National Finance Spokesperson Amy Adams says the Government's planned reforms could undermine the Reserve Bank and turn it into a political tool

National Finance Spokesperson Amy Adams says the Government's planned reforms could undermine the Reserve Bank and turn it into a political tool
Amy Adams by Jacky Carpenter.

National's Finance spokesperson Amy Adams says she has "serious concerns" the Government's reforms of the Reserve Bank could undermine its independence and turn it into a political tool.

Adams chose to express the concerns in an interview with international newswire Bloomberg on Thursday. She stopped short, however, of saying definitively that National would reverse the changes if re-elected.

"Treasury have wanted more control over the Reserve Bank since Adam played fullback for the apostles," Adams told Bloomberg.

“It also suits the Government’s agenda. It’s in the Government’s interest to be able to much more strongly dictate to the Reserve Bank what they should say about Government policy and its effect on the economy.”

The upcoming reforms of the RBNZ will see a new Monetary Policy Committee making decisions on New Zealand's official interest rates. Somewhat controversially, Finance Minister Grant Robertson will get to appoint the members of the committee, while there will be a non-voting rep from Treasury sitting in - the latter move having been opposed by the RBNZ and the independent panel advising the Government on the changes.

This week the RBNZ invited Secretary to the Treasury Gabriel Makhlouf to attend monetary policy deliberation and decision meetings as an observer from the end of October.

"This invitation comes ahead of the proposed creation of a formal Treasury observer position in the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill. This Bill is currently being considered by the Finance and Expenditure [Select] Committee," the Reserve Bank said.

In the Bloomberg interview Adams said  she would hate to see the RBNZ "becoming a little bit like the US Supreme Court, where it’s all about stacking it with your people".

"It’s too important for that."

She said Treasury would effectively be “pushing the government line” in a room of policy makers appointed by the minister who “could be inclined to want to do the minister’s bidding.”

“That is an incredible weakening of the Reserve Bank’s independent and autonomous assessment.”

But asked by Bloomberg if National would repeal the changes if it is returned to government, Adams said: “We have significant concerns about them, and while we’re not prepared to make definitive statements about what our plans are, anything that’s passed without bipartisan support has to have questions raised as to its enduring nature.”

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Agreed, the Reserve Bank should remain fully independent form the government.

Remain Independent? It just paid a $1/2 billion dividend to the crown accounts. It's not independent now!

Pure lack of understanding the role of the Reserve Bank my friend

Lack of understanding in many areas unfortunately

Would either of you fine fellows like to provide a sensible comment or challenge?

I am well aware of the role of a central bank/central banks. But what I have highlighted is that if a central bank is making profits that are being returned to the government's purse then the government already has an interest and therefore that central bank is not wholly independent. It may be partially independent but still has a duty of care to the government, it's stakeholder, to return a profit to its balance sheet. In this respect the RBNZ is different to many central other central banks who don't have the same 'cash generative' function for government accounts within their doctrine,

Would either of you good chaps like to comment differently?

Is this a piece of diversionary 'fake' or 'non' news?
Will she put her hat in the ring again?

That picture of Amy Adams at the top of the article is really quite accurate, with the whole look of being in a drunken stupor and the bung eye thing going on.

Considering National modified the charter policy agreement in 2008 to remove the policy target of zero unemployment, (as part of their 'first 100 days plan'), this is more like undoing the ideological changes National made than anything new.