Ele Ludemann: Reserve Bank loses $$s

The Reserve Bank is losing millions of dollars in funding:

The Reserve Bank will have its funding dramatically reduced over the next five years after reaching a new funding deal with the Government.

In a statement, Finance Minister Nicola Willis said the deal worked out at about $150 million in annual operating spending – 25% less than the $200m budgeted for this year.

The $200m figure for the 2025 year is new – the bank’s 2023 amendment to its 2020 funding agreement budgeted just $149m for the 2024/25 year.

In order to preserve its independence, the Reserve Bank is kept out of the annual government budget cycle. Instead, its board negotiates five year funding agreements with the finance minister.

Willis said that the bank had initially requested $1.03b over the next five years. .

“Treasury advised me that that amount did not represent good value for money,” Willis said.

Did Treasury provide that advice to the previous government that increased the Bank’s funding so much even though it was failing to keep inflation under control and that government ignore the advice?

If not, it’s good that Treasury is in step with the government’s determination to stop wasteful spending.


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Instead, the bank will get operating funding of $750m and capital funding of $25.6m for the period.

“Benchmarking analysis performed by the Treasury shows that several of the Reserve Bank’s non-legislative functions, particularly in the People and Communications teams, appear overstaffed,” she said. . .

If the Bank had time for non-legislative functions it doesn’t just appear to be overstaffed, it is overstaffed.

While job losses are difficult for those affected, getting leaner will be better for the bank and taxpayers.

Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.