Being an engaging central bank

Last week the Reserve Bank released the latest issue of the Bulletin.  This issue, by Head of Communications, Mike Hannah, ran with the slightly twee title of “Being an engaging central bank”.   The article consisted of two things:  it reported the results of a fairly extensive survey of the Bank’s engagement with the public and other so-called stakeholders, and articulated and  defended the Bank’s communications approach.  Appended to the article was the 80 page report from the consultants the Bank hired to do the engagement study. I haven’t seen  any  media coverage of article, so perhaps this mention will help generate some readers.

The Reserve Bank has long had a self-image of being quite a transparent organisation.  And it has made significant efforts in that regard.  Fifteen years ago, the Bank might reasonably have been considered a leader.  The Bank makes much of the modest increase in the number of speeches it is doing, but older readers may recall Don Brash’s roadshows around the regions in earlier years.  There isn’t anything very new about what has happened in the last year or two.

As readers will know, I have highlighted a number of areas in which the Reserve Bank is currently very far from best practice when it comes to transparency, around both monetary policy, financial stability, and the Bank’s market operations.  I have also pointed to areas where they don’t even seem to comply with the provisions of their Act as regards communications (re both the Monetary Policy Statement and the Financial Stability Report) and, as recently as this morning, I have highlighted the Bank’s cavalier attitude (in common with many other public agencies) to the provisions of the Official Information Act.  So, I thought I really should read the Bulletin article.

There is interesting material there and (as often with these sorts of things) the research report is more interesting than the Bank’s public take on it.  It was nice, for example, to learn how many visitors the Bank’s website gets (just over 2000 a day last year, which frankly seemed surprisingly low).  Both bits, however, are riddled with PR-speak (“future-state” vision,  “a partner in the economic infrastructure space” , “further inside the future-vision tent”).

On the questions posed, the Bank emerges relatively well –  if the general public (a rather important group) don’t have much trust in the Bank, those who are closer to the institution appear to, and to generally be reasonably positive about the Bank’s engagement with them.  That covers modest samples of people from regulated entities, the business community, researchers, the media, and other government agencies.    The results are good news, as far as they go.

As regards, the Bank’s relationship with central government, both the consultants and the Bank seem a bit confused, describing the Bank as “both a partner and a constituent”.  Surely, most of all, the Bank is a creature of Parliament, funded by Parliament, and directly accountable to Parliament and to the Minister of Finance?    If one wants to adopt the jargon, perhaps “adviser” and “service provider” might better describe the Bank’s relationship with central government.  Perhaps the authors only had other government departments in mind, but part of effective engagement is clear communication.

As I noted, the article also engages in a bit of defence of the current limits of transparency.    One line that was a little concerning was the suggestion that “different degrees of transparency are appropriate for different stakeholder groups”.  I think I understand what they are trying to get at, but this expression of the point seems really quite dangerous.  We will be more transparent to the people who get on with us?  To people who agree with us?  To “people like us”?  To economists in lock-ups, more than to the public?  It is quite a dangerous path to go down, and is part of the reason why the country needs an effective Official Information  Act.  Transparency is not just about what a government agency wants to communicate –  which, in fairness, is probably the focus of the external engagement work –  it is about the ability to scrutinise public agencies even when they don’t want to be scrutinised, or when it is uncomfortable or even embarrassing to be scrutinised.  That is the difference between, say, a private firm, and a government agency.

The article also suggests that publication of interest rate projections is as informative as “the minutes of our monetary policy meetings”.  That may well be true, although since no one has seen the minutes of the Governing Committee or the Monetary Policy Committee they have no way to know.  More to point, those documents are about two quite different things.  Interest rate projections are the Governor’s current best view of where interest rates are likely to go in future.  Good monetary policy minutes abroad convey much more of the richness of the sorts of factors, and debates,  that went into reaching the current OCR decision.  Given a choice, good minutes offer more real information than projections  –  it is that distinction between things we know very little about, and things we know a lot about, that I wrote about a couple of weeks ago.  The Bank is quite good on the former, but very weak on the latter.

Which brings me to my final point.  The consultants use, and Hannah picks up, the phrase “the paradox of transparency”, in which allegedly too much transparency by the Bank could “threaten  the certainty” that respondents value.    It is a convenient phraseology but it is largely misguided.  The Governor does not know where interest rates will be year from now.  He does not even know what lending controls might be in place by then.  There is very little certainty in anything around this business.  Greater transparency (both historical transparency OIA style), and perhaps a range of public views from members of a formal decision-making committee, would be likely to reflect the real uncertainty we and they face, rather than create it.

I could cover a lot more points, but you might consider reading the material yourself and seeing what you think.   I’m not sure that in good conscience I could recommend it as a wise use of anyone’s time, but more data is almost always better than less.  It is great that the Bank has pro-actively published the material, although I am left wondering how long it might have taken to get it out of them under the OIA had the results been seen by Bank management as less favourable to them.

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