New Zealand central bank says former head quit over funding dispute

[SYDNEY] Former New Zealand central bank governor Adrian Orr’s surprise resignation in March was due to his disagreements with the treasury over proposed cuts to the bank’s operating budget, official documents showed on Wednesday.

The Reserve Bank of New Zealand (RBNZ), in an official response to requests received under the Official Information Act, said Orr viewed the funding offered to the bank “a considerably lesser amount.”

“This caused distress to Orr and the impasse risked damaging necessary working relationships,” the RBNZ said in the document.

“(It) led to Orr’s personal decision 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.”

Finance Minister Nicola Willis said in April that the central bank’s operating budget would be cut by about 25 per cent in the coming fiscal year and set at roughly NZ$150 million (S$117 million) for each of the next five years.

Orr resigned suddenly in March, ending a seven-year term that had become contentious after painfully high interest rates tipped New Zealand into one of its worst downturns since 1991.

The current National Party-led government of Prime Minister Christopher Luxon was critical of Orr’s stewardship while it was in opposition, blaming him for soaring inflation after the pandemic and the high interest rates that led to recession.

When Orr was reappointed for a second five-year term in November 2022, Willis, then the opposition finance spokesperson, said the decision was “a serious mistake”, calling for an independent inquiry into the bank’s monetary policy response during the pandemic.

The RBNZ also said while it and Willis had discussed appropriate levels of regulatory capital for banks, there was no indication that those talks were significant to Orr’s decision to resign. REUTERS