Thomas Coughlan: NZ Herald political editor on Nicola Willis reducing the Reserve Bank's funding

The Finance Minister has unveiled a major reduction to the Central Bank's planned spending.

The Government and the Reserve Bank have agreed to reduce operating expenses by a quarter in the coming year.

They've signed a five-year funding agreement, allowing $750 million of operating expenses, well below the $1 billion the Bank was asking for.

NZ Herald political editor Thomas Coughlan unpacks the announcement further.

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Episode Transcript

Speaker 1 (00:00):
And with us now is The Herald's political editor, Thomas
Cognane Thomas Okay, So Nikola has rained in the spending
on the Reserve Bank, but has she actually.

Speaker 2 (00:09):
Very very very good question. So the Reserve Bank, the spending,
I think inarguably has gone a wee bit nuts the
last few years. It was about fifty million dollars a
year in the agreement signed by the last National Government
labor up to that, spending to about one to one
hundred and twenty million dollars a year from twenty twenty onwards.
Now thing's got a wee bit weird. In twenty twenty

(00:29):
three the Reserve Bank got some new responsibilities and got
some additional money to compensate for those new responsibilities. So
the funding goes up to about one hundred and sixty
million and twenty three, one hundred and fifty million and
twenty four to twenty five. But the bank has then
it appears, spent an additional fifteen million dollars on top
of that, taking this year spending to two hundred million dollars.

(00:51):
So all of those numbers apologies for them. So if
you take that two hundred million dollars as your baseline,
then yes, there's a funding cut, but if you look
back over the last of five years, then actually spending
is roughly level and might even be a wee bit
a wee bit higher. So it really depends who you're asking.

Speaker 1 (01:06):
So the agreement for the last financial year was one
hundred and fifty million and nicol and but they spent
two hundred million because they blew their budget. But now
Nicola is saying we've cut it back to one hundred
and fifty million. That's not a cut, that's level.

Speaker 2 (01:19):
Yeah, that's and and if that's if that's the way
that you're which I think, to be honest, is that's
the way that I look at it. So I think
I think you could say she's cut it from I mean,
I've asked them Reserve Bank, what on earth was going
on was going on this year? They meant to get
back to me by the end of the day, so
I guess I'll hear back from them then. But I
don't know what's going on with with this two hundred

(01:41):
million dollars that they spent this year. It's I mean,
when you think about it, you know, it wasn't two
thousand and nineteen was not that long ago, and in
twenty nineteen everyone at the bank was fine with fifty
two million dollars. Fast forward to this year and two
hundred million dollars is what they're spending. It's it's it's
it's incomprehensible. What what has happened here that the bank

(02:01):
needs needs this much money? And to me, frankly, it's
incredible that the bank doesn't sort of front up a
little bit more and explain why it's spending all this money.
That's some of it is necessary. I think with the
deposit takers stuff that they're changing, there is some some
reason behind it. But quadrupling the amount of spending, I
don't know.

Speaker 1 (02:17):
Yeah, I don't know either. And why did Adrian all
quit over this? I mean, this is hardly if he's
maintaining that the extraordinary level of funding that the Reserve
Bank has got, whydey pack a tandy and pack off.

Speaker 2 (02:29):
Well, I mean the other the other, I mean the
interesting the other interesting thing with this, this agreement today
is that the bank wanted a billion dollars, over a
billion dollars over five years, and Nicola Willis paid them
back to about seven hundred and fifty million dollars so
the bank wanted even more money. It's it is, there is,
of course, the irony here is is that there is

(02:49):
an institution in New Zealand which is meant to ensure
that there is price stability and that you don't need
more and more money every year just to stand still.
And that institution.

Speaker 1 (03:00):
Is the Reserve Bank.

Speaker 2 (03:01):
Wow, that's the reserve bank.

Speaker 1 (03:04):
Okay, this is the this is the thing I don't understand.
So the Marty party comes up with its latest cooked idea,
which is that Mary people should be able to take
the pension and therefore retire ten years before everybody else.
The question is asked of labor what do you make
of it? And labor goes, I'm not saying yet, why
don't they just kill it?

Speaker 2 (03:20):
Kill the oda? It's terrible, it is, it is, it
is an I think this. This idea is also difficult
to get head around. I mean Willie Jackson was actually
asked it a few weeks ago by by Order Young
and he said it would cause division and wasn't a
good idea and he didn't want to go down that route.
So so one one labor person has actually said they
don't want to do it. Barbar Readmonds, I think today

(03:42):
was in that in that story saying.

Speaker 1 (03:45):
That she's not making policy upright, she's not.

Speaker 2 (03:47):
Making policy up right now, which I'm not sure how
tenable that is. I mean, barbar Riadmonds as well last
week in the House was asking Nikola Willis, will she
rule out and come testing the best art payment? Will
she rule out and come testing the winter energy payment?
So you know, Barbara Humans is starting to play the
rule out game with Nicola Willis, the Finance Minister, but

(04:07):
she's not so keen on playing it when people start
to ask you to rule out coalition partner promises and
this one is, as you say, this one's an easy
one to rule out. Labor can't find four billion dollars
to do this idea. Regardless of whether whether or not
you think it's fair, there is not four billion dollars
lying around to spend, you know, not just this year,
but every year going forward to the future. Four billion

(04:27):
dollars that is that is an enormous amount of money.
It's it's it's huge. I think I think it's it
would be roughly comparable I think to our justice spending
at the moment, law and order spending. It's it's it's
it's money that you cannot find down the back of
the couch. So I I really don't know why, why labors,
why I was opted to be ambiguous on that one.

(04:50):
Because it's not going to happen. I can tell you
right now, come election time, because it just ruled out,
it won't happen.

Speaker 1 (04:54):
Thank you, Thomas, will talk to you again tomorrow. Look
after yourself. That's Thomas Coglan, the Herald's political editor. Head
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