An expanding empire

A couple of weeks ago I did the first couple of posts in a series looking at the Reserve Bank’s stewardship of monetary policy since the start of 2020 (and the start of Covid). That proved to be too much for my intermittent (at best) post-Covid energy levels, and although I will come back and complete the series that won’t be this week either.

But I was glancing at the Reserve Bank’s page of selected OIA releases (always interesting to see what others have asked) when I found this release last Friday under the heading “Growth of RBNZ”. The Bank appears to have adopted a new strategy where the OIA request responses it chooses to release on the website are released there on the same day the requester themselves gets the information (a strategy often intended to reduce the payoff to the effort involved in actually devising and lodging an OIA request – it has been more normal over the years to put releases on the website at least a few days after providing the information to the requester.)

Actually on checking again, I find that there were three releases on Friday, quite possibly to the same person. First was “RBNZ Brand and Design” (which request appeared to be in response to a Bank advert a couple of months ago for a brand manager), second was “Growth of RBNZ”, and third was “RBNZ media inquiries”. There is the odd amusing snippet in the first, including


In the third release, the answers aren’t very interesting (which media interviews the Bank did), but there were several questions with potentially interesting answers which the Bank claimed were dealt with in (long) documents on Parliament’s website as part of the Bank’s Annual Review last year.

But what really caught my eye was the “Growth of RBNZ” request/answers, where the requester had asked for breakdowns of staff numbers over the last 10 years. They didn’t really need to go back that far – all the 200 FTE growth in staff numbers has occurred since Orr took office (up from 255 then to 454 on 30 June 2022) but it was interesting nonetheless. One gets a very clear sense of the bloat. Here for example

(I can recall a time, 35 years ago, when the numbers were probably larger but (a) total staff numbers were even larger than Orr levels), and (b) most counted the slimming down as something much more appropriate, and appropriately concerned with a restrained approach to public spending.)

The Bank’s functions haven’t changed but – like too many public agencies – the number of “communications” staff has increased hugely

An OIA I’d lodged a couple of years ago (and written about here) gives a bit more background on that function (although numbers have grown more since).

We know there has been senior management bloat – a whole new lawyer of second tier appointees (Assistant Governors) most of whom seem to have little subject expertise to offer)

On the other hand, there are the Bank’s core economics functions. Until very recently, monetary policy was by statute the primary function of the Bank. That has changed (reasonably enough) but it is still a key core function. But here are staff numbers in the Economics Department

There are no self-evidently right or wrong answers as to how big a central bank Economics Department should be but there are few/no economies of scale, the Bank has been publishing very little serious research (or even revealing analysis) in recent years, and….inflation is through the roof. It doesn’t have the feel of an appropriate level of spending, especially when the Minister of Finance is throwing money at the Bank (all those hugely increased “support” functions above). But it is consistent with the stories one hears, at second hand but from inside the institution, suggesting that the Governor has little interest in monetary policy or the supporting macroeconomics. The Bank also released some salary data by function and it is striking that in 2021/22 the total salary spend on the Economics Department was almost 10 per cent lower than it had been in 2012/13.

The Financial Markets Department has usually been seen primarily as an element of the Bank’s monetary policy function (implementation etc), so it looks somewhat odd to see a huge increase in staff numbers there even as the economics function has been flat or falling. These were the operational people who, on the Governor’s instructions, lost the taxpayer billions and billions of dollars through the LSAP (so it isn’t even as if market functions were paying for themselves).

The other obvious area of growth – but harder to illustrate given the changing definitions/structures, so that numbers for the earlier period aren’t readily comparable to those now – is around the Bank’s financial stability functions. Some will welcome this growth, citing recommendations from the (fellow supervisors who did the) IMF’s FSAP a few years ago. Count me sceptical. For example, as at 30 June 2022 the Bank now has 38 people doing “Prudential Policy”, which feels large not just by historical Bank standards (there was a time 20 years ago when, perhaps going through the other extreme, all the prudential functions, not just policy, had about 10 people) but by comparisons with the policy functions for specific areas of policy in other ministries. It is, for example, more than the total staffing in the Economics Department. Oh, and they also have 22 staff doing “Financial Stability Assessment and Strategy” and yet the Bank publishes nothing particularly insightful and no research relevant to the prudential or financial stability functions. As best I can tell from this release, total staff numbers in the financial stability functions have more than doubled since 2018 when Orr took office.

Orr has long had something of a reputation as an empire-builder, and in his first four years at the Bank that seems to have been amply warranted again. This is scarce taxpayers’ money and yet Orr (facilitated by the Minister and the Board) flings it round with gay abandon……without even the consolation of better quality research, analysis, policy design, let alone policy outcomes. But it has been a windfall for HR people and former journalists.

10 thoughts on “An expanding empire

  1. How does Treasury fit into this? Does it not have a role to advise the MoF on whether the growth is good value for money or verging towards bloat? You would have thought that the bank’s growing size would be ringing alarm bells at Treasury because it must fast becoming as big as the treasury itself! A big RB might not be in Treasury’s best interests!

    Liked by 1 person

  2. So, not enough people to do the work we’d be expecting them to do right now (perhaps this function is being performed elsewhere?), but that’s a lot of staff doing SOMETHING. Are they just really inefficient, or is there a large ‘project’ they’re working on, not really connected to their core purpose?

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    • Yes, that would be ‘Project Te Putea Matua’. To date New’s Zealand most expensive program of public works. Unfortunately ‘Project Te Putea Matua ’ is not expected to positively contribute to the Government’s ‘Net Zero’ goals ( in fact any other goals due to the increase in National Debt) given the significant amount of hot air emissions involved in producing nothing. Note: this ‘quantitative’ assessment was derived following the RBNZ’s Cost Benefit policy of simply making things up.

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  3. The ratio of Human Resources staff to employees is extremely high. Given the size of the organisation it seems to be double what I would expect. For an organisation of 454 FTE an HR department of 9 or 10 people would be more comparable to other similar sized organisations. Of course, if there hadn’t been such significant growth in employee numbers, they probably would have been able to carry on with just the 6 they had in the 5 years prior.

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  4. 200 staff for $8bio?….$40mio per person?….bargain! I mean inventing job titles for the RBNZ Executive Team is no easy task when there are so many of them -one has to be very creative! …is Assistant Governor, General Manager of Managerial Affairs & Menagerie Matters in there yet? All those glossy photos of flora & fauna take a lot of cutting & pasting to put in those ‘rebranded’ documents (that no one reads because they contain so little information about the Reserve Bank’s actual statutory responsibilities).

    And to top that is the FLP comment by the MPC, “ will fund no more than 6% of Bank lending”?… they took the initialism literally? It would be hilarious, if it wasn’t so tragic and reflective of their blatant short comings, especially the new Assistant Governor of Economics and Financial Markets who couldn’t even quote it correctly to the FEC…maybe it was written in ComicSans, because 4% isn’t 6%. Fortunately I’m sure the ‘new’ Board can set them right with all the experience of Monetary Policy, economics and whatnot that they bring.

    Merriam-Webster has the following definition: ‘partiality to …Friends of long standing, especially as evidenced in the appointment of political hangers-on to office without regard to their qualifications’. I always wondered what the ‘C’ in the New Zealand’s Central Bank OCR meant.

    Ending on a positive note, its good to list all the ‘risk adjusted net benefits’ the RBNZ has made recently to the wellbeing of New Zealanders, and of course in the fight against Climate Change: ……………………………………………………………………….………………………………………………………………………..hmmm? Nothing, because ‘risk adjusted net benefits’ just isn’t a (quantifiable) thing when it comes to monetary policy outcomes.


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