Jenee Tibshraeny: NZ Herald Wellington business editor on Nicola Willis revealing legal advice was sought over RBNZ funding

The Finance Minister's revealed top-level legal advice was sought over the Reserve Bank's battle with Treasury for funding. 

The bank received less money than it anticipated in the latest funding round - which prompted Adrian Orr to quit as Governor. 

NZ Herald Wellington business editor Jenee Tibshraeny unpacks the issue further.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
The Finance Minister has revealed that there was some top
level legal advice that was sought over the Reserve Bank's
battle with Treasury, and this was overfunding. Nikola Willis revealed
it this morning. She found some of the bank's accounting
methods questionable. I became aware that the Reserve Bank had
engaged in a practice where it was bringing forward under
spins which had the effect of ramping up its effect

(00:37):
of budget. Janatib Trainey is The Herald's Wellington Business editor
and with us Hey Jana Hey, he seems like a
reasonably significant step to get that legal advice and doesn't.

Speaker 3 (00:47):
It Well, I guess there was a pretty big debate
that went on at the Reserve Bank and with the Treasury.
The Reserve Bank gets an envelope of funding every five
years from the government effectively, and you know, there are
a couple of ways you can look at that. Look
at that. You can say, well, it can spend that
envelope over the five years as it wishes, or you

(01:09):
can divvy up that envelope year by year and then
if you know, if it underspends one year, it can
carry that underspend forward to the next year and spend
more that year. So that's what the Reserve Bank had
done and Nikola Willis didn't like that. And now under
the new funding agreement that takes effect next month, they
can't carry forward underspends.

Speaker 2 (01:31):
Okay, So yeah, now did she get any questions about
Neil Quigley.

Speaker 3 (01:37):
She did, And actually, I would just go back to
this funding thing. I thought it was interesting she appeared
before Select Committee and Labor's Barbara Edmonds decided to focus
on this underspend issue. She sounded like she, you know,
was empathetic to the perspective that Adrian or had around this.
And you know, his big argument was that the government

(01:57):
shouldn't get so involved with the Reserve Bank and that
the independence of the Reserve Bank was really important. And
you know, Adrian authought that the government was you know,
flexing a bit too much by trying to troll how
it used its funding. So it was interesting that that
Barbara Edmonds kind of, you know, it seemed like she
was sort of had had some empathy for that perspective.

(02:19):
I'm not sure how well that that that view would
resonate politically, you know, in terms of politicians always try
to get a few hits in these committees. But yes,
she did also ask about Neil Quigley, that's the chair
of the Reserve Bank Board. You know here that you've
talked about this a lot on your show. The way
he handled, you know, communication around Adrianaw's resignation was pretty terrible.

(02:43):
Nicola Willis has continued to say that she thinks the
Reserve Bank should have talked about, you know, not withheld
information about Oh's resignation for as long as it did.
But she hasn't gone so fast to say she doesn't
have confidence in Neil Quigley. She sees she still has
confidence in him, and you know, he's got an important
job to do because they need to appoint a new governor.

Speaker 2 (03:05):
Totally and so obviously you need a little bit of stability.
So there is a case for him to stick around
for a little bit. I can see that. But the
Reserve Bank itself doesn't appear to have learned anything about
being more transparent, hasn't because it's still being weird and cagey.

Speaker 3 (03:18):
Well, you know, this is the thing. It sort of
shot itself on the foot because of the way it
handled Adrianaw's resignation. It didn't just tell us on the day,
look this is what happened, or it didn't tell us
soon after, look this is what happened. It's not that
this is not some big scandal. Because of that, you know,
we are now paying more attention to everything the Reserve
Bank does. And one of the members of its Monetary

(03:39):
Policy Committee, that's the committee that sets the OCR Prisana Guy,
he did a speech at an Auckland Chamber of Commerce
event a week ago. This speech was newsworthy in my
perspective because it was only the second time that an
external member of that committee gave a speech. It's also
newsworthy because Prosana Guy is someone who some people think

(03:59):
might be the next governor of the Reserve Bank. We
wanted to go along to listen to what he had
to say, and the Reserve Bank said no, They said no.
Media they published some slides that showed what Prisana talked about,
but the speech wasn't live streamed or broadcast. So you know,
that has raised a few eyebrows because whatever anyone on

(04:21):
that committee says can be market sensitive. You know, they
might give insight into you know, what the committee might
do next with the ocr It is good practice for
that information to be widely available.

Speaker 1 (04:33):
Now.

Speaker 3 (04:33):
I have no reason to believe Prosana said something that
was you know, that would give some people information they
could trade on. But it all just does amount to
this sort of picture of the Reserve Bank being particularly
cagy unnecessarily KG.

Speaker 2 (04:46):
Perhaps it's weird in cag Jena. Thanks very much, appreciate it,
Jane to Chirini, The Herald's Wellington Business editor.

Speaker 1 (04:52):
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