Adrian Orr has been reappointed as Reserve Bank Governor for another five years in a move that has inflamed the opposition parties, with the National Party saying it is "appalled".
Finance Minister Grant Robertson announced the reappointment on Tuesday, saying he was "pleased to appoint Adrian for another five-year term" effective from March 27, 2023 following the "unanimous" recommendation of the RBNZ board. His current five year term expires in March.
"Adrian has demonstrated the skills, knowledge and experience to help steer the financial system through the 1-in-100 year economic shock of the pandemic. I am happy to endorse the recommendation of the board. I have full confidence that he will continue to display the same integrity and leadership in performing his duties as Governor in what is still a challenging environment," Robertson said.
It is fair to say that Orr has been a polarising presence since starting in the role in 2018.
The timing of the reappointment announcement will likely irk the National Party - coming as it does just two days before a major five year review of the RBNZ's handling of monetary policy is due to be released.
This review, the first since changes to the Reserve Bank Act in 2018, will look at various contentious issues, such as how the RBNZ handled the onset of Covid, with the massive monetary policy stimulus that was applied in 2020, including the buying of $53 billion of government bonds and the funding for lending (FLP) programme offering billions of dollars of cheap loans to banks.
There has been the strong criticism levelled that such actions have helped to lead to New Zealand's current 7.2% inflation, the extreme house price rises of 2020-21 and now rising interest rates - with the RBNZ having raised the Official Cash Rate by 275 basis points (to 3.5%) so far in 2022 and with another 75 basis-point rise largely expected later this month.
National had earlier suggested a separate "independent" review of the RBNZ's actions.
And on Tuesday National Party Finance spokesperson Nicola Willis said the party was "appalled" by Robertson’s decision to re-appoint Orr without first completing an independent review of the central bank’s performance.
"We have repeatedly urged the Government to conduct an independent review of the Reserve Bank’s performance before endorsing the Governor for another five years. Re-appointing him without first completing such an inquiry is a serious mistake.
"In recent years, Adrian Orr as the Chair of the [RBNZ] Monetary Policy Committee signed off on an extraordinary programme of money printing and cheap lending that pumped tens of billions of dollars into the economy. That programme directly contributed to house prices rising 28% in one year, inflation rising to a 32-year high, and record bank profits.
"New Zealanders now suffering through a cost of living crisis are owed some answers. Was a more careful monetary policy approach warranted? Has the Bank fulfilled its mandate? Did Orr get it wrong?
It seems entirely likely the National Party would have sought to use the release of this review to further lobby against Orr's reappointment. Robertson's announcement appears timed to head that off.
Recently National's leader Chris Luxon stated a preference for Orr to be given a 12-month extension to his term till after the 2023 election.
That would then give a new government the opportunity to appoint the the next governor. Luxon had said he would be unhappy to become prime minister with Orr in place for another five years.
ACT Party leader David Seymour said despite "a term of poor leadership, poor focus and poor outcomes", Adrian Orr has "somehow" been reappointed.
"In September I sent Finance Minister Grant Robertson an extensive letter outlining the many reasons we can’t afford another term of Adrian Orr in the role.
"He has shown poor leadership throughout his term, punctuated by high staff turnover and a failure to accept any responsibility for these issues.
"ACT has made it clear it has no confidence in Adrian Orr, and with polls showing we are on track to play a big role in the next Government, Grant Robertson should not have appointed him for a full term."
This is the statement from Finance Minister Grant Robertson:
Adrian Orr has been reappointed as Reserve Bank Governor.
"Following the Reserve Bank Board’s unanimous recommendation to me, I am pleased to reappoint Adrian for another five-year term, effective from 27 March 2023," Grant Robertson said.
"The Reserve Bank has been undergoing a considerable period of change since Adrian’s appointment in 2018. The Reserve Bank of New Zealand Act 2021 came into force in July this year and has changed how the Bank operates and is governed. This has led to considerable change in the Bank’s strategy, people and culture.
"As the Governor, Mr Orr has been instrumental in leading this change and his reappointment will allow him to carry on and ensure these changes are bedded in.
"In light of global conditions, this is also a time when stability and continuity are paramount for the Bank."
Under the Reserve Bank Act, the Bank’s main objectives are to achieve and maintain stability in the general level of prices over the medium term, support maximum sustainable employment, protect and promote the stability of New Zealand’s financial system.
"Adrian has demonstrated the skills, knowledge and experience to help steer the financial system through the 1-in-100 year economic shock of the pandemic. I am happy to endorse the recommendation of the Board. I have full confidence that he will continue to display the same integrity and leadership in performing his duties as Governor in what is still a challenging environment." Grant Robertson said.
This is the statement from Nicola Willis:
The National Party is appalled by Finance Minister Grant Robertson’s decision to re-appoint Reserve Bank Governor Adrian Orr without first completing an independent review of the Bank’s performance, says National’s Finance spokesperson Nicola Willis.
"We have repeatedly urged the Government to conduct an independent review of the Reserve Bank’s performance before endorsing the Governor for another five years. Re-appointing him without first completing such an inquiry is a serious mistake.
"In recent years, Adrian Orr as the Chair of the Monetary Policy Committee signed off on an extraordinary programme of money printing and cheap lending that pumped tens of billions of dollars into the economy. That programme directly contributed to house prices rising 28 per cent in one year, inflation rising to a 32-year high, and record bank profits.
"New Zealanders now suffering through a cost of living crisis are owed some answers. Was a more careful monetary policy approach warranted? Has the Bank fulfilled its mandate? Did Orr get it wrong?
"The Government’s refusal to even ask these questions shows contempt for the New Zealand public. It’s not enough for the Minister of Finance to lean on the endorsement of the board he helped appoint. He should have kicked-off a thorough external review to satisfy himself and New Zealanders that the Bank did the best it could have. Instead, he has directly shied away from any semblance of accountability. The ‘ask no questions’ approach is unacceptable.
"It’s completely insufficient for the Bank to mark its own homework with an internal review verified by its own hand-picked favourites.
"“New Zealanders suffering through a cost of living crisis deserve more than a cosy re-appointment process with no accountability.
"National would immediately initiate an independent inquiry into monetary policy decision making over the past two years, including its contribution to the cost of living crisis, unsustainable house price rises, co-ordination with fiscal policy, losses on bond purchases and its contribution to bank profits."
This is the statement from David Seymour:
"Despite a term of poor leadership, poor focus and poor outcomes, Adrian Orr has somehow been reappointed for another term as Reserve Bank Governor,” says ACT Leader David Seymour.
"In September I sent Finance Minister Grant Robertson an extensive letter outlining the many reasons we can’t afford another term of Adrian Orr in the role.
"He has shown poor leadership throughout his term, punctuated by high staff turnover and a failure to accept any responsibility for these issues.
"A failure to accept responsibility is possibly the defining feature of Orr. When appearing in front of the Finance and Expenditure Committee last week he refused to accept the Reserve Bank has gotten anything wrong, despite massively overstimulating the economy, causing consumer price inflation, asset price inflation, inequality, and now higher interest rates.
"He also carried out an extensive and expensive review into New Zealand banks’ conduct and found nothing of note but refuses to admit as much and claims changes are still necessary. He is incapable of accepting a mistake.
"The Governor at his best can be described as colourful, but might be more accurately described as indulgent and unfocused. His analogies where the financial system is a forest and his organisation happens to be Tane Mahuta, the god of the forest, are an excellent example of this.
"Giving a speech to the Central Banking Global Summer Meetings entitled Why we embraced te ao Māori during a cost of living crisis that hits Māori hardest. Failing to mention the Reserve Bank’s failure to contain inflation shows that he is not focussed on issues that the Reserve Bank should be.
"ACT has made it clear it has no confidence in Adrian Orr, and with polls showing we are on track to play a big role in the next Government, Grant Robertson should not have appointed him for a full term.
"The good news is that a Government with ACT in it will keep Adrian Orr on a tight leash. There will be no more loose monetary targets that allow targets to be met in the ‘medium term’, a timeframe that even the Prime Minister couldn’t define.
"ACT would set a strict Monetary Policy Remit with specific targets in specific timeframes. We will restore monetary policy credibility to the Reserve Bank by returning its mandate to solely taming inflation, allowing the appointment of monetary policy experts from New Zealand and abroad, and applying stricter scrutiny in future before granting Crown indemnities.
"This just shows the low standards Labour is setting for New Zealand. Reappointing Orr says that that it is ok to have a Governor with questionable leadership skills, a diffuse focus, and terrible outcomes. The Minister should have aimed higher, it’s what New Zealanders deserve so they are not the victim of monetary incompetence that amounts to a thief in their pocket."
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