why is such rank dishonesty tolerated? | croaking cassandra
There are strong grounds to believe that the Governor makes these claims to your committee either knowing them to be false, or holding a position (and with resources at his disposal) in which he should be reasonably be expected to know that they are false, Within the limited time each member inevitably gets in these FEC hearings, and with none of the MPs involved being specialists, he appears to count on getting away with it because none of you will have precise facts at your fingertips.
You are new to the FEC role. Unfortunately, over the last few years there has been a succession of claims to the Committee by the Governor that are demonstrably false or misleading. Many of these have been documented on my blog, and I would be happy to provide further detail.
Conduct like this tends to diminish both the Reserve Bank (once highly regarded internationally, now more often regarded with eye-rolling despair) and, more importantly, Parliament itself. FEC scrutiny has been a key element of the autonomous Reserve Bank model since it was first set up in 1989, and effective parliamentary scrutiny of any public agency relies on the honesty and integrity of senior public officials. You will know better than me the very serious view that Parliament has historically taken of either MPs or witnesses at select committees misleading Parliament or its committees.
At very least, I would urge you to follow up this matter with the Governor, inviting him to provide solid substantiation for his very specific claims.
Yours faithfully
Michael Reddell spent most of his career at the Reserve Bank of New Zealand, where he was heavily involved with monetary policy formulation, and in financial markets and financial regulatory policy, serving for a time as Head of Financial Markets. Michael blogs at Croaking Cassandra - where this article was sourced.
“We were one of the first central banks in the world to be tightening; we were one of the first central banks in the world to be easing” said the Governor.
He’d made versions of the first bit of it previously (many times) but the second claim seemed new.
So I thought it might be useful to devote a single post just to rebutting those two specific claims. It would be easy to refer people to in future (and to find myself). It was headed, plaintively, Why is such rank dishonesty tolerated?
I didn’t give it much more thought. But someone else who is equally frustrated by Orr’s record of playing fast and loose with the facts got in touch suggesting that it might be worth raising the matter with the Finance and Expenditure Committee. I don’t have much confidence in any of our institutions these days, but the person who contacted me tends to be a bit more optimistic about things. Reflecting on the suggestion a bit more I decided it couldn’t really do any harm. There was, after all, a new chair of FEC, and it was possible he was neither aware of the extent to which his committee hearing had been misled, or of past form.
And so I wrote to Cameron Brewer, the National MP newly appointed to chair the committee, copied to Labour’s finance spokesperson Barbara Edmonds.
Click to view
I heard nothing at all from Edmonds (perhaps Oppositions don’t bother with scrutiny of government agencies these days?). There was an automated reply from Brewer which assured correspondents that
Click to view
More than five business days have now passed, and not even the courtesy of a reply.
Now, in a sense some of the specific concern has been overtaken by events. The Governor has resigned, effective from 31 March, and disappeared on leave for the rest of month with no explanations. But a) Orr is still a public official, and b) his two colleagues who sat alongside him while he made these claims are still in office (both statutory officeholders on the MPC). The chief economist at least must have known his boss was simply making stuff up, but did nothing to clarify things for the committee members.
Is Parliament, is FEC specifically, really so unbothered about being misled by such senior officials? Revealed behaviour over the years suggests so, but there is always (idle?) hope when a new person takes over. Perhaps some might take Parliament and its committees seriously as more than just a chance for performative display and bonhomie, and with an expectation that senior public officials, exercising a huge amount of power, might account for themselves in an honest, transparent, and positively helpful manner. It is what we should expect from members of Parliament – our representatives – and from the public officials. Too often it isn’t what we get.
Perhaps if someone in power had called Orr out previously we might never have got to Wednesday’s very messy departure, that seems to diminish both him, the Bank, and those (Board, minister, MPs) paid to hold him to account.
Appendix:
In case people have trouble reading the photo of the letter above, here is the body of the text:
Dear Mr Brewer,
I am writing to you in your capacity as chair of Parliament’s Finance and Expenditure Committee (cc’ed to the senior Labour Party member of the committee).
At your hearing on Thursday 20 February on the Reserve Bank’s latest Monetary Policy Statement, the Governor, Adrian Orr, in response to a question from Dan Bidois stated of the Bank and MPC
“We were one of the first central banks in the world to be tightening; we were one of the first central banks in the world to be easing”
This was simply not so, on either count (tightening or loosening). Moreover, it is not the first time that he has made similar claims to FEC, particularly in respect of the tightenings that began in late 2021.
I am a former senior Reserve Bank official, served formerly on the board of the International Monetary Fund (and serve now as a director of the central bank of Papua New Guinea). Among other topics, my economics blog devotes considerable space to monetary policy and central bank governance issues. In a post yesterday, I documented again how indefensible the Governor’s claims around 2021 were, and that the claim about being “one of the first to ease” (a new claim from him) was even less defensible. In fact, in both episodes the Bank acted around the middle of the pack of OECD central banks (having allowed the economy first to become materially more overheated than most of their peers had).
Why is such rank dishonesty tolerated? | croaking cassandraThere are strong grounds to believe that the Governor makes these claims to your committee either knowing them to be false, or holding a position (and with resources at his disposal) in which he should be reasonably be expected to know that they are false, Within the limited time each member inevitably gets in these FEC hearings, and with none of the MPs involved being specialists, he appears to count on getting away with it because none of you will have precise facts at your fingertips.
You are new to the FEC role. Unfortunately, over the last few years there has been a succession of claims to the Committee by the Governor that are demonstrably false or misleading. Many of these have been documented on my blog, and I would be happy to provide further detail.
Conduct like this tends to diminish both the Reserve Bank (once highly regarded internationally, now more often regarded with eye-rolling despair) and, more importantly, Parliament itself. FEC scrutiny has been a key element of the autonomous Reserve Bank model since it was first set up in 1989, and effective parliamentary scrutiny of any public agency relies on the honesty and integrity of senior public officials. You will know better than me the very serious view that Parliament has historically taken of either MPs or witnesses at select committees misleading Parliament or its committees.
At very least, I would urge you to follow up this matter with the Governor, inviting him to provide solid substantiation for his very specific claims.
Yours faithfully
Michael Reddell spent most of his career at the Reserve Bank of New Zealand, where he was heavily involved with monetary policy formulation, and in financial markets and financial regulatory policy, serving for a time as Head of Financial Markets. Michael blogs at Croaking Cassandra - where this article was sourced.
No comments:
Post a Comment