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?

National’s relationship with China also under fire

A lot has been said over the last week about apparent difficulties the Government is having in it’s relationship with China, in part because of the relationship between Jacinda Ardern and Winston Peters. Ardern is the first Prime Minister for decades who hasn’t been on a visit to China in her first year, and that trip seems to be on indefinite hold.

But National’s relationship with China is also being criticised.

Michael Reddell (Newsroom): National’s craven deference to China?

But over the past couple of decades, New Zealand political figures, and the National Party ones in particular, seem to have binned any sense of decency, integrity, or values when it comes to Chinese Communist Party-ruled China. I don’t suppose individually most of them have much sympathy for PRC policies and practices, but they just show no sign of caring any longer. Deals, donations, and indifference seem to be the order of the day.

Over the past couple of years the depths the party, its leaders and MPs, have been plumbing have become more visible. In 2017, in government, they signed a Memorandum of Understanding with the PRC on the Belt and Road Initiative. In that document they – Simon Bridges as signatory – committed to “promote” the “fusion of civilisations”.

Plenty of people will probably dismiss such statements as “meaningless”, the stuff of official communiques. But decent people – under no duress whatever – don’t sign up to things suggesting that today’s equivalent of Nazi-ruled Germany is a normal and decent regime. Of course, they would probably dispute the parallel, but that’s just willed deliberate blindness.

Later that same year we learned the National Party had had a former PLA intelligence officer, Communist Party member, sitting in its parliamentary caucus. It seems to be generally accepted that Jian Yang, of such a questionable background, is one of the party’s largest fundraisers. Presumably the leaders (John Key and Peter Goodfellow) were aware of his past, but let’s be generous and assume that most of the caucus was as unaware as the public. But for the past 18 months, everyone has known.

But what the National Party – leader, president, MPs, and all those holding office in the party – is responsible for is the fact that Jian Yang still sits in Parliament, still sits in the National caucus, is still National’s spokesman (on a couple of minor portfolios), with the express support of successive leaders, and (apparently) in ongoing business relationships with the party president (he who trots of to Beijing to praise the regime and its leader).

A few months ago we had the egregious former Minister of Trade, and foreign affairs spokesperson, Todd McClay plumbing new depths. In an interview with Stuff, he championed the PRC regime interpretation of the mass internment of Uighurs in Xinjiang, noting that “the existence and purpose of vocational training centres is a domestic matter for the Chinese government.”

He was spinning for the CCP regime in Beijing.

No sense at all in anything Bridges – or any other National Party figure – says that the PRC itself has changed: bad as the regime always was, it has now become worse.

In his Beijing-deferential interview on the Herald website the other day, David Mahon tried to frame the current PRC upset with New Zealand as “the Chinese see it as akin to infidelity”.

New Zealand “leaders ” have been the most sycophantic and compliant, perhaps there is a sense that China can’t afford to let us get away with some renewed self-respect. That, after all, might encourage others to think and act for themselves, for the values of their peoples. Better to foster the illusion – assisted by local politicians and academics – that the PRC hold our prosperity in its hand.

It simply doesn’t. It never did.

But that’s New Zealand politics, that seems to be today’s National Party. It is sickening.

Strong words – and I have effectively toned it down with editing.

It is difficult when a major trading partner is a dictatorship with a poor human rights record.

It could be alarming if Reddell is anywhere near right about the degree of financial subservience of National to China.

And of course article this won’t help with the New Zealand-China relationship.

Should all potential MPs be investigated?

How much should MPs or possible future MPs be investigated?

Last week Newsroom published a number of stories about National MP Joan Yang:

How much should candidates be vetted by parties?

How much should they be investigated by media?

Should only immigrants standing for Parliament be questioned?

Michael Reddell writes of A near-complete cone of silence

I’d been planning to write a post today about the near-complete cone of silence that seems to have descended over elite New Zealand around the Jian Yang scandal.

That a former member of the Chinese intelligence service, former (perhaps present, if passive) member of the Chinese Communist Party, still in the very good graces of the Chinese authorities –  never, that is, having denounced the oppressive expansionist regime he served –  sits in New Zealand’s Parliament, nominated to again win a seat in Parliament on Saturday, is both astonishing –  at least to those like me who haven’t been close observers of such things –  and reprehensible.

That it seems not to bother anyone in, or close to, power (at least enough to do or say anything) is perhaps even more alarming.  There was a wave of stories in the first 24 hours after the Financial Times/Newsroom stories broke, and then……well, almost nothing.

Should there have been more said, done, investigated about Yang?

Does it matter what he did before he moved to New Zealand in 1999? Should he be investigated and judged on his distant past, or just on his record in New Zealand?

I don’t think there is any evidence he is a Chinese spy, but there have been many suggestions of that.

What about other immigrant candidates?

What about Green candidate Golriz Ghahraman?

Labour MP Raymond Huo?

NZ First MP Mahesh Bindra? He served in the Indian Army, migrating to New Zealand in 2002. Is he an Indian spy?

Should all immigrants wanting to stand for Parliament be regarded as suspect?

Should they all have had Newsroom investigations published during an election campaign?

A lot of questions here – I don’t have the answers, but some of them may be tricky in an open democracy.

 

Reserve Bank Governor refuses to answer questions

Michael Reddell at Croaking Cassandra writes about yesterday’s news conference with Graeme Wheeler, Governor of the Reserve Bank:

…the outgoing Governor of the Reserve Bank today both refused to accept that he’d made any mistakes, while refusing any comment at all on some of the more searching questions.

The news conference was on the occasion of the release of his statutory monetary policy accountability document, the Monetary Policy Statement.    It was the last opportunity journalists will get to question him.

And yet faced with questions about the Toplis affair (his use of public resources, including his senior managers, to attempt to close down critical commentary from an employee of an organisation the Bank regulates), he simply refused to comment.

I’m sure he is now feeling quite embattled and defensive, but surely it should be unacceptable for a powerful public official to simply refuse all comment on such a chilling example of abuse of executive office?

I hope members of Parliament use their opportunity this afternoon to ask questions on this matter, and to insist on answers.

And:

The Governor also tried to avoid most questions about his term in office (but was happy to provide a long answer to a curious question about risks around North Korea, on which he has (a) no accountability, and (b) no more knowledge than the rest of us).  Apparently there is a speech coming –  which may be interesting, but it provides no opportunity for follow-up challenge or scrutiny.   Asked if his critics have been fair, and if at times their criticism may have clouded his judgement in decisionmaking, he claimed he will cover that in his speech.  If so, that should be interesting.      Asked also about:

  • what surprised him about the economy in the last five years,
  • about his inflation record in the last five years, and
  • what his successor should worry about

he refused to provide any answers, and simply referred everyone to the forthcoming speech.

Odd that Wheeler had a media conference before giving his speech.

A lot more about the failure to answer questions and about Reserve Bank matters in: Consistent to the end…..sadly

“How mediocre our immigration programme has actually been”

Michael Reddell (30+ years doing economic analysis and policy advice in a range of institutions, in New Zealand and overseas) details an interesting recent history of issues) to the present.

Reddell was involved in the 2025 Taskforce, established in 2009 as part of a Confidence and Supply agreement between National and Act (a Dr Bryce Wilkonson was also a member of the task force along with Don Brash, David Caygill and Australian economist Judith Sloan).

To cut the story short, I had little interest in the issues until I was involved with the 2025 Taskforce, set up to advise the government on why the large income and productivity gaps to Australia had opened up, and to recommend a policy programme that might close the gaps over the following 15 years.   I was seconded to Treasury at the time, and there was also quite a bit of interest there in why New Zealand’s interest rates were so high (relative to those abroad).

The 2025 Taskforce did not –  as readers might expect –  come out in favour of high rates of immigration.

I came away from involvement with the Taskforce pretty supportive of the list of measures, and way of thinking about things, that they proposed.     But the more I reflected on the issues, the more it started to seem like a list of measures that, while useful, was unlikely to make a large enough difference to close the gap.

It was only out of all that experience –  mostly down to the good fortune of the secondment to Treasury –  that my current way of thinking started to develop.

Through this period, my focus was very high-level and macroeconomic in nature.  I kept being told –  by Treasury and MBIE – that our immigration programme was one of the best in the world (and there were papers to prove it).

I didn’t have any reason to disagree (I didn’t have the detailed knowledge and my background was macroeconomics), but as I always stressed, if my argument/analysis was valid, it was so broadly speaking regardless of the quality of the individual immigrants.

The last couple of years, outside the public sector, have certainly been an eye-opener for me, on just how mediocre our immigration programme has actually been.  It may well be that our average non-native born worker has among the highest skills of any of those in the OECD.

It may even be that our immigration programme is better than those of most  –  in many ways it should be, as we have full effective control of our own borders.  But it simply isn’t very good.

Even on those OECD numbers, the average non-native born worker (immigrants past and present) has skill levels below those of natives (the latter being among the most skilled in the OECD).

There have been many very able migrants, but averages are averages, encompassing the excellent and the poor.  The average isn’t impressive.

And the disillusionment –  stripping away of the old illusions and official stories –  has continued even in the last week or two.

At a broader policy level, MBIE released data last week showing that 57.5 per cent of those applying for residence under the Skilled Migrant category –  the most skilled bit of the residence approvals programme –  were earning less than $48859 per annum.  No doubt some of them would have been turned down, but the rejection rate of applications that get to this stage isn’t high.

On policy to date, a huge proportion of the so-called skilled migrants can’t even command that much income in the New Zealand labour market (and recall that 80 per cent of all residence approvals are granted to people already onshore, and I suspect that share is higher for the SMC category).

Perhaps I’m naively optimistic, but a week or so after these data came out, I’m still shocked at how low a skill level they reveal.

Our ministers and officials have repeatedly grossly misrepresented the programme and the number and sort of “skilled” people New Zealand is granting residence to.   If it were similar data on any other policy or economic topic, I suspect it would be front-page news in our media.

It looks increasingly like a costly sham.  New Zealanders have been sold the policy on one basis but –  whatever the merits of the policy they’ve been told we were running –  the actual policy looks to have been far worse than we were told.  And, I suspect, far worse than the people who first designed the more liberal immigration policy thirty years ago would have had in mind.

People will differ on how all this came to pass.  I’m not a conspiracy theorist, and suspect it mostly developed with the best of intentions all round (rather than, say, a deliberate attempt to drive up Auckland land prices and drive down lowly-skilled wages).   But good intentions don’t excuse shocking outcomes.  We simply don’t really have a skilled migration programme at all.

As I like to stress, I try to be an equal opportunity sceptic.  Immigration policy has, for 30 years, been pretty much common ground between National and Labour.     The Donghua Liu case shouldn’t be quickly forgotten.

There’s more detail from Reddell in Immigration thoughts over 40 years.

Croaking Cassandra blog (Economics, public policy, monetary policy, financial regulation, with a New Zealand perspective): About Michael Reddell: