Nicola Willis: Finance Minister says she's satisfied with the balance struck over Reserve Bank funding

The Finance Minister is confident in the operational funding she's giving the Reserve Bank. 

Nicola Willis has signed the bank up to a new five-year agreement - 25 percent under the billion dollars sought by the central bank.

Willis says she's peeled back the $200 million a year the Reserve Bank had budgeted for - to $150 million.

"Not just - are we taking it back to that figure? But we're saying, we want you to stop this pattern of the number escalating every year. We want that to hold steady."

Willis says the 750-million dollar budget gives the Bank enough to carry out its statutory functions well. 

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Episode Transcript

Speaker 1 (00:00):
What Heather do for see us.

Speaker 2 (00:02):
So the Reserve Bank's getting a funding boost. It's five
year budget is going to go from six hundred and
forty million dollars to seven hundred and fifty million dollars. Now,
this is interesting because this is the reason that Adrian
or apparently quit because he wanted more money. Finance Minister
Nikola Willis is with us. Now, Hey, Nikola, Hi, why
are you giving them more?

Speaker 1 (00:19):
Well, that's not quite right, Heather. You're basing that on
our release from the Taxpayers Union and not for the
first time. They haven't got their facts quite in a row.
So the Reserve Bank requested initially a billion dollars for
the coming five years. We've paired that back to seven
hundred and fifty million. Now, when you compare their funding profile,

(00:39):
what's been happening is it's been increasing every year such
that in the current year they were budgeting to spend
two hundred million. We've said, actually next year one hundred
and fifty million. One hundred and fifty million is twenty
five percent less than two hundred million. It's fifty million less.
And what's more, not just are we taking it back
to that figure, but we're saying we want want you

(01:00):
to stop this pattern of the number escalating every year.
We want that to hold steady, but having to require restraint.

Speaker 2 (01:07):
Wasn't the funding agreement for the twenty twenty four to
twenty twenty five year just one hundred and forty nine
million dollars. They just managed to save fifty million dollars across.

Speaker 1 (01:15):
The press twenty So.

Speaker 2 (01:17):
It's actually you paired it back to exactly the same
amount as the last financial year.

Speaker 1 (01:21):
Well, what you're omitting is the fact that the agreement
was then increased in twenty twenty three. So in addition
to what they agreed back in twenty twenty, they came
back for seconds in twenty twenty three, added another forty
eight million to the operating budget that year, and then
another thirty million the following year.

Speaker 2 (01:39):
So those did that not take that to one hundred
and fifty that I'm talking about.

Speaker 1 (01:43):
Well, that was additional to what they had previously agreed
under the five year agreement. They came back for more
in twenty twenty three, meaning by the time they got
to this year, the budgeted spending was two hundred million.
Taking the combination of the five year agreement and the
increases the Robertson granted them. So we've said, okay, let's
start again. Let's take that two hundred million figure that

(02:05):
you've got yourselves, to peer it back to something more
sensible one hundred and fifty million, and then let's hold
that steady over time. Rather than continuing this collection.

Speaker 3 (02:14):
Why not harder? I mean, this is this is consistently.

Speaker 2 (02:17):
The problem that I have with your government is that
you guys, you'd tinker right, you could take I mean,
these guys are spending three times what they spent in
twenty fifteen. Ten years ago, they were spending fifty million.
Now they're spending one hundred and fifty million. If you
wanted to, you could slash properly.

Speaker 3 (02:31):
Why don't you?

Speaker 1 (02:33):
Well, because they do have very important statutory functions. They're
there to deliver monetary policy, stable inflation. They've also had.

Speaker 3 (02:40):
But they were we're going to be fair financial.

Speaker 2 (02:43):
They were doing it okay with two hundred and twenty
five employees only six years ago.

Speaker 3 (02:47):
Now they've got six hundred and sixty. That's bloated.

Speaker 1 (02:49):
That is bloated, and that is why I've delivered to
twenty five percent. That is why Heather I've delivered a
twenty five percent funding reduction. And to put this in context,
when we negotiated this between the Treasury and the Reserve
Bank Board, their starting position was they wanted a billion bucks.
We've got them back to seven hundred and even point
starting position.

Speaker 3 (03:10):
Ten billion doesn't mean you have to second.

Speaker 1 (03:13):
The second point that's very important here is that the
Treasury's view was that the lowest number that they would
have comfort with was seven hundred and twenty million. So
we put that to the Bank and they said, we
think that that would curtail our ability to deliver our
very important core statutory functions around financial stability and monetary policy.

(03:34):
I want to look everyone in the eye in New
Zealand and in our international markets and say the Reserve
Bank is getting enough funding to do its statutory functions. Well,
that's an important undertaking for me to be able to make,
and I'm satisfied that this figure puts me in the
position to make that commitment. That's the balance that we've struck.

Speaker 3 (03:51):
Nicola, as always, thank you so much for your time.
That's Nicola Willi's Finance Minister. For more from Heather duplessy
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