Month: July 2025

Orr, Quigley, and Willis: 31 July edition

Michael Reddell Adrian Orr, Reserve Bank Board, Treasury

I have other things to do with my time, but feel some obligation to my source – the (anonymous and unknown to me) person who seemed to take quite a personal risk, to help reopen the Orr departure story – to keep on making sense of developments, inch by inch as it often seems, in this story.

There are three things I wanted to comment on this morning, all prompted by yesterday’s release by Treasury of their internal file note of the 24 February meeting between the Bank, Treasury, and Willis.

  • an article in The Post this morning,
  • one on the Herald website last night, with further comments from Quigley, and
  • my own reflections on yesterday’s release.

The relevant section of the record of that 45 minute meeting is this

Post article

The Post article really isn’t worth linking to (you can no doubt find it if you want). It is noteworthy only for this extraordinary line:

“Hawkesby, and then Orr, left the 45-minute meeting shortly before it ended, but there is no evidence in the minutes that the discussion became heated.”

Which seems to ignore several things. First, the Deputy Governor is recorded as having left the meeting, but at the end of his item. He was the Bank’s senior manager responsible for financial stability and the first two items on the agenda (Prudential Regulation and Competition) were in his bailiwick, and he left when that discussion ended. He wasn’t a member of the Bank’s Board, and the Funding Agreement is between the Board and the Minister. He also wouldn’t have been one of the senior managers (CFOs and the like) providing technical/operational support on budgetary details.

Orr, by contrast, left in the middle of the Funding Agreement item. Moreover, Nicola Willis has confirmed (it is in the Herald piece – see below) that Orr “chose to leave the meeting early” (and she is likely to be phrasing that diplomatically). And Willis told Heather du Plessis-Allan several days ago that it was clear to her that emotions were running high in that meeting.

And, finally, I guess the journalist has never been a bureaucrat. Writing down that the Governor “expressed frustration” about the Bank/Treasury relationship is likely to be a very muted and diplomatic rendering of the summary of the actual words and the tone around them. An official writing up such meetings isn’t, say, a Bob Woodward looking to capture all the drama for publication. (Note that my source last week suggested that the account was still not muted enough for Quigley, who reportedly was very upset to learn that such a record existed at all and allegedly rang Treasury to complain in no uncertain terms – an OIA may shed light on whether that was so.)

It might not be going too far to suggest that a more accurate account might involve words like “stormed out”, walking out not only on the Minister but on his own board chair, having (so the account suggests) sought to undermine his own board by making a direct play to the Minister for his personal view of what the Funding Agreement level should be (recall that Orr was both a board member, and working under board delegations of authority etc on management and budgetary issues).

Herald article

The Herald article appears to have been prompted by yesterday’s Treasury release (they, like me, have had long running OIAs in with Treasury – theirs longer than mine – and this release was a partial response, while we wait for the rest of the issues to be addressed). But the article also contains quite a few comments from Quigley, apparently from an interview Tibshraeny did with him late last week after the Minister’s meeting with the Reserve Bank Board, as well as a fresh report that Willis had again expressed confidence in Quigley.

(It is to Treasury’s credit that they released both last week’s Quigley email (apologising for Orr’s conduct at a meeting with Treasury) and this file note. Either Rennie has decided that Treasury wants to be no part of the ongoing coverup and attempts to mislead by the Bank/Quigley, or (perhaps in addition) he has been encouraged in that direction by Willis, who seems to want more openness (and to be frustrated with the Board). If there are gag orders that Quigley signed the Bank up to they won’t bind Treasury.)

The article is behind a paywall so I’m not going to quote at length.

On Quigley, Willis is quoted as suggesting he is the right person for the job right now, including selecting a nominee for new Governor, and that at this “critical juncture” what matters is stability. It is pretty unbelievable, and utterly unconvincing stuff. The Bank is an embattled mess, and much of the mess is of Quigley’s own doing – spinning out the obstruction and misleading for months, overseeing the budget-busting spend up last year (that they’d not told the Minister about), and of course the appointment and reappointment of Orr in the first place. How can anyone have any confidence in a nominee out of a process led by Quigley? How could a good potential new Governor have any confidence in his chair? How can staff have any confidence in the board chair, when he is responsible for actively misleading them (as well as us) and for the big dislocations, layoffs etc the place is now going through? Rebuilding from here really demands a clean slate, led by someone commanding widespread respect and confidence.

But if the Minister’s line was perhaps predictable (you have to back someone until you fire them I suppose), Quigley’s comments were more interesting. He noted that the rest of the board had (we are told) expressed confidence in him – which perhaps isn’t unduly surprising as all but Spencer (new appointment) are as implicated as him in the events of recent months – but then must have been asked about the OIA obstructionism.

There has never ever been any sign that Quigley has any sort of commitment to openness or public scrutiny. The obstructionism, and reported quotes along the lines that he didn’t think the public had a right or need to know what went on (with one of the most powerful controversial officials in New Zealand), has to some extent been par for the course. But you did get the sense here that he feels the ground slipping away from under him. Most likely his staff gave him the sort of advice he wanted to hear on the law, but even if he got cover to hide there so far, it was a spectacularly bad call – in governance and public trust terms – to (a) be as obstructive as they’ve been (multiple OIAs have never been responded to directly, let alone completely) and b) to actively mislead the public repeatedly. No law required that. And any adviser who advised him that it was a good course of action shouldn’t be working there much longer.

In his final comments, Quigley seems to grudgingly acknowledge that his role included providing feedback to the Governor on his performance, but it is – on his telling – none of our business. He acts as if either Orr was some low level employee (say a junior accountant at Waikato University), or as if his responsibility is to the Bank and its management, rather than to the Minister and the public. And again, nothing warrants the calculated deceit of recent months, or attempts to substitute his judgement for the spirit and principles of the Official Information Act.

My thoughts prompted by yesterday’s Treasury release

A couple of additional thoughts occurred to me after reflecting further on yesterday’s release. The first (and probably not central) was this from their covering note.

The Bank had submitted its Funding Agreement bid to Treasury back in September 2024. Can it really only have been in early February that officials did even a preliminary assessment of what levels of spending they thought the Bank should be allowed? It seems odd, and yet in the papers the Bank released on 11 June in which an Orr email records him stating on 14 February “We have not heard from Treasury as to a preferred number”. It seems puzzling, but perhaps some of the outstanding OIAs will eventually shed some light.

But the bigger question is what we make of this episode of Orr’s extraordinary behaviour on Monday afternoon 24 February, in light of all else we know (or suspect). It must have been critical because, as I highlighted yesterday drawing from the Bank’s own 11 June selective release, within 24 hours various members of senior management were (a) aware an exit was a possibility, and b) putting together a working group to manage things at the Bank’s end. But, equally, it cannot have been final and determinative – except perhaps that Quigley and Willis may have concluded to themselves that Orr had to go (after undermining his board chair in front of the Minister and then walking out of the meeting, all only a couple of days after Quigley had had to apologise to Treasury for Orr’s conduct, because Orr himself wouldn’t).

I had a useful exchange yesterday afternoon with someone whose views always force me to think. This person argued that Orr’s behaviour in that meeting was tantamount to a resignation. I certainly agree that, on what we know, it was the sort of behaviour that shouldn’t be tolerated from any public sector chief executive, and there was no obvious way back from it (especially given the track record of Orr’s behavioural issues in the job, recent and past). But did Orr see it that way? Over the years he’d held the job he’d already gotten away with so much, and perhaps it is unlikely (to say the least) that it was the first time his undisciplined side had been on display in a Minister of Finance’s office. The Bank’s statement of 11 June may at one level have been accurate (if misleading)

“Distress” sounds like a reasonable description for what we now know of the 20 and 24 February meetings, and “necessary working relationships” must have been quite deeply impaired – but not just with the Board, but with the Minister and Treasury too – and Orr did finally come to a decision to go.

But there is still no sign that on 24 February he thought he was resigning, and every indication that his decision to go came only after quite a bit of pressure applied in the following few days. After all, recall my source’s story (and that person’s general account of what went on seems to have been vindicated so far where independent details have since emerged) that it wasn’t until 27 February that Quigley sent that Statement of Concerns to Orr, seeking a response (this wasn’t a quiet private chat, but something formal in writing by email), which seems to have been the final straw [UPDATE: Quigley probably also needed to get the rest of the Board squared away, who hadn’t witnessed Monday’s debacle]. And even then, if perhaps Orr wasn’t fighting too hard – it was clear he was going to lose the funding battle, and it clearly was close to his heart, and surely even he must have had some self-knowledge reflecting on his conduct over the past week – it was still a case of “senior counsel” called in by each side to negotiate, not a simple resort to standard resignation provisions in Orr’s contract, and getting him out of the office the very hour the resignation was announced.

Both Orr and Quigley will have known that it was most unlikely the Minister would sack him, and so he held leverage – I’ll go, but only if you sign up to a gag order (the limits of which, or the authority for which – did the Minister really not know? – are still not clear). He was clearly pushed, and there is no way by this point that the Board chair can have had confidence in Orr continuing (despite what he claimed on 5 March). Perhaps it was one thing to pledge that precise details of behaviour would not be disclosed, except as required by law (you can’t contract out of the OIA), but Quigley and Willis should have insisted on something like “After discussions initiated by the Board, the Governor has chosen to resign and left office today”. Except that – unless we see clear evidence to the contrary – perhaps they then preferred that we not know (and no one else on the Board seems to have objected). And so the obstructionism and repeated active deception of the public began, and continues to this day.

The Treasury file note of the 24 February meeting

Michael Reddell Adrian Orr, Reserve Bank Board, Treasury

A few minutes ago I had this email from The Treasury

This is the document that my source last week claimed Quigley went ballistic about when he learned of its existence,

Taking Treasury’s caveats re the views expressed by anyone including Orr, can we conclude at least from the description of events that Orr walked out of the meeting in the middle of the Funding Agreement discussion, having undercut his own governing board’s views in front of the minister and his chair?

Oh, and credit to The Treasury for releasing this in full now.

UPDATE: I just wanted to put the record out there rather than write much commentary. However, I’ve had a few people get in touch suggesting that the record is capable of a more benign (for Orr) interpretation, noting that the Deputy Governor, Christian Hawkesby is also shown as having left the meeting part way through. However, I don’t think this alternative interpretation is correct. Hawkesby is shown leaving at a natural break point, where the banking regulation and supervision discussion ends. His main role at the Bank at the time was responsibility for those functions. He was not on the Board and Funding Agreement issues were mainly a matter for the Board and chief executive (supported by other DCEs on the financial management side of the Bank), so it seems quite natural that he would have left at that point.

By contrast, Orr is recorded as having highlighted differences between himself (and management more generally) and his board, and then to have sounded off at Treasury (“expressed frustration” is an official’s record, not that of a fly on the wall biographer, so likely to be understated), and then is recorded as leaving the meeting while the Funding Agreement discussion is still going on. It has also been suggested that perhaps the Minister had simply asked Quigley to stay behind. That interpretation seems unlikely given that the Treasury team (and MoF’s office advisers) were all still there (a later one-on-one might not be a surprise, but Treasury officials would not have been there to record that).

In the end, we do not know with certainty, although either Willis or Quigley (or Orr for that matter) could give us straight answers (so could Rennie, but it isn’t his role to).

Rereading the material

Michael Reddell Adrian Orr, Reserve Bank Board

As I outlined in my post on Friday, it now seems that much the most likely explanation for the sudden no-notice departure of the Governor of the Reserve Bank is that he was ousted; not formally sacked by the Minister of Finance (as she might well have had grounds to do, but it could have got messy), but – having left himself vulnerable by his record of questionable conduct – engineered out by the Bank’s Board (more specifically its chair), almost certainly with the foreknowledge and acquiescence, and possibly the direct encouragement, of the Minister of Finance herself. If so, well done them on that count. But the subsequent and ongoing active deception of the public (and of the Bank’s own staff), and the apparent defiance of the Official Information Act, is simply inexcusable, and it would seem that the Board (especially the chair), the Minister, and the temporary Governor share responsibility, to one degree or another, for that.

Looking back now, it is puzzling that this hadn’t seemed the most likely explanation pretty much ever since Orr left on 5 March, or at very least since the Bank’s big release, and statement, on 11 June. I guess that is what comes of treating words out of the mouth of the Bank, and especially its chair, as having any degree of trustworthiness whatsoever. More fool me.

Recall that the first set of statements and Board chair comments on 5 March was clearly intended to lead us to believe there was nothing to see here. It was just a “personal decision”, there were no conduct, performance or policy issues at the heart of it, and really….when a big job was done, why wouldn’t an impressive leader take the opportunity to hand over the reigns. I won’t repeat all the things Quigley said that day, but this statement, issued by the Bank mid-afternoon on 5 March, after many questions had already arisen, rather captures the tone

Cincinnatus and all that. A couple of hours later he told the hastily-called press conference that he personally had still had confidence in Orr, and answered a direct question thus

The Bank spent the next three months blocking OIA requests and refusing to add anything, until the great reveal on 11 June. There was a set of carefully selected papers released (while avoiding anything on whole chunks of what must have gone on) and an official statement, presumably owned by both the Board and the temporary Governor and probably carefully vetted by lawyers (including ones for Orr?).

Having abandoned the 5 March story, this was all now carefully crafted to focus us on (a) that board meeting on 27 February, and b) a policy difference between the Board and the Governor which Orr, somewhat oddly, took so strongly to heart (“caused distress”) that he felt it would be better for him to simply go.

If you go back and read my posts when this release came out, you’ll see I never really bought the framing (which the Bank must have been pleased that much of the media followed) that this was a dispute over the Funding Agreement per se. As I have noted several times, many or most public service chief executives have suffered budgetary disappointment in the last couple of years, and none of them stormed off with no notice. But we were still clearly supposed to believe that whatever really happened, Orr had real agency (it was he who decided to leave, of his own accord, with no notice).

But there were still plenty of clues that it wasn’t the real story. There was, for example, the strident and repeated insistence by the Minister of Finance that it was all nothing to do with her, she knew little or nothing etc (even though she was the person responsible for the Governor, and to whom any resignation actually had to be addressed).

And there was the near-final version of the 11 June statement, which they’d sent out in error to OIA requesters shortly before the official general release time.

The shift from one (near-final) to the other (final) being clearly designed to remove any references to a meeting with the Minister and Treasury, and to draw attention away from them generally (and the earlier wording wasn’t going to have got into a near-final document of this magnitude by accident or the whims and failings of a junior staffer).

And there was the exit agreement itself, and negotiations being undertaken by “senior counsel” – interesting that that term was explicitly chosen by the Bank when they could easily just have used “lawyers” – for both sides. For an amicable departure, surely a quick chat with HR could have sorted out the application of Orr’s standard resignation terms, and any waivers of notice that might be sought or granted? And there was this summary (from the 11 June statement) of the exit agreement

Who typically has negotiated exit agreements? People being forced out (but not specifically fired). And Quigley has repeatedly referred to legal constraints on his ability to explain things, which can really only have arisen from the terms of this exit agreement, where Orr will have had some negotiating leverage (and were it all Cincinnatus-like there would be nothing for either side to want to hide – and no reason for Orr to have left the office the very day of the resignation, and yet be paid for several more weeks).

But things hung in limbo – hamstrung in part by the Bank’s obstructiveness over various OIA requests now having been appealed to the Ombudsman – until the account provided to me by someone who was clearly fairly close to events, and reported here. That person’s account was that (a) Orr’s behaviour had been very bad in a meeting with The Treasury on the Funding Agreement issues and then on 24 February in a meeting with both Treasury and the Minister of Finance, and that b) on the 27th, the day of the Bank’s board meeting, Quigley had emailed Orr a Statement of Concerns raising conduct issues stretching back several years and inviting a response. So the story went, at that point Orr decided to resign.

Treasury then disclosed an email sent by Quigley to a mid-level Treasury staffer after a meeting on 20 February apologising to that person that Orr had lost his cool in the meeting, in response to a perfectly reasonable question that Quigley acknowledged should have been anticipated and for which Bank management should have had a dispassionate answer. At a time when negotiations on the Bank’s future five-year funding were approaching climax Orr, in the presence of his chair, had (a) lost it with Treasury, and b) neither then nor later been willing to apologise himself (why otherwise was Quigley doing so, and not even on Orr’s behalf).

Then the Minister confirmed that “emotions were running high” in that meeting on 24 February too (around Funding Agreement disputes), while seeming to confirm that “employment negotiations” had been underway between Orr and the board in the days leading up to the resignation. And while the Bank has refused any further comment, they have also not chosen to deny any of it (including the alleged 27 February email, for which there is still no independent confirmation of its existence). Had there been no substance to any of this, they’d surely have owed it to both Orr and Quigley to (however briefly and tersely) set the record straight. They seem now to be hoping to wait out the Ombudsman.

And so the “engineered” ousting came to seem like the best working hypothesis for what had gone on. Perhaps on the spur of the moment, or perhaps lying in wait for some months, Orr’s conduct seems to have crossed the line (again – perhaps he’d been warned) and they had the leverage to get him to go. No doubt he was disheartened that he was going to lose the Funding Agreement fight and perhaps that made him readier than otherwise to go without much of a fight?

Anyway, having got to that point I decided to go back and reread that package of material the Bank had put out on 11 June, and see if any of it read differently in light of what we had since come to know.

I’d assumed – I think understandably enough – that the Bank’s Board meeting of Thursday 27 February might have been decisive. The 11 June statement seemed to point that way, as did my source’s report that the (apparently) decisive email had been sent to Orr on 27 February, and the fact that the only indications of advice to Treasury or the Minister had dated from then (I’ve now asked the Ombudsman to review the extensive withholdings in that release).

And perhaps there was some sort of final showdown then and a final decision made (to call in the “senior counsel” to negotiate exit terms). But the Bank’s information release pack included this (read from the bottom)

Who are the characters here? Hawkesby was (then) the Deputy Governor, McBride was (and is) the Bank’s General Counsel (but a third tier person, under an Assistant Governor who was also a lawyer), John McDermott was the Assistant Governor responsible for HR matters, and Naomi Mitchell was the (third tier) Director of Communications. And before 4:46pm on Tuesday 25 February [UPDATE: as it turns out, less than 24 hours after Quigley got out of that 24 Feb meeting] they already knew that something was afoot and agreed to the establishment of an “ad hoc committee” to help manage the situation. It seems clear that decisions had not yet been made (“If not just yet, maybe if events escalate.”) but this was two days before the Board meeting and just the day after that (“emotions were running high”) meeting with the Minister and Treasury. Was it Orr who told this group of his managers, or was it Quigley (Board chair)? We don’t know, but whatever had already unfolded – a serious risk of the Governor going presumably – was material enough for a range of key managers, not all direct reports to the CE, to have been brought into the picture (apparently separately/individually) this early. (This group then meets or exchanges messages over the remaining period pre and post resignation that was covered by the release.)

We don’t know what events were on the Statement of Concerns list Quigley is claimed to have sent Orr. As I noted last week, it isn’t as if he would have been short of examples just from material that had found its way into the public domain by then. But I wondered what other events might have been salient for the Minister and/or the Board.

I noted last week that when (with spectacularly poor judgement) Quigley and the Board had recommended Orr’s reappointment in late 2022 there had been this.

When this was first released some time back it seemed like little more than make-believe stuff. But perhaps it had been the basis for conversations with Orr at the time? After all, the Board (and Quigley) can hardly have been oblivious to the long list of concerns and issues, so perhaps there was some attempt at insistence on better behaviour in a second term?

If so, it didn’t go well. Even externally, Orr continued to mislead (or worse) FEC and media. As the Minister noted last week, she’d last year passed a complaint about Orr’s behaviour to a New Zealand Initiative employee to the board to address.

And we learned just yesterday that it seems that the Bank never told the Minister of Finance that they were going to budget in 24/25 for operational spending far in excess of even what Grant Robertson had allowed them for that year (although, to be clear, responsibility for that must lie with both Quigley – as board chair – and Orr, as CEO). Perhaps when Willis finally realised she had been had, she was (and I would hope she was) really annoyed and perhaps, as regards Orr, steel entered her soul (belatedly) at that point. Of itself, not quite dismissal material perhaps (after all, Quigley was responsible too and she’d just reappointed him) but enough to put you on watch.

Who knows if Orr’s conduct at and after those two February meetings was itself enough to lay him open to pressure to go. As yet, we have only quite sanitised comments on how those meetings went down (including the Orr/Wood exchange, where they were both trying to settle things down after the event) but it was repeated behaviour from a very senior figure within days, at a time when the Bank really need to maintain good relationships. If it wasn’t enough in itself, there was other stuff going on at the very same time.

Going back to that period, I realised that it had been on the very morning of 20 February – the day of that unapologetic blow up at Treasury – that Orr had been telling demonstrable untruths again to Parliament’s Finance and Expenditure Committee (at his appearance on the February Monetary Policy Statement). I wrote about it in a post on 21 February, “Orr at it again”. I went back through that post the other day, and listened again to the video of the hearing to check that I’d heard and recorded things correctly. It was, as it turned out, probably his last public appearance as Governor and I counted five outright misrepresentations (two I would go so far as to call worse than that), all on matters where the Governor was either well aware of the truth, or should reasonably have been expected to have known the truth. (And just to be clear that responsibility is shared: at the table with him were his deputy responsible for monetary policy, Karen Silk, and the chief economist Paul Conway. In the row behind Orr you can see Christian Hawkesby, MPC member and Deputy Governor, Naomi Mitchell (Director of Communications), and one of the external MPC members. Not one of them made any attempt to correct Orr on any of these points.

The most egregious of Orr’s claims that day – although not necessarily particularly consequential, just the easiest to unambiguously refute – was the (repeated) claim that the Reserve Bank had been among the first central banks to tighten (when inflation took off a few years previously) and the new, and even more out of step with reality, claim that the Reserve Bank had then been among the first central banks to cut rates.

In my post that day I observed

As I noted, he’d done this sort of thing often enough before, but when I checked my records it seemed to have been the first time since the change of government that he’d been caught in such flagrant attempts to mislead a parliamentary committee (there are plenty documented in the years previously). Had he been less bad for a while, or had I not been paying so much attention? I ended up raising this episode with the Finance and Expenditure Committee the following week (before Orr’s resignation), in time with full chapter and verse – as I recall, I thought it was pointless to raise it with Willis, but the FEC chair was new.

I don’t suppose this particular episode of egregious behaviour – which his senior team seemed to walk by – had anything particularly to do with Orr’s ouster, underway just a few days later. My point is only that if for whatever reason you think what we know of those two private meetings mightn’t really have been serious enough to use as a lever to oust Orr, there was plenty more behaviour that could have, this one visible to anyone who chose to watch/read. If Willis helped engineer the ousting of the Governor, she did us – and standards of public life in New Zealand – a service.

None of which – not NDAs, not nothing – warrants participation in active and repeated, ongoing now, attempts to mislead New Zealanders and obstruct scrutiny. And if – as the Minister suggests – she isn’t overly happy with how the Bank is now handing things, the Board chair serves at her pleasure. If she wants different standards, a good way to signal that would be to replace the chair, now.

If something like what I’ve hypothesised here is what happened back in late February and early March, perhaps the Board and Minister should have insisted on a terse statement along the lines of “Following discussions initiated by the Board, the Governor has resigned and has left office today” and said nothing more that day. It wouldn’t have stopped the questions, or the OIAs. Perhaps it wouldn’t have proved tenable, or Orr wouldn’t have agreed. But there is just no excuse for the deliberate repeated ongoing effort to mislead us.

Or their staff. This was from the package of Q&As sent out by Naomi Mitchell to the entire Bank second and third tier mamagement group first thing in the morning the day after the resignation, for use with staff.

Yeah right.

They didn’t tell her

Michael Reddell Adrian Orr, Reserve Bank Board, Treasury

One of the mysteries of the months leading up to (what appears now to have been) Orr’s ousting as Governor, was how the Minister of Finance – apparently very focused last year on spending restraint in central government agencies, especially ones that weren’t really public facing – had let Orr and Quigley (and the rest of the Board) away with 2024/25 operating expenses so far in excess (23 per cent in excess) of the level of spending for that year allowed under the amended Funding Agreement Grant Robertson had signed off shortly before the 2023 election.

The Minister can’t directly control the Bank’s annual budget but the law requires the Bank to produce a Statement of Performance Expectations each year, to be published before the start of each financial year. The Act sets out what has to be included in a Statement of Performance Expectations (SPE)

The Act specifically provides for the Minister of Finance to be provided with the opportunity to comment on a draft of that SPE, and explicitly provides 15 working days for her to provide comments (drawing, no doubt, on advice from The Treasury which, again under the Act, has been made formally the Minister’s monitor of the Reserve Bank). The Minister also has the power of the bully pulpit: she could openly call out excess, if she knew about it.

In a post a couple of weeks ago I revealed that neither the Minister nor the Treasury had raised any concerns about Orr and the Board proposing to run levels of spending miles in excess of allowed levels, at a time when pretty much every other central government agency was facing actual cuts, and when the Minister had already (in early April 2024) reminded the Bank of her “fiscal sustainability programme” in her letter of expectation, in the context of approaching negotiations over a future Funding Agreement.

And when she mentioned reprioritising “before seeking any additional funding” you’d have to suppose that the benchmark against which “additional” would be understood by her was the level of funding her predecessor had approved only eight months earlier.

It seemed pretty surprising, to put it politely, that neither the Minister nor Treasury had raised any concerns when they were offered the opportunity to comment on the draft SPE. But I’d realised that although I had their comments, I didn’t have the draft they were reacting (or not) to. So on 3 July I asked for that and it turned up this morning, in full and unredacted (so should presumably have been supplied weeks ago).

And it turns out that the answer to my question as to why neither the Minister nor The Treasury had raised any concerns about the planned spending levels is that….the Bank just didn’t tell them.

You might find that surprising. I certainly did. You might wonder if I have misread something. But here is chapter and verse from the short covering memo to the Minister of Finance, dated 30 April 2024, and signed out by Simone Robbers, at the time one of Orr’s many deputy chief executives (formally, Assistant Governor, Strategy, Engagement and Sustainability).

It isn’t clear what about the “current operating environment” meant they thought they shouldn’t tell the Minister how much they were planning to spend. But whatever their reason, they didn’t. She didn’t know.

My view of the Minister of Finance has been revised up quite a bit in recent days, and this discovery is one of the reasons.

If you were being uncharitable you might think that the Minister should have asked, or the political advisers in her office should have asked, or – when it was sent on to them – The Treasury should have asked. And perhaps they should. But in the Minister’s case it was her first year in office, she had sent that Letter of Expectation just a few weeks previously, and she’d have had absolutely no prior reason to suspect that the Bank was going to adopt a budget with operating spending levels so far in excess of the elevated levels for 2024/25 Grant Robertson had approved the previous year. Who would? After all, this was Mr “cool your jets” Orr himself, who talked of fiscal restraint assisting in getting inflation down.

Perhaps The Treasury is more culpable, but I expect that the people reviewing the draft Statement of Performance Expectations were by nature more focused on the structures of documents and getting the Bank to jump through the right bureaucratic hoops. They won’t have been fiscal focused, and again….why would they suspect the Bank would just decide to blow out spending way beyond approved levels?

In bureaucrat land, “no surprises” is a big thing. But the Bank (Orr and Quigley) seem to have consciously chosen to run a great big surprise for the Minister of Finance. Perhaps the budgets were not quite locked down on 30 April (probably they weren’t) but if they’d been planning to stay within Funding Agreement limits it would have been easy enough to have included a brief mention that the forecast statement of comprehensive revenue and expense would include in-scope spending at levels consistent with the Funding Agreement allowance for 2024/25. Or, if they really thought they somehow had authority to spend so far beyond, they could at least have given the Minister an indicative range, and explained how it related to the (then) Funding Agreement limits. Instead, they seem to have told her nothing.

It is really quite extraordinary.

And one is left wondering when the Minister finally realised she’d been had. Perhaps it wasn’t until Treasury, many months later, got inside the Bank’s opening bid for the 2025-30 Funding Agreement, ran the numbers and realised that while the Bank purported to be offering up modest cuts, in fact they were from a level far above what had been allowed in the previous Funding Agreement; an inflated, bloated, baseline of their extravagant creation.

(It is always possible there is some other advice somewhere in which all this was pointed out early to the Minister, but if such advice exists the Bank has had every reason to helpfully – to them – disclose it. For the moment, it seems very unlikely that they were straightforward with her.)

And if the ousting of Orr has been accomplished, the board chair Neil Quigley remains in office. It wasn’t his signature on that 30 April advice to the Minister, but it was his Board that approved both the egregious 24/25 budget and the equally egregious 2025-30 Funding Agreement bid. Useful as he may have been to the Minister in late February and early March, there is no way he should still be in office.

The Bank purports to pride itself on integrity

But there has been little or none on display through any of this.

(By way of curiosity: I don’t usually pay much attention to which countries my readers come from, but I have noticed in the last few days quite an upsurge – from a vanishingly small base – in views from the Cook Islands. Perhaps some Wellington public servants need to find some lighter reading for their winter holidays, or is the former Governor now a quiet reader? Who knows.)

UPDATE (30/7):

Just for the record and future reference, here is the link to the comments Treasury and the Minister did make on the draft Statement of Performance Expectations and here is the Bank’s covering note (see above) when they sent the Minister the draft on 30 April 2024.

Two sets of Willis comments, and a plausible story

Michael Reddell Adrian Orr, Quigley, Reserve Bank Board, Treasury

In the last day or so I’ve seen or heard two sets of comments from the Minister of Finance on the Orr/Quigley/Reserve Bank/Treasury/Willis – and it is now about all of them – business.

The first, that I want to deal with only briefly, was in The Post this morning under the heading “Willis dismay with RBNZ” (online here).

The journalist was obviously a bit of an Orr fan, as this article is the second time in two days The Post has talked of Orr’s “reputation for being charming”. No doubt he could and did turn it on when he chose, but not, surely, ever to anyone who ever challenged or disagreed with him (that included – very evidently – Nicola Willis when on occasion as Opposition finance spokesperson she asked Orr a slightly uncomfortable question at FEC hearings).

Much of what is in the article was also covered in my post yesterday. So I wanted to mention only this snippet

I guess she’d have looked a bit silly to have objected, but it is good to see her explicitly welcoming that Treasury release. On the second bit of that extract, it refers to the meeting on 24 February involving Quigley, Orr, Hawkesby, and senior Treasury people as well as the Minister herself. It is good to know that Treasury is considering releasing the minute of the meeting given that my request for it was lodged with them more than a month ago (as part of a larger request on Funding Agreement issues) but I presume there have been other requests, including since Tuesday when I reported the claim by my source that Quigley had been apoplectic and had complained to Treasury when he’d learned that such a minute existed. Again, it is good to know the Minister thinks Treasury should comply with the law, and we will look forward to the release.

The Minister’s more substantive comments were in an interview yesterday afternoon with Heather du Plessis-Allan. The audio is here and my transcript is here

Transcript of Heather du Plessis interview with Nicola Willis on 24 July 2025

Why do I bother doing the transcript?  Partly for future reference and partly as a way of focusing my mind on all the lines Willis used in answering (and avoiding answering) questions.   There were things I hadn’t really noticed when I listened live. 

What do we learn from the interview?  First that “emotions were running high” (the no doubt carefully chosen phrase for something like Adrian Orr losing his cool again) in the 24 February meeting she attended (although apparently there was no swearing) and she’d “heard reports” of the 20 February meeting between the Bank and Treasury where again “emotions ran high”.    About, of all things, the Funding Agreement…..as if almost every single agency in Wellington hadn’t already been facing budget cuts (and it presumably wasn’t as if anyone was proposing cutting out the role of Governor). 

Recall that Quigley email to Treasury (reproduced in yesterday’s post).  The Governor was so ill-disciplined and out of control that in response to what Quigley recognised was a perfectly reasonable question from a mid-level Treasury official, Orr lost it, and then wouldn’t apologise, either immediately or after the meeting (instead Quigley was left to go and make his own apologies for Adrian).  And sufficiently out of control, and unresponsive to what must have been feedback from his own chair, that the “losing his cool”, “emotions running high” behaviour was on display again several days later to a meeting with the Minister himself.      In a normal employee such behaviour, especially repeated and without prompt and full apology, might of itself almost have been grounds for dismissal.  (Humans make mistakes, even public sector chief executives, sometimes provoked, sometimes not.  But when made aware you apologise, ensure it won’t happen again, or….you really aren’t fit to lead people and public organisations.)

Willis was again at pains to suggest that the employment of the Governor was nothing to do with her, but purely something for the Reserve Bank Board.   As a matter of law it simply isn’t so (I ran through the relevant provisions a couple of days ago), and the fact that it isn’t so has nothing to do –  contrary to the Minister’s claim –  with the “independence” of the Reserve Bank.  There are plenty of roles and powers for the Minister of Finance in the Reserve Bank Act (as well as appointing and dismissing and receiving resignations from the Governor).  For example, the Reserve Bank has what is known as “operational autonomy” on monetary policy, but they work to an inflation target by the Minister.   In banking supervision and crisis management, some powers are exercised wholly by the Bank while others need ministerial approval.  The Minister is directly party to the Funding Agreement. Parliament could have chosen to give the Minister no role re the Governor’s appointment etc but it never has (fortunately or there would be no political accountability at all).  The Minister is responsible for the Governor, while the Board –  whose chair is removable at will be the Minister – monitors etc the Governor, accountable to her. 

At the very end of the interview Willis is asked

So far, we’ve had two quite different stories from Quigley, neither of which appears to be the truth. First, back on 5 March we were assured it was just “a personal decision”, with denials of any policy or conduct or similar issues being involved. We were intended to believe the man was tired, the job was done, and it was time to do something else. Then on 11 June, the Bank’s carefully crafted statement told us a new story. In this story there had indeed been material differences between the Board and the Governor over what they could live with in the next Funding Agreement. This we were told

“caused distress to Mr Orr and the impasse risked damaging necessary working relationships, and led to Mr Orr’s personal decision [ that term again] that he had achieved all he could as Governor of the Reserve Bank and could not continue in that role with sufficiently less funding than he thought was viable for the organisation”.

This time we were clearly intended to believe that the “personal decision” [which in a narrow and formal sense it was] was really just about (strongly felt) policy and resourcing differences.

Had you read either or both of those accounts, you might have believed (and were clearly supposed to) that the very first the Minister of Finance would have known that anything so dramatic was afoot was when on 27 February Quigley advised Iain Rennie of something briefly (words were withheld), who in turn advised the Minister briefly (words were withheld), who responded (puzzlingly) with nothing much more than something like “thanks for the update”.

But look at what the Minister said yesterday afternoon

You don’t usually have “employment discussions” when someone comes to you and says their job is done and they are going to leave, and even when the CE comes out of a Board discussion on funding and concludes it might be better for everyone if he, the CE, moves on. There will have been standard resignation and notice provisions in the Governor’s contract. Easy enough to have HR put those in train.

“Employment discussions” between the Governor and the Board preceding his resignation strongly suggest that serious issues were raised by the Board with the Governor, serious enough to have potential implications for whether they would be happy for him to continue as Governor. Which would be consistent with my source’s story, from the post on Tuesday:

And you can well understand why it might trigger Orr’s resignation, since getting to such a point clearly indicated a serious loss of confidence in the Governor, and quite possibly an almost irreparable breakdown of trust.

The Minister continues to state that she does not know the contents of the exit agreement then negotiated between expensive senior lawyers for both the Board and Orr. Which, on her account of what went on, should be simply extraordinary, because (a) the resignation would have to come to her, and b) she is the only guardian of the public interest here, and the one who would, in principle, have to account to Parliament for any deals done. She and her office, or at very least Treasury, should have been all over any terms – especially around non-disclosure matters – Quigley was agreeing with her (outgoing) Governor. And yet we must presumably take her at her word that she was not, and the OIAed paper trail suggests no Treasury advice on such matters at all.

One of the things that has puzzled me in the last few weeks is the absence of advice from either Treasury or the Board chair (or Board generally) to the Minister on the looming resignation. Last month I had an OIA response from Treasury (briefly written up and linked to at the end of this post), with almost nothing there (not withheld, just nothing there).

And then on 30 June I had a response to an OIA to the Bank. The relevant bit of the request was this

and their response was

Which isn’t exactly what you’d have expected if the initial Quigley spin had been anything like the truth or if the 11 June statement had been anything like the full story.

But it would make a lot more sense if the Minister of Finance had been the one initiating/prompting the actions that led directly to Orr’s “personal decision” to resign.

There is no direct evidence of that at this point. But something along those lines might explain rather a lot.

Let’s go back to that meeting on 24 February between the Minister, the top Bank people, and (presumably) very senior Treasury people. If Adrian had again lost his cool (“emotions were running high”) what do we supposed happened afterwards? Every one just put it down to a bad day and moved on? It doesn’t seem very likely. After all, we know that a few days previously Quigley had taken the initiative to apologise for Orr’s conduct to a mid-level Treasury staffer. Was he likely to have done much less after his CE blew up in a meeting with the Minister herself? As for the Minister, surely she’d have debriefed with her political advisers – “can you believe that?” sort of thing (of course, they probably could because Orr’s behaviour and style has been well known, including to the Minister, for years), or “we have to do something about him/something has to be done about him”. Perhaps she had a chat with Iain Rennie, or perhaps people in her office passed on the reports of the Treasury meeting a few days previously?

It doesn’t seem at all impossible – and I’m not sure any OIA so far (that I’ve heard of) would have captured this – that she, or someone senior acting on her behalf, got hold of Quigley (keeping Rennie in the loop) and indicated that Orr’s performance was intolerable, and that he really had to go. The specific incidents may have been like a heaven-sent opportunity, with Orr laying himself open, by having openly embarrassed the Board chair and Board as a whole, at a very delicate time re the Funding Agreement, by egregious behaviour – unacceptable in any official – in front of the two groups (MInister and Treasury) they needed to avoid antagonising to try to get a decent settlement. Perhaps Quigley intimated that he had a long list of behavioural issues re Orr that he’d built up over several years, and reckoned the Board would probably have had enongh too. Both sides will have known that only the Minister could fire the Governor – and she wouldn’t want to have done that directly – but it will have become apparent that they had leverage and could put pressure on, that would be likely to result in his “personal decision” to leave. And if something like that is what went on, maybe the Minister – conscious of maintaining semi-plausible deniability – indicated that whatever it took should be done, and don’t bother me with (or show me) the details.

It fits the facts we have better than any other story so far, including in making sense of why Willis has been so over the top in her disavowal of any involvement and insisting (contrary to the law) that hiring and firing etc Governors was just a matter for the Board, nothing to do with her. And, of course, of why there was an exit agreement – negotiated by senior counsel at all – with gag orders etc: they wouldn’t have been willing, probably, to directly fire Orr (judicial review has always been a risk too), and so he could insist on (some) terms, but it isn’t clear that Quigley isn’t using them to protect himself too.

If the truth is anything like this – another layer behind the story from my source, which itself so far looks sound – perhaps where they (the Minister in particular) misjudged was in putting too much confidence in Quigley to deal with the public side of things (if so, pretty inexcusable on her part as Quigley has no track record of being a deft and effective or trustworthy communicator). Both after 11 June and again yesterday the Minister has indicated that she isn’t satisfied with what the Board has said (or not said). From the interview yesterday

“I have also however previously shared my disappointment at the way information on this matter has been shared with New Zealanders. Today I had a prescheduled meeting with the entire Board of the Reserve Bank and at that meeting I sought to convey to everyone present that I was disappointed with the way that this matter had been handled given the ongoing public speculation because it is in New Zealand’s interest that the Reserve Bank maintains its reputation at all times and I think with better handling we would not still be having these interviews and this discussion.‘

Well, indeed, but what did you expect? They never seem to have had lines that they’d effectively stress-tested (to stand up for more than a few minutes – 5 March – or hours – 11 June) and hadn’t even got the process straight (witness what the Bank has already confirmed that the Minister was putting pressure on on the afternoon of 5 March for Quigley to do a press conference he didn’t really want to do – something surely that should have been sorted out in advance and properly rehearsed). The Minister clearly now isn’t that happy with the ongoing OIA obstructionism, and she is quite right to suggest that better handling of this whole thing would have seen it as yesterday’s story, one for next history of the RB, pretty quickly, perhaps within a week or two of 5 March. Instead, here we are, months on, and so many unanswered questions, including from the Minister herself, and with the Ombudsman all over the issues.

The Minister’s main message yesterday – to various outlets – was that she still had confidence in Neil Quigley as Board chair (which since she could have fired him at will and hasn’t we pretty well knew that by revealed preference).

But why? Some speculate that perhaps it has to do with the medical school – might not be a good look, might undermine confidence, to toss Quigley out the very week the government had granted him his controversial new medical school.

But it might also be that in some sense in fact she is deeply grateful to Neil Quigley, for having done the dirty work, possibly at her own bidding, and got rid of Orr. Perhaps somehow that compensates for the Clouseau-like performance over months since – only worse than Clouseau because it is quite clear that Quigley wasn’t just bad at this stuff, but that he had, and has, consciously and repeatedly set out to mislead New Zealanders.

In one of those quotes a little way back up the page the Minister rightly stressed the importance of the reputation of a central bank. The Bank knows it too. This is from their recent Statement of Performance Expectations

But the problem is that we (and they) are starting from things as they are, and it is hard to see anyone with even a modicum of interest could have any trust at all in our powerful independent central bank and those who run it. There have been repeated policy failures, bloated budgets (and spending last year left to run wild while the Minister did nothing to rein in the Governor or Board chair), lies to Parliament, lies to the Treasury (see final bit of this post on Quigley and the first MPC), pretty weak (or worse) policy communications, top tiers of management currently held by people simply not fit for the job, a Governor with serious behavioural issues left unchecked for years, and now all this……the active misleading, the cover-up, and (from the chair) the sheer disdain for any sense of public accountability or interest. Oh, and a Minister who did nothing about any of this for her first year or so in office – about conduct, about fiscal excesses, about replacing the chair, about filling board vacancies, about simply insisting on something a lot closer to both excellence and openness.

And that is among the reason why Quigley really should resign or be sacked now. There will be a new Governor later in the year. That person will need to sweep clean. But how can we have any initial confidence in a new Governor – whether some stray Canadian hand-me-down not likely ever to make Governor at home, as speculated in the press the other day, or whoever – when that person has been selected by a process led by the same chap who delivered us Orr in the first place, who championed his reappointment despite all failings being evident by then, who presided over that budget-blowing (well Funding Agreement blowing) last year, and who can’t or won’t even give a straight story – somewhat diplomatic as it might have to be – about the early departure of the last Governor.

Anyway, some questions to ask. Perhaps the story here is also nothing like the truth. But it is beyond time for the truth to be told and a clean breast to be made of things. And if what happened is something like what is suggested here, it should mean some very serious questions indeed for the Minister of Finance as regards her part in misleading New Zealanders. Not exactly a sound basis for trust.

(UPDATE: To be clear, if the Minister did engineer Orr’s departure along these sorts of lines, then well done her – found an opportunity and seized it – and there should be no harrumphing about affronts to central bank independence. But the subsequent spin, misdirection etc would still raise very real questions.)

Bad behaviour: an update

Michael Reddell Adrian Orr, Quigley, Reserve Bank Board

Since I published the post on Tuesday, reporting what an anonymous (currently or recently former) insider had told me about events around the Adrian Orr resignation, what new we’ve heard or learned seems (to say the least) not inconsistent with the substance of that person’s story.

As it happened, the one concrete revelation may almost have come about by accident. In my post on Tuesday I’d written that Board chair Neil Quigley had contacted Treasury quite agitated about a Treasury record of a meeting between senior Bank and Treasury people on 21 February. It was only yesterday I reread my source and realised I’d made a mistake, and that bit of the story related to the meeting between the Bank, Treasury, and Minister of Finance on 24 February. But by then the Herald had asked Treasury about the earlier meeting (which was actually on the 20th). Treasury could, fairly easily, have stonewalled, but in fact they confirmed that Neil Quigley had emailed one of their staff after the meeting in respect of the Governor’s behaviour at that meeting. Today they have released that email exchange.

We don’t know how bad it got but…..things have to have been pretty bad for the Board chair to have taken that initiative (and notice the Treasury official’s “emotions can run high” – about funding debates, among normal disciplined people???), presumably having failed to persuade his chief executive, the Governor, that he himself needed to apologise. So, if we don’t yet know a lot with certainty about the 24 February meeting, and the record thereof, we now definitely know that Orr’s conduct was a significant issue just days before the exit agreement negotiations started, following the Board meeting on the 27th.

We don’t know with certainty that Quigley emailed Orr on the 27th attaching a statement of behavioural/conduct issues going back several years, and asking for a response, but…..the Reserve Bank refuses to deny the existence of such a document (there are multiple OIAs from people trying to smoke it out). Even allowing for their dogmatic “we’ve said all we are saying or legally can say” line, if the story was simply untrue, and had no basis in fact, surely it would be in both Orr’s and Quigley’s interests to have it denied in no uncertain terms (free opportunity to tar me as well I guess). The obstructiveness is, almost certainly, pure choice. And despite their claims otherwise, there has been no evidence of good faith dealing with legitimate public interest at almost any time since 5 March, when Quigley began his unsuccessful attempt to mislead us into believing that it was just “a personal decision’ [as in one sense it was: Orr is a person, he did decide] of someone who was tired or thought a big job had now been done and it was just time for a change.

The Reserve Bank and its Board appear to be attempting to hide behind claims that there are legal restrictions on what they can say, including in response to OIAs (and remember that any request for information can in technical terms be considered an Official Information Act request whether it is answered on the spot or months later). This was a line they have also fed to the Minister who said the other day:

First, consider the Official Information Act itself.

There are conclusive reasons for withholding information. But they relate to national security, diplomacy, and one the Bank has occasionally used on me (very dubiously even then), things that if released could

What was going on around the unexpected sudden departure of the Governor just does not count.

So then we are down to section 9 which has a whole long list of other reasons why information can be withheld, all prefaced with the public interest override. It seems probable that 9(2)(a) is what they will be relying on

although whether it is Orr or Quigley, or perhaps both, they are trying to protect is perhaps open to question. For Quigley, of course, there would no case at all – embarrassment of someone who appears to have actively, deliberately, and repeatedly sought to mislead the public from his highly paid perch as chair of a government board is exceptionally unlikely to count as decent grounds.

Employees are a different matter. If some junior employee was quietly exited you’d expect 9(2)(a) to apply, in all but the most extreme circumstances (if I recall correctly I was once – possibly still – a party to such an arrangement – as manager that is, not employee). But on this occasion we are talking about the utterly unexpected no notice departure of one of the most senior, powerful, and controversial public officials. And it is also clear that the Bank – and its board chair – have already sought to obstruct understanding, transparency and accountability on repeated occasions. Not just by trying to convince us it was just “a personal decision” (tired, job done etc) but by obstructing (for months) and still OIA requests that included requests for material that cannot be any stretch of the imagination come wholly under 9(2)(a) at all (eg there are four board meetings in March – one the day the resignation was announced – where they have not even acknowledged the request for the minutes, let alone provided those minutes, even heavily redacted). They are trying to stonewall and obstruct understanding, and they should not be allowed to do so. 9(1) would give them ample grounds to release almost anything that has been requested, if they were at all interested in the public interest (in scrutiny, accountability, transparency….and little things they say they value like trust in an independent central bank). I say “almost everything”. If there really is the “Statement of Concerns” document, with its list of (alleged) behavioural/conduct issues, I don’t feel a need to see it; the fact of its existence and being sent to the Governor with a request for a response would then provide ample certainty, that what actually happened was a negotiated exit in the context of severe relationship breakdown and loss of mutual confidence, brought to a head by actual and recent serious conduct incidents.

The remaining uncertainty is around the exit agreement negotiated with Orr. As I noted weeks ago, if someone resigns because they are tired etc, you don’t need expensive lawyers to negotiate exit agreements. Tired and job done are perfectly legitimate comprehensible reasons, with nothing to hide. You might agree to waive notice, but it doesn’t take a lawyer for that.

But in this case the expensive lawyers (“senior counsel”) were brought in by both sides.

This is what the Bank told us about the agreement on 11 June

I’ve now lodged a request for a copy of the items: “a process for agreeing a public statement”, and terms around “confidentiality, non-disparagement”. These seems likely to be very process oriented (very unlikely to describe whatever bad stuff Orr is claimed to have done) so there shouldn’t be any grounds to withhold, and there is a clear public interest in such a release, given that no one has given clear answers about the parameters of what the Bank promised not to say or why (or, I guess, what Orr promised not to say). I’m not optimistic, but we’ll see.

As far as I can see (but I’m not an OIA lawyer) you can’t just contract out of the OIA by signing an NDA (with quite as broad a reach as suits two people trying to avoid transparency, scrutiny or accountability). Ombudsman guidance notes suggest as much, but who knows. It looks as though whatever the NDA provisions in the exit agreement are, they could still be overridden by the “public interest” test in section 9 (the more so perhaps now, with so much effort to mislead already, than on 5 March). Perhaps the Bank has committed not to do so unless the Ombudsman explicitly rules otherwise – which could be years away, although I’m sure that I like all who’ve appealed related issues to the Ombudsman hope he is going to give this issue some urgency. We don’t know, and it isn’t good enough to simply wave your hands and say “we’ve done all we legally can”, often without even telling us the nature of what they’ve got and have withheld, or to explain what the parameters are of what they contracted to.

If this really is what it increasingly looks like, a negotiated but pressured exit, precipitated by real behavioural/conduct issues, perhaps some limited sort of non-disclosure provisions might have been a price worth paying. But even if so the public interest – transparency, accountability and all that – had to be paramount, and any restrictions had to be very tightly limited. And non-disclosure agreements don’t give license to simply make stuff up, and actively mislead the public. If Quigley is – as he probably is – so tone-deaf and indifferent to wider public interest considerations not to see that (and to recognise that interested parties were not likely to give up easily on seeking answers), the Minister (and Treasury) should have insisted on it. And despite the Minister’s attempt to disclaim all responsibility, recall that Orr’s resignation was to her, she is the only one who could have fired him, the board chair serves at her pleasure, the board operates accountable to her, the board operates within broad parameters in her letter of expectation. If she knew nothing about it, that is on her. She, it seems, had days to ensure that the public interest was being protected, and that real accountability would be protected.

As for the Minister of Finance, what is new from her is that she says that the first she knew of that Quigley email to Treasury was yesterday. Quite possibly so in the specifics, but Treasury is formally charged by her (and funded) to act as monitor on the Reserve Bank. If they had not been keeping her abreast of conduct concerns which weren’t exactly new – and many of them in the public domain anyway – they simply weren’t doing their job.

There isn’t much else to say about the Minister beyond the scepticism I noted in yesterday’s post. Does anyone believe she didn’t know what was going on? But in reflecting on the mystery of her dogmatic insistence that it is all nothing to do her, two old lines did come to mind:

  • methinks she doth protest too much, and
  • who will rid me of this turbulent priest [or Governor]?

If somehow she did use an opportunity that Orr created by his behaviour in mid-late February to prompt Quigley and the Board to somehow engineer an exit (that list of behavioural/conduct issues Quigley seems to have had must have been tended and grown over several years) then….well done Minister. If not, well….the mysteries are still there.

As to Quigley, whether or not the Taxpayers’ Union is generally to your taste, it is hard to disagree with this concluding paragraph of their call this afternoon for Quigley to go.

UPDATE: The one other thing I meant to include here was a suggestion that some journalist might ask the Bank (or other plausible entities where people might have become aware of the relevant bits of information – eg Treasury, or MoF’s office) if they’ve launched a leak inquiry. If it is all make-believe stuff and nothing of substance was true in what my source said then…..there wasn’t a leak. If some or much or all of it was substantively true then, given the Bank’s determination to say nothing more, there was a leak from somewhere. I have no idea where the source works or worked, but there is probably a quite limited range of options, and the Bank must be one of them.

Willis and Quigley questioned

Michael Reddell Adrian Orr, Quigley, Reserve Bank Board

Following on from my post yesterday, two of the key players in the story (one of whom is keen to minimise her role) faced questions.

The first was the Minister of Finance who was questioned by a number of journalists before going into Parliament’s debating chamber early yesterday afternoon. The Herald posted the audio, and I’ve made a transcription here.

Comments by Nicola Willis on Adrian Orr departure Transcript of 22 July comments

Ever since the announcement of Orr’s resignation on 5 March, when he departed with no notice on the very eve of a major international conference he’d been quite ebullient about planning to host, the Minister of Finance has attempted to distance herself from it all.

At times she has asked us to believe that she didn’t actually know any more than we did about why Orr resigned (“I have always been able to speculate” was one of her early lines), which can really only be true if she let it be known to The Treasury and the board chair that she did not want to know, and if Orr himself gave no reasons in the letter of resignation which he had (by law) to have addressed to her (I have asked for a copy of that letter and of any reply). What responsible Minister of Finance, advised by the Secretary to the Treasury (in turn advised by the board chair, Quigley) that Orr had indicated he would resign would not ask (a) why, and b) seek out details of when and on what terms? A resignation with three months notice might be a very different matter (including in terms of temporary replacements etc) than leaving with no notice at all. Someone tired and wanting to retire to his farm very different from someone going following a scandal about to be revealed or an irrevocable breakdown of trust. No one can seriously believe that she didn’t know (even if what paper trail we actually have is thin at best).

The thrust of Willis’s comments yesterday was, again, that it was nothing to do with her and all a matter for the Bank’s Board. That is playing fast and loose with the law.

As a reminder, the Board does not appoint the Governor. The Minister (via Cabinet and the Governor-General) does, albeit she can only appoint someone the Board recommends. The Minister is the only person who can fire the Governor. The Board members are all appointed by the Minister and are, by law, accountable to her for the performance of their duties. Board members can only be dismissed for just cause, but the board chair is not only appointed by the Minister but can be removed by her at will (no substantive cause required although she has to consult the person before dismissing them). Resignations of a Governor are made, again by law, to the Minister of Finance. The Board does not even get to set the Governor’s pay (that is a matter for the Remuneration Authority) although it does get to set the other terms and conditions of employment (presumably including standard resignation and notice provisions in the Governor’s contract).

I noted that only the Minister could fire the Governor (and only for, statutorily identified, ‘just cause’, which doesn’t include policy disputes). The Board has a responsibility to monitor the Governor’s performance and is obliged by law to report to the Minister if they think there is just cause for the removal of the Governor (a couple of grounds – re obstructing the Board – can only be used by the Minister if there is a positive recommendation to act from the Board). They simply do not hire or fire the Governor, notwithstanding the Minister’s attempts to influence the general sense otherwise. The Governor is the Minister’s responsibility. Which is as it should be given (a) how much power Governors wield, and b) that only the Minister is accountable to Parliament and the public.

Instead we get stuff like this (which probably captures the flavour of the rest)

Or

The Board chair serves at your pleasure Minister. If the Board is not being adequately transparent with, and accountable to, New Zealanders, and you do nothing about the chair, that responsibility is on you.

And note that rather than answer the very final question about the non-disclosure agreement apparently signed with Orr – the terms of which we also don’t know – Willis simply walked away.

In an earlier post, I identified a substantial list of questions for Willis. None of them has yet been answered. All remain germane to understanding what happened, and the context for what happened.

I’m almost inclined to wonder if there is not yet one more final layer behind the story in yesterday’s post. Why is the Minister so determined to try to convince us it is all nothing to do with her, when a powerful senior official appointed by the Minister of Finance, dismissable only by her, suddenly ups and leaves with no notice (but several weeks of pay nonetheless)?

The second interview yesterday was one Heather du Plessis-Allan did with board chair Neil Quigley. You might wonder how she got him on her show, given his usual reluctance to engage with journalists on Bank matters, but apparently he wanted to be heard in defence of his medical school, and that provided the opening for questions on Reserve Bank stuff. The audio is here (starting about 4 minutes in) and my transcription is here

Transcript of Heather du Plessis interview with Neil Quigley 22 July 2025

I hadn’t previously noticed that the 2021 Reserve Bank Act now requires the Board to operate “in a manner consistent with the spirit of service to the public” (that Peter Hughes phrase that is supposed to guide all the doings of the public sector as a whole). I’d be surprised if anyone thinks that the Board’s approach since lunchtime on 5 March has shown any resemblance to being “consistent with the spirit of service to the public at all” (and probably not in the days prior when they appear to have, with the Minister’s acquiescence or not, signed up to a gag agreement with Orr to protect them, Orr, perhaps the Minister (or all three) but definitely not the public). Quigley last night was in his usual poor form, obstructive, misleading, and still defending the claim that it was just a “personal decision”.

Since it was such a good quote from Luke Malpass, it is a shame not to use it again

In this particular interview, Quigley spends some time trying to convince the interviewer that there is a material difference between saying that a departure was a “personal decision” (his actual words on 5 March) and saying that it was “for personal reasons”. It is angels-on-the-head-of-a-pin in this context.

In the interview, faced with repeated questions about claims reported in yesterday’s post, Quigley refused to say anything. He refused to say whether Orr had sworn in a meeting with Treasury on 21 February. He refused to say whether Orr had sworn at a meeting with Minister and Treasury on 24 February (he was at both meetings). He refused to say whether he’d sent an email to Orr three days later with the catalogue of conduct/behavioural issues. He attempts to justify his silence on some pretend right that Orr has to privacy, but of course by refusing to comment he confirms the essential truth of the claims. Had they been materially false, sure it was his obligation – having been directly involved or witness to all three, and as chair of the Board – to have refuted the claims in the strongest terms (quite possibly having a go at me as well, as gullible or worse) precisely to protect the former Governor. If none of this happened, surely Orr too would want us to know, lest we think worse of him than he really deserves.

Quigley’s other line was that all this was covered by “an Official Information Act request” (there were actually multiple requests)

This is simply nonsense. The Bank’s 11 June pro-active release covers nothing at all about the meetings on 21 or 24 February, nothing at all about the Board’s deliberations or communications with Orr, nothing about the substance of gag orders (or why they ever made), and nothing (of course) about the (claimed) 27 February email. In addition, the Bank has chosen simply to ignore (not to decline with specific reasons) whole categories of inquiry that made up those Official Information Act requests. What is truer is another a line he used which is basically that we said all we are going to say on 11 June, and tough luck on anything else. Which doesn’t seem like either the “spirit of service” or any sort of spirit of compliance with the Official Information Act itself. We shall one day – perhaps next year, perhaps the following one – what the Ombudsman makes of the defiance of the law.

The final aspect of Quigley’s specific comments I wanted to touch on was the convoluted round-in-circles discussion on the role of differences over the Funding Agreement played. For example

But that is actually quite telling. It goes to the point I have been making since 11 June, that this was not a departure simply over differences around the future Funding Agreement (bureaucrats face those sort of disappointments all the time, especially in the last couple of years). And, actually, the Bank has said as much. Remember this from their statement of 11 June

Even if this was true – and it seems increasingly unlikely that it was anything like the essence of the truth – it is such a severe difference of opinion, expressed presumably in ways from which there was no going back (unlike usual robust discussion among peers etc), that it was pretty clear the Governor had to go, that things just wouldn’t work in future if he stayed. That is the clear import of the Bank’s own statement, and the bit they released in error on the morning of 11 June, had tied that breakdown more closely not just to the board but to that meeting with the Minister. Of course, in some sense it was a “personal decision” (as Quigley claimed all along) but it had nothing to do with being tired, sick, or a sense of a job now completed. There is, as my source yesterday implied, a strong element of being pushed (and Quigly himself consistently refuses to shed direct light on that, despite his role supposedly being to serve the public, accountable to the Minister). It wasn’t (as Neil says) the funding discussion per se that “required” Adrian to resign – smart people will have robust arguments about resourcing and then, once settled, move on – but about things much deeper about Orr’s own conduct, quite possibly building on the list of behavioural complaints that Quigley seems to have compiled over several years.

Some straightforward answers would be nice – from the Minister, from the Board chair, perhaps even some board member who might consider breaking ranks (perhaps at the cost of their position) because they think the public deserves to know. The questions are about both substance and about process. Had we had an honest accounting months ago (at absolute latest when the Funding Agreement was signed), the issue would all be water under the bridge by now. Instead….most questions are still unanswered, and Quigley presumably hopes the Ombudsman takes his usual dilatory approach (on usual form, Quigley would be gone next July before we hear anything from the Ombudsman’s office).

Bad behaviour: Orr, Quigley, and the rest

Michael Reddell Adrian Orr, Quigley, Reserve Bank Board, Treasury

On 11 June the Reserve Bank finally (more than three months after his departure) did a pro-active release of carefully selected documents relating to the departure of Adrian Orr. Those documents purported to respond to various OIA requests, although many elements of events around the departure, and many elements of the OIA requests, were simply ignored. It appeared to be a belated attempt to shape the narrative, never mind the law.

I’ve done a number of posts on these issues since 11 June, drawing partly on what the Bank released in that package, and on various interviews, and some other OIA releases, all to try to make more sense of what really went on in the months, days, and weeks leading up to the resignation and sudden departure of the central bank Governor.

The Orr story (well, part of it anyway)
Why is Neil Quigley still RB board chair?
Quigley, Orr, and the RB board: edition number 965
Willis and Quigley
What were the Minister and Treasury doing?
41 questions

and last week this

A few more bits from recent RB releases

That last post, from last Thursday, prompted someone who seems to have been very close to events back in February/March to contact me out of the blue with a number of quite detailed comments about some of what really seems to have happened. I do not know who the person is.

I also cannot directly verify what follows. I have however this morning lodged a series of Official Information Act requests with the Minister of Finance, the Reserve Bank, and The Treasury in an attempt to check key elements of the account. My overall sense is that the account is likely to be trustworthy. It is written in a calm style, in places details fit with other stuff that is already in the public domain, and the author is not black and white (at one point Quigley is defended, on another where part of the account appears to be secondhand, the lack of certainty is explicitly acknowledged). My interactions since suggest someone who, while a little fearful for their own position, is frustrated at the lack of transparency (including abuse of the OIA) and believes more of the story needs to be told. Could I be being played? I suppose so, but on balance I don’t think that is what is happening.

When I was contacted, the person commented positively on what I have written about these events and suggested that they wanted to fill in some gaps. I will step through the various elements of the account I have been given, and will explain how what I was told fits with other stuff we know, or seems to fill gaps. As I noted to the person, their account “isn’t overly surprising unfortunately”.

The person who sent me this account out of the blue asked just that I keep their details confidential (I have barely any). I was still a little unsure what they envisaged or hoped for, so I went back and explicitly asked what, if any, of what they had sent me they would be happy with me using here. I noted that an alternative would simply be that I used what had been provided to shape some more OIAs without referring directly to anything in this correspondence. I also suggested that I might not be the ideal vehicle if they did want the material publicised and explicitly noted that, for example, the Herald had given these issues serious coverage and might be a better vehicle (including – a point I didn’t make explicitly – because they could ring up people in power and ask follow-up questions directly).

I was uneasy about the idea of using direct quotes since, in principle, writing style could be used if someone (a past or present employer) wanted to try to track down the individual. Independent of that unease, my correspondent got back in touch and explicitly indicated that they were okay with me using their information here, subject to using paraphrases rather than direct quotes. They reiterated both an unease about their personal risk and a view that the story should be told. They have made several mentions of the public interest considerations that are supposed to be of importance in dealing with OIAs.

And so here goes:

In last week’s post, I referred to a mention in a recent OIA response from the Reserve Bank that an hour or so after Orr’s resignation had been announced the Minister of Finance’s office had asked Neil Quigley to do a press conference. According to the Bank’s account, “the Minister thought it was important for the chair to front the media and possibly to calm the markets”. I’d noted in another post that no one had made Quigley do this press conference (which proved to be a bit of train wreck).

My correspondent starts by noting that in their view on this point I had been a bit unfair to Quigley. It is claimed that Quigley did not want to talk to the media (something I can quite believe, based both on his past behaviour and his responses to questions on and after 11 June) and had made that clear to management. My correspondent states that it actually took multiple communications, texts and calls with/from both the Minister herself and people in her office, before Quigley finally agreed to do so. There was no hint of any of this in the 11 June Reserve Bank release and my correspondent indicates that it was material that was within-scope for at least some OIA requests on events around the Orr resignation (including, I believe, mine). I still maintain that it was Quigley’s choice to do the press conference, but clearly he was put under considerable pressure.

In and of itself, it is not a revelation of great moment. However, the Minister of Finance has consistently attempted to distance herself from events around the Orr resignation, having claimed variously that she had no knowledge of why Orr resigned (“I have always been able to speculate”) and had no contact with the Board or Board chair on such matters (even though the Governor’s resignation had to be made to her not to the Board and – more a matter of substance than law – this was the very powerful chief executive of one of her main agencies). Perhaps it also points to the chaos of the day: recall that an earlier Herald OIA had revealed that Orr’s resignation had been brought forward on the morning of Wednesday 5 March to that day rather than, as planned until then, the following Monday. One might have supposed that the Bank, the Board chair, and the Minister and her office would have sorted out who would say what when before the resignation statement went out.

The second leg of the story goes to the heart of the resignation itself.

Recall that the Bank has tried to spin us a story that it was all about disputes over the Funding Agreement. This extract is from the (final version of the) statement the Bank published on 11 June.

An earlier (but near-final) draft – which they sent in error that morning to OIA requesters – had tied it more to a meeting between Orr, Quigley, Treasury officials and Willis on 24 February.

I noted then that it clearly wasn’t correct to characterise this as just a dispute over funding (as much media coverage did), since many public service CEOs have had disappointed expectations in the last 18 months and none of them had resigned with no notice. In one of my post 11 June posts I even observed (but briefly and without follow up) that it really wasn’t clear to what extent Orr had chosen to go and to what extent he’d been pushed.

My correspondent suggests there was a very considerable element of push to it, and that funding disputes were really no more than the immediate presenting context.

You may recall that an earlier Herald OIA (reported here) reported some Q&As that the Minister’s staff had prepared for her around the resignation included the telling one “Did the governor ever raise his voice with you?”, which it was suggested she should avoid answering, clearly suggesting that exactly such a “voice raising” had in fact occurred. As David Farrar put it at the time

My correspondent says “raising his voice” was the least of it, reporting that at a meeting with Treasury on 21 February the Governor had completely lost his cool, behaving in a way that was “completely inappropriate and swearing” and that it had been much the same in the 24 February meeting with the Minister.

The timing of these events is pretty clear. The fact of the 24 February meeting has long been known. Of the meeting on the 21st we hadn’t previously heard directly, but it is likely to be the one proposed in this email from Quigley that was in the 11 June release pack

but ended up happening on the 21st rather than the afternoon of the 20th as Neil had proposed. The Bank clearly envisaged by this point that it was going to be smooth sailing on the Funding Agreement from here and that everything could be tied up within a few days. Clearly, that wasn’t what happened…..and as context for Orr completely losing it (if in fact he did) it sounds quite plausible and aligned to the facts.

Now, in this debauched age swearing isn’t uncommon and newspapers have taken to reporting crass and vulgar language directly. If you are less bothered by such behaviour than I am, it was still pretty extraordinary for an official – no matter how senior – to completely lose it in crucial meetings, most particularly with/to the Minister herself. You could see why future working relationships might be impaired – not by differences over approved spending (just the meat and drink of bureaucratic life) but over Orr’s quite extraordinary conduct. Or rather, just the latest episode.

Because my correspondent goes on. The claim made to me, quite specifically, is that on 27 February Neil Quigley, as Board chair, sent an email to Orr which had an attached “Statement of Concerns” outlining quite a range of concrete and specific issues with the Governor’s behaviour covering several years (and not about funding). Quigley is reported to have asked Orr to respond. It was this, my correspondent says, that triggered Orr’s resignation.

The story fits with other things we know. The Bank’s Board met, for seven hours on 27 February. As I noted last week there is nothing in the minutes about the Funding Agreement, nor of course about Orr. It seems that such issues were all discussed in a (probably protracted) “Board-only time”, perhaps in part (also not disclosed in the minutes) without the Governor. We know that 27 February is also when Quigley advised Rennie who advised Willis that something was in the works re Orr’s future. And (although I can’t track it down this minute) if I recall correctly the exit agreement negotiations occurred over the couple of days after 27 February, and were concluded on Monday 3 March.

The story, if true, also goes some way to the mystery of the exit agreement which – we’ve been told – included gag provisions of some sort. When it appeared that the exit had been driven solely from Orr’s side it was very puzzling why the Board agreed to any such restrictions (setting aside the fact that resignation was a matter for which the Minister was responsible for dealing with).

But for the Board – and we must presume that Quigley wouldn’t have been acting without their support – to have presented Orr with a memo documenting behavioural concerns over several years, and explicitly seeking a response, they must have got to the point where, even if they wouldn’t put it in quite so many words, they had lost confidence in the Governor. When things get to that point, exit is a pretty common option (at lower levels, when public servants are told they are going to be put on performance improvement plans it isn’t unheard of them for them to up and resign, saving everyone the pain, and the employee the CV issues, of a dismissal process). But Orr still held a few cards: he was only two years into a second five year term, the Board couldn’t fire him, and (even with serious behavioural concerns) it would not have been easy for the Minister to have fired him (intense scrutiny, political controversy and all). So perhaps he told Quigley “I’ll go, so long as no one tells the truth about what went on”. By then perhaps it seemed cheap at the price to Quigley (bearing in mind, even more mundanely, that Orr’s record was an an empire builder not as a cutter and chopper, adjusting to budgetary restraint and – as the Bank’s 11 June statement notes by then the Board had accepted that much lower budgets were coming).

Who knows what items were on that behavioural concerns list, if such there was. Even on the things in the public domain there were so many to choose from over Orr’s time as Governor, let alone all the stories that seep out from those who were there. Why, on the very morning before he’s reported to have completely lost his cool at Treasury, he’d been lying to FEC (again). None of this, sadly, seems very surprising. If there is a surprise it is that the Board had finally – finally – chosen to take a stand. With one exception (new Board member) these board members had all been responsible for recommending Orr’s reappointment in late 2022, when almost all the concerns – well, perhaps not swearing etc at ministers – were already documented. At the time, Quigley signed the recommendation with this

At the time I observed

They must have known then – Quigley more than most (much of the Board was new, but Quigley had been there throughout, chairing the board that first nominated him in 2017) – just how detached from reality that endorsement was. Of course, Robertson will have known too (I’m looking forward to how his book, due out next month, treats Orr).

But, we must be fair, and give the Board some credit for finally acting, possibly under pressure.

What then becomes utterly inexplicable is the decision to lie about what went on.

It isn’t just the press release on 5 March which was spin from start to finish, lauding Orr’s contribution, including in “modernising its culture” (losing your cool and swearing?), or Quigley’s statement – released by the Bank – a bit later that afternoon

We were clearly supposed then to believe that a long-serving Governor was, perhaps, tired, and having done his one big job he decided – Cincinnatus-like – to take a step back and return to private life. It seemed unlikely then. It is pretty clearly outrightly false now.

(As previously documented from the 11 June release, the Bank (Hawkesby) ran the same utterly misleading line to staff.)

And if those statements weren’t bad enough, there was the press conference. Even accepting that Quigley was pushed into doing it by the Minister, surely, surely, he must have rehearsed his lines and tested how he was going to answer the inevitable questions he would face?

At the press conference, Quigley started off with “he felt it was just the right time to go” sort of stuff, highlighting all he’d done. Then when he was asked if the Board still had confidence in Adrian he responded – avoiding the specific question

“My relationship with Adrian has been very good, and I have confidence in Adrian. Yes, he and I have been through a lot in my time as board chair of his time as governor, and with the pandemic and everything else, we have very good memories of the challenges that we have confronted.”

I recall noting earlier that interesting juxtaposition (he claimed he still had confidence, avoided answering about the Board), but how can we possibly now believe Quigley was being honest even reporting his own views. You don’t send a written statement of multi-year behavioural concerns by email and ask, by email, for a response when you have confidence in your CEO (a quiet CEO/Chair chat might be a different kettle of fish).

There were then actively misleading answers about the Funding Agreement before we got this

Q: What has been the precipitating factor to what you call this personal decision?

A: I think you have to remember that the job of the Reserve Bank Governor is one where you face unrelenting critique of your actions. You know, no matter what you do, there are near alternatives that other people say that they would have taken. And so there is a time when you think having achieved what you wanted to achieve, that’s That’s enough.

I suppose just possibly he had in mind some “unrelenting critique” that included the Board, but it was clearly a deliberate exercise in deception, all the more so if today’s account is accurate.

It goes on and on (bringing to mind Peter Mahon’s famous line on Air New Zealand) including

Q: Can you just be clear that no, policy, conduct and performance issues are at the center of this resignation?

A: We have issues that we’ve been working through, but there are no issues of that type that are behind this.

You’ll recall that when challenged on some of this after the 11 June release, Quigley first attempted to fob off questions suggesting he wasn’t going to be grilled by a journalist acting like a courtroom lawyer, only to fall back on the excuse of the supposed gag orders (the details of which have never been released). But gag orders do not oblige (or excuse) chairs of powerful government organisations to go out and actively misrepresent what actually was going on. Don’t hold a press conference if you can’t or won’t give straight answers.

So far, we have heard quite a bit about Orr’s conduct. Quigley’s has long been pretty egregious as well, centred on his repeated and deliberate attempts to mislead as regards appointments to the first MPC (summarised again here). My correspondent added some more, on top of the already documented public cover-up and avoidance of scrutiny efforts around the resignation. According to the correspondent, any records of that meeting with Treasury on 21 February were within-scope of at least one of the OIA requests (not mine). It turns out that Treasury staff at the meeting had written up a record of the meeting (which would seem to be a normal thing to do), but that when Quigley learned of this record he went apopolectic (my word, but captures the flavour of my correspondent’s words) – not just internally, but rang Treasury to complain vigorously. It is reported that in meeting some or other OIA request the Bank so heavily redacted that document that an RB comms manager could boast that they’d rendered it useless. [UPDATE 23/7: Rereading my source, this claim is actually about the Treasury record of the meeting of 24 February with the Minister and Treasury.]

On its own, again perhaps not so surprising. Senior public officials often don’t like stuff being written down – discovery risks and all that awkward stuff, scrutiny – but…..the Official Information Act is the law, and there are overriding considerations of public interest. The Bank’s approach (most likely either acquiesced in by the Board chair or driven by him) has been to release absolutely as little as possible, as inconsequential as possible (so note that the 11 June release had quite a few bits and pieces, but most shed no light at all, and almost none of those that might shed light were released at all. OIAs were – and are being – simply ignored.

The final point in my correspondent’s statement related to an issue I wasn’t aware of at all, and isn’t directly related to the Orr departure. The correspondent claims that the Bank is about to move its Auckland office into one of the plusher buildings down near the waterfront (PWC Tower, which seems to boast all sorts of Orr-pleasing green credentials). I have no way of knowing if this is so, but published board minutes certainly reveal that they were planning to shift and suggest that in March negotiations were still ongoing. The suggestion is that the space being leased is “three times” what would be needed for the staff there, the more so after the Funding Agreement cuts. The report from my correspondent is that management – post Orr – suggested reconsidering (optics, job losses, and all that) but that the Board itself refused, and that by the time the final decision was made the Board knew the lower level the new Funding Agreement would be set at. My correspondent seems very confident about all that, but notes that they are not sure of the reasons, reporting only a general sense among Bank people that the Board had wanted fancy spaces for themselves. Staff will speculate, staff may have that one wrong, but it doesn’t sound like a very good look at all. Again, occurring on Quigley’s watch.

If offence it is, it is certainly one of the lesser ones, but it does point in the direction of the Funding Agreement not actually having been cut to the bone. You’ll recall last week’s post that the Bank’s operating expenses in 2025/26 will be 12 per cent above the level in 2023/24, the last year budgets were set under Labour, and that line about the culture of excess that Quigley had included in his last ditch bid in March to limit the cuts the Minister was going to impose.

This has been a long post. As noted earlier, I have lodged a number of new OIAs, with the aim of trying to verify as much as possible of what is reported here. I expect there will be more obfuscation and outright ignoring of requests, although if so that will be telling in itself.

None of it leaves anyone looking very good (although perhaps it partly redeems the standing, at that late date at least, of the Board members other than Quigley). We have not had straight answers yet from either Quigley or the Minister of Finance (and have heard nothing at all from Orr, which might perhaps be more understandable if he really was close to having been forced out on conduct/behavioural grounds). And OIAs continue to be ignored.

If this were just any junior public servant of course things would be different. There would be no particular public interest in disclosure. But we are talking here about the sudden departure of one of the most powerful and highly paid officials in New Zealand, who had often boasted (mostly not correctly) of how open and transparent he and his institution were. And yet someone who used his office to treat people poorly, in some cases (it seems) abominably, and of course who had such a questionable policy record too – all that (core) inflation, all that economic dislocation, those $11 billion of losses for taxpayers. We deserve some honesty. And it remains almost beyond belief that after all this not only is Neil Quigley still in office, but that he is now leading the search for the nominee for a new Governor. Because his last pick worked out so well?

A month ago, I wrapped up a series of posts on these issues with one posing 41 Questions for the Board, for Quigley, for Willis, for Treasury, and for the temporary Governor Christian Hawkesby. Most remain outstanding.

UPDATE: I hadn’t known there was any accessible footage of Quigley’s 5 March press conference (and some Wilis comments) but here is a link that contains many of his answers. Nothing new beyond what I’ve previously quoted from a written transcript, but fyi.

Rating our Ministers of Finance

Michael Reddell New Zealand economic history

A couple of months ago a journalist got in touch and asked for some thoughts on New Zealand’s best and worst Ministers of Finance. Eric Frkyberg was working on an article for The Listener, following on from one that magazine ran late last year ranking Prime Ministers. The Ministers of Finance article appears in the issue that turned up in my letterbox at lunchtime. He took views from three historians, a tax policy expert, and me and ended up ranking 10 Ministers of Finance from best (Douglas) to worst (Muldoon).

I didn’t actually give Frykberg a simple ranking like that. Instead, I tried to summarise my analysis in this chart

There are other elements one could evaluate these people on (some were more technically able than others, some served in more (or less) propitious times, some will have been nicer people) but I looked at the difference these ministers made, and whether and to what extent I thought those differences had been for good or ill. Nash, for example, was responsible for economic policy for a long time (14 years as Minister of Finance), and the controls-oriented model lasted for decades, but I assess that contribution as deeply net negative (I’m expecting correspondence on this point!). Muldoon was much less consequential because although he was Minister of Finance for much longer than Douglas (say), much of his economic policy (at least the better remembered bits) was swept away pretty quickly, even if they helped trigger what followed.

Anyway, for anyone interested here were the comments I sent Frykberg:

Thoughts on New Zealand Ministers of Finance

May 2025

There have been 29 people who have been Minister of Finance (or Treasurer, or Colonial Treasurer) since 1900, seven of whom were Prime Minister at the same time.

14 of them served for a significant period of time (more than one full parliamentary term)

Of the others, a couple are worth consideration as among the better Ministers of Finance, people who made a discernible difference even though both served for only about three years (Gordon Coates and Ruth Richardson).

Of the earlier list, I’d quickly knock out of consideration Allen, Lake and Birch.  Each seems to have been a fairly safe pairs of hands, without contributing a great deal that was distinctively constructive as Minister of Finance. [A former Treasury official recently passed on anecdote re Lake – who had had health problems for much of his term – that Treasury knew not to expect that he’d read anything longer than a page or two.]

And I’d also knock out both Seddon and Ward (despite their long terms), probably mainly because until the Great Depression macroeconomic management really wasn’t a thing in New Zealand, but also because of Ward’s questionable personal business record/bankruptcy and his ill-starred return in 1928.

That leaves a reduced list of:

Downie Stewart[1] is also worth a mention, mostly because he was the last Minister of Finance to resign on an issue of policy principle (he opposed the exchange rate devaluation in 1933 and resigned).  I think his policy position on that issue was wrong, but I admire a politician willing to pay the price.

How to think about each of these nine?

Coates won the battle to depreciate the NZ pound (such as it was) in early 1933, which helped turn the tide of the Great Depression.  On the other hand, he was also responsible for the deliberate default on the NZ government’s domestic public debt.  He was responsible for the establishment of an independent Reserve Bank in 1934 (and our first coinage in 1933). He was, to some extent, fortunate in his timing –  the worst of the Depression in the UK for example had already passed by the time he took office – and the pressure to cut spending (because of limited access to forex, whether from net exports or borrowing) had eased.  Work on a central bank had already been underway before he took office, but he nonetheless made it happen.  By the time he went out of office New Zealand had substantially recovered from the Depression.

Nash was Minister of Finance for 14 years in succession (albeit for a couple of years he was minister resident in Washington) which warrants consideration.    He deserves most credit perhaps for his fiscal stewardship of WW2 and the substantial reduction in NZ government outstanding external debt through that period.   On the other hand, his Reserve Bank reforms were a clear step backwards (putting the Bank under the thumb of government, and macroeconomic policy generally was run far too loosely in the early years, running into a foreign exchange crisis in late 1938 and what would have been default on sovereign foreign debt in 1939 if the approach of the war had not made the UK willing to intervene to enable maturing debt to be rolled over.  Moreover, the entire turn inwards (import licensing etc) occurred on his watch, and post war the government was far too slow to (a) liberalise, and b) keep inflationary pressures in check.  If there are positive enduring legacies of the 1st Labour govt it isn’t obvious things Nash was primarily responsible for are among them.

Holland isn’t primarily remembered as a Minister of Finance, but served as both PM and Minister of Finance from 1949 to 1954.  He was the first Minister of Finance after the 1st Labour govt, and made a number of useful steps (seeking to unwind import licensing, enabling tenants to buy state houses, removing the ability of the Minister of Finance to direct the Reserve Bank, the revival of monetary policy as a countercyclical tool, seeking to reintroduce competition in domestic aviation, ending rationing, introducing the annual Economic Survey to accompany the Budget).

Muldoon is a polarising figure.  Perhaps his biggest misfortune was to be Minister of Finance spanning almost entirely the period of very decline in New Zealand’s terms of trade (almost entirely outside NZ’s control).   A focus on the 1982-84 price and wage freeze, the undelivered 1984 Budget and the 1984 devaluation would lead to a very low score, and one could add Think Big to that mix especially with the benefit of hindsight[2].   The inflation record increasingly stood out (to our discredit) relative to peer countries abroad.

On the other hand, he left office with net govt debt only about a third of GDP (not much higher than now), had managed the late 60s slump in the terms of trade and painful (IMF- supported adjustment) as well as anyone was likely to have at the time.   And as Minister of Finance he also presided over significant, if fitful, financial sector liberalisation (right almost to the end) and in his combined PM/MOF role enabled CER, plans to reduce the importance of import licensing, road transport and shopping hours liberalisation, corporatising rail, and so on.

It is a very mixed record.   And he ends up not as consequential as either Nash or Douglas because little that he did really lasted long (good and bad both subsumed in the Douglas/Lange “revolution”).

Douglas was Minister of Finance for a little under 4.5 years, but it was an enormously consequential period (including that most of what was done then lives on in one form or another) and the dominant view among economists would probably be that those changes –  in law and ethos –  reestablished macroeconomic stability (fiscal and monetary) and contributed to a sustained improvement in our productivity performance (at least relative to the counterfactual).  He remains enormously controversial –  perhaps an embarrassment to his own (then) party –  and he was part of a team of ministers, but specifics one could point to include the Public Finance Act, the Reserve Bank Act (although legislated under his successor), an overhauled and much more efficient tax system, the corporatisation and privatisation of government trading entities, the removal of interest rate, exchange rate, and exchange control regulations etc.

Richardson was Minister of Finance for only three years, and arguably the thing she is most remembered for (the Fiscal Responsibility Act) was achieved only after she was sacked as Minister of Finance and had left Cabinet.    Notwithstanding the headlines and historical memory around the Dec 1990 fiscal package and the 1991 “Mother of All Budgets”, much of the necessary structural fiscal adjustment had already been done by Douglas/Caygill (government was running a significant primary surplus by the year to March 1991).  In that sense, she consolidated and extended work already under way.   Deserves credit for greatly accelerating the increase in the NZS eligibility age (a process initiated by Caygill).  Arguably the biggest economic policy reforms of that government’s term was the Employment Contracts Act, but it was Bill Birch’s legislation not Richardson’s.

Cullen.    In a blog post on Cullen’s memoir I wrote

“On the front cover of the book, Helen Clark describes Cullen as “one of our greatest finance ministers”. There aren’t that many (relatively long-serving ones) to choose from but I’d hesitate to endorse the accolade. Running down the public debt was an achievement but (a) demographics, (b) a prolonged, but productivity-lite, boom, and (c) the terms of trade ran strongly in his favour, and the dam burst in the final three years of his term. I guess he has monuments to his name – Kiwisaver and the NZSF (“Cullen fund”) – but then so does Bill Birch from his time as Minister of Energy, and the best evidence to date is that Kiwisaver has not changed national savings rates, and it isn’t clear what useful function the big taxpayer-owned hedge fund has accomplished. Meanwhile Cullen – and Clark herself of course – bequeathed to the next government (who in turn bequeathed it to this one), the twin economic failures: house prices and productivity (the latter shorthand for all the opportunities foregone, especially for those nearer the bottom of the income distribution).”

15 years on Kiwisaver and NZSF have endured so Cullen probably deserves marks for consequentiality.   But not much had been changed for the better.    Note that he shouldn’t really be blamed either for the deficits that emerged as he left office –  on his last (2008) Budget Treasury’s best professional forecasts/estimates were that the budget would remain (narrowly) in surplus.  They were wrong, but that wasn’t Cullen’s fault.  He thought he was going to leave a balanced budget.

English was Minister of Finance for eight years.  There is little to show for that time.   The government’s finances took a major hit with the Christchurch earthquakes but it still took a long time for the government to take the steps that would return the budget to balance.   There were few, if any, significant and positive economic reforms initiated and the twin legacies –  house prices and productivity –  I noted for Cullen above were also unaddressed on English’s watch.  He enabled a serious decline in the quality of The Treasury.  If one were looking for things to credit, the 2010 tax switch is probably worth a favourable note but it involved an overall increase in taxes on business (at a time when business income tax rates were generally being lowered globally).

Robertson was Minister of Finance only 18 months ago and so one could argue we are too close to evaluate him fairly.    There isn’t much to his credit (positives might include establishing a Reserve Bank MPC rather than a single decisionmaker –  although his claim to credit is marred by going along with a model that initially banned experts from serving and still in effect bars them from speaking –  the new deposit insurance scheme, and the critical early couple of months of Covid).  On the other hand, he inherited a structural budget surplus and bequeathed a large structural deficit (after the Covid effects had already passed through), made few/no useful structural reforms and displayed little real interest in productivity, he reappointed an RB Governor who had performed really badly (financial losses, inflation, personal style) and had failed to do much to reverse the decline in The Treasury.  So both institutions and macroeconomic outcomes worsened materially on his watch.  A moderately high score for consequentiality relates to (a) Covid, and b) the difficult legacy left.

One last candidate

In this exercise I focused only on the period since Seddon/Ward.    If one were to take the entire sweep of post-1840 New Zealand history one could argue this overlooks a prime contender for best and/or most consequential Minister of Finance

Vogel served four stints as Minister of Finance (Colonial Treasurer) totalling about nine years.  He was, arguably, the first champion in a succession of “big New Zealand” politicians, and was the author of the first “Think Big” economic strategy –  borrowing on a large scale in London to facilitate immigration and railways development[3].    He’d easily be in top 3 for consequentiality, although no doubt views would differ widely on how appropriate or beneficial the economic strategy was.

In summary

Here’s a chart [see above], trying to summarise how I see these ministers on the twin dimensions of consequentiality and net benefit (the latter can be positive or negative).

It is worth bearing in mind that all of them were creatures of their time (Douglas in 1935 and Nash in 1984 would no doubt have done things differently than in their own time; Muldoon might have struggled to feature at all had he just been Minister from say 1960 to 72).

[1] Disclosure of interest here: I’m related to Holland and my wife and kids to Downie Stewart.

[2] Nonetheless, I recall Graeme Wheeler –  who was in the energy section of Treasury at the time –  telling us that contemporary Treasury opinion had been pretty divided on the merits of Think Big.

[3] I wrote about him here A former Prime Minister and Minister of Finance on immigration policy | croaking cassandra

Big scary numbers

Michael Reddell Banking, Reserve Bank

When our kids were little one of the books we often read them was “Bears in the Night” in which the young bears, hearing a noise outside, sneak out of the house at night, climb Spook Hill and then, terrified by the sudden appearance of an owl – not the most threatening of birds – whose call they’d heard, rush back to the comfort and security of home and bed.

It came to mind when reading some of the arguments being advanced by government officials and banks over the Credit Contracts and Consumer Finance Amendment Bill currently making its way through the Finance and Expenditure Select Committee.

The key controversial bit of the bill is the proposal to legislate retrospectively to close down class action suits currently before the courts against ANZ and ASB in respect of flaws in loan variation procedures etc that occurred between 2015 and 2019. The Credit Contracts and Consumer Finance Act had been amended in 2015 in ways that provided (MBIE’s words here) “that the borrower is not liable to pay interest or fees over any period of non-compliant disclosure made before loans are entered into or varied”. In late 2019 the Act was further amended so that for future breaches courts would have “explicit discretion to extinguish or reduce the effect of this provision in order to reach a just and equitable outcome”. That amendment was deliberately and consciously not made retrospective, but the current government now proposes to further amend the Act to apply the post-2019 regime to breaches that arose between 2015 and 2019.

Retrospective legislation is, almost without exception, an odious concept. Perhaps one might make an exception where, say, there was a clear typo in the legislation, giving a quite different meaning to the words of the legislation than Parliament had clearly intended. That wasn’t the case here. Rather, right or wrongly, Parliament changed its mind in 2019 about what the law should be going forward. Now the government – egged on by the banks – wants to make it as if a consciously and deliberately chosen law never was.

(Perhaps one might also make an exception to the general principle against retrospectivity if it was belatedly realised that the words Parliament had enacted enabled the strong to egregiously exploit the weak. I don’t know that that exception is in the typical lawyers’ list, but as a citizen/voter I could see the possibility (perhaps a parallel to exercise in criminal cases of a royal prerogative of mercy).)

What is puzzling is why the government would propose to amend the law retrospectively to help out large and highly profitable foreign banks. And in so doing to bypass what is apparently usually the practice when (as happens on rare occasions) retrospective legislation is passed, when cases already before the courts are (apparently) protected.

I hadn’t paid an awful lot of attention to the whole issue until two or three weeks ago when big scary numbers generated by the Reserve Bank were reported (eg here) and thus entered the public debate under headlines (not, to be clear, sourced to the Reserve Bank) about threats to the financial system unless this retrospective law was passed. $12.9 billion (the maximum estimate reported) sounded like a lot of money (but just glancing at articles I didn’t have a basis for knowing what a right number might actually be), even if stories about threats to the soundness of the financial system never rang true even for a minute.

And I still didn’t pay a lot of attention until the media reporting this week of the appearances before the select committee of the Bankers’ Association (strongly in support of the proposed amendment), the lawyers for the plaintiffs in the class action suits, and representatives of the litigation funders, LPF. The video of those appearances, and associated questions and answers, is currently here.

Yesterday, one of LPF’s representatives rang me, apparently given my name by several people as someone who might write a critical piece for them, especially on the Reserve Bank numbers, and the uses and abuses being made of them. I don’t really do submissions for hire, and am not taking any money from them, but my interest was piqued, and I benefited from a couple of useful conversations with them. More importantly, they sent me the document that contains the material from the Reserve Bank, a paper from MBIE to the then Minister of Commerce and Consumer Affairs (Andrew Bayly) from October last year which includes “Annex Two: Summary of RBNZ modelling and advice”. That annex appears to have been written by the Bank. The full document is here

MBIE Paper on CCCFA retrospectivity amendment 10 October 2024

Here is what there is on the estimates

In other words, we know nothing about the model, the scenarios, assumptions etc although it appears – from the OIA exclusion ground cited – that they must have obtained some data from one or other of the banks to somehow inform their numbers.

Note, though, that even the “big scary number” scenario, isn’t exactly a grave financial stability risk: “low to medium impact on capital ratios” is the Reserve Bank’s own line. Big numbers but if the underlying business models are profitable (as New Zealand banking typically is) then even in a hypothetical like this recapitalisation wouldn’t be expected to be an issue (whether from direct shareholder injections or retained earnings). Aside from anything else, and as they note, litigation will roll on for years. Losing on the scale of this “big scary number scenario” would be painful, but from the outside you could conceptualise it as a bit like a backward-looking windfall tax which, justified or not, wouldn’t normally really affect future behaviour. And when bureaucrats and the like come up with three scenarios, or three policy options, they typically expect people will be drawn to the middle one as perhaps best expressing their view or preference (and to be clear in this Annex the Reserve Bank is not taking a position on the merits of the proposed retrospective amendment).

It really isn’t clear how the Reserve Bank came up with the big scary number. Over the period in question – 2015 to 2019 – total housing and consumer loans averaged about $275 billion. If the average interest rate over this period was about 5 per cent, the average disclosure failing occurred half way through the period, and a third of all retail loans in the economy (by value) were subject to disclosure failings, the total interest involved would have been be about $10 billion, which is (I guess) in the same order of magnitude as the Reserve Bank’s $12.9 billion number (especially if one allows for interest on such an amount through to today).

But we know, for multiple reasons, that this cannot be a number to take seriously.

For a start, if the Bankers’ Association and its members thought it was even roughly accurate as an estimate of the sector’s exposure, they’d have hired a consultant economist to churn out quickly a well-explained and documented version of their own (rather than just waving around the worst Reserve Bank numbers, where any details as to how it was done are – perhaps conveniently for them – blacked out). It wouldn’t take long, and the Bankers’ Association clearly isn’t short of money to deal with this issue: at their FEC appearance they brought along three [UPDATE: two apparently] KCs to help testify and answer questions on legal dimensions. One of those KCs – James Every-Palmer – actually told FEC (at about 24 minutes in) that the sums being sought in the cases against the ANZ and ASB were “as I understand it, hundreds of millions of dollars” (before then handwaving to tie this to a system-wide $12.9 billion dollars). ANZ and ASB together make up the best part of half the banking system, so if the Bankers’ Association understands the claims against them to be “hundreds of millions” then even if that represented $1 billion in total, it is all but impossible to see how the rest of the system could be exposed to $12 billion of claims.

There are several reasons for that statement: no other claims have been lodged, the litigation funders told the committee they had heard of no other claims (and any such claims could really only go forward with litigation funding given the cost of civil justice), and the existing legislation is written in such a way that any further claims, not already lodged, would almost certainly be out of time (more than five years on from when breaches were disclosed). I’ll leave those points to the lawyers to argue about, but there is also some hard data on the numbers of customers involved.

The Commerce Commission reached settlements with the four big banks (and Kiwibank) some years ago, and those settlements (which involve compensation for actual loss, and did not preclude civil action by customers) are all sitting on the Commerce Commission website to consult.

Take the ANZ first. This is what had happened.

102000 customers were affected. That appears to have been around 30 per cent of ANZ’s mortgage customers in 2015, and at 31 December 2015 ANZ had about $63 billion of retail credit outstanding.

Under the existing provisions of the CCCFA, customers were not liable for interest in the period between an erroneous notification and either when it was corrected and they were notified, or when they next made a (validly informed) change to their loan. Someone who changed the fixed term of their mortgage in December 2015 (getting incorrect disclosure) is likely to have changed it again before the end of 2019 – say, on average, December 2017 – and received correct information then.

However, as I understand it, the (potential) ability to claim back all interest also only applies to those loans which had been taken out from 2015 onwards, so it is likely to be only a minority who are covered by the current class action suits, given that the poor disclosures only occurred for one year.

It isn’t impossible – depending on the specific assumptions – to get up to a total towards $1 billion of exposure, BUT we already know that is a) more than Bankers’ Association lawyer suggested the claims were, b) more than implied by the plaintiffs’ settlement offer this week (around $300m, suggesting that was around two-thirds of the total exposure).

The ASB situation is a little murkier. For ANZ, the bank knew exactly who’d been affected (and so past actual reimbursements were for actual errors). At the time of its Commerce Commission settlement, ASB did not know how many or who had got the wrong disclosure, only that in total 73000 customers were potentially affected.

The breach went on for longer so a larger proportion of those customers are likely to be able to potentially claim back the interest and fees paid over those years (the median such customer in principle having a claim for about two years of interest). But we have no idea how many customers actually got the correct disclosure – ASB seems not to have had the systems to know, but presumably if this case proceeds will go to lengths (costly lengths) to ensure that the actual victims of procedure “not consistently followed” are identified and only for them might there be an exposure (in the Commerce Commission settlement all 73000 were paid a fixed and modest lump sum, presumably cheaper then than trying then to go through every customer file).

If 20 per cent of the affected (post 2015) customers got the incorrect disclosures, I could produce an estimate as high as $700-800 million. But again, as with ANZ, these numbers seem higher than material in the public domain from those better placed to know already suggests. And even taken together with a high-end estimate for ANZ, nowhere near half of the $12.9 billion for the Reserve Bank’s high-end scary number scenario.

And those are the two banks against whom a case is actually being taken.

Of the other two big banks, BNZ accepted a warning from the Commerce Commission. The number of customers involved was much smaller (11956 in total) of whom 2300 had been directly compensated by BNZ. Meanwhile, the Westpac settlement involved new credit card customers only (so, on average, far smaller loan balances) and only 19000 of them. Kiwibank – while smaller in total – has a substantial retail customer base and seems to have had a similar issue to ASB. It had 35000 new borrowers with a variation potentially affected. But it is hard, even adding all three up, to get to more than another $1 billion maximum exposure. And, to repeat, no class action civil case has been taken against those banks, or indeed any of the smaller lenders, about whom MBIE purported to be so worried. Even if things were not out of time, smaller lenders who’d breached might in any case have been unlikely to have sufficient customers to attract a potential litigation funder).

Only someone with access to really detailed information at an individual bank level could come up with a reasonably robust system-wide estimate of potential exposure in the now, almost impossible event, that cases were to have been taken against any other institutions. But it still looks as though even the Reserve Bank’s second scenario – which they describe as “low impact” on capital ratios – would err on the high side. Based on what the Bankers’ Association lawyers have said, based on what the plaintiff’s lawyers have said, and taking account of the absence of other claims and the likely out-of-time nature of any further claims, it is difficult to see how a worst case involving actual claims before the courts exceeds $1 billion in total.

You can understand why the ANZ and ASB and their shareholders would prefer not to pay such a sum, and would (a) fight it in court, and b), if they could, lobby for a retrospective law change. But it simply isn’t a financial stability issue. It is worth remembering that 15 years ago a big tax case went against the banks, costing them $2.2 billion in an economy then about half the size (nominal GDP) of today’s (and in the midst of a severe recession). Banks affected emerged just fine. When MBIE advised the Minister last October to act to “immediately alleviate distress in the market”, there was (and is) no sign of distress in the market – as it affected ability or willingness to lend, of large players, players being sued, or other lenders – just some “distress” in the local board rooms of ANZ and ASB.

(And note that MBIE’s own advice a month later – page 31 here – was that the proposed amendment was “not clearly necessary to address concerns about the financial position of either ANZ or ASB” and “we acknowledge that applying this amendment to the active class action has “upside” potential for the banks only”.)

Without someone launching an OIA – which the Bank might well stall for several months – we have no way of knowing what the Reserve Bank makes of the use being made by the Bankers’ Association of the $12.9 billion number, or even whether they would still stand by it as a plausible scenario now, 9 months on. But it is pretty clear that – with material then in the public domain – a number on that scale never made any plausible sense, and that the only cases that are actually before the courts – the only cases now likely ever to be – probably involve total stakes less than 10 per cent of that “big scary number”. The banks affected will know that too, but in expected value terms it is no doubt better them to just repeat over and over the “big scary number” and hope to scare the government into passing this retrospective law than to come straight out and acknowledge the plausible maximum scale of any exposure if they lose in courts (and several rounds of appeals) and if the courts made awards fully consistent with the plaintiffs’ claims.

I took from the select committee appearances the other day that while the plaintiffs and their funders oppose the use of retrospectivity on principle, they would (unsurprisingly perhaps) be content with a carveout that meant that the proposed amendment did not apply to cases already before the courts. You can understand why ANZ and ASB would not like that, but why shouldn’t the government and Parliament, particularly once they realise that the big scary number is just a fairy tale, although being used rather more maliciously than a typical parent readings Bears in the Night to their young ones? And yet lawyers for ANZ have the gall to suggest that the plaintiff’s settlement offer this week is “a cynical attempt to influence the law reform process currently before Parliament”. One might well understand why the plaintiffs might make a settlement offer when ANZ and ASB seem to have the government lined up in their corner, but there is no mistaking that brandishing the poor old Reserve Bank’s big scary number is much more evidently an attempt to keep the select committee in line and make public opinion a little less unsympathetic to a law change designed specifically (and only) to help two big (foreign) banks.

For anyone interested, there is a column by Jenny Ruth ($) on related issues this morning.

Finally, regular readers will know that I am not exactly a “bank basher” and have often here derided the rather desperate anti-Australianism implicit in a lot of the NZ political attacks on banks. I think we have a pretty good banking system generally. I’m not necessarily a big fan of the CCCFA in any of its forms (and thought the actual plaintiff who was wheeled up to the select committee the other day was singularly unpersuasive – unlike his lawyer). But I don’t like people playing fast and loose with “big scary numbers”, when they know (or could reasonably be expected to know) that they, and claims made for them, bear little or no relationship to reality. And I don’t like retrospective legislation one little bit.