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 (00:00):
Now 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.

Speaker 2 (00:13):
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 of budget.

Speaker 1 (00:22):
Janetib Trainy is The Herald's Wellington Business editor and with
us Hey Jana Hey, seems like a reasonably significant step
to get that legal advice and doesn't it Well, I guess.

Speaker 2 (00:31):
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 can divvy up

(00:53):
that envelope year by year and then if you know,
if it underspends one year, it can carry that underspin
forward to the 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 1 (01:15):
Okay, so yeah, now did she get any questions about
Neil Quigley.

Speaker 2 (01:20):
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 his big argument was that the
government shouldn't get so involved with the Reserve Bank and

(01:43):
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 control 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.
I'm not sure how well that that view would resonate politically,

(02:07):
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. Nikola
Willis has continued to say that she thinks the Reserve

(02:29):
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.

Speaker 1 (02:47):
Governor 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 being weird
and cagey.

Speaker 2 (03:02):
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 Policy Committee,

(03:23):
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 might
be the next governor of the Reserve Bank. We wanted

(03:46):
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 or broadcast. So
you know, that has raised a few eyebrows because whatever
anyone on that committee says can be market sensitive. You know,

(04:07):
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 now I have
no reason to believe Prasana 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 1 (04:30):
Perhaps it's weird in cag Jene. Thanks very much, appreciate it,
Jane to Pirani, The Herald's Wellington Business editor. For more
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