Finance Minister Nicola Willis has denied playing politics with her announcement that a review into the Reserve Bank’s Covid response would be released in September, just months before the election.
The probe, announced yesterday, aimed to examine the Reserve Bank’s actions during the pandemic to “learn from experience”.
The central bank slashed the official cash rate (OCR) – which influences mortgage rates and broader borrowing costs – to a record low, and also launched a large-scale asset purchase programme, a form of quantitative easing where it bought government bonds to inject money into the economy.
Willis said yesterday those actions helped save jobs and businesses, but came with significant consequences. Criticism has long been levelled at the Reserve Bank for its choices, which some blamed for a deeper economic rut in more recent times.
A review into the bank’s response was largely supported by parties on both sides of the House, but its September release – as parties go into campaign mode and Kiwis prepare to vote in November – was more contentious.
Green Party co-leader Chlöe Swarbrick described the timing as “a bit sus”.
“This independent review is something which we would have absolutely welcomed, and to be honest, largely still do,” she told Breakfast this morning.
“However, I think that the timing of it speaks to a Minister of Finance and a Government that wants to continue reminding people of Covid-19 in the lead-up to the election.
“Are we really going to have all too much time to properly digest and have a fully informed, evidence-based debate about economics? Unfortunately, given my experience of politics in the last 10 years, I don’t really think so.”
Swarbrick said she had been calling for an inquiry back at the start of 2022 and believed the Government could have done it sooner.
“I do not genuinely think that Nicola Willis is interested in attending to or dealing with inequality that was created throughout the Covid 19 pandemic, let alone the inequality that she’s created through her own government’s decisions.
“So, it really has to be again this basic question of how much information are we getting into the public sphere in a way that is useful and conducive for the election.”
Labour Leader Chris Hipkins called Willis’ announcement “another exercise in cynical political manipulation”.
“If she really wanted to know whether the Reserve Bank had handled the Covid pandemic accurately, she would have launched this inquiry when she became Minister of Finance, not right in the middle of a general election campaign.”
He said it was an attempt to “re-liven up the Covid-19 conspiracy theorists”, and said National was becoming “desperate”.
“Anything that they can get their hands on, they’re grabbing it.”
Responding to Swarbrick’s comments, Labour’s Kieran McAnulty said the release was “more than a bit sus, it’s pretty bloody obvious what they’re trying to do”.
“They’re looking for distractions, just like they have for the last two years, and people are seeing through it."
Willis responds: 'It's a good time'
When asked on Breakfast today, Willis denied playing politics.
She said the review would not be political, with impartial monetary policy experts - Athanasios Orphanides and David Archer - appointed.
“They’re not going to write a report that is political, because what they are is professors and people with strong experience in monetary policy.”
Willis said there were questions that “should be asked”, adding that all sides of politics should be able to “digest those lessons without having to feel that it’s all very political”.
Defending the timing of the release, Willis said it was a “factor” of the Government’s commitment to conduct the review within its first term.
The last few years have been difficult for the Reserve Bank, marked by the chaotic exit of former Governor Adrian Orr and the process of hiring and appointing his successor, Dr Anna Breman.
“I didn’t think it was a good idea to be launching an inquiry while we were doing that recruitment process,” Willis said.
“The timing now is that we have a new governor, we have a refreshed Reserve Bank board. It’s a good time to be doing a pause, a review, a learn.”
She said the Reserve Bank's policy during the pandemic was to support the economy, “and it clearly did that”, but wanted to see if it went too far or was “about right”.
“We must learn the lessons of history, and we can’t just have the Reserve Bank marking their own homework.”
Housing Minister Chris Bishop told Breakfast there were “big impacts” because of the bank’s moves during Covid, and said there had been “calls from many people to have a good look at it”.
On the criticism about its timing, he said: “People will see in it what they want to see, I suppose.”
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