Analysis: The new Reserve Bank boss has a heck of a job on her hands, writes 1News business correspondent Jason Walls.
Dr Anna Breman smashed the central bank’s glass ceiling today, after Nicola Willis named her Governor. She’s the first female at the head of the Reserve Bank in its almost 100-year history.
She’s got her work cut out for her when it comes to navigating New Zealand through troubled economic waters, and pressure is building on the Reserve Bank to cut its rates to bolster sluggish economic growth.
Breman will need to hit the ground running when she starts in December. But turning around the country’s economic woes will take time. Her first test is rebuilding the trust Kiwis have lost in the bank.
It’s somewhat of an understatement to say the Reserve Bank has had a tumultuous year.
Adrian Orr’s abrupt resignation as Governor in March sent shockwaves across the capital. It’s incredibly rare for a sitting Governor to quit mid-way through their term.
Worse still was the bank’s handling of the shock departure. The then-RBNZ chairperson, Neil Quigley, reluctantly fronted a press conference hours after the announcement was made.
The reason given for Orr handing in his notice? “Personal reasons.”
The explanation was laughably vague, and the bank quite rightly drew a wide array of criticism for its lack of transparency.
That lack of transparency continued for months, as Official Information Act requests were delayed numerous times. For an astonishing three months, Kiwis remained in the dark over exactly why Orr had so abruptly quit.
History-making appointment as Willis introduces central bank's new governor - Watch on TVNZ+
When the bank finally decided to comply with its legal requirements under the OIA, it released a summary of information, not the documents and correspondence which had been requested.
That summary revealed what the Herald’s Thomas Coughlan revealed the day after Orr left: He quit after a disagreement with Treasury over the amount of money the bank would be receiving.
Why the bank waited so long to reveal the truth that was already widely known was a subject of much frustration to the Finance Minister, who voiced her displeasure at the way the bank had handled the release of the information.
Incredibly, the problems didn’t stop then.
The Ombudsman, the transparency watchdog, then compelled the bank to release the information reporters had been requesting.
After being dragged, kicking and screaming, to reveal the full truth, the bank revealed that chair Quigley wrote to the bank’s top-brass, outlining concerns over the “tenor of [Adrian Orr’s] dialogue” during a meeting with the Treasury officials.
This culminated in the resignation of Quigley, some five months after Orr’s departure. It was announced at 6pm on a Friday night.
“My concern was that the bank's reputation was being impacted. He agreed with me that that was a serious matter," Willis told RNZ.
"If he had not offered his resignation, I would have asked him for it."
A grim admission and a telling sign of the tense relationship between Willis and the RBNZ.
But it was too late to save the bank’s battered reputation. Put simply, it had already lost the trust of many New Zealanders.
The Reserve Bank is fiercely independent – and for good reason. It needs to look past the day-to-day political posturing and point scoring to decide what’s best for the economy.
Cool an overheating economy by increasing interest rates? Stimulate economic growth by cutting them? These decisions have enormous political ramifications, which is why it’s so important that politicians have nothing to do with them.
But with that independence comes responsibility – the responsibility of transparency and accountability.
It’s not lost on Breman how much work she has to do to regain this trust.
“A key component to build trust and credibility for the Reserve Bank is transparency and openness,” she told reporters at the Beehive today.
“We will strive for transparency and accountability and clear communication within all the work we do.”
It’s a good start – but she has a long way to go to rebuild that trust lost at the Reserve Bank. She owes New Zealanders that much.
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