Those were the words that sprang to mind on Friday evening when I heard the news that Neil Quigley had finally resigned as board chair (and board member) of the Reserve Bank. There had been more than enough in his conduct over recent years, and in what he tolerated from Orr, that Quigley should have gone long ago – and certainly shouldn’t have been reappointed by Willis last June – but had it not been for the repeated and sustained efforts of mislead the public over the circumstances of Orr’s departure no doubt he’d have seen out his term (which expired 30 June 2026).
Both the government and the Bank will no doubt be hoping that Quigley’s resignation marks the end of the story. It shouldn’t be, although it should at least mark the turning of a corner that might allow a badly diminished central bank to begin the task of rebuilding, including (critically) rebuilding confidence and trust among both the wider public and expert observers. As it is, Quigley almost singlehandedly (but enabled by the Minister, the rest of the board, and the temporary Governor) has dragged the Bank’s standing much further down in recent months (and his own standing too, but I guess that is his problem).
A few decades ago, the Reserve Bank of New Zealand was highly regarded internationally. It would never have the depth of resources, or outputs, of the world’s major central banks, but innovative policy approaches, a commitment to a degree of transparency that (at least by central bank standards – not high) was unusual, and a lean and efficient approach to its own operations, all supported by legislation that clearly distinguished between goal-setting (primarily for the elected government) and monetary policy operations (in which the Bank had operational autonomy) contributed to the reputation. You could debate how much difference it actually made to New Zealand, but it certainly got us invited to a better class of conferences (and made it easy to attract highly capable visiting scholar etc whom we learned from).
And now we are in the position where within six months both the central bank Governor and the board chair have gone, for cause in both cases, and we currently have only a temporary Governor and a temporary fill-in chair. It is very unusual in advanced countries for a Governor to be edged out on conduct grounds (it is in fact unusual for a Governor not to complete their term), and here we have seen both the Governor and the chair ousted in circumstances which, in each case, reflect poorly on the individual concerned, and (I believe) on the New Zealand policy/political environment that enabled this mess. It might be, as second best, good that our system meant that behaviour had consequences, but the public deserved better – the situation(s) should simply never have arisen, and would not have done so if those responsible (ie politicians) had taken responsibility, and acted, earlier.
Over the weekend, Labour’s finance spokesperson weighed in, noting the twin departures. She was keen to sheet home responsibility to Nicola Willis and the current government (well, she would wouldn’t she?) but in Orr’s case in particular he is much more of a shared responsibility than Edmonds would prefer to acknowledge openly. He was first appointed by Grant Robertson (& the then Labour/NZ First government) in late 2017, but had been nominated by a Reserve Bank Board itself appointed entirely by the previous National government. Despite all the well-documented concerns/issues, Orr was reappointed by Grant Robertson in late 2022, over the objections of both ACT and National (Labour had amended the law to require such formal consultation). The massive spending spree – and staff bloat – was enabled and authorised by Robertson, and Quigley was made chair of the newly-powerful new Reserve Bank Board (now an actual governing body, not just responsible for monitoring the Governor/MPC). Of course, Labour left office in late 2023, but they left a toxic combination to the next government. The new Minister of Finance did not handle that situation well, and – as documented again last week – was played for a fool by both Orr and Quigley when, in a climate of general public spending restraint, they set a Bank budget for 24/25 that was (a) a big increase, and b) far in excess of what even Robertson’s Funding Agreement allowed. They didn’t tell her this, and when (when precisely?) she and Treasury eventually found it, she seems to have done nothing at all in response. Quigley himself was reappointed last year, for reasons no outsider can yet fathom. And if we are sharing around responsibility, Parliament’s Finance and Expenditure Committee – under Labour and under National – seems to have been largely supine in the face of Orr/Quigley, never even taking seriously when Orr quite openly either lied to them or actively misled them (usually flanked by other senior managers). Yes, some members sometimes asked pointed questions (including Willis in Opposition) – and saw (again) the prickly side of Orr – but there was never any follow through from the committee as a whole. If we want high standards maintained in public life, we have to be prepared to sweat the small stuff – to make a fuss and insist on those standards, even when individual issues might seem small. No one in official/political New Zealand did – under multiple governments – and we ended with this year’s mess.
But it was a) the Reserve Bank Board, and b) the current Minister of Finance who were in charge for the last year or so, and so the rest of the post focuses mainly on them.
Quigley has been tossed to the wolves, as he should have been. One need not have any sympathy for someone who as late as 2pm on Friday – a little under three hours before, under pressure, he finally resigned – had the Bank’s comms team feeding this defiant and unrepentant stuff to The Post.
A few decades ago, the Reserve Bank of New Zealand was highly regarded internationally. It would never have the depth of resources, or outputs, of the world’s major central banks, but innovative policy approaches, a commitment to a degree of transparency that (at least by central bank standards – not high) was unusual, and a lean and efficient approach to its own operations, all supported by legislation that clearly distinguished between goal-setting (primarily for the elected government) and monetary policy operations (in which the Bank had operational autonomy) contributed to the reputation. You could debate how much difference it actually made to New Zealand, but it certainly got us invited to a better class of conferences (and made it easy to attract highly capable visiting scholar etc whom we learned from).
And now we are in the position where within six months both the central bank Governor and the board chair have gone, for cause in both cases, and we currently have only a temporary Governor and a temporary fill-in chair. It is very unusual in advanced countries for a Governor to be edged out on conduct grounds (it is in fact unusual for a Governor not to complete their term), and here we have seen both the Governor and the chair ousted in circumstances which, in each case, reflect poorly on the individual concerned, and (I believe) on the New Zealand policy/political environment that enabled this mess. It might be, as second best, good that our system meant that behaviour had consequences, but the public deserved better – the situation(s) should simply never have arisen, and would not have done so if those responsible (ie politicians) had taken responsibility, and acted, earlier.
Over the weekend, Labour’s finance spokesperson weighed in, noting the twin departures. She was keen to sheet home responsibility to Nicola Willis and the current government (well, she would wouldn’t she?) but in Orr’s case in particular he is much more of a shared responsibility than Edmonds would prefer to acknowledge openly. He was first appointed by Grant Robertson (& the then Labour/NZ First government) in late 2017, but had been nominated by a Reserve Bank Board itself appointed entirely by the previous National government. Despite all the well-documented concerns/issues, Orr was reappointed by Grant Robertson in late 2022, over the objections of both ACT and National (Labour had amended the law to require such formal consultation). The massive spending spree – and staff bloat – was enabled and authorised by Robertson, and Quigley was made chair of the newly-powerful new Reserve Bank Board (now an actual governing body, not just responsible for monitoring the Governor/MPC). Of course, Labour left office in late 2023, but they left a toxic combination to the next government. The new Minister of Finance did not handle that situation well, and – as documented again last week – was played for a fool by both Orr and Quigley when, in a climate of general public spending restraint, they set a Bank budget for 24/25 that was (a) a big increase, and b) far in excess of what even Robertson’s Funding Agreement allowed. They didn’t tell her this, and when (when precisely?) she and Treasury eventually found it, she seems to have done nothing at all in response. Quigley himself was reappointed last year, for reasons no outsider can yet fathom. And if we are sharing around responsibility, Parliament’s Finance and Expenditure Committee – under Labour and under National – seems to have been largely supine in the face of Orr/Quigley, never even taking seriously when Orr quite openly either lied to them or actively misled them (usually flanked by other senior managers). Yes, some members sometimes asked pointed questions (including Willis in Opposition) – and saw (again) the prickly side of Orr – but there was never any follow through from the committee as a whole. If we want high standards maintained in public life, we have to be prepared to sweat the small stuff – to make a fuss and insist on those standards, even when individual issues might seem small. No one in official/political New Zealand did – under multiple governments – and we ended with this year’s mess.
But it was a) the Reserve Bank Board, and b) the current Minister of Finance who were in charge for the last year or so, and so the rest of the post focuses mainly on them.
Quigley has been tossed to the wolves, as he should have been. One need not have any sympathy for someone who as late as 2pm on Friday – a little under three hours before, under pressure, he finally resigned – had the Bank’s comms team feeding this defiant and unrepentant stuff to The Post.
Yes, some people did initially conflate Quigley’s words but for months everyone has recognised that he used the term “personal decision” AND that that usage was deliberately misleading and had been from day one, including because it was not used in isolation but together with lines like this (from the afternoon of 5 March)
Click to view
Or the repeated denial (beginning at Quigley’s press conference that day, but continuing for months) that there was anything to see here (and notably that there were no conduct or behavioural concerns). If there was ever any inadvertent misunderstanding, the onus was on Quigley – well-paid head of a powerful government board – to have cleared things up. Instead, he actively misled us for months, unrepentant to the end (not only in those Friday lines, but in his Thursday statement on the Ombudsman’s ruling, which he claimed vindicated the Bank and his own approach).
But the Board chair is not, and was not, the governing body of the Bank, and all those other directors are still in place. Most were there last year when that egregious budget was set, most were there last year when they unanimously bid for substantial increases in approved funding over what had been allowed in the previous Funding Agreement. And if they saw the light, on the government’s tolerance re funding, earlier than the Governor did, and then helped engineer his exit, they deserve a little credit for that. But they were also responsible for the exit agreement that attempted to hide from the public what had actually gone on, they have sat by as the OIA obstructionism went on, and that sat silent while their chair actively and repeatedly misled the public. Either they agreed with the chair’s acts/choices – in which case they share direct culpability – or they didn’t and (despite holding a majority) did nothing, in which case they are useless under pressure and unfit to hold the well-remunerated board positions. Decent board members – particularly the four who were in office throughout the last year – would tender their resignations, and the government would accept them (perhaps allowing just enough time to get a strong and capable board appointed in their place).
It also hasn’t been the finest hour for Christian Hawkesby, the temporary Governor (and thus, as I read things, temporary board member). Sure, it was a difficult position for him – notably because he has acknowledged that he has applied to be the permanent Governor – but the measure of a leader is their performance under pressure, when hard calls have to be made. Again, either Hawkesby supported Quigley’s calls since 5 March, which makes him directly culpable, or didn’t but was unwilling or unable to get his way – not even to keep his staff out of things on Friday afternoon – which does not speak well to his fitness to be Governor (even if he hadn’t himself already actively misled FEC).
And that brings us to the role and performance of the Minister of Finance. You will recall, from earlier posts, that under the law (and as it should be) she is responsible for hiring and firing the Governor of the Reserve Bank. The Board has a role in monitoring the Governor’s performance (as The Treasury does in monitoring the Bank as a whole) but the legal power and responsibility rests with the Minister of Finance, the only participant in this mix who is answerable to Parliament and whom, as an MP, we can toss out.
She was culpable on multiple counts, before and since the Orr situation came to a head in late February:
- She reappointed Quigley as board chair in June 2024
- Neither she nor her office show any sign of having been all over the Bank when, six months into her term, the Bank gave her chance to comments on its draft Statement of Performance Expectations, which should have included the proposed budget, but didn’t,
- There seem to have been no consequences (no one dismissed, no stern written warning) when she eventually learned that the Bank had set itself such a generous budget and was still ramping up staff numbers (and expensive floor space),
- She seems not to have asked any hard questions of Treasury, officially funded to monitor the Bank (and, to be fair, Treasury itself seems culpable, apparently asleep on the watch),
- When the Bank’s egregious funding agreement bid came in in September 2024, neither the Minister nor the Treasury seems to have slapped it down early (rather letting things drift for months).
But we haven’t had straightforwardness from Willis either on what happened next, or on her role since 5 March.
After Orr stormed out of the meeting with Treasury and the Minister on the afternoon of 24 February, it is simply inconceivable that there was no followup discussion between the Minister (or just possibly her office) and the Board chair on what had happened that day. After all, Quigley had apologised to a mid-level Treasury official only days earlier when Orr had lost his cool in that meeting. Was he going to be any less assiduous when it came to the Minister herself, and how is the Minister likely to have reacted when her Reserve Bank storms out of a meeting with her and the Secretary to the Treasury? We know that the process leading to the exit got underway almost immediately (various senior RB management were exchanging emails on it, and setting up a process to manage things, within about 24 hours). And although we must take the Minister at her word when she says she has seen neither the statement of concerns Quigley emailed to Orr, nor the terms of the exit agreement the board and Orr reached, she has now acknowledged – months later – that she had known that Orr had left office days before the official announcement of the resignation (and the PM this morning acknowledges that he was aware of what was going on too). And wasn’t her responsibility, on behalf of the public, to ensure that if the board was negotiating exit agreements (why were there at all?), that any such agreement – which didn’t bind her or Treasury – was not designed to hide from the public, or repeatedly us, as to what had gone on. And Willis and her office must have known that Quigley is famously poor and prickly when exposed to the public. She should have taken control of the process pretty much from the start (even if she used the board to do some detailed stuff). It was, after all, her to whom Orr had to submit any resignation letter (as he finally did on 5 March).
The Minister attempts to excuse herself now by noting that over recent months she (and apparently Treasury) had expressed concerns to the Bank about how they were dealing with OIAs. Quigley seemed to be rapped over the knuckles in public two or three times before the end came on Friday. The Minister could not directly overrule the Bank in its handling of its own OIAs, but she could have insisted months ago – way back on 5 March, and ever since, that the public not be misled. Her office had seen the press release on 5 March before it went on – but there is no evidence of any remonstrations or concerns – her office knew the statement Quigley made mid-afternoon (see above), she knew what Quigley said at the 5 March press conference, and she and her staff have seem every misrepresentation etc since. And she knew that they were all wholly misleading and did nothing to sort things out, to make clear that her board chair was actively and repeatedly misleading the public. She wasn’t bound by any NDAs (a point Heather du Plessis-Allan made to Willis in an excellent interview on Friday night), but instead of clarifying things, and insisting Quigley did so, she spent months claiming she knew little or nothing and that it was nothing to with her. In so doing, she actively facilitated and abetted the cover-up and the effort to mislead.
And it was so right to the end. Look at her press statement on Friday afternoon.
Click to view
It was exactly the same sort of phraseology Orr and Quigley had used back on 5 March, to suggest it was all very normal, nothing to see here, and just good jobs now done, time to move on (media reports suggest that Quigley’s resignation letter went further, claiming that he just want to spend more time with his medical school).
Now, in fairness to Willis, this last attempt to mislead the public lasted not much more than minutes. She – and to her credit – did an interview almost immediately with Heather du Plessis-Allan, surely New Zealand’s best interviewer, where she largely walked away from the spin, and indicated that while there had been no ultimatum to Quigley, had he not finally tendered his resignation she would have asked for it. But what is on record – her own press statement – just repeat the flannel, and the attempt to frame things in a way that involves as little recorded accountability and culpability as possible.
And then this morning (on RNZ) the Prime Minister only adds to things
Click to view
But it really should be utterly unacceptable for a Minister of Finance to have, over months, deliberately abetted a cover-up when at any time she could have made clear the circumstances of Orr’s resignation (itself an event widely welcomed). Who knows what drove her originally? Perhaps a desire not to be seen to “politicise” things, but a) the law is clear and responsibility for hiring and firing the Governor rests with her, and b) there is simply no excuse in these circumstances for misleading New Zealanders so egregiously. Out of the whole affair, and even having finally got rid of Quigley, she seems weak and untrustworthy. Hard a state of affairs desirable in a Minister of Finance, and all the more so when we now have an enfeebled central bank with either a substantive Governor or board chair.
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.
6 comments:
What do you expect but deception from a politician. As well we have a finance minister with a degree in English and journalism. How does someone with these qualifications get that job? It is certainly not based on MEI. No wonder young intelligent people are leaving this country.
So, in summary, Willis is equally as useless as Robertson which is quite an achievement in itself. But will she have the wit to organise a $600k bailout?
Aren't all decisions made by an individual 'personal'? Seriously, who fell for this crap? I'm sick to death of all this corporate word salad non-speak. It's high time the 'elites' started speaking plainly, rather than taking us all for fools.
At least the chumocracy will ensure Quigley gets to continue slurping away at the taxpayers trough. Never leave a chum behind.
Michael, that’s a very good summary. Sadly it confirms what many of us know; we have a layer of ‘elites’ running this country who couldn’t run a roadside lemonade stand. And my guess is it will get much worse before we see any signs of recovery.
“Inflation is always and everywhere a monetary phenomenon", a quote by economist Milton Friedman, suggesting that sustained price increases are primarily caused by an excessive expansion of the money supply, i.e. borrowing fiat currency into existence or “money printing”.
Inflation is theft, a silent tax. When counterfeiting is considered “legal”, then we are ruled by criminals.
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