Last week I ran a post about the Reserve Bank’s refusal to release the submissions on the new investor finance restrictions, and in particular the reliance the Bank appeared to be putting on the confidentiality provisions in section 105 of the Reserve Bank Act. Those provisions appear to prohibit the Bank releasing any information it received from anyone “ relating to the exercise, or possible exercise, of the powers conferred by this Part” of the Act.
As I noted then
This seems like a travesty of democracy. Submissions – on major new public policy initiatives – can be disclosed to foreign central banks or supervisors, but not to the New Zealand public. Any views banks or members of the public might submit to the Reserve Bank on monetary policy would typically be discoverable under the OIA, but those on prudential matters are apparently not. And this is so, even though for for monetary policy there is a relatively specific objective for which the Governor can be held to account, while there is nothing remotely specific about how the statutory objectives for prudential policy should be measured.
A system in which the Governor can tell us as much, or as little, and then with his own slant, on the submissions he receives should be seen as simply unacceptable. In this case, quite a simple amendment to the Reserve Bank Act would rectify the situation, making explicit that submissions on proposed changes to conditions of registration, or any other restrictions that affect all institutions, are not covered by the section 105 exemption, and should routinely be published on the Reserve Bank’s website.
And noted that.
Of course, if anyone else wants to request copies of the submissions, the Bank should presumably respond immediately declining their request and explaining why. Unless they want to reconsider and change their interpretation of section 105, any delay would itself be a breach of the Official Information Act.
I knew then that another request had been made and had not been responded to immediately.
Today, the Reserve Bank has responded to that request, and there has been a major change of heart .
Having told me that it would be too much work to release the papers, that the summary of submissions met the statutory requirements (both laughable arguments), and that in any case much of the each of the submissions would have to be withheld, they have had a (welcome) re-think. The Reserve Bank has now released in full, on its website, the submissions made by all people and entities who are not banks regulated by the Reserve Bank.
This is a significant step forward. It is probably the first time the Reserve Bank has released any submissions on proposed regulatory changes. I hope that this now sets a precedent, and to check that I have requested copies of the submissions on the regulatory stocktake.
However, the Reserve Bank is still refusing to release submissions made by banks. It asserts that these are protected by the confidentiality provisions in section 105 of the Reserve Bank Act. I describe it as an “assertion” because there is no supporting argument or evidence in the letter to Jenny Ruth as to how section 105 protects bank submissions but not those made by other submitters. Here is what the Act says:
- This section applies to—
- (a) information, data, and forecasts supplied or disclosed to, or obtained by,—
under, or for the purposes of, or in connection with the exercise of powers conferred by, this Part:
- (b) information and data derived from or based upon information, data, and forecasts referred to in paragraph (a):
- (c) information relating to the exercise, or possible exercise, of the powers conferred by this Part.
There is no hint I can see of any legal differentiation between material supplied by banks, and material supplied on the same issue by other parties.
If the Bank has a strong legal case, they should let us see it. I’m certainly not suggesting that they should break the law and release bank submissions if they are legally prohibited from doing so, although I suspect that they may be doing so by releasing any submissions at all
Whatever the law currently says, is there a case for withholding bank submissions? I think the answer is no, and if anything it is much more important that bank submissions are discoverable than that those of other submitters are. After all, banks are regulated entities and the idea that regulated entities should be able to lobby the regulator in secret, and we (citizens) have no ability to see what arguments they have made goes strongly against the principles of open government. Those concerns about regulators and the regulated getting too close were what motivated Ross Levine to write an entire book, The Guardians of Finance (which I wrote about here). If anything, there is probably a case for more material on banks to be made public, as I noted in yesterday’s post, but certainly their submissions on policy proposals should not have legislative protection.
In conclusion, I wanted to make two other observations.
First, the Bank has asserted that the “summary of submissions we’ve published accurately and fully summarises the responses received from banks”. If that is so, it would certainly be welcome, but as their summary certainly didn’t accurately or fully summarise my submission, we have no reason to be confident as to how they have reported bank submissions.
And second, I received a letter from the Reserve Bank this afternoon attempting to rationalise their refusal to release anything to me when I sought the same material. Here is what they had to say:
Subsequent to publication of our summary of submissions and response to submissions for our consultation on adjustments to restrictions on high-LVR residential mortgage lending, the Bank received another Official Information request seeking copies of all submissions. The timing of these two equivalent requests is a differentiating factor in the Bank’s responses to these requests.
- Your request was made prior to us doing the necessary work to collate, assess, and consider our response to the submissions and then publish our summary and response.
- The subsequent request, from a newspaper, was made on 24 August, after we had completed our assessments and published the summary and our responses.
The difference in timing is significant because one of the primary reasons for declining to provide information to you was, as envisaged by section 16(2)(a) of the Official Information Act, that doing so would impair efficient administration due to the need to repeat the work assessing submissions for their primary purpose while also assessing them to respond to your request. With the primary assessment work completed, we do not need to repeat it for the Official Information request made on 24 August. Accordingly, our response to the request we received on 24 August is that we are releasing submissions made to us by individual and by non-bank organisations that we do not regulate,
Again, this simply not persuasive, and appears to be a rather desperate ex post rationalisation for what is clearly a change of view. For any OIA request, the Bank has 20 working days to respond, and can (and has previously, and regularly, done so) extend that time by another 20 working days if necessary. There was no need for any repetition, or any disruption to their deliberations (especially as they had openly signalled that they intended to turn the submissions around, and announce the Governor’s decision, quite quickly).
I don’t hold it against people when, having reflected more fully on the issue, they change their minds. I’ve welcomed the partial step forward reflected in the release of the material today. But it would best not to pretend that the two requests were so different that they had good legal grounds to refuse my request altogether, but were also legally required to release today’s material . One decision was a mistake – hopefully not a wilful one.
As I noted last week about section 105
Like so much about the Reserve Bank Act, it is past time to reform these provisions. Good access to official information is vital if we are to ensure that such a powerful institution is to be robustly accountable. At present, there is far too little effective accountability and scrutiny. A system in which the Governor can tell us as much, or as little, and then with his own slant, on the submissions he receives should be seen as simply unacceptable. In this case, quite a simple amendment to the Reserve Bank Act would rectify the situation, making explicit that submissions on proposed changes to conditions of registration, or any other restrictions that affect all institutions, are not covered by the section 105 exemption, and should routinely be published on the Reserve Bank’s website.