I’m pretty tied up for the next couple of weeks so unless there are significant new developments (things like, for example, complying with the OIA) this will be my final post on events around the Orr resignation for the time being.

We know from what the Reserve Bank did choose to release last week that their story is now one in which Orr’s behaviour triggered by the prospect of deeper cuts to the Bank’s next Funding Agreement than he would have liked was what led to the departure. That is the gist of the (no doubt lawyer-vetted language) of the statement/press release last week:

“This caused distress to Mr Orr and the impasse risked damaging necessary working relationships, and led to Mr Orr’s personal decision that he….could not continue in that role with sufficiently less funding than he thought was viable for the organisation”. They wouldn’t have included that “this caused distress” stuff if it had just been a bunch of reasonable senior people (Board, management, Treasury, Minister) having a purely professionally-conducted disagreement and one deciding it was time for him to go.

But, as I’ve noted in a number of posts, having finally got that disclosure, more than three months after the resignation, there are still lots of unanswered questions (some for Quigley, some for the Board as a whole, and some for Willis, the people who continue in office). It would, of course, be great if Orr himself would give a substantive interview to a serious but searching journalist, but he is now just a private citizen.

This post attempts to bring the outstanding questions together in a list.

Questions for the Minister of Finance

1. Did you really never ask (Rennie, Quigley, or indeed Orr) why Orr was planning to resign?
2. Did neither officials nor the Board chair nor Orr (eg in his resignation letter, which had to be submitted to you to be effective) ever tell you why the Governor of the Reserve Bank was resigning?
3. Did you ever make it known, directly or indirectly, that you did not wish to know?
4. Were you aware that an exit agreement (going beyond resignation terms in Orr’s contract) was being negotiated? When?
5. If not, why not? If so, did you ever make representations regarding possible severance payments and/or non-disclosure agreements?
6. What was the atmosphere of the meeting held between you and Orr/Quigley and others (including Treasury officials and Hawkesby) on 24 February? Was the Governor’s conduct wholly and entirely professional?
7. What representations and comments did you make on the Reserve Bank’s proposed 2024/25 Budget as part of their required consultation with you on the draft Statement of Performance Expectations?
8. If those comments did not push back very strongly on planned levels of operating spending that went well beyond (around 23 per cent in excess of) what was permitted under the then-current Funding Agreement, why not?
9. What was Treasury’s stance on that proposed budget?
10. When did you first indicate to Treasury and/or the Bank (management or Board) that their initial bid for the new Funding Agreement (for $981 million in opex over five years) was unacceptable?
11. Why were levels of Reserve Bank operating spending far in excess of (say) what the previous Funding Agreement had allowed for 24/25 included in the HYEFU numbers in December last year (reflecting fiscal policy decisions you had made up to 28 November). (NB: The previous Funding Agreement allowed around $154 million of (in scope) spending in 2024/25, while HYEFU appears to allowed $181 million per annum for each of 25/26, 26/27, and 27/28.]

Questions for Neil Quigley, Board chair

1. Why did you approve a Bank budget for 24/25 involving levels of operating spending far in excess of what was allowed under the then-current Funding Agreement? Had any comments from Treasury or the Minister’s office raised any material concerns before the final Board decision was made?
2. Why was it that as late as your email on Friday afternoon 14 February you seemed to believe that an agreement with Treasury on funding agreement matters could be sealed the following week?
3. What stance had the Board taken on these matters at its meeting earlier that day?
4. When did Treasury or the Minister first make it clear to you (or the Board generally) that the level of funding the Bank was still seeking by early February ($900m over five years, per Orr’s 5 February email) was quite unacceptable?
5. Was there any communication from the Minister (or her office) to you after the 24 February meeting raising concerns about the Governor’s behaviour etc?
6. When did you first learn that the Governor was seriously considering resigning? Was it at or after the 27 February Board meeting?
7. Why was a negotiated exit agreement (covering anything more than, say, waiving notice requirements) considered necessary or appropriate (given that standard resignation provisions were presumably already part of the Governor’s contract)?
8. Why did the terms of that agreement include paid “special leave” to 31 March rather than a resignation effective immediately (ie from 5 March)?
9. Was there any discussion with the Minister, her office, or with Treasury regarding the possible terms of such an exit agreement. Did any of them raise concerns about gagging orders (whether binding on the Bank or on Orr?)
10. What, if anything, are the terms of any gagging restrictions still in place? Given the extensive comments you have made, it seems the Bank may not be subject to material constraints? Is Orr, and if so why, and what consideration was given in exchange for him agreeing to such a term?
11. Why did you say (per statement in the released pack) on the afternoon of 5 March (but independently of your press conference) “Adrian’s decision to resign as RBNZ Governor was a personal decision. He has conveyed that with consumer price inflation back within its target band, the time was right for him to step down.” Relative to the option (always open) of saying nothing, wasn’t this aggressively and deliberately misleading? How does that square with the Bank’s values around transparency and accountability?
12. Why did you choose to hold a press conference at 5pm on 5 March? There is no suggestion of one in the pre-event planning. Was holding such a conference consistent with your agreement with Orr?
13. Why did it take the Bank (for which, as chair you are responsible) more than three months to make the public statement that you did last week? Even if one granted some sensitivity around the Funding Agreement negotiations, the final Funding Agreement was released in mid-April?
14. Did you and/or the Board approve what was released last week, including the text of the Summary Statement?
15. What steps has the Board now taken to ensure that the Bank complies with its legal obligations under the Official Information Act, including in respect of requests on this broad issue (Orr resignation) that have been outstanding for months are were not addressed at all in last week’s release)?
16. Why does last week’s release disclose nothing about dealings between you/the Board and either the Minister or Treasury in and around Orr’s release?
17. Why does last week’s release disclose nothing about the Board’s own deliberations on these matters and/or their engagement with Orr once he made clear he was considering resigning?

Questions for the Board as a whole

1. Why did you approve a budget for the Bank for 24/25 that was so far in excess of the level of spending authorised under the then-current Funding Agreement?
2. Why did you agree to make a Funding Agreement bid that involved a large increase in future operating spending relative to levels authorised in the previous Agreement, despite being well aware of the prevailing climate of fiscal stringency. What sort of pushback did you provide to management, and did you insist on stress-testing the various options (including likely ministerial reaction to such a bid)?
3. When were you first collectively made aware that the Governor was considering resigning, and what (if any) reasons were you given. What was the Board’s reaction?
4. Why did the board agree to negotiating an exit agreement beyond the standard resignation provisions in the Governor’s contract. Did you approve the terms or was everything delegated to the chair? If the latter, given the sensitivity of such issues, why?
5. Do you still have confidence in the chair after his handling of the public side of this issue, both on 5 March and since?

Questions for the temporary Governor

1. Did you ever push back against either the 24/25 Budget, approved by the Board last June, or against the appropriateness of using such a vastly inflated level of spending as the starting point for the Funding Agreement bid?
2. Who decided, and when, that Adrian Orr would not open or attend the inflation targeting conference (noting both his email at lunchtime on 5 March and comments later that day from the Board chair suggesting it still wasn’t clear)?
3. Why did it take three months for any sort of statement (other than the highly misleading ones made to public and staff on 5/6 March) to be made on Orr’s resignation?
4. What steps have been taken to ensure that the Bank meets its obligation under the Official Information Act, including actually addressing the specific requests lodged on this subject some months ago?

Questions for Treasury?

1. What comments, if any, did you make on the proposed Bank budget for 24/25? What advice did you give to the Minister on this?
2. When did you first make clear to the Bank’s Board that the initial Funding Agreement bid was quite unacceptable? Why weren’t they sent away early to revise and resubmit?
3. Why were such spending numbers (well above previous Funding Agreement) included in the HYEFU fiscal numbers?
4. Were you aware that an exit agreement was being negotiated with Orr? If so, did you make any representations on severance payments and/or gagging restrictions (if so, what?)?

UPDATE:

As it happens, I received a response to my OIA to The Treasury on (some of) these matters this afternoon.

The request was as follows

There is very little there. Here is the full response, including a note of one document (only) withheld completely, with even the title kept secret.

Treasury response to OIA re Orr departure 16 June 2025

I think the only positive things we learn from this is

• Rennie’s initial advice to Willis on the afternoon of 27 Feb (the day of the crucial RB Board meeting) apparently reporting initial advice from Neil Quigley is very short (2.5 lines of a text) and not enough for more than a “Thank you for the heads up” from the Minister in reply.  It seems to have been followed up with fuller conversation (Rennie/Quigley) that evening, which seems to conclude with the suggestion of a meeting or phone call (Willis/Quigley?) presumably the next day.
• On the Friday 28th, Quigley texts Rennie to ask him to call, saying he has an update.  It seems likely this was the point where Orr had decided to go.  Other papers reveal the exit agreement between Quigley and Orr was reached by Monday afternoon (3rd).

But what surprises me is what isn’t there.   Faced with the likely, and then certain, resignation of the Governor of the Reserve Bank, an agency Treasury is responsible for monitoring and where the Secretary sits as a non-voting MPC member, there is nothing else at all written down, either before the announcement, on the day, or in the few days following. 

Questions about the Funding Agreement, HYEFU, and last year’s RB budget were, of course, not covered by this request.

This morning as the Quigley/Orr/Board saga rumbles on I wanted to touch on three items:

• the latest comments from Board chair Neil Quigley (and the Minister’s comments on and to him)
• a reminder of where this all started, with the Board unanimously approving a budget last year far in excess of what had been approved under their then-current Funding Agreement, and
• outstanding OIAs.

Quigley

When I wrote my post yesterday morning I’d seen only Quigley’s extraordinary jaw-dropping comments to interest.co.nz suggesting that he had been deliberately (to say the least) economical with the truth and actively misleading the public because they had no right, or particular need, to know. And when Brunskill suggested that this was perhaps inconsistent with the Bank’s oft-boasted commitment to transparency, Quigley let loose with the classic line that “I’m not interested in having you question me like you’re a lawyer”. A journalist doing his job would have been more like it…. It was, sadly, consistent with the Quigley who has long acted as if public affairs are matters only for the chosen and that the great unwashed should really pipe down and be grateful.

Then I saw another story from Brunskill in which he recorded that in a follow-up email Quigley had said that an agreement with Orr limited “the communication we could offer on March 5”. Which may well have been true, but doesn’t take us any further since

(a) it was Orr who resigned, and there were presumably standard resignation terms in his contract,

b) even if they had mutually agreed that the only comment on 5 March would be the agreed official press release i) Quigley did not need to agree to content that actively misled the public (reread the statement it is clearly designed to give the impression of “nothing to see here”, but perhaps suggestive of a long-serving CE who was tired and had accomplished what needed doing), and ii) it was Quigley who chose to give the press conference later that afternoon in which he clearly went well beyond the press release, trying fairly explicit to suggest that it was all just personal reasons – but not conduct or anything of the sort – and more or less explicitly denied it had anything to do with (the emotional overreaction to disappointment around) the forthcoming Funding Agreement.

Then the Minister of Finance entered the picture, giving a press conference at Fieldays (account here)

Which was a good start, although re that final paragraph note that the Board (Quigley) chose what to agree to in the exit agreement. It seems to have been Orr who wanted out. Quigley should have been acting to protect the interests of New Zealanders, including in transparency and accountability.

And then a few hours later a statement emerged from Quigley himself. It came via the Bank’s standard email advisory list (link here to a website version). I really don’t think it helped (and from people I’ve talked to I’m not the only one).

He started with this

“Late” doesn’t even begin to describe it. The bundle they have released – while interesting and revealing in itself – hides as much as it reveals, including almost everything about Quigley’s role, and does not even touch on large chunks of my request (not sure about others but my impression from reading coverage is that others are similarly underwhelmed). And the law is the law, and they knew from day 1 (well actually from when Adrian first said he was going) that there would be intense public interest in this and should have been pro-actively positioned to provide a comprehensive response early, for public and for staff.

As for that 3rd para, as noted above while Orr’s employment contract was a given, it was Quigley who decided what sort of non-disclosure restrictions to accept/impose.

Note that in the early afternoon of 5 March, just an hour before the resignation statement went out, Orr was planning to front the conference the next day and “discuss today’s news”.

As it happened, going through some old articles this morning I found one from 5 March when Dan Brunskill had door-stopped Quigley and asked him about the conference (“Quigley said he did not know whether Orr would still host the central bank’s monetary policy conference”) He had sorted that out by the time of his ill-starred press conference later in the afternoon, but none of it feels like some advance commitment that Orr would disappear in utter silence and no answers would be given for months.

The second bit of Quigley’s statement was this

On the first para:

• even if there had been an agreement that the only public comment on 5 March would be the official agreed press release (a not unreasonable approach in itself), a) Quigley had a great degree of control over what was (and wasn’t) said in any statement, and b) why then did he seem to go off-reservation with a press conference where again and again he seems to have actively misled the public (acknowledging to Brunskill on Wednesday that he had done so deliberately?
• the fact that the Funding Agreement hadn’t been finalised is really just distraction. The Minister had already said in public the previous week that she was looking for cuts, documents released show even Orr was reconciled to a lower level of spending than they’d initially asked for (even if not to what the Board was willing to go to to reach agreement with MoF). What stopped them saying “negotiations between the Board and Minister on the next funding agreement are progressing. In straitened fiscal times it is unsurprising that the Minister is looking for cuts. The Governor did not believe that the scale of cuts sought was appropriate and chose to resign”. Sure, it would have been uncomfortable, but….that is what real accountability and transparency means. (And anyway, the Funding Agreement was published in mid April and we got no disclosure until 11 June.)

As for the second para, their treatment of their staff seems to have been particularly egregious. Recall this from their internal Q&As for managers to use with staff.

They lied. They – Board and remaining senior management – had known for weeks at least (it is the released documents) that staff cuts were going to be necessary. That is more or less what public sector budget cuts meant across the board. Staff are adults. They know that. Sure, the final budget numbers hadn’t been determined but it would have been perfectly possible – they had days to do it – to have crafted a message for staff that said “it is now certain that our funding next year will be materially lower than this year’s operating budget. We do not know how much lower but the implications will certainly include staff cuts this year”.

Or, slightly less bad perhaps than the way they actually treated staff, they could just have stonewalled and said “no comment, no comment, no comment” when staff asked what was going on.

Can Quigley survive? He certainly shouldn’t but who knows. When a journalist asked me last night I noted that since I didn’t adequately understand why Willis had reappointed Quigley for a final two year term last year, one couldn’t be confident she’d do the right and necessary thing, but I still reckoned that within a month there was a better than ever chance he’d be gone. Victoria University’s Martien Lubberink suggested on Twitter last night that he was buying a lettuce. The original lettuce outlasted Liz Truss. I hope this one lasts longer than Quigley. Any good he did in his 15 years on the board seems long long past and there needs to be change at the top now.

Budgets

I was in a meeting yesterday and chatting over lunch with people who aren’t very focused on central banking or government finance issues, and a couple asked “what was Orr planning to do with all that money?” My response was simple: it wasn’t what he was planning to do in the future, but rather that the money had already been spent. And in breach of the Funding Agreement they’d signed with the Minister of Finance in mid 2023 (an agreement that covered the 23/24 and 24/25 financial years, amending the 2020-25 five-yearly Funding Agreement).

All the details of this are in a post I wrote last month. But to quickly summarise:

• in that 2023 amendment the Bank had been allowed to spend about $154.4 million on (within scope) operating expenses in 2024/25,
• the Bank’s Board adopted on operating budget for the same (within scope) items for 24/25 of $191 million, 23 per cent above the level of operating expenses Grant Robertson had allowed them for 24/25. This Budget was adopted unanimously by the Bank’s Board last June (and overall budget numbers were included in the Statement of Performance Expectations published then),
• the Bank’s bid in respect of its next Funding Agreement, also adopted unanimously by the Board, involved a 7.5 per cent cut from that $191 million level (with a bit of sleight of hand in proposing to move some more things out of scope).

If you doubt the story, here it is in their own words

Spend up hugely, far beyond what the Minister of Finance had allowed – something no other government agency or department could do – and then offer up modest savings relatively to that grossly inflated (and improperly authorised level).

Consistent with this, they’d increased staff numbers from, 601 to 660 between 30 June last year and 31 January, and the documents revealed Orr talking of a plan to take it as far as 742.

It really was that simple, that extraordinary. And if it represents an abuse of office in respect of New Zealand taxpayers, it was almost worse in respect of their own staff. People had taken on new jobs in those last few months as the empire continued to be built even as Board and management were (at best) deceiving themselves about the fiscal environment and the sort of restraint that might reasonably be expected from them (as most other public agencies).

Now, there are still a couple of puzzles around the role of the Minister and Treasury. As my detailed post documents, the Minister of Finance had to be consulted on that Statement of Performance Expectations (containing the budget). We do not yet know whether she ever pushed back strongly at that stage (just after last year’s government budget).

And then there was this, spotted in the recent (government) Budget Summary of Initiatives document

The savings are good, but it looks as though Treasury had included in the HYEFU numbers much much higher levels of spending than the Minister eventually accepted, and more in line with the Bank’s opening bid. Why did they do that, when those higher levels were well above the previous Funding Agreement? Had conversations with the Minister in the second half of last year indicated that she was then fairly relaxed? We do not know (but really should).

So, it was never a bid for even more, it was about consolidating most of the extraordinary growth in spending and staff in recent years, the last and most egregious bit (in 24/25) having happened without any ministerial authorisation, quite inconsistent with the statutory instrument governing Bank spending, the 2025-30 (amended) Funding Agreement.

Outstanding OIAs

I saw a serious observer on Twitter the other day note that he’d had several OIAs in with the RB since February (clearly not Orr resignation related) and had not yet had a response.

My experience isn’t that bad, but…..

On the spending levels and the Minister’s involvement, I still have this outstanding

All this will have been readily accessible. If Quigley is serious about sharpening up the Bank’s OIA act, perhaps he could get them to address this one rather more promptly.

And then there was my request regarding the Orr resignation events. I didn’t put one in until quite late, and deliberately touched on only some specific aspects. This was lodged with them on 14 April

In their official response to me on Wednesday they claimed that the document dump dealt with this request.

It didn’t. I had already pointed out to them that the first request had almost nothing to do with the Governor’s resignation (and of course nothing in the release dealt with that). This morning I went back to them as follows

It is as if they either can’t/won’t read, or somehow think the Official Information Act doesn’t apply to them. I’m not optimistic of getting anything more (well, at best this side of 2028 if it involves the Ombudsman), but they can’t get away with claiming they’ve responded to OIAs they’ve chosen to ignore.

And then there is this outstanding from The Treasury, which should be due in the next few days.

Months after various OIAs had been lodged on the question of Adrian Orr’s sudden departure on 5 March, we finally got a partial dump of documents this morning.

(Sufficiently mishandled that at 10:04 this morning they’d send an email to OIA requesters saying they’d email out the response at 10:45 and then have it on their public website at 11 (it being usual to give requesters at least some advance notice)). Then it seems they changed their minds because the emails didn’t come until after 11. And then it turned out – they emailed us again – that they’d sent only a near-final version of the Summary Statement they were releasing, not the final version that is on the website. There are material differences between the two – see below.)

I noted above that this was a partial release. Why do I say that? Because what is released today contains:

• nothing of advice to or communication with either The Treasury or the Minister (or her office),
• nothing of any discussions between the non-executive members of the board and Orr, including reactions/responses when he first intimated his intention to resign,
• no records or summaries of any meetings or conversations among non-executive directors

And those are just the omissions that I reckon were covered by my OIA on this matter (mine was only one of a number they claim to have responded to with their omnibus release this morning).

But, to the substance:

Strangely, and after months of speculation, these comments from my post the morning after the resignation ended up looking closer to accurate than I had recently supposed.

We have known for some time now that they had actually bid for a big increase in Funding Agreement resources over the levels allowed them by Grant Robertson just prior to the last election (and their statutory roles hadn’t changed since then), justifying this on the – simply extraordinary – grounds that it was in fact a modest cut relative to their own 2024/25 Budget; the one in which they had set out to spend far far in excess of the amount Robertson had allowed them for the last year of the previous Funding Agreement.

Both that 2024/25 Budget and the $1 billion funding agreement bid had been unanimously adopted by the Board last year (Orr himself was a board member). Details of all that are in this post.

Here is the text from the Summary Statement released (in error it appears) to OIA requesters this morning

For a start, this description seems odd. First, the Governor works for and to the Board not vice versa, so why the talk about Board members negotiating with Treasury “under the direction of the Governor”? But, second, all this paragraph talks about the Governor having a view as to what future budget resources were needed, but never mentions that the Bank’s bid had been adopted by the Board itself (the Funding Agreement is an agreement between the board – as the Bank’s governance body – and the Minister). Maybe Orr led the non-executives by the nose when the Funding Agreement bid was signed off last year, but in the end it wasn’t his call.

Then the Board seems to get blamed for bowing to reality. Too little has yet emerged of the Funding Agreement process documentation, but it seems likely that Treasury and the Minister had made pretty clear that a Funding Agreement that involved a large increase in funding relative to what Grant Robertson had approved just wasn’t going to be acceptable in these straitened fiscal times. It isn’t clear when the Minister or Treasury finally pushed back, but eventually they did, and the Board – recognising that ultimately choices about acceptable resources levels were for the Minister – had adjusted to that reality. Orr, by contrast, didn’t.

Here is the version of the Summary Statement that is now on the website (where there have been changes)

Note the attempt to shift the emphasis away from that meeting with the Minister of Finance on 24 February (the one that has already had quite a bit of coverage, with the Minister’s press secretary having to advise her to avoid answering a question about whether the Governor had ever shouted at the Minister).

Either way, what we are left with is a hotheaded Governor who finally came face to face with reality….and could not cope. And a Board which seems to have been as worse-than-useless as had been widely supposed since most of them were appointed in 2022, but who – in the end – could actually face reality.

Look at those descriptions about “The matter was distressing for Mr Orr” (or “This caused distress to Mr Orr”). It is a bit like a bloodless description of a moody teenager having lashed out in the playground.

Fiscal restraint has, in fact, been the order of the day for (most) central government agencies since the change of government. Many chief executives probably had had grand visions for how much additional growth their agencies needed, and even perhaps a belief that in some sense the national interest demanded it. But almost all of them – perhaps MFAT aside, which wasn’t asked to – faced reality, and got on and implemented the budget cuts that were demanded of them. Not one seems to have thrown his or her toys out of the cot and stormed off with no notice. They acted like adults, people who’d developed the resilience we like to help shape in our children as they grow. But not Orr.

And that is why I don’t think it is at all correct to characterise his departure as just a dispute over budgets. Plenty of people have conflicting views on budgets, and it wasn’t as if – even when the final Funding Agreement decisions were made – the Bank was being asked to operate with very material cuts at all relative to the last spending level approved by a Minister of Finance (a big-spending one at that). He just wasn’t going to get to grow his empire even bigger (you may recall from earlier posts that the Bank had grown staff numbers from about 600 on 30 June last year to about 660 on 30 January this year, and in the documents there is a note from Orr dated 5 Feb talking of having wanted to get up to 742 FTEs.)

It really looks to have been a toxic combination of headstrong volatile chief executive (who’d been lying to Parliament again just days prior to that critical meeting with the Minister), weak or non-existent accountability from his Board, and an utter lack of resilience or perspective which you’d only really expect to see from someone at the end of his tether. That is reinforced by that line in the final official version about how “the impasse risked damaging necessary working relationships”. Not among decent disciplined people – the Funding Agreement was a matter for the Board and the Minister (primarily the latter) and the Governor’s job as employee and chief executive was primarily to implement the agreement and manage within approved resources, and to do so in an effective not petulant way. After all, the reduced budget wouldn’t even come into effect until 1 July (so perhaps a resignation effective 30 June?)

Let’s grant (charitably) that Orr really really believed that the Bank’s statutory functions could only be performed with the $1 billion budget (and 40 or so senior managers). In those circumstances, perhaps the best thing to do was to move aside and let someone else take his place. But normal people – normal chief executives (see, eg the Vice-Chancellor of Auckland University today) – give notice, and work out that notice, enabling the governing body to do a thorough careful search for a permanent replacement. They don’t storm off with no notice, having engaged senior lawyers to negotiate an exit (presumably there were conventional resignation provisions in Orr’s contract already), offering no explanation whatever, despite holding one of the most powerful public sector positions in New Zealand.

If Orr emerges really badly from this Statement and document dump, he isn’t the only one.

Take the Board (Quigley and the other non-executives) for example.

It remains beyond belief how they (a) signed off on a budget last year so far in excess of the Robertson-approved levels, and b) how they ever imagined that it was appropriate to treat that unauthorised level as some new-normal base against which they could then offer up tiny cuts. Did any of them ever push back against management and insist that the Governor stress-test for them a range of alternative budget scenarios? (If so, there is no sign in the published minutes).

And where was the Board in controlling the process at the end? Why did they let the Governor simply leave office the day of the announcement, rather than insisting on him working out notice? Why did they grant him (presumably paid) “special leave” for the period 5 March to 31 March (rather than, say, making him take annual leave if his resignation was going to be legally effective until 31 March). And why did they allow such a pig’s breakfast of a communications debacle to (a) occur, and b) persist for months?

To be sure, both the Board and the Minister were put in a difficult position by the Governor’s petulant walk-off. They hadn’t, as at 5 March, finalised the Funding Agreement (indeed, the Minister’s later releases on that subject suggest some continuing back and forth over the coming weeks), so they probably couldn’t release the whole picture.

But as it was they actively misled both their own staff and the wider public.

On staff, this is from a set of internal Q&As given to managers the day after Orr’s resignation to use with staff.

When in fact, on their telling now, it was all about looming significant budget cuts (relative to the Bank’s own budget, if not relative to the previous Funding Agreement) the Board had, perhaps reluctantly, accepted and the Governor has refused to (and petulantly stormed off).

As for the wider public, Neil Quigley – the Board chair, with an unfortunate reputation now for not being straight on RB things, but somehow succeeding to keep getting reappointed – held a short press conference late on the afternoon of the resignation.

In it, he told us that he (he avoiding answering for the Board) had still had confidence in Orr? How is that possible when your chief executive stormed out the door apparently because he couldn’t live with not getting a further inflated Funding Agreement and reckoned he couldn’t work effectively with the Board and/or Minister?

Then he was asked whether Funding Agreement issues played a part. Accordingly to the transcript I was kindly sent his response was

“we are working through some views about the funding of the bank, the board is in the process of finalizing its submission to the Minister about our next funding agreement. So that conversation about funding has involved the normal challenge that you would expect, and has been constructive. So the board is managing that process”

Which is just utterly at odds with what we have learned today.

(The very next question Quigley was asked was what about the big conference the next day, and the thought that the resignation might overshadow it. He responded “with the decision that Adrian had made, he decided actually that it was better not to be in front of the conference, having made that decision himself”. Which is weird – if not overly important – as in today’s document dump there is an email from Orr, at lunchtime on 5 March, less than an hour before the resignation went out, talking about how he’d be proudly opening the conference the following day, “there to discuss today’s news”….)

The press conference went on

Q: Reserve Bank governors don’t just up and resign? 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 enough.

And I guess that isn’t inconsistent with an emotional end-of-his-tether story, but….it is rather at odds with today’s revelation that the Board had accepted budgetary reality and the Governor had simply refused to.

And finally

Q, Had the government, had the government communicated to you or Adrian any issues that triggered him coming to you in the last few days?

A. No, there’s no, been no direct communication officially from the government on anything that I could think of in that.

Except that that is just evidently not true, given a) the meeting with MoF on 24 February and b) the now official statement that by the Board meeting of the 27th it was clear that the Board and Minister were willing to agree a number the Governor could not accept. The initiative for cuts was not, it is pretty clear, coming from the Board but the government.

We were actively misled (some would use stronger words). If you weren’t willing to give honest answers, why would a decent person hold a press conference at all? No one compelled him to.

And, a final question for the Board, why did not insist that straight answers be given weeks ago? If it was difficult to do so on 5 March, there can have been no possible excuse once the Funding Agreement itself had been agreed between the Board and Minister (published 16 April, almost two months ago now). The public was owed straight answers as soon as reasonably practicable (which also happens to be the OIA legal standard). The Board, and/or the acting/temporary Governor, seems to have been unbothered. But accountability is about things that are awkward or uncomfortable for you, not just the things you want the public to know.

Incidentally, the Minister of Finance also seem to have abetted keeping the public in the dark (if, perhaps, less directly responsible than the Board). This came out in an earlier Herald OIA, reported here

She must have been advised – assuming what the Bank today told us is true – that actually funding agreement issues were at the heart of the departure.

To wrap up, neither Orr nor the Board emerge with much credit from this affair – Orr none at all, having led the drive to the bloat and loss of focus, failed to read the (fiscal times), and then with so little self-discipline and without the sort of maturity one should be able to take for granted in someone holding high office as Governor, and the Board only a modicum for having very belatedly bowed to reality and accepted that the funding agreements weren’t going to go on rising forever.

Orr has gone, and you might think (hope) that after such an astonishing display he would struggle ever again to get a top-tier job.

But the Board – hardly changed at all over the last year – remains, and in particular Neil Quigley continues (reappointed by this government) as chair for another year. In that role, he drives the selection process for a nominee for the new Governor. This is the person with a track record of actively misleading the public on RB matters even before this last blow-up (remember his assertions, contradicted by both documents and his colleagues, that experts had not been blackballed from the first MPC), but who, more importantly, was responsible for driving the reappointment of a Governor so out of control and personally undisciplined that he couldn’t live with some budgetary restraint (recall that the final level MoF imposed represents pretty minor savings relative to Robertson’s last approved levels) and couldn’t even manage a disciplined and tidy no-drama exit. To add to which, Quigley was Board chair when that egregious 24/25 Bank budget was set. Every day he remains in office diminishes our central bank, and it is astonishing that the Minister of Finance has done nothing to force the issue, to make clear that the government no longer has confidence in Quigley to chair the Board, particularly given the vital role the Board has in the selection. We simply cannot afford another appointee – from Quigley and his board – even half as bad as Orr.

(There is more material in the documents released – including a 14 Feb email from Quigley to Orr suggesting that a deal was likely to be done with Treasury in the following few days – but that is enough for now.)

UPDATE: A response to this OIA should also be due shortly

It is almost six weeks since the shock announcement early on the afternoon of Wednesday 5 March that the Governor of the Reserve Bank, Adrian Orr, was resigning effective 31 March, and that in fact he had already left and an acting Governor was already in place. Orr had been (controversially) reappointed in late 2022 to a second five-year term that still had a little over three years to run. In his seven years in office he’d been a near-constant figure of controversy, not least for his role as chair of the Monetary Policy Committee which had not only let inflation run out of control then needing to bring about a (mild) recession to get back in check, but for the $11 billion of losses the Bank had sustained punting in the government bond market. His relationships with anyone but sycophants and yes-men seemed strained – whether the rapid turnover of senior managers, his treatment of external critics, or the very evident rather dismissive and at best frosty relationship with the current Minister of Finance when she was in Opposition. On many occasions – including at numerous select committee hearings – his relationship with the truth also seemed tenuous.

It is good to see the back of him, but it really isn’t adequate that we’ve had no explanation at all for the sudden departure, sufficiently precipitate that he simply walked off the day before he was due to host a research conference, with speakers of the eminence of Ben Bernanke, to mark 35 years of inflation targeting. Orr’s own comments – the only ones being in the official statement (linked to above) – shed no light at all on the reasons for his resignation or for the precipitate departure. Neither the Bank’s Board nor the Minister of Finance has shed any light at all, including on why they allowed their employee to simply walk off with no (effective) notice whatsoever. What were the relevant provisions in his contract, and were they enforced? One can think of circumstances in which an employer might want an employee- senior or junior – out instantly (eg if there were serious behavioural issues or if someone was resigning to take up a position that involved a direct conflict of interest – eg when Don Brash left the Reserve Bank to go into politics, or if Orr had resigned to go and work for a bank or funds managers), but generally people expect to (and are expected/required to) give a decent amount of notice and to work out that notice. As just one example, when the Deputy Governor resigned a few years ago he gave four months notice. Why wasn’t Orr working out a decent length of notice?

I’ve been looking back through articles etc from 5 March, and what limited material has emerged since. The line that caught my eye was from Infometrics’ Brad Olsen on the day of the resignation:
“Let’s be very blunt. The Board of the Reserve Bank needs to front, they need to front urgently, and they need to be open and transparent. Anything less is just not acceptable”

And yet “anything less” is just what we have got. No straight answers from either the Board or the Minister of Finance. The Bank likes to boast of its commitment to transparency, but as I’ve had cause to observe numerous times over the years while they are very open about things they want us to know, they are consistently obstructive about much of the rest. Serious transparency involves openness even when it is uncomfortable or embarrassing. Anything else is really just PR/spin.

Early candidates for the explanation for Orr’s departure were disputes with the Minister of Finance over either (or both) the Bank’s budgets and (forthcoming new) Funding Agreement or bank capital etc regulation. It had been only a week previously that the Minister had finally confirmed publicly that she would be looking for savings from the Bank.

Neither of those factors ever seemed adequate to account for what we knew. After all, despite suggestions that the Bank had actually been bidding for more funding, pretty much every government agency had had to live with budget cuts in the last year, and no other chief executive is known to have tossed his/her toys and stormed off in protest. The Bank and Governor must have known that fiscal restraint was going to come for them too. And the Board chair told us that while discussions were ongoing nothing had been finalised by 5 March. And even if the Governor had concluded that in his best professional opinion the Bank couldn’t do its job on the level of funding the Minister and/or Treasury were proposing, why storm off with no notice (around a not-yet-finalised agreement) when the new Funding Agreement was not even due to come into effect until 1 July this year? Giving notice that he’d be going on 30 June would have seemed to (relatively) mature and responsible approach had fiscal concerns been the key to Orr wanting to leave.

Much the same goes for issues around bank capital regulation. The Minister has been quite open that she had been taking advice on possible changes to the legislation to allow her to determine key prudential policy parameters. Reasonable people can and do differ on that. A central bank Governor might have regarded such changes, had they been confirmed, as simply unacceptable and not a regime he/she would be willing to work under. But there do not seem to have been any confirmed decisions, legislation takes time to put in place, and again…..3-4 months notice would have been quite reasonable if the Governor had concluded that someone else should pick up the baton for the years ahead. There is nothing of such apparent urgency to account for simply walking off with no effective notice at all.

Same goes if the Governor had simply come back from his summer holiday and decided he no longer has enough “gas in the tank”, was tired, and thought it was time to go. Plenty of people do come back from holidays thinking it is time for a change (plenty of them then settle back into the routine of the year), and look around for another job and/or give notice and move on. People might even sympathise with a senior official who got to that point. But it doesn’t make sense of Orr’s departure….with no effective notice at all.

If anything, the mystery – and a sense that the Board and Minister are keeping important stuff from us – was highlighted by the OIA response obtained from the Minister of Finance by the Herald’s assiduous Jenee Tibshraeny, as reported here. (I’m guessing she probably has a similar request in with the Bank itself, but is probably being obstructed and delayed there.)

Those documents suggest that Orr had last met with Willis on 24 February. By 27 February, Board chair Neil Quigley had been in touch with Treasury Secretary Iain Rennie about Orr, and Rennie advised the Minister of this conversation (substance of which was withheld). Most strikingly, the documents show that on the morning of 5 March “Reserve Bank staff sent Willis’s staff a draft press release for the resignation announcement, dated 10 March” (the following Monday, and after the inflation targeting conference was out of the way). And yet by 1:30pm on the 5th the resignation announcement went out – Orr himself was already out – with staff (on both sides of Bowen St/The Terrace) having scrambled to finalise press releases.

Something must have happened that morning. It simply cannot have been developments around either the funding agreement or bank regulatory policy (and although I can’t verify these claims I have heard a couple of times from people I trust that (other) people very close to the situation have confirmed that neither was the explanation for either the departure or the suddenly expedited announcement and no-notice nature of the exit).

Then there is the other document reported in the Herald article: some proposed Q&As for the Minister prepared by her press secretary. This particular press secretary must have been particularly averse to openness, suggesting that in response to a question “Did you ever have disagreements with Adrian Orr” she answer (in essence) “no comment”, when surely almost any minister and agency CE worth their salt would have disagreements, including on policy issues, from time to time.

Then there was this one

Which has to be the ultimate answer designed to deflect, and yet in the process suggested there really was something there. David Farrar picked up on this issue thus

It would be pretty extraordinary for a senior official to raise his/her voice with a minister (sadly, vice versa is not unknown), and although Orr was not formally a public servant, it would still be pretty grossly unacceptable behaviour from such an official and something the Board should have been alerted to. Unfortunately, Orr’s impulsive and undisciplined nature means that raising his voice at the Minister sounds all too plausible.

But, even if so, still not an adequate explanation for why the resignation was brought forward at the very last minute.

The Herald article also reports that (a) the Minister told her press secretary not to give out the purpose of the 24 February meeting (not exactly committed to transparency is she?), b) wasn’t briefed by her press secretary on answering questions re bank capital (presumably the press secretary didn’t think that was the story), and c) Willis was advised to say “not that I’m aware of” if asked if the resignation had anything to do with either the funding agreement or her opposition to his 2022 reappointment.

So where does it leave us? We – the public – are clearly being stonewalled by both Willis and the Bank’s Board (while Orr, now no longer a public official is saying nothing at all). The usually supine Finance and Expenditure Committee – currently launching an inquiry into improving performance reporting and public accountability – is living down to form.

Faced with the set of facts (the unquestioned known ones), and applying something like Occam’s Razor, most reasonable people would deduce that something pretty serious and potentially scandalous must have gone on. The facts?

• resignation with no-effective notice (out of the door by the time the announcement hit the screens (Quigley told questioners that the acting Governor had been in place from “lunchtime today”)
• resignation on the eve of a significant and fairly prestigious conference, where CEO level hospitality would normally have been expected,
• resignation accelerated at the last minute (10th brought forward to the 5th),
• person resigning not indicating anything about (a) a new job, and b) even general new career directions,
• other proffered stories (funding, bank capital) making no sense of the stylised facts, even from an undisciplined and volatile character like Orr.  (Health hypotheses also don’t work, as even a short non-specific mention of health as the explanation would have quickly allayed questioning and resulted in widespread sympathy.)

There are, of course, problems with a conduct/scandal hypothesis.

Specifically, Neil Quigley appears to have denied it at his hastily-called short press conference later on the afternoon of 5 March.   Someone who was there kindly sent me a transcript, which this draws from.

Quigley’s first answer on this point might appear to have wriggle room.  Asked if there were “any conduct issues outstanding”, Quigley replies with a simple “No”.  But, of course, it isn’t exactly unknown for questionable conduct to be dealt with by way of quid pro quo: someone resigns and an issue is taken no further.  Once the resignation is lodged and accepted (as it clearly was by late on 5 March) there wouldn’t be any conduct issues “outstanding”.

But a later question seemed to allow less wriggle room: asked whether there were any “policy, conduct and performance issues which are at the centre of this resignation”, Quigley responded “we have issues that we’ve been working through, but there are no issues of that type that are behind this”, and in a follow-up clarified that the issues they’d been working on had been the policy/funding issues.   But was he then primarily answering about “policy” rather than the other limbs of the question?

There is also a final question, where the transcript isn’t fully clear.  Quigley appears to have been asked if there are “current issue with Adrian” and if there had been “any complaints”.   He is recorded as responding “I’m not going to go into that because that’s history”, and something about “some things that have made as a public record’ [perhaps past concerns about Orr’s treatment of people like Roger Partridge and Martien Lubberink] “but I don’t intend to go into those now” before he walked off and terminated the press conference.

Quigley also stated that Orr had still had his (Quigley’s) confidence, while avoiding answering a question that was about the Board’s continuing confidence.

The problem is that Quigley (a) doesn’t seem to be giving straight answers, and b) has form.   Thus, if the only thing you read was the transcript of his press conference you’d get the sense that the story was somehow about Orr feeling the job had been done and it was time to move on.   But that makes no sense of what we now know (the rush to bring forward the announcement to that afternoon), and he provided no compelling explanation when asked why Orr hadn’t just stuck round long enough even just to be hospitable at the conference.   And even what he did say doesn’t make much sense of a “time for a change” story, noting that he and Orr had been in discussion on “this and exactly how it would play out over a few days”. 

And, as to Quigley’s “form”, regular readers will recall his denial –  and putting Treasury in a place where it went public with a denial –  that there had ever been any sort of blackball on expertise when the first MPC members were appointed five years ago.  Not only did personal testimony contradict him (people who were told by Quigley himself they would not be considered because they were active experts), but so did the documentary record (OIAs), and comments from one of his own fellow Board members who’d been actively involved in the selection process back then.

One final straw in the wind is that just a few days after Orr left, a release quietly appeared on the Reserve Bank’s website advising that one of Orr’s several deputies, an Assistant Governor responsible for Information, Data, and Analytics, had resigned.  There was no indication of any other job to go to, and the departure date was less than three weeks from the date of the announcement (by contrast, another Assistant Governor resigned last year, offering more than two months notice).    Perhaps there is no connection to Orr’s departure.   But the coincidence in timing, with no specific job to go to, should at least prompt some questions.

We (the public) still have no idea what actually happened.  And that really isn’t good enough from either the Board or the Minister about the holder of such a consequential office.    But what we do know is enough to lead a reasonable interpreter to fear that it really may have been something around Orr’s conduct.   If not (and one genuinely hopes not) a straightforward explanation could set the record straight very quickly.  And if so, people shouldn’t be able to hide behind private commitments to secrecy that might serve the interests of some of the powerful, but are hardly likely to serve the public interest.

Today is the last day in office for the Governor of the Reserve Bank, Adrian Orr. Of course, he hasn’t been in the office since 5 March when, on the eve of his major international conference, his resignation was announced and he stormed off with no (effective) notice and no explanation.

I’m not going to waste my time or bore readers with a retrospective assessment of Orr’s overall tenure. I recently reread the couple of substantive posts I wrote on prospects at the time he was appointed, and although I was probably more openly sceptical than most, I wasn’t nearly pessimistic enough. But if the initial appointment was (perhaps) pardonable, he should never have been reappointed, and his departure now is both welcome and long overdue.

When Orr’s resignation was announced, we were told that his deputy would be acting Governor for the rest of the month and were led to believe that from 1 April a formal “temporary Governor” (explicitly provided for in the Act) would be in place. Here is the extract from the Bank’s statement

and this is from the Minister’s statement

But then this appeared in The Post this morning

It may be legal (although the RB spokesperson appears to have the details wrong as the Act does not seem to impose a deadline on the Minister, only on the Board, and – if Orr’s resignation really is effective only from today – they’d appear to have another 28 days even to make a recommendation)

but it certainly isn’t what we were led to expect on 5 March in either announcement (see above). There doesn’t seem to be any good reason for the Bank’s Board not yet to have made a recommendation to the Minister. They’d had more than three weeks already.

As per earlier posts, I think it is quite inappropriate that board chair Quigley is still in office. The government should have prevailed him to do the decent thing and step aside so that someone new can lead the search for a new permanent Governor. But even if the government were so minded, it isn’t a good reason for not getting a proper temporary Governor in place, and for not having a recommendation on the Minister’s desk already. Probably most people expect Hawkesby to be appointed as temporary Governor, and if that was the Board’s inclination it should have been quick and easy to decide on that recommendation. Of course, it is always possible that the Minister has in mind something different and is in back-channels and unofficial conversation with the Board about just who they might nominate (“back-channels and unofficial” since the Act is clear that the onus is on the Board to nominate and on the Minister only to accept or reject).

It all seems rather sloppy and lackadaisical (dating right back to those 5 March press releases, which perhaps had to be churned out in a hurry). And one reason countries typically give long (and fixed) terms to central bank Governors is precisely so that Ministers of Finance cannot do what the Stuff journalist suggests and make decisions about short terms based on whether someone makes monetary policy decisions to the Minister’s satisfaction (not that I am suggesting Willis will). And if this process is sloppy and lackadaisical it only compounds the bad impression made about a country and its central bank when the incumbent Governor resigned with no notice and not a word of explanation.