The headline of this blog is designed to ruffle Wellington feathers. Because governments, whether National and Labour, will say that it shows an obvious lack of understanding of the Reserve Bank of NZ Governor appointments process.
The formal, legal, official process behind that appointment is enshrined in legislation which says that its the RBNZ board which must make a recommendation. It can be accepted or rejected by the Minister of Finance. Should it be rejected, the Board must look for another candidate. Should it be accepted, the Finance Minister must consult with other political parties, and then make a final recommendation to the Governor General. The entire point of the process is to ensure Central Bank Independence from partisan politics. Upon the Board conducting its own independent search for the best person, it becomes very awkward for a Finance Minister to reject that candidate. Even should they do so, the Minister still has no control over the next one who is proposed by the Board. Politics is thereby kept to a minimum.
How nice in theory. Especially when first, a former Minister of Finance, and second, one of the highest profile current political leaders in NZ, told me that is not how it works in practice. What did my two sources have to say about this matter? The former Finance Minister said that a chat occurred between them & the RBNZ Chair to arrive at a mutually agreeable candidate. Lovely, but not constitutional. After the meeting, the Bank Chair knows that the candidate who they will propose will in turn be accepted - thereby avoiding embarrassment all round. In sport, they call it "match fixing". But this is NZ, after all, so everything has to be pleasant & everyone has to get along. No room for trouble makers & disruptors, especially "radical" ones. Yes the actual appointments process is completely different from the legal one. Instead a committee of two people, the RBNZ Board Chair & Finance Minister, together decide who will be the next Governor, by unanimous vote. Funny how nothing like that process appears in a single official document.
What's more, a funny thing happened years ago when my son was invited to a party, and I picked him up. It was at the time of the Christmas lights in Auckland - the address was Franklin Rd. A who's who of politics was at the adult part of the party, including big-time Ministers from several parties & Governor General. It was 2017. Labour had just won the election under Ardern. They were in the process of appointing a new RBNZ Governor. I discussed it with a super prominent Minister of the current Coalition Cabinet - and referred to the Board making a recommendation. He said, "If you think its the Board of the Reserve Bank that appoints the Governor, then you must be joking". I took the line to mean how he intended it - the Governor is chosen by the Finance Minister - and any pretense otherwise is laughable. It only tricks fools like myself (and 5 million other Kiwis). Its only a pretense the law is followed regards this appointments process & other high level public "independent" search processes. We're bored with Wellington corruption.
How nice in theory. Especially when first, a former Minister of Finance, and second, one of the highest profile current political leaders in NZ, told me that is not how it works in practice. What did my two sources have to say about this matter? The former Finance Minister said that a chat occurred between them & the RBNZ Chair to arrive at a mutually agreeable candidate. Lovely, but not constitutional. After the meeting, the Bank Chair knows that the candidate who they will propose will in turn be accepted - thereby avoiding embarrassment all round. In sport, they call it "match fixing". But this is NZ, after all, so everything has to be pleasant & everyone has to get along. No room for trouble makers & disruptors, especially "radical" ones. Yes the actual appointments process is completely different from the legal one. Instead a committee of two people, the RBNZ Board Chair & Finance Minister, together decide who will be the next Governor, by unanimous vote. Funny how nothing like that process appears in a single official document.
What's more, a funny thing happened years ago when my son was invited to a party, and I picked him up. It was at the time of the Christmas lights in Auckland - the address was Franklin Rd. A who's who of politics was at the adult part of the party, including big-time Ministers from several parties & Governor General. It was 2017. Labour had just won the election under Ardern. They were in the process of appointing a new RBNZ Governor. I discussed it with a super prominent Minister of the current Coalition Cabinet - and referred to the Board making a recommendation. He said, "If you think its the Board of the Reserve Bank that appoints the Governor, then you must be joking". I took the line to mean how he intended it - the Governor is chosen by the Finance Minister - and any pretense otherwise is laughable. It only tricks fools like myself (and 5 million other Kiwis). Its only a pretense the law is followed regards this appointments process & other high level public "independent" search processes. We're bored with Wellington corruption.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
7 comments:
Yes, NZ very incestuous--who you know, usually someone born in NZ, and often another B student you knew in college.
After taking "advice" from all and sundry I have zero faith that Willis and/or Luxon will make a good or indeed the right decision.
Another case of our country’s silent corruption. Jobs for the boys.
Come on, Robert. You can't be that naive, surely.
That's the way politics works the world over. Select who you want in advance then work back through the process to make it look impartial and unbiased.
A bit like scientific research these days, particularly on climate change.
GDP is rising,
offshore funds are interested in investing in NZ Inc,
a trade agreement has been signed with the UAE, and another trade agreement with India is imminent,
gangs have been reined in and crime is reducing,
Inflation is under control, interest rates are dropping,
the economy is growing again......
And stil you complain?
Ps. My comment is to the commenters.....
Robert is right to point out dangerous political maneuvers.
I'm still trying to figure out how Ardern had enough influence to get DJs into the country during lock down and how their frend Karel Sroubek stayed in the country.
In fact robert.... don't publish those comments.... not my best work. MH
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