This morning it was announced that something that purports to be a Policy Targets Agreement, to cover the conduct of monetary policy during the six months after Graeme Wheeler leaves office, had been signed between the Minister of Finance and Grant Spencer, currently the deputy chief executive of the Reserve Bank. The Minister announced some months ago that he intended to appoint Spencer as acting Governor for six months, to get the appointment of a permanent Governor clear of the election period.
There are a number of problems with this:
- first, the Minister has no statutory power to appoint an acting Governor, except where a Governor resigns or otherwise leaves office during an uncompleted term, and
- second, even if it were argued, contrary to the clear sense of the legislation, that the Minister had such appointment powers, there is also no statutory provision for a Policy Targets Agreement between an acting Governor and the Minister (rather, the Act envisages that the acting Governor would run monetary policy under the PTA already signed with the substantive Governor for his/her unexpectedly foreshortened term).
You might respond that even if there is no statutory provision, there is nothing to stop the Minister and the “acting Governor” signing an agreed statement about how monetary policy would be run during the “acting Governor’s” term. And if the acting Governor appointment was itself lawful, I would agree with you. But the so-called Policy Targets Agreement signed yesterday explicitly states the parties believe it to be the genuine binding article, not just some informal statement of agreed intentions.
This agreement between the Minister of Finance and the Governor of the Reserve Bank of New Zealand (the Bank) is made under section 9 of the Reserve Bank of New Zealand Act 1989 (the Act).
The Reserve Bank’s statement stressed that there were no changes in this new (pseudo) PTA, relative to the current PTA applying during Graeme Wheeler’s term. Unfortunately they seem to have taken that a bit too literally. You’ll notice that in that extract (immediately above) it is referred to as an agreement between “the Governor” and the Minister. But the Minister’s announcement in February was that Spencer would only be “acting Governor”. Indeed, there is no way that Spencer could have been appointed as “Governor”, because any new person appointed as Governor has to be appointed for a term of five years, and any such appointment would have defeated the whole point of not making a long-term appointment in or around the election period.
It wasn’t just a slip either. At the bottom of the document it is signed by Steven Joyce as Minister of Finance and by Grant Spencer as “Governor Designate” (the “designate” bit matters, because real PTAs have to be agreed before the appointment is formally made). But Spencer isn’t “Governor designate” at all, he is “acting Governor designate”. I guess they are trying to slip him in under the provisions of section 9 (rules governing the PTAs) which refer only to the Governor, not to any acting Governors. As I said before, the Act does not provide for acting Governors to sign proper PTAs. So the document resembles a PTA, but it can’t in fact be one.
Does it matter? In one sense, perhaps not. But laws matter, and details matter, and this appointment, and the purported PTA, appear to be in breach of the law. If nothing goes wrong and there are no legal challenges during the “acting Governor’s” term, then there probably won’t be any practical problems. But the Governor exercises a lot of powers, including in crises, and the last thing one needs in crises – which one never foresees correctly the timing of – is uncertainty as to whether a purported Governor really has powers to do what he is trying to do.
(As I have noted previously, there are remedies, even if awkward ones. For example, Graeme Wheeler – as an existing Governor – could have been reappointed for six months, and a new PTA signed with him, all while he announced his intention to resign after one day. Nothing then would prevent the Minister appointing Spencer as lawful acting Governor, operating under a fully lawful PTA.)
I have put in OIA requests with both the Bank and Treasury for the papers relevant to today’s purported PTA.
Being in a slightly flippant mood this evening, I thought I’d throw a few curiosities from the day.
First, on looking on the blog statistics page I discovered that someone had got to my blog today by searching under “functions of weet bix to the unborn”. Quite why anyone would be searching for anything using those words for a search at all is a beyond my understanding. On scrolling down several pages of search results I discovered that I had once, long ago, referred to Weetbix, but not to nutrition or the unborn.
Second, the Reserve Bank might find my OIA requests annoying (they did, after all, launch a whole charging regime in response). But other people lodge requests too. I occasionally have a look at the ones the Bank releases. Some are easy to answer, but distinctly strange. A few weeks ago they responded to this one
I would like a categorical response to the question ” What influence does the Rothschild family exert over the reserve bank of New Zealand?
The categorical answer, of course, is none whatever, although the Bank gave the person a slightly fuller response.
It has been quite a while since I’d seen such a New Zealand-focused example of the old conspiracy theory, in which bankers – especially perhaps Jewish bankers – had the central banks of the world under their thumb. It is a fascinating, if unnerving, phenomenon. On a par, I suppose, with the whole “one world government” conspiracy stories: I have on my shelves a book which claims that Don Brash was installed as Reserve Bank Governor by the one world government, as a safe pair of hands, as the son of someone who himself had been part of the conspiracy, as a leading figure in the World Council of Churches.
And finally, looking back at Steven Joyce’s statement on 7 February announcing that Graeme Wheeler was retiring, I noticed the Minister’s description of the Governor’s conduct
The Governor has performed his role calmly and expertly during a highly unusual period for the world economy
Calmness having been so prominently highlighted as a feature of the Governor’s stewardship, I can only assume that the story I heard a while ago on the grapevine, that the Governor had, as it were, tossed his toys out of the cot when someone wrote something the Governor disagreed with, couldn’t possibly be true.