There's confusion around the Reserve Bank Governor's resignation.
Adrian Orr's announced he's quitting, two years into his second five-year tenure.
Neither the Prime Minister nor Finance Minister are giving any details of why he's abruptly quit.
University of Auckland Business School Professor Robert MacCulloch told Kerre Woodham that while we don’t know for certain, the criticism Orr has received over the years likely played a factor.
He recommends not getting too political about it, saying that one shouldn’t take their eye off the ball that he was a bad governor, and the country stagnated due to significant mistakes made during his tenure.
LISTEN ABOVE
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
You're listening to the Kerrywood and Mornings podcast from News Talks.
Speaker 2 (00:10):
He'd be, as I mentioned in my opener, a former
Reserve Bank senior staff for ranks. Adrian Or is the
least competent Reserve Bank governor New Zealand has ever had.
Or has announced his quitting. He announced it yesterday, two
years into a second five year tenure. I'm joined now
by University of Auckland Business School Professor Robert McCulloch, who
(00:33):
also worked at the Reserve Bank before traveling to the
UK to complete a PhD in economics at Oxford University.
Many other honors to his name. Professor McCulloch joins me
now a very good morning to you.
Speaker 3 (00:46):
Good morning.
Speaker 2 (00:48):
How would you rank Adrian Orr?
Speaker 3 (00:52):
He was a poor governor, He was a lousy governor.
And it's good he's gone.
Speaker 2 (00:58):
Why do you think he has gone? Everybody speculating wildly
and having a reckon.
Speaker 3 (01:03):
Well, it is speculation. None of us exactly know the reason,
although the chair of the Board, Neil Quigley, who should
also go. He referred to critiques and criticism that Or
had received over the years. He did mention that in
(01:24):
his speech and as you know, a bunch of us,
including myself, have been critics so much of what he's done.
I think it was much deserved. So to the extent
that's the reason. Possibly that played a factor. He seems
to have a thin skin at some level. But when
you're in an extremely high profile and powerful public job,
(01:46):
you're going to get flack. That's the nature of the job.
Speaker 2 (01:50):
We had a caller on who suggested that he was
unhappy with the dual mandate given to him by the
Labor government and struggled with that and in part blame
should go on the previous government. Do you accept that.
Speaker 3 (02:07):
No, I think that's got nothing to do with it
at all. In practice, there's almost no difference between the
duel and the single mandate. The United States, several federal
Reserve operates under the dual mandate, and it's extremely similar
in practice to what the Reserve Bank now has, So
that certainly had nothing to do with it.
Speaker 2 (02:28):
There was certainly friction between the Finance Minister and the
Reserve Bank. The former Reserve Bank governor. They you know,
I mean, I don't think that's any secret. They wanted
their funding maintained, which had trebled since twenty twenty and
Nikola Willis was kicking up Bobsydie about that, how could
(02:49):
that possibly be justified a trebling of the budget for
the Reserve Bank.
Speaker 3 (02:55):
Well, yes, I wouldn't get too political about it, because
I don't think one should take one's eye off the ball.
That he was a bad governor and much of this
country stagnation is due to significant mistakes he made during
his tenure. And when you've shown poor judgment, and when
(03:20):
you've created a huge amount of financial distress for a
large part of the country with these massive hikes and
their mortgage rates, when you've done all those sorts of things,
when you've consistently got it wrong, I think that's ultimately
the main reason why why he's gone. He knew it
deep inside, he knew it. I think the criticism stung
(03:40):
with him because although he publicly tried to defend himself,
he knew he'd got it wrong. And I think he
feels bad about that. So, you know, there may have
been tactics like cutting his funding to maybe precipitate him,
to get him to resign, but that's more sort of
political tactics, you know, because the government can't fire the
(04:01):
governor he's got to resign. So you know, you could
put together some sort of idea of how the government
planned to precipitate a resignation, but ultimately he was just
a bad governor. So I don't think we should lose
sight of that.
Speaker 2 (04:14):
When it comes to where the budget, a lot of
the budget went. It was into creating new departments and
new areas of interest for the Reserve Bank, like the
Marii economy liked ol Mary, like climate change and you know,
absolutely this is part of how New Zealand operates, but
(04:36):
should it be how the Reserve Bank operates? Should that
be in its sphere of interest?
Speaker 3 (04:42):
Well, probably not. And that's another contributing factor to his
downfall because he went into blood of areas which are
not traditionally within the auspices of the central Bank, which
is more banking regulation and setting interest rates, and so
he got into these highly controversial areas and at times
(05:04):
he kind of talked like he was a born again
member of the Green Party. And now that's all well
and fine, but you know, he is unelected and again
he's wading into highly contentious topics. Not everyone votes for
the Green Party, and when you go into those areas.
(05:25):
My view is for any of us, as you know
on your show, when you wade into controversial areas, you're
going to get ferocious pushback. And he seemed very emotionally
stung by that. It seems that psychology played a big
role in maybe his departure. He seemed very hurt when
people responded. But when you get political, you're going to
(05:48):
get that flack. And he did go political. He wasn't
the traditional conservative central banker. If you look at the
types we've had before, Alan Ballard, Graham, Wheeler, a lot
of them shunned publicity. They didn't want to be media celebrities.
They didn't want to be a sort of a Kardashian
or whatever and an influencer. But it seems that Or
(06:11):
waded into these debates and seemed to almost want to
be a celebrity governor. And it's dangerous when you do that.
So I think that did embroil him in a lot
of trouble.
Speaker 2 (06:24):
What could he have done differently or should he have
done differently?
Speaker 3 (06:27):
In your opinion, Well, my view is probably about half
of the problems we've had due to inflation and the
country's stagnation is directly attributable to his governorship. The main
thing he should have done differently is he should have
never printed fifty billion bucks of cash starting in twenty
(06:50):
twenty when the pandemic blew up. That was probably the
single most disastrous decision he made. He probably knows it
himself now. And the reason is that you have to
go back in time a bit. But in twenty twenty,
you know, whatever your partisan views about the pandemic, and
(07:10):
twenty twenty New Zealand was the toast of the world.
We had largely eliminated the virus. It was only in
later years the COVID response went per shape. But twenty
twenty was going pretty well and kiwis were out and
about and were holiday and the government did the wage
substy scheme which ensured everyone. It wasn't necessary on top
of the elimination and the wage substy to print fifty
(07:32):
billion bucks as well, And he seemed to have got
over excited. And my theory is he just liked being
in the news and he did something which was completely
unnecessary and led to unnecessarily high in fleetion with terrible
consequences for the country. Now, back in two thousand and eight,
(07:52):
during the global Financial crisis. Graham Wheeler was governor and
he did not print one dollar during the GFC. The
United States, Europe, England, they all went on these money
printing programs and did it. It didn't and it was
a sign of great strength for our nation that we
were stronger than the rest of the world. We didn't
(08:13):
need to go down that kind of emergency route. And
as soon as or went down that money printing route,
the entire world perception of New Zealand changed. People thought, oh,
but we you know, we thought you were a strong economy,
a great country that was prospering. You eliminated the virus,
and now what you're you know, apparently the bottom's falling
(08:35):
out of your country and you're having to print money,
in fact, more than nearly every other country in the world.
And I think that was a radical change of perception
that we're suffering from today of the strength of this nation.
And it led to high inflation. Half of it was
overseas factors, but half of it was are And then
(08:55):
he famously said the line that probably brought him down
more than any other. I want to engineer a recession
to get this inflation. No other central bank in the
world would ever dream of saying something like that, because
you're saying to people, I want to you know, wreck
your family finances. I want to throw you out of it. Yeah,
(09:17):
I want to butt you out of work. I want
to destroy you all in the name of getting inflation down.
So what had the other central bank governors said? They
said things like, look, we'd like to bring down inflation,
but we want a soft landing, and we want to
do it as much as we can without hurting people
and without having a recession. And essentially that's what the
(09:39):
whole world did. And instead New Zealand did an engineer one,
recessional engineered three and went into one of the slowest
growing economies in the world, one hundred and eighty first
out of one hundred and ninety am IMF countries. So
I think that's what ultimately brought them down.
Speaker 2 (09:56):
I thank you, as always for your insights. That is
Professor Robert McCulloch, Economics Professor, University of Auckland Business School.
Speaker 1 (10:04):
For more from Kerry Wood Mornings, listen live to news
Talks at b from nine am weekdays, or follow the
podcast on iHeartRadio.
You're listening to the Kerrywood and Mornings podcast from News Talks.
Speaker 2 (00:10):
He'd be, as I mentioned in my opener, a former
Reserve Bank senior staff for ranks. Adrian Or is the
least competent Reserve Bank governor New Zealand has ever had.
Or has announced his quitting. He announced it yesterday, two
years into a second five year tenure. I'm joined now
by University of Auckland Business School Professor Robert McCulloch, who
(00:33):
also worked at the Reserve Bank before traveling to the
UK to complete a PhD in economics at Oxford University.
Many other honors to his name. Professor McCulloch joins me
now a very good morning to you.
Speaker 3 (00:46):
Good morning.
Speaker 2 (00:48):
How would you rank Adrian Orr?
Speaker 3 (00:52):
He was a poor governor, He was a lousy governor.
And it's good he's gone.
Speaker 2 (00:58):
Why do you think he has gone? Everybody speculating wildly
and having a reckon.
Speaker 3 (01:03):
Well, it is speculation. None of us exactly know the reason,
although the chair of the Board, Neil Quigley, who should
also go. He referred to critiques and criticism that Or
had received over the years. He did mention that in
(01:24):
his speech and as you know, a bunch of us,
including myself, have been critics so much of what he's done.
I think it was much deserved. So to the extent
that's the reason. Possibly that played a factor. He seems
to have a thin skin at some level. But when
you're in an extremely high profile and powerful public job,
(01:46):
you're going to get flack. That's the nature of the job.
Speaker 2 (01:50):
We had a caller on who suggested that he was
unhappy with the dual mandate given to him by the
Labor government and struggled with that and in part blame
should go on the previous government. Do you accept that.
Speaker 3 (02:07):
No, I think that's got nothing to do with it
at all. In practice, there's almost no difference between the
duel and the single mandate. The United States, several federal
Reserve operates under the dual mandate, and it's extremely similar
in practice to what the Reserve Bank now has, So
that certainly had nothing to do with it.
Speaker 2 (02:28):
There was certainly friction between the Finance Minister and the
Reserve Bank. The former Reserve Bank governor. They you know,
I mean, I don't think that's any secret. They wanted
their funding maintained, which had trebled since twenty twenty and
Nikola Willis was kicking up Bobsydie about that, how could
(02:49):
that possibly be justified a trebling of the budget for
the Reserve Bank.
Speaker 3 (02:55):
Well, yes, I wouldn't get too political about it, because
I don't think one should take one's eye off the ball.
That he was a bad governor and much of this
country stagnation is due to significant mistakes he made during
his tenure. And when you've shown poor judgment, and when
(03:20):
you've created a huge amount of financial distress for a
large part of the country with these massive hikes and
their mortgage rates, when you've done all those sorts of things,
when you've consistently got it wrong, I think that's ultimately
the main reason why why he's gone. He knew it
deep inside, he knew it. I think the criticism stung
(03:40):
with him because although he publicly tried to defend himself,
he knew he'd got it wrong. And I think he
feels bad about that. So, you know, there may have
been tactics like cutting his funding to maybe precipitate him,
to get him to resign, but that's more sort of
political tactics, you know, because the government can't fire the
(04:01):
governor he's got to resign. So you know, you could
put together some sort of idea of how the government
planned to precipitate a resignation, but ultimately he was just
a bad governor. So I don't think we should lose
sight of that.
Speaker 2 (04:14):
When it comes to where the budget, a lot of
the budget went. It was into creating new departments and
new areas of interest for the Reserve Bank, like the
Marii economy liked ol Mary, like climate change and you know,
absolutely this is part of how New Zealand operates, but
(04:36):
should it be how the Reserve Bank operates? Should that
be in its sphere of interest?
Speaker 3 (04:42):
Well, probably not. And that's another contributing factor to his
downfall because he went into blood of areas which are
not traditionally within the auspices of the central Bank, which
is more banking regulation and setting interest rates, and so
he got into these highly controversial areas and at times
(05:04):
he kind of talked like he was a born again
member of the Green Party. And now that's all well
and fine, but you know, he is unelected and again
he's wading into highly contentious topics. Not everyone votes for
the Green Party, and when you go into those areas.
(05:25):
My view is for any of us, as you know
on your show, when you wade into controversial areas, you're
going to get ferocious pushback. And he seemed very emotionally
stung by that. It seems that psychology played a big
role in maybe his departure. He seemed very hurt when
people responded. But when you get political, you're going to
(05:48):
get that flack. And he did go political. He wasn't
the traditional conservative central banker. If you look at the
types we've had before, Alan Ballard, Graham, Wheeler, a lot
of them shunned publicity. They didn't want to be media celebrities.
They didn't want to be a sort of a Kardashian
or whatever and an influencer. But it seems that Or
(06:11):
waded into these debates and seemed to almost want to
be a celebrity governor. And it's dangerous when you do that.
So I think that did embroil him in a lot
of trouble.
Speaker 2 (06:24):
What could he have done differently or should he have
done differently?
Speaker 3 (06:27):
In your opinion, Well, my view is probably about half
of the problems we've had due to inflation and the
country's stagnation is directly attributable to his governorship. The main
thing he should have done differently is he should have
never printed fifty billion bucks of cash starting in twenty
(06:50):
twenty when the pandemic blew up. That was probably the
single most disastrous decision he made. He probably knows it
himself now. And the reason is that you have to
go back in time a bit. But in twenty twenty,
you know, whatever your partisan views about the pandemic, and
(07:10):
twenty twenty New Zealand was the toast of the world.
We had largely eliminated the virus. It was only in
later years the COVID response went per shape. But twenty
twenty was going pretty well and kiwis were out and
about and were holiday and the government did the wage
substy scheme which ensured everyone. It wasn't necessary on top
of the elimination and the wage substy to print fifty
(07:32):
billion bucks as well, And he seemed to have got
over excited. And my theory is he just liked being
in the news and he did something which was completely
unnecessary and led to unnecessarily high in fleetion with terrible
consequences for the country. Now, back in two thousand and eight,
(07:52):
during the global Financial crisis. Graham Wheeler was governor and
he did not print one dollar during the GFC. The
United States, Europe, England, they all went on these money
printing programs and did it. It didn't and it was
a sign of great strength for our nation that we
were stronger than the rest of the world. We didn't
(08:13):
need to go down that kind of emergency route. And
as soon as or went down that money printing route,
the entire world perception of New Zealand changed. People thought, oh,
but we you know, we thought you were a strong economy,
a great country that was prospering. You eliminated the virus,
and now what you're you know, apparently the bottom's falling
(08:35):
out of your country and you're having to print money,
in fact, more than nearly every other country in the world.
And I think that was a radical change of perception
that we're suffering from today of the strength of this nation.
And it led to high inflation. Half of it was
overseas factors, but half of it was are And then
(08:55):
he famously said the line that probably brought him down
more than any other. I want to engineer a recession
to get this inflation. No other central bank in the
world would ever dream of saying something like that, because
you're saying to people, I want to you know, wreck
your family finances. I want to throw you out of it. Yeah,
(09:17):
I want to butt you out of work. I want
to destroy you all in the name of getting inflation down.
So what had the other central bank governors said? They
said things like, look, we'd like to bring down inflation,
but we want a soft landing, and we want to
do it as much as we can without hurting people
and without having a recession. And essentially that's what the
(09:39):
whole world did. And instead New Zealand did an engineer one,
recessional engineered three and went into one of the slowest
growing economies in the world, one hundred and eighty first
out of one hundred and ninety am IMF countries. So
I think that's what ultimately brought them down.
Speaker 2 (09:56):
I thank you, as always for your insights. That is
Professor Robert McCulloch, Economics Professor, University of Auckland Business School.
Speaker 1 (10:04):
For more from Kerry Wood Mornings, listen live to news
Talks at b from nine am weekdays, or follow the
podcast on iHeartRadio.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.