I was meeting someone in town this morning. I was a bit early and the person I was meeting was a bit late so I found myself standing for some 20 minutes across the road from the Reserve Bank. As I did, I became a bit curious about these four guys.
In the entire time I watched them, this is all the activity there was (the chap with his hand on the cone).
Most of the Bank’s building is apparently still closed as a result of the asbestos scare, although the ground floor museum has now reopened. But it isn’t at all clear what these guys were doing. Access to the turning circle is now controlled (remotely) by those metal bollards, and although there will probably be billions of dollars of notes in the vaults, electronic security systems – and big thick steel doors and walls – will be guarding that. They weren’t acting as a guide to members of the public – various people walked up the main steps into the museum while I watched and none interacted with the security men. They seemed to be just standing there. And when I walked past again 45 minutes later, they were still there….just standing. Is the Bank a bit overfunded, or is it just the average productivity in New Zealand is so low that labour intensive operations (accomplishing what?) are still affordable?
I’ve commented here on the new Governor’s enthusiasm for all manner of green causes. But he seems to be doing his bit personally, or maybe just saving a few dollars for the staff cafeteria. Someone pointed out to me that the Bank now has a dinky little vegetable garden right on the corner of Bowen St and The Terrace. I guess the space is too small for a tree?
On a slightly more serious note, readers will recall that a few weeks ago the Governor was billed as giving a speech on transparency, to the annual meeting of the (largely) taxpayer-funded lobby group Transparency International, to be introduced by the State Services Commissioner (who has responsibilities for open government)……..and yet the speech was to be totally non-transparent (no text published). Potential attendees were told that the Governor was to be thanked by the head of the Department of Prime Minister and Cabinet, Andrew Kibblewhite, who is shortly to take up the job of Secretary for Justice, with responsibilities for the Official Information Act.
As it happens, the newsletter of Transparency International dropped into my inbox the other day. It featured a report of the Orr address.
Guest Speaker: Adrian Orr
Guest speaker, Governor of the Reserve Bank of New Zealand (RBNZ), Adrian Orr, was introduced by Adrienne Meikle, CEO of the Commerce Commission. Noting that people referred to her as “the other Adrienne” she augmented her introduction with comments about the key priorities of the Commission.
The RBNZ Governor provided a most insightful, off-the-record address with ideas to stimulate thinking about the relevance of transparency, accountability and integrity for more-effective governance.
The vote of thanks was delivered by Lyn McMorran, Executive Director of the Financial Services Federation, who has contributed an account of Adrian’s presentation below.
Perhaps Peter Hughes and Andrew Kibblewhite were just too busy in the end, or did they get cold feet about being associated with such a travesty – the secret speech on transparency by a public official, to a (publically funded) transparency and governance lobby group?
Senior officials, in roles that are closely followed by markets etc, really shouldn’t be doing “most insightful” off-the record addresses. If the speaker can’t be bothered writing a full text he or she can do as the Reserve Bank of Australia does and make an audio or video record available.
As it happens, Ms McMorran has given us a summary of this “off-the-record” address. Here is an extract (emphasis in the original)
He said, however, that often constructs within society work against us doing the right thing. In terms of transparency he said that what gets measured gets managed. Too often what is measured are things that are short term and that managers are often being incentivised for the start line not the finish line.
It is, therefore, crucial to get the horizon right – determine what outcomes we want over time – horizons that matter.
Another excellent point Governor Orr made was about the principal/agent phenomenon where a manager owns the capital but is highly divorced from the managers and the managers of managers to whom they outsource this capital and it is hard for the person at the top to know how ethical all the layers are within their organisation.
Same old themes – especially the bit about time horizons, where the Governor seems still to be convinced that he knows better than citizens and markets what timeframes are relevant for what sorts of institutions/issues.
Under the Official Information Act I also asked the Bank for the speech or – if no full record existed – a summary of what was said (memories are official information too). For completeness, here is the summary I received.
Governor Orr did not use any notes for his speech but drew upon:
- a speech entitled ‘Geopolitics, New Zealand and the Winds of Change’ that he delivered to the ‘Shaping Futures National Conference’ Financial Services Council in September in Auckland, and
- a Bulletin article by Paul Conway and Adrian Orr (2000) entitled ‘The process of economic growth in New Zealand’.
An outline of the speech from Governor Orr’s recollection, is as follows:
- Thanks for the invite.
- Congratulations on your work to raise transparency as a means of ensuring integrity in peoples/firms/governments behaviour.
- Property rights sit at the basis of a sound functioning economy.
- Macro stability is also very useful (monetary and fiscal policy).
- Microeconomic incentives to invest productively are also necessary (human and physical capital investment).
- 3-5 (above) are endogenous inputs to economic growth (see Conway and Orr, RBNZ Bulletin 2000).
- Transparency assists 3-5 occur – as it reduces the likelihood of some forms of ‘market failure’ – myopia, asymmetric information, time inconsistency in policy, and principal-agent issues.
- Even if people don’t aim to create bad outcomes, market failure can lead to sub-optimal outcomes. Likewise, market intervention can suffer the same issues. Hence, commitment and transparency can reduce these risks.
- Applause and thanks.
There were no questions as there wasn’t time.
I remain less interested in the specific substance of the speech than in the principle of openness. Private fee-paying audiences shouldn’t have better access to the Governor’s views or insights than the wider market or public audience.