Labour agrees with the Government’s decision to appoint an interim Reserve Bank governor when Graeme Wheeler steps down on 26 September, finance spokesperson Grant Robertson told interest.co.nz.
The expiration of Wheeler’s five-year term just three days after New Zealand’s 23 September general election was just “very unfortunate” timing, Robertson said.
On Tuesday, Wheeler announced he would not seek a second term. RBNZ board chair Neil Quigley said the Government had advised the board that its recruitment process to determine the next governor should not begin until later in the year due to the proximity of the general election.
The six months current deputy governor Grant Spencer is pencilled in for as interim governor from 26 September could fit the timeframe Labour might need for a review into expanding the RBNZ’s policy targets agreement (PTA) if it leads the Government after 23 September, Robertson noted.
However, if the review does not take that long, Labour is set to cut the arrangement short.
“If it takes four months, it takes four months,” Robertson said.
The Labour finance spokesman has already said publicly that he wants to expand the Reserve Bank’s remit. In 2015 he called for a broader PTA to include a focus on employment.
A full announcement on Labour’s position will come later this year as the election nears, Robertson said. The party has already settled on language it wishes to use in its announcement, influenced by mandates for the Reserve Bank of Australia (RBA) and the US Federal Reserve, he said.
Labour understands the Reserve Bank cannot be tied to employment outcomes, as it is clearly not the sole arbiter of jobs growth, Robertson said.
“But we can ask them to consider employment and unemployment within their thinking,” as with the RBA, he said.
The RBA has a “has a duty to maintain price stability, full employment, and the economic prosperity and welfare of the Australian people,” according to its remit. Like the RBNZ, it has an inflation target for achieving this.