That is what the Public Records Act 2005 requires of all “public offices”.    Specifically

Every public office and local authority must create and maintain full and accurate records of its affairs, in accordance with normal, prudent business practice, including the records of any matter that is contracted out to an independent contractor.

and

Every public office must maintain in an accessible form, so as to be able to be used for subsequent reference, all public records that are in its control,

Under the Act “public office”

a) means the legislative, executive, and judicial branches of the Government of New Zealand; and

(b) means the agencies or instruments of those branches of government;

I don’t think there would be any doubt that the Reserve Bank, and its Board, would qualify as “public offices”.  And yet the Board, in particular, appears to have, at best, a shaky grasp on its statutory responsibilities in this area.

As regular readers know, I’ve been trying to understand the process that led to the appointment in February of an acting Governor of the Reserve Bank, including understanding how, if at all, officials and ministers convinced themselves that the appointment is lawful.

As I noted in a recent post

Section 48 of the Act covers a vacancy in the office of Governor.    The key bits read as follows

If the office of Governor becomes vacant, the Minister shall, on the recommendation of the Board, appoint….[a person] to act as Governor for a period not exceeding 6 months or for the remainder of the Governor’s term, whichever is less.

The critical phrase here appears to be “whichever is less”.      When Don Brash resigned as Governor in April 2002, there was about sixteen months to run on his term.  The then Minister appointed Rod Carr to act as Governor.    He could be appointed for as long as six months, because there was still sixteen months to run on “the Governor’s term”.  By contrast, on 26 September this year there will be no days left on the Governor’s term.  Graeme Wheeler’s term will have expired at midnight the previous day.   So an acting Governor can only be appointed for…….. zero days, since there are no days left on “the Governor’s term”.  In other words, the Act simply does not appear to allow an acting Governor appointment along the lines of the (purported) Spencer appointment.

In an earlier post, I covered the extensive material The Treasury had released on the period leading up to the acting Governor appointment.

By contrast, the Reserve Bank Board released almost nothing.    I had lodged a pretty comprehensive request seeking

copies of all papers of the Reserve Bank Board relating to the end of Graeme Wheeler’s term as Governor, the process for appointing a permanent replacement, and the appointment of Grant Spencer as acting Governor.   This request includes papers on the Board’s agenda, minutes of relevant discussions, papers/letters sent to the Minister of Finance or Treasury, and filenotes of any relevant meetings.

I got back a copy of a single very brief letter from the chair of the Board to the Minister of Finance recommending the acting Governor appointment (with no supporting analysis or advice).    The only material they told me they were withholding was some Human Resources advice and some in-house legal advice.  The latter apparently covers the questions around the relevant provisions of the Reserve Bank Act, and I have appealed the Ombudsman the decision to withhold.   There was, if the Board was to be believed, nothing else at all.

But that seemed odd.  I knew that Board meetings had minutes, and if those minutes were often quite loosely written (in another context, I’m dealing with legal uncertainty created by loose Board minutes from 25 years ago), at least the minutes seemed likely to exist.  In fact, the letter from the Board chair to the Minister of Finance explicitly referred to an agreement by the Board on 30 January to make the acting Governor recommendation.  Surely there were minutes of that meeting (and the Bank’s Act explicitly covers both physical meetings and teleconference ones)?    They should have been captured in my earlier request, but perhaps there had been an adminstrative oversight?

I also knew from the papers Treasury had released that by late last year the Board had already been well-underway in getting going a process for appointing a new permanent Governor once Graeme Wheeler’s term expires in September, and had been told as late as the end of November by the then Minister of Finance to keep on with that process, apparently regardless of the election issue.  In fact, the Treasury papers referred to the Board already having appointed a search firm.  So out of curiousity, I lodged a new request, not just for the minutes of the 30 January meeting, but also for minutes of any Board meeting in the December quarter last year.

I got a response to that request yesterday.  They released in full the minutes of the half hour (teleconference) Board meeting held on 30 January.  They were brief, but of some interest.

The Board received advice from the Minister of Finance that, on advice the Cabinet Office and after consultation with Cabinet, he had decided to appoint an acting Governor for a six month period to cover the post-election caretaker period, allowing the next Government time to make a decision on the appointment of a permanent Governor for the next five-year term. The Minister asked the Board to recommend a candidate for acting Governor.

The Board agreed unanimously to recommend Grant Spencer, currently Deputy Governor and Head of Financial Stability, for the role of acting Governor. The Chair would forward this advice to the Minister.

The Board chair’s letter to the Minister, dated 31 January, had sought to imply that the initiative for the acting appointment recommendation had come from the Board itself (the Act certainly envisages the Board taking the lead).  That never seemed likely, given the material Treasury and the Minister of Finance had released.  These minutes confirm that the Board was simply told what to do, and complied.  It is a poor reflection on the Board  that they had simply seemed unbothered about moving ahead to make a long-term appointment, which would take effect around the time of the election, in a climate in which there was little cross-party consensus on Reserve Bank matters.  Fortunately they were stopped in their tracks by the Minister of Finance.

It is another illustration of the weakness of the Board (not necessarily the current individuals, but the structure).  It reinforces my call to remove the recommendation/appointment powers from them back to the (normal international) model in which the Minister of Finance simply appoints a Governor.   These people simply don’t have the background, or any legitimacy, to be making an appointment of one of the most powerful people in New Zealand.   If there is a change of government (in particular), amending this provision of the Reserve Bank Act should be an early legislative priority.

But what also caught my interest is that although the Board released the minutes of its three meetings held in the December quarter (I will post a link when the Bank puts the material on its website), there is no record at all of any of their deliberations or decisions around the process they had underway of moving towards appointing a new Governor.  We know a lot about it from the Treasury documents, but if these releases are to believed, the Reserve Bank’s Board simply kept no records.

There was plenty of material omitted from the minutes that were released, but all the headings of the individual items were released.  Some of the decisions to withhold look questionable, but since I wasn’t really interested in that other material, I won’t take that any further.

In the October 2016 meeting there is an item 8.3 “Director’s-only discussion”.    That may well have been an occasion on which they dealt with the coming gubernatorial appointment.  But, if so, we’ll never know.    The minutes of this discussion weren’t withheld (in which case that withholding could be challenged to the Ombudsman, and future historical researchers would probably get access anyway) but simply don’t exist at all.    Minutes are typically taken by the Board secretary, who is a Bank staff member, but there is no reason why one of the Board members themselves could not have minuted this discussion, and recorded them in a version of the minutes not given general circulation.  But there appears to be no record at all.

In the November 2016 meeting there was nothing similar at all, and no (apparent) discussion of these issues.   In the December 2016 meeting, despite coming only a couple of weeks after Bill English had told the Board chair he was comfortable with them moving ahead with selecting a Governor recommendation, there is also nothing recorded.  Again, there is an item 8.3 “Non-executive directors only Session”, but there are no minutes at all (again, to stress, the minutes aren’t withheld; they simply don’t seem to exist).

It is quite extraordinary, given that we know from the Treasury material that there had been interactions with the Minister of Finance, the directors had appointed a search firm, and were planning to start advertising in January, only a month later.  But where are records of any of this?  It is possible that some of the decisions had been made earlier, but it is simply inconceivable that there was no substantive discussion, and no decisions taken, in the last three months of last year.   But none of it appears to be recorded.

Now perhaps there are some secret records –  file notes, email exchanges among directors – that the Bank staff who handled my request were not aware of. But any such material would have been covered under one or both of my OIA requests, and when I lodged the OIA requests I was quite explicit that they were requests to the Board, not to the staff of the Bank.

We seem to be in the sad state of affairs where either the  powerful Board of a major government agency is denying the existence of records that do actually exist about the process they had underway, and had to call to a halt, to appoint a new Governor.   That would be in breach of the Official Information Act.    Or the same Board is so shoddy in its record-keeping that it would seem almost certain to be in breach of the Public Records Act.    I’m not quite sure which to believe (although I suspect it is mostly the latter explanation).  Neither seem remotely satisfactory.  Neither option seems like what one should expect from a government-appointed Board responsible for recommending the next Governor of the Reserve Bank, holder of the most powerful unelected role in New Zealand.

It is not even as though this is material about something under active consideration.    The search process they were working on late last year, apparently oblivious to the significance of the election, was called to a halt.    In fact, as the Bank told us last week

The Reserve Bank Board of Directors’ recruitment process to identify a successor to Mr Wheeler is to commence later in the year.

We have record-keeping requirements on public agencies, and disclosure requirements such as the OIA, in significant part to enhance accountability and

thereby to enhance respect for the law and to promote the good government of New Zealand

If records simply aren’t kept, we have no way of knowing whether public appointees have done their job adequately,  That doesn’t enhance respect for the law, or promote good government.  Specifically, we still have no basis for knowing how the Board of the Bank concluded, or whether they advised the Minister, that the appointment of an acting Governor in these circumstances was lawful.

Full, accurate, and accessible records are a statutory obligation.  The Reserve Bank’s Board doesn’t appear to have been complying, even though the appointment of a new Governor is one of the few areas in which the Act gives them explicit decisionmaking powers.   It simply isn’t good enough.

UPDATE: The Bank appears to have decided not to put this material on its website, contrary to their usual OIA practice.  Here are the minutes of the three December quarter meetings.

1.3 Board Minutes – 20 October 2016 – for release

1.3 Board Minutes – 17 November 2016 – for release

1.3 Board Minutes – 15 December 2016- for release