Michael Reddell: Not much parliamentary scrutiny

This was the post I was planning to write this morning to mark Orr’s final day. That said, if the underlying events – deliberate attempts to mislead Parliament – were Orr’s doing, the post is more about the apparent uselessness of Parliament (specifically the Finance and Expenditure Committee) in holding him and the rest of the Bank (other MPC members, Board) to account. This is just one small example.

I was brought up – 7th form and university history – on the courage of the likes of Hampden and Pym in the House of Commons, resisting over-mighty acts of the executive, but I guess these days too often too many MPs seem more focused on becoming part of the executive themselves.

A few weeks ago one Saturday afternoon I wrote a short post about a letter I’d sent to the chair of the Finance and Expenditure Committee (in that capacity), cc’ed to the senior opposition member, about what seemed a (and yet another) pretty blatant and deliberate effort by the Governor at his most recent FEC appearance to mislead (or worse) the Committee. Orr had done so with two of his senior managers, and fellow MPC members, sitting either side of him. They’d done nothing to clarify and correct what Orr had told the Committee. I suggested that perhaps the Committee could consider inviting the Bank to verify the Governor’s claim that the RBNZ had been one of the first central banks to tighten and one of the first to ease.

The letter had been sent on Friday 28 February (so while Orr was still at work, before any of us had any hint of a forthcoming resignation) and more than a week later I’d heard nothing (the chair’s auto-reply had indicated he’d respond within 3-5 working days).

(I could add here that I’m not in the habit of writing to parliamentary committees or ministers. OIA requests aside, I think I’ve written one letter to a minister in 10 years, and the odd submission on legislation had been my only contact with FEC itself. I’ve occasionally exchanged notes with, and even met, some members of FEC, but only at their initiative.)

Anyway, the post seemed to have been brought to the attention of the two MPs.

On the following Monday morning (10 March) I heard from Barbara Edmonds’ email account

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And that was that.

From the committee chair, Cameron Brewer, there was a little more. He sent me an email on the Tuesday afternoon (11th). In that email he claimed that he hadn’t wanted to respond while research was underway, and implying that his office really should have sent me a holding reply.

What research? Well, it seemed that he had asked the parliamentary library staff to look into the matter. He even sent me a copy. This was first bit of it (highlighting added)

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It was pretty clear that the research hadn’t been requested the previous week, but at – what seems like – very short notice indeed. So short that the poor parliamentary staff hadn’t even had time to check all the OECD central banks, even though it takes about 30 seconds to do each one. And, by their reckoning (having left out 10 of the relevant central banks), the Reserve Bank had indeed been third (of their sub-sample) to tighten (and something like sixth to ease).

Brewer passed this along, apparently content that it seemed to vindicate the Governor (and if so I guess there was no need to do anything so awkward as bother the Bank). But he did add “If this information falls short of your expectations, I’m happy to put your email formally to the committee for them to acknowledge receipt or action further.”

I went back to Brewer the following day, pointing out that parliamentary staff had simply not checked a large group of OECD central banks, drawing the distinction between euro-area and other central banks (thus there were only about 20 independent sets of monetary policy), and repeating the listing I’d referred him to in my first letter, showing that the Reserve Bank of New Zealand had been roughly middle of the pack (by date) in both tightening and easing. I noted that the parliamentary research had not identified any mistakes or errors in my listing, and so it wasn’t clear how – incomplete and all – it shed any useful light.

(Note that the issue has never about macroeconomic significance – there is none in the rank ordering, when every country faces its own unique set of macro circumstances and inflation risks/threats – but about a senior public official appearing to deliberately mislead Parliament, aided and abetted (by their silence) by senior colleagues, all with no apparent consequences.)

As to where to next, I was a little torn. It was pretty clear that Brewer wanted the issue to go away, and of course Orr had announced his resignation (while still being in office until today) between me writing the letter and him responding. So, assuming it would be the last I heard, I ended my email back to him pretty emolliently.

“Quite how you choose to pursue (or not) this matter is of course over to you. Given that parliamentary committees routinely ask follow up question of government agencies that appear before them, my suggestion had been that at least you ask the Bank for the evidence and/or argumentation to back the claims made by the Governor.”

But, there was more to come. I got this reply.

“Thanks Michael. Good points. Let me put it back to them. Appreciate your comprehensive work in this area. I honestly did not know our international rankings on monetary tightening and loosening during that period, hence expressed no opinion and appreciate your response (as I sought unvarnished from you in my last email) to the Parliamentary Library’s paper.”

It was a bit odd, since my concern wasn’t with the Parliamentary Library staff, but with the Reserve Bank (the senior public officials who had actually misled FEC).

I went back to Brewer thus

“In some respects the specifics of my original email to you (28 Feb) has been overtaken by events (Orr’s unexpected early resignation), and obviously it is up to you and the committee whether you want to pursue it any further (given that other RB managers sat silently by). That said, in some respects the thing I’d urge you to think about more is how under the (soon to be appointed) temporary Governor and then a new permanent Governor you will hold the Bank to account and ensure you are consistently being given straight answers. Ideally, of course, the character of the new appointees will be such that no further serious issues of this sort arise.”

Anyway, they must have given the Parliamentary Library staff a bit more time this time as I heard nothing more until last week.

In the meantime, as I’ve previously highlighted on Twitter, a reader had drawn my attention to a new OECD report which (p 32) actually addressed the timing matter directly (at least as far as easings) in a summary table

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Contrary to what the Governor had told Parliament, the RBNZ was (of course) not among the first to ease.

Last week, I heard back from Brewer’s EA.

….we have compiled a more extensive report, noting your concerns. Again, I strongly emphasize that this comes from Cameron in his personal, and induvial [sic] capacity as an MP. Formal matters would need to be raised with the committee itself.

We will leave the findings to your expertise, and hope you find it helpful. We will leave this with you.

Many thanks for taking the time to write.

I was rolling my eyes at this point. Did writing to the committee chair, explicitly in that capacity, cc’ed to the senior Labour member of the committee, somehow not count as “raising it with the Committee itself”? And “we will leave the findings to my expertise”, when the issue was never the data – which anyone could track down with an hour’s quick internet searches – but whether MPs were bothered about being lied to. They apparently weren’t.

But Brewer’s EA did send me the Parliamentary Library’s new piece…..which told me exactly what I already knew, and had raised with FEC, that the Reserve Bank was not among the first to tighten or the first to ease. In fact, here is their table.

Click to view

The Parliamentary Library (now) know that Orr was simply making stuff up. So does the OECD. So, in fact, does anyone who even bothered to check. So, it seems, now does the chair of FEC. But he and his members simply don’t seem at all bothered. And that, it seems, is Parliament for you.

I was overseas last week and was recounting this experience to a colleague over dinner. He was, understandably, a bit flabbergasted. After all, he noted, surely Orr’s initial claims were just factual and easily verified (or otherwise)? Well, indeed. And why would a parliamentary committee not be bothered about having been lied to? Well, there I couldn’t really help him. I explained that the timing of the resignation perhaps eased any pressure they might otherwise have felt, but it didn’t seem even close to a decent explanation, since (as I had noted to the – new – FEC chair) this was only the last in a long series of Orrian efforts to mislead the committee, his senior colleagues had sat by silently (again) while he did it, and if we are looking (as the law says we must) to the Bank’s Board to lead the selection of a new Governor, surely asking them questions about their past Governor’s egregious behaviour might have shed some useful light.

But instead we live in the age of Donald Trump, Pete Hegseth, and Karoline Leavitt where truth and straightforwardness in public officials seems at best an optional extra…..even, it seems, in New Zealand.

(And, to be clear, had Brewer come back to me the day Orr announced his resignation and said something like “thanks for raising those concerns, which do seem a little troubling, but since the Governor has now resigned there probably isn’t much mileage in us pursuing this specific any further”, I’d probably have gone “fair enough, that’s life” and moved on.)

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.