Documents released under the Official Information Act show the public was not told the full story behind the abrupt resignation of Reserve Bank (RBNZ) Governor Adrian Orr in March.
It has now been revealed he quit amid a stoush over the funding and independence of the central bank during negotiations with Treasury and Finance Minister Nicola Willis, with the RBNZ Board willing to accept less funding than Orr was.
When the central bank announced his departure at 1:37pm on March 5, Orr was already on leave and Deputy Governor Christian Hawkesby was acting in his place.
The press release made no attempt to explain why Orr was stepping down without notice, on the eve of a major economics conference hosted by the RBNZ.
After a rush of media requests, RBNZ Chairman Neil Quigley gave an 11-minute press conference at 5pm that day. He told reporters the resignation was a personal decision and that now was the right time, with inflation back in the 1% to 3% target band.
Quigley deflected a direct question on whether funding negotiations had contributed to the decision. The board was “working through some views” on funding, but the process had been “constructive” and “normal,” he said.
Documents have since revealed it was a disagreement over the five-year funding plan that led to Orr’s resignation — something Quigley confirmed to Interest.co.nz on Wednesday morning.
At the March press conference, the board chairman was asked to “categorically” confirm there were no “policy, conduct, or performance issues” behind the resignation.
He responded: “We have issues that we've been working through, but no issues of that type are behind this resignation.”
The RBNZ declined to release some records related to the resignation, instead providing a summary statement explaining the departure.
Sunlight at last
The summary said staff and board members had been negotiating a five-year funding agreement with Treasury in the months leading up to the deal’s finalisation on April 9.
During the talks, Orr formed a view on the level of funding needed for the RBNZ to meet its legislated objectives and ministerial expectations.
At a meeting in late February, it became clear the board and Willis were prepared to agree to a “considerably lesser amount” than Orr believed was necessary.
“This caused distress to Mr Orr and the impasse risked damaging necessary working relationships, and led to Mr Orr’s personal decision that he had achieved all he could as Governor of the Reserve Bank and could not continue in that role with sufficiently less funding than he thought was viable for the organisation,” RBNZ said.
Orr and Quiqley both hired senior lawyers to negotiate an exit and it was ultimately decided it should be announced prior to the conference, rather than wait and risk the news leaking.
There is the true story of his resignation: Orr thought the funding agreed between the Board and the Minister was insufficient to run the RBNZ, and he resigned rather than accept it.
Orr had been pushing the board to reset negotiations. In a 5 February email, he urged colleagues to present the full picture directly to Willis.
“I have asked the team to cease and desist negotiating with various Treasury Officials. The board needs the picture, and they need to negotiate with the MoF [Minister of Finance].”
He said the team had estimated $1.08 billion would be needed to maintain current services, but had since offered to take a 16% “haircut” down to $900 million.
Even that would be a “tough financial ask” and come with additional risks, as it would need to cover 3% to 5% annual cost increases, he said.
Willis and the RBNZ board ultimately agreed to $750 million in operating expenses over five years — an average of $150 million a year. There was also $25.6 million in capital funding and scope for some projects to seek funding separately.
Credibility hit
Brad Olsen, Chief Executive of Infometrics, said the central bank had damaged its credibility by not disclosing the reasons for the resignation at the time.
“Surely, we could have had this conversation three months ago. There have been all sorts of rumours flying around. That wasn't good for anyone. It wasn't good for the respect and trust the Reserve Bank has to have in the way that it operates,” he said.
“No one ever believed the comments that were made at the time, that the Governor thought it was the right time to leave, and that, you know, he'd done all he needed to and could.”
Olsen said the decision to resign was a respectable one. Orr couldn’t get the funding he believed was necessary and chose to step down. That could have been explained, even if it was awkward or difficult for the leadership.
He said the RBNZ holds power to make major economic decisions with limited public oversight. With that comes a duty “to be transparent, to communicate properly, and to be above reproach.”
“People are now looking at statements made three months ago and asking whether they were as fulsome as they could have been,” Olsen said.
While the central bank hasn't lost its credibility over this, Olsen said members of the public have raised questions during the economic presentations he gives to business and community groups around the country.
In a phone call, Quigley said he did not think the public needed to know the motivation behind the resignation. But in a follow-up email, he said an agreement with Orr limited “the communication we could offer on March 5.”
“Under the Official Information Act we have been able to provide a summary of documents and recollections that provides more clarity on the events leading up to Adrian's resignation.”
This claim cannot be verified. The RBNZ withheld discussions from the OIA, and its summary only states that a process for agreeing a public statement was included in the exit agreement.
Codename: Baroda
When Orr decided to resign in late February, the RBNZ set up "Project Baroda" to manage communications and operational logistics.
The resignation was classified as a “PSR sensitive announcement,” meaning it could move financial markets and had to be released internally and externally at the same time.
The documents noted there would be “noise/speculation/critics” and said the bank’s messaging needed to “convey confidence and conviction.” They also warned that all communications would be subject to the OIA and should be treated as public.
Despite this, many internal messages were withheld from the latest document release, with only sanitised RBNZ summaries made public.
Naomi Mitchell, the RBNZ’s Director of Communications, emailed the bank’s leadership advising it was “really important not to talk to media” about the resignation once announced.
A set of scripted answers was prepared for managers fielding questions from staff. They were told to say the resignation was a “personal decision” and was not “forced or compelled.”
“The role of Governor of the Reserve Bank of New Zealand attracts substantial attention, speculation, and criticism, which Adrian has handled with grace over the past seven years.”
“He is leaving on his own terms after driving a significant strengthening of RBNZ’s capability and capacity,” they were instructed to tell staff.
Mitchell also sent Willis’ press secretary a prepared quote attributed to Quigley:
“Adrian’s decision to resign as RBNZ Governor was a personal decision. He has conveyed that with consumer price inflation back within its target band, the time was right for him to step down.”
Documents have since confirmed this statement was not accurate. It is unclear whether the quote was ever used verbatim in public communications.
In a statement, Willis said she had accepted the explanation at face value but believed the bank’s leadership should have been more transparent about the motivation.
“While I have always been able to speculate that Mr Orr’s views on funding may have contributed to his resignation, I did not view it as proper for me to speculate on that matter when I was not a party to the employment discussions that led to his resignation,” Willis said.
“It has now become clear that it is the Reserve Bank’s view that that is what precipitated Mr Orr’s resignation. It is my view that it would have been appropriate for the bank to share that information earlier.”
Independence under threat
Barbara Edmonds, Labour’s finance spokesperson, said the documents raised further questions about whether “any lines were crossed with regards to the independence of the Reserve Bank.”
“We were told that Adrian Orr stepped aside for personal reasons, but now we know that it was because of funding disagreements between him and Willis,” she said.
In a 14 February email to board members, Orr explicitly raised concerns about preserving the RBNZ’s independence during the funding negotiations.
“The FYFA [five year funding agreement] construct is deliberately 5 years to attempt to maintain appropriate operational independence for the Central Bank—for monetary policy and prudential settings—amongst other CB tasks as designated,” he wrote.
“The importance and clarity of operational independence for central banks is judged by global financial markets now and in the future. Not by any current government.”
He warned the bank was under “continual pressure” from lobby groups, which he expected would influence an upcoming meeting with Willis and Quigley to discuss the funding agreement and capital requirements.
Previous OIA requests have revealed some details about the meeting, including that Willis instructed her media team to keep its subjects confidential. Orr resigned days later.
In the February email Orr wrote: “The challenge I have in my head is: Providing a FYFA proposal that Crown may ‘want to hear’ vs. [a proposal] the Board believes best meets their strategic goals.”
“These options differ significantly. Both options will need to retain operational independence where relevant.”
Epilogue
A final note: Project Baroda did appear to plan for Adrian Orr to make public comments on his departure “if appropriate/supporting stability message.”
An email from Orr, sent just an hour before the resignation announcement, said:
“A quick note to thank you all for the expedient work today. I will proudly open the conference tomorrow morning, noting I am there to discuss today's news. I am proud to have worked with and for you all, and I know you will succeed ahead.”
Documents released by the RBNZ do not explain why this did not happen.
10 Comments
Orr threw his toys out of the cot.
Out of the cot, out of the window and jumped right after them. Reportedly the head office executive at the RBNZ had ballooned to an extraordinary extent during Orr’s tenure. Perhaps the reduction in funding was simply going to be an exercise in itself to rein that in and re-establish an appropriate and effective level of staffing sufficient to simply manage the core activities and responsibilities of the RBNZ.
On another point Mr Orr warned that the RBNZ was under “continual pressure” from lobby groups. Surely the RBNZ should be untouchable in that respect. It is very difficult to accept that a policy decision should made in one aspect simply because the lobbying for it was of a superior nature, better funded for instance, to that of an alternative. The doors to those corridors need to be slammed shut.
It reads to me both that he wasn't accepting that his RBNZ had bloat, but also that Nicola Willis was tryin to get her tendrils of influence in there to pull the strings and he wasn't going to be around for seeing that happen. We'd need to see the redactions for confirmation.
Foxglove and Interesting1234
The RBNZ is costlier to run compared to the US Fed, in terms of both total costs and staffing, when the numbers are crunched as a percentage of GDP.
Methinks there is a lot more to this hasty exit than meets the eye. See my comment later in this string.
Cheers
Col
1...They want ridiculous amounts of our money for their own operation. 2... They are happy to mislead us.
Not the sort of characters you want in a pivotal role in our economy.
"Baroda" aka "Fibs"
Fibs is a term that brings up a picture of ugly disputing children. All with snotty noses.
Not characters we should be paying those big salaries to. From our taxes.
Whatever happened, I think headlining the $150m annual operating cost as a five year lump sum of $750m is a little mischievous.
It would also be good to get some context on the relative operating costs of reserve banks from other similar sized economies or countries
Perhaps Orr could have offered to take a pay cut to help bridge the gap. The RBNZ leader is paid an extraordinary amount (even compared to many international equivalents).
Seems bizarre to me that the RBNZ executive should be paid significantly more than the Prime Minister.
Perhaps the real talking point is how we’ve allowed the central bank to become a self licking ice cream cone?
Without strong leadership, nobody says no when it is needed. One of the core issues from locking the country down an having worker scarcity, was the promotion of too many into roles they were not competent in, as they were the best option left from those that stuck around in the govt departments. This lead to a greater sense of entitlement to high salaries for incompetence, and is a hard notion to reflect on for those losing their roles in these positions.
BARODA IN AMERICAN ENGLISH MEANS OBSOLETE - so very apt in more than one way.
Quoted... "Documents released under the Official Information Act show the public was not told the full story behind the abrupt resignation of Reserve Bank (RBNZ) Governor Adrian Orr in March."
FUNDING
And so what on earth would lead us to believe that we are being told the "full story" now?
I delved into a funding comparison today using the US Fed as a benchmark, and bearing in mind that its costs should reflect its global role with the New York Branch being the principal fiat 'money' spigot for the global economy.
The numbers were interesting, to put it mildly. They are expressed in US dollars and as percentages of raw GDP numbers in an attempt to compare apples with apples. They are net of treasury reimbursements and also reflect the recent budget cuts.
US Fed total operating costs 0.028% of GDP
RBNZ total operating costs 0.034% of GDP
US Fed staff costs 0.016% of GDP
RBNZ staff costs 0.19% of GDP
Funding was possibly part of the reason for the sudden departure, but I am suspicious there is another factor involved too. We will probably know more soon after the BRICS Summit that is to be held in Rio, Brazil, July 6/7th which is less than a month off now.
THE DEMISE OF FIAT CURRENCIES - interesting that the Five Eyes countries all got this horribly wrong.
I would hazard a guess that Mr Orr has enough between his ears to know that there is a paradigm shift in the wind, and that ALL fiat currencies are very near the end of their lifespan.
This is a major event because the replacement global financial structure will be built on a foundation of BRICS-centric hard-backed currencies, and not just backed with gold and other PMs, but probably a range of other durable commodities as well.
Four central banks look particularly conspicuous to me, in that they don't seem to have made any real attempt to prepare for this challenge.
One of them (the US Fed), bet pretty much the entire house against this eventuating, and the others, the UK, Canada, and NZ, appear to be in denial - interesting that they just happen to be four of the five members of the Five Eyes group.
Australia, the fifth member, is conspicuous too, as they are the 3rd largest gold-producing country in the world. Arguably that makes them the most lax of all, given they have a small gold stash in relation to their huge annual mined tonnage.
As I have mentioned before on this forum, the world was sent the memo from the BIS in Basel back on January 1, 2023, when they designated certified physical gold a Tier 1 balance sheet asset - they were effectively preparing the groundwork to throw ALL fiat currencies under the bus - I wonder if either Orr or our Treasury even bothered to read it?
THE GIANT WESTERN FIAT PONZI - built on sovereign bond sales.
Given that the existing Western world fiat Ponzi financial structure is built upon the US's ability to sell sovereign treasury bonds, this entire scam is about to come tumbling down.
This was happening anyway, but the unwind has been brought forward dramatically because the US #47 Admin chose to declare a trade/tariff war on the entire planet - including on the traditional buyers of US sovereign debt.
Now these countries have every reason to not bother to roll over their existing bonds, let alone purchase any new ones. Who could blame them if they divested into other forms of reserve assets that don't carry significant counterparty, currency shift, and weaponisation risks?
The collective central banks of the world, have been net sellers since 2014, so any of them that could see what was unfolding didn't hang around for the Basel memo, they have been getting their houses sorted for more than a decade.
RUNNING FOR COVER
I am no fan of Mr Orr, but we cannot lay all of the blame for what's happening at his feet. The other RBNZ Governors failed to address this challenge too - after all, it was Mr Brash who sold out NZ's last remaining gold reserves back in 1991 - and for the princely sum of around $350/oz. Suffice to say, anyone who wears a gold ring on their finger owns more gold than the NZ Treasury.
And my point - well clearly, no one in their right mind would want to be on watch in the RBNZ Governor chair when this giant Ponzi comes tumbling down - least of all an incumbent Governor, still on duty, who hadn't foreseen, let alone addressed, a looming paradigm shift out of fiat currencies.
That said, policy decisions regarding gold reserves back in the day, just as they are currently, would have been made jointly in coordination with the then Secretary to the Treasury (Dr Graham Scott), and the Minister of Finance (Ruth Richardson).
Fast forward again to 2025 - would the RBNZ fess up to any of this as a contributing reason for Orr's sudden departure? - rhetorical question.
Regards
Col
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.