On Monday I wrote about the MPC membership of Caroline Saunders, whose four-year term had expired on 2 April 2023 and who appeared to be continuing to serve only at the day-to-day pleasure of the Minister of Finance. The Reserve Bank’s website on Monday said that her term had expired, and there was no statement from the Reserve Bank or from the Minister of Finance to the effect that she had either been reappointed or told to go away. That all seemed less than desirable (fact, and lack of transparency).
As I noted in that post, it all seemed rather odd. The election is approaching and the Minister of Finance had already last year reappointed one member, Peter Harris, to a term expiring in October. Under the conventions around elections, no new appointment could be made by the current government when the new term would start smack in the middle of the election period. It seemed reasonable to expect that at some point the Minister would use the statutory power to extend Harris’s term for one final six month period into early next year (by law, having served two proper terms he cannot be reappointed).
But there had been nothing to stop the government reappointing Saunders for up to a further full four year term. And given the (on paper) importance of these MPC positions it seemed careless at best, and a bit disconcerting, that the government had not got on and made a permanent appointment (whether Saunders of someone else – although there had been no evidence of any open search process).
But this morning a piece on Business Desk drew my attention to the fact that decisions had been made on both Harris and Saunders. Naturally, one looks to the Minister of Finance Beehive page for an announcement – these are, after all (and in principle) powerful or influential macroeconomic policymakers at a time when inflation is miles outside the target range the MPC was supposed to be delivering – but there was nothing. There was no press release from the Reserve Bank either, but when I checked the Bank’s website page for the MPC sure enough, there it was:
The suggestion being, at least in the new Saunders description, that this might have happened a few weeks ago and neither the Minister nor the Bank had thought fit to tell us.
And so then I turned to the repository of all official appointment announcements, the Gazette, where there is this
which is all good and official, but not many macroeconomists and Reserve Bank watchers routinely read the Gazette.
I have no more to say about Harris specifically. He never should have been reappointed for a short term ending in election season, but given that he was an extension to early 2024 was pretty much inevitable (although a short period with a vacancy also wouldn’t have been a problem).
But what of Saunders? She could have been appointed for a full four year term but has been given only 15 months or so. Was she reluctant and had to have her arm twisted to take an extension. Was the Bank’s Board reluctant to recommend her? Was the Minister really not so keen (having, from the papers, first appointed her mainly for her sex). And why was none of its sorted out months ago well before her first time expired. It is hardly a ringing vote of confidence in a macro policymaker, amid a serious policy failure, to be reappointed for such a short period only, especially as the result of her appointment is the end of the external member terms (and all will have done two terms and have to go) are now bunched quite tightly: Harris finishes on 31 March next year, Saunders’ term finishes on 30 June, and the third member (Bob Buckle) has a term finishing on 31 March 2025.
If there were to be a change of government later this year, this combination looks opportune. I wrote a post last year about what a new government could and couldn’t do quickly if they were serious about overhauling the Bank and MPC. They can’t get rid of the Governor (who has just started a second, but final, five year term. But they would be able to (would have to) replace all three external MPC members in fairly short order. It would be an opportunity to insist on a quite different approach (eg the repeal of the blackball on anyone with ongoing macro analytical and research interests and output).
Which from a National Party perspective looks good of the current government. But one is still left wondering why Robertson left things this way. He could have reappointed Saunders for four years, or could have replaced her with someone he was comfortable with for a four year term. Instead, he is leaving the way open for the other side if the election does not go his way.
As I noted the other day, I have several OIA requests in around these appointments, which may (or may not) shed some light. They are perhaps unlikely to tell us why the Minister, the Governor, and the Board chair were so reluctant to let us know about the appointments of these (supposedly) powerful macro policymakers. Perhaps they’d have struggled to craft an honest press release on the achievements of these policymakers in their four years so far, when – for the first time in decades – inflation blasted well away from target, and none of them was prepared to front up with a good story about the inflation outcomes they’ve delivered, let alone the massive financial losses their choices resulted in for the taxpayer.
Perhaps some journalist might seek comment from Robertson, from Orr, from Quigley or from Saunders. Or perhaps even from Nicola Willis who no doubt expects to be in a position to make all those MPC appointments before too long.