Reserve Bank Governor ’embattled’

Michael Reddell isn’t a fan of the performance of Reserve Bank Governor Adrian Orr.

Croaking Cassandra: An embattled Orr

And then there was the press conference.   I’ve seen some pretty poor performances from Governors over the years –  early ones by Alan Bollard were often awkward, and as Graeme Wheeler became more embattled the defensive introvert, never comfortable with the media, took over.     But this one was the worst I’ve seen, and from someone who has many talents in communications.  But just not, so it is confirmed again, in coping with challenge, disagreement, or finding himself on the back foot.  I doubt a senior politician would have got away with it, and it isn’t obvious why an unelected bureaucrat, uncomfortable at facing serious scrutiny, should do so.

The Governor and Deputy Governor faced several questions about the possible impact of the Bank’s capital proposals on farm lending –  various commentators have suggested such borrowers will be among the hardest hit.  The Bank attempted to push back claiming that any sectoral impacts were nothing to do with them, and all about banks’ own choices.  But they seemed blind to the fact that banks will have more ability to pass on the additional costs of the higher capital requirements to some sectors, some borrowers, than others.  And that is because of a point the Bank never addresses: their capital requirements don’t apply to all lenders.

The Governor came across as embattled from start to finish –  embattled at best, at times prickly, rude, and behaving in a manner quite inappropriate for a senior unelected public official exercising a great deal of discretionary power, with few formal checks and balances.   BusinessDesk’s Jenny Ruth – who often asks particularly pointed questions about the exercise of the Bank’s regulatory powers, and the lack of transparency around its use of those powers – was the particular target of his ire, and at one point he tried to refuse to take further questions from her.

The press conference deterioriated further as it got towards the end.  Without specific further prompting, the Governor noted a certain frostiness in the room, and then launched off again in his own defence.

A couple of articles in the Herald in recent days tells us some more of the story.   The first was from Liam Dann, who has in the past provided a trusty outlet for the views of successive Governors, and the second was a column from Pattrick Smellie, under the heading “Bunker mentality returns to the RBNZ?”, evoking unwelcome memories of the Wheeler governorship.

Orr very much needs to be pulled into line, for his own sake and that of the country (as single decisionmaker he still wields huge untrammelled power).

At present, he is displaying none of the qualities that we should expect to find in powerful unelected official –  nothing calm, nothing judicious, nothing open and engaging, just embattled, defensive, aggressive, playing the man rather than the ball, all around troubles of his own making (poor process around radical proposals made without any robust shared analysis, all while he is prosecutor, judge, and jury in his own case).

He also notes something odd – “when we have no idea who will even be Secretary to the Treasury –  lead economic adviser to the government –  three weeks from now”. That’s if Treasury Secretary Gabriel Makhlouf stays in the job that long.

Is there really no replacement for him yet?

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16 Comments

  1. Alan Wilkinson

     /  8th June 2019

    A bit of a worry with a government largely comprising the financially clueless and the two principal government financial institutions acting headless.

    Reply
    • The Greens have the solution: Ban dairy farming. This will lead to much less govt income and with less money they reason there’ll be less to worry about.

      Reply
    • Blazer

       /  8th June 2019

      which financial genius can the Nats offer?

      With the career pollie,the ex forex gambler and the zoologist gone…there’s an empty space!

      Reply
      • Duker

         /  8th June 2019

        The small town prosecutor, The Truckstop waitress ,a couple of suburban lawyers , a former EU bureaucrat & BA in Politics ( Todd McClay) and a former police Dog Handler…woof

        More dog meat than dogs !

        Reply
      • Pink David

         /  8th June 2019

        “which financial genius can the Nats offer?”

        Perhaps you could offer your services.

        Reply
      • Key, English, Joyce… These guys managed to draw up budgets in tough times that allowed for no extra spending but they still grew the economy. Labour drew up a budget that included surpluses earned by National but couldn’t even link to it without cocking it up. True fact.

        Reply
        • Kitty Catkin

           /  8th June 2019

          The constant referrences to Paula Bennett as a truckstop waitress (how many decades ago was she a waitress ? ) are derogatory and sexist. I assume that Simon Bridges is the ‘small town prosecutor’ .

          These sneers say much more about the sneerer than those he sneers at. Envy oozes from every word.

          Reply
          • duperez

             /  8th June 2019

            You reckon the go at Ardern for working in a takeaways place will cease? And the comments that that is all she is capable of?

            Reply
            • Kitty Catkin

               /  8th June 2019

              People don’t go on and on and on about it as if that was all she’d ever done. I haven’t heard anyone doing it, anyway. This is a straw man argument. People like Duker DO insult Paula Bennett by referring to as a waitress as if she’d never been anything else.

            • Kitty Catkin

               /  8th June 2019

              Get a grip on reality, she was 14 and it was an after school job.

              How many people talk about it now ? It came up in an article about her visiting her home town.

  2. Blazer

     /  8th June 2019

    relentless pressure from the Commercial banks now,that they are continually being shown up as non compliant.

    They use their trusty weapon,its going to cost X,Y and Z more for finance to pressure EB policy.

    They need to be brought to heel,and maybe Orr is the man to do it.

    Political pressure involved too.

    Reply
    • Dave K

       /  8th June 2019

      Maybe have a read of some background before commenting. You obviously don’t understand what Orr is proposing, it is nothing to do with bringing the dastardly aussie banks to heel. Rather……the net result of his bank capital proposals (essentially equivalent to requiring the banks to hold ultra deluxe insurance policies with all the added extras) will be an output cost equivalent to around ~0.3% of GDP which, using the standard Treasury discount rate is equivalent to a present value of lost output of around $15 billion. That’s a whole bunch of pocket change in an economy that is already only just treading water.

      Redell’s point is that the Governers position isn’t well thought out, hasn’t been through a proper cost-benefit assessment, is inconsistent with just about every other advanced economy and hasn’t been properly consulted on particularly when he is chief poo-bah and is answerable to (literally) no-one. But aparently anyone who questions his ultimate authority is only doing so due to ‘vested interests’

      Reply
      • Blazer

         /  8th June 2019

        looking at a macro view here.

        Reply
      • Alan Wilkinson

         /  8th June 2019

        The usual bureaucratic view that protecting their own backside from any risk is a priority ranking ahead of any and every cost to anyone else. Precisely why houses are now unaffordable.

        Reply
  3. David

     /  8th June 2019

    Orr has always been somewhat bloody minded. He, in my opinion, is far better than all of his predecessors who were all put interest rates up too high too quickly which has hampered capital formation for kiwi families while our inflation rate never deviated much from the prevailing global average.
    He does have the issue of our banks are overseas owned so he has to act differently to his counterparts but his requirements are way too onerous and leaves me wondering if this is a negotiating position or a personal crusade divorced from what is needed.

    Reply
  4. Duker

     /  8th June 2019

    Cassandra has had it in for the Reserve bank and all its minions since ‘forever’- he used to be one of theose minions.
    Imagine a whole building full of unbearable smart arses, who in addition, the bureaucracy is their lifes work. I hear they too rely on computer models a lot, dont undertand that 3 months is a big ask and yet they model changes out 20 years. Even the economic theory doesnt last that long ( thrown away now is the old theory of government borrowing drives up interest rates, or that too much full employment is a bad thing, but only thrown away reluctantly), let alone the mathematical process of computer modeling

    Reply

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