Investor finance restrictions: the Reserve Bank asserts a right to secrecy

The Reserve Bank has been consulting on a proposal to ban any lending with an LVR greater than 70 per cent to residential property rental businesses in Auckland.   I have been noting that the Governor acts as investigator, prosecutor, judge and jury in his own case in matters like this. I have also noted the contrast between the way the Bank handles submissions on its consultative documents, (releasing only a (self)-selected summary after the final decision has been made), with the process used in respect of submissions to parliamentary select committees, in which submissions are published (and the committee members are not themselves final decision makers on legislation).  This is a serious democratic deficit –  a unelected decision-maker keeping secret submissions on major economic policy initiatives, which will have pervasive effects on potential borrowers and on the efficiency of the financial system.

Under the Official Information Act, I asked for copies of the submissions the Reserve Bank has received on the Governor’s latest proposed controls.  This afternoon I received the letter below, refusing my request (it is, however, far the fastest they have responded to any of my OIA requests).

I have no idea whether their stance is legal, and will consider lodging a complaint with the Ombudsman, on the grounds that there is a strong public interest in having this information available.  Whether or not it is legal, it hardly seems wise for an unelected individual who exercises so much power, and who has already been challenged as having apparently misrepresented material in his consultative documents and responses to submissions.

There is a serious democratic deficit in the way the Reserve Bank is structured.  The Governor could choose to allay some of those concerns by the way he operates, but instead he adopts a secretive style while one individual makes these decisions, which appear to be at best weakly justified under the provisions of the Reserve Bank Act, which require its powers to be used to promote the soundness and efficiency of the financial system.  It is difficult for the public to have trust in a Governor who will not even make public the submissions he receives on his proposals, and is himself responsible for any summary of submissions that may later be published.

Dear Michael

On 14 July you made an Official Information request seeking: Copies of all submissions made to the Reserve Bank on the proposed changes and extensions to LVR restrictions.

The Reserve Bank recognises that there is a tension between the public interest in full disclosure and the statutory requirement to maintain the confidentiality of information we use to regulate banks. In order to balance transparency with confidentiality, our long-standing practice is to publish a summary of submissions rather than publish original documents submitted to us. We currently have work underway to publish a summary of submissions relating to our consultation on adjustments to restrictions on high-LVR mortgage lending.

Official Information Act section 16(2) says that we should provide requested information in the way that a requester prefers to receive it, unless doing so would:

(a)    impair efficient administration, or

(b)   be contrary to our legal duty in respect of the document.

Official Information Act section 16(1)(e) allows that information may be made available by giving an excerpt or summary of the contents.

Much of the information contained in the submissions that you have requested must be withheld in order to comply with the confidentiality provisions of section 105 of the Reserve Bank of New Zealand Act, and it would be administratively inefficient to publish our summary and repeat the work of summarising by redacting documents that are already being summarised for publication.

Accordingly, your request is refused on the following two grounds of the OIA:

  • s18(c)(i) – providing some of the information would be contrary to another Act; in this instance, section 105 of  the Reserve Bank of New Zealand Act, and
  • s18(d) – that the information is or will soon be publicly available; in this instance, as a summary.

The Reserve Bank expects to publish its summary of submissions near the end of August. The summary of submissions will include names of people and organisations that provided submissions, which gives you the option to directly approach submitters to ask if they will provide you with the information you’re seeking.

You have the right to seek a review of the Bank’s decision under section 28 of the Official Information Act.

Yours sincerely

Angus Barclay

External Communications Advisor | Reserve Bank of New Zealand

2 The Terrace, Wellington 6011 | P O Box 2498, Wellington 6140

From: Michael Reddell ] Sent: Tuesday, 14 July 2015 11:59 a.m. To: macroprudential Subject: RE: Submission on proposed investor finance restrictions

Thanks Daniel

This is to request, under the Official Information Act, copies of all submissions made to the Reserve Bank on the proposed changes and extensions to LVR restrictions.



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