Our financial ecosystem seems well and truly rooted.
Point of Order doffs its cap to Michael Reddell for alerting the public to the Reserve Bank of New Zealand’s plunge into political correctness.
Reddell draws attention, too, to the awful reality that a great deal of government improvidence goes undetected by the Point of Order Trough Monitor, which limits its surveillance to the profligacy of the inhabitants of the Beehive.
In particular, he has highlighted the Reserve Bank’s recruiting a “cultural capability advisor Maori” and wonders what this bureaucrat will do in an agency with three main jobs, none of them involving direct dealing with the general public – Maori, European, Chinese, Mexican or whatever:
- the Bank issues bank notes and coins. That involves purchasing them from overseas producers, and selling them to (repurchasing them from) the head offices of retail banks;
- it sets monetary policy. There is one policy interest rate, one New Zealand dollar, affecting economic activiity (in the short-term) and prices without distinction by race or culture. Making monetary policy happen, at a technical level, involves setting an interest rate on accounts banks hold with the Reserve Bank, and a rate at which the Reserve Bank will lend (secured) to much the same group. The target – the inflation target, conditioned on employment (a single target for all New Zealand) – is set for them by the Minister of Finance.
- and it regulates/supervises banks, non-bank deposit-takers, and insurance companies, under various bits of legislation that don’t differentiate by race or culture.
RBNZ governor Adrian Orr nevertheless seems to be promoting a programme of acculturation, to absorb Maori spiritual beliefs into the Reserve Bank’s culture.
To what purpose? To monitor the strength of the mauri in the nation’s money supply? Or mana in the Kiwi dollar?
Reddell recalls drawing attention last year to the superstitious side of Orr’s governorship when the bank published The Journey of Te Putea Matua: our Tane Mahuta.
Te Putea Matua is the Maori name the Reserve Bank has given itself, following the impulse of other public-sector agencies to have a Maori name.
The Governor seems dead keen on championing Maori belief systems from centuries past, Reddell observes while quoting from the bank publication:
A core pillar of the evolving Māori belief system is a tale of the earth mother (Papatūānuku) and the sky father (Ranginui) who needed separating to allow the
sun to shine in. Tāne Mahuta – the god of the forest and birds – managed this task after some false starts and help from his family. The sunlight allowed life to flourish in Tāne Mahuta’s garden.
What does this have to do with macroeconomic management or financial stability?
Orr apparently answered that in a radio interview – before there was a Reserve Bank “darkness was on our economy”. The Reserve Bank was the god of the forest, and let the sun shine in.
Reddell notes another passage in the bank publication on its journey:
Many of these birds feature on the NZ dollar money including the kereru, kaka, and kiwi – core to our belief system and survival.
He rightly questions this contention and is confident most New Zealanders have never regarded a bird as “core” to their belief systems.
More significantly, he is bothered that – 49 weeks into the job – Orr has delivered no substantive speeches about things he is actually responsive for.
Reddell’s post triggered this from The Taxpayers Union
The Reserve Bank should focus on monetary policy and prudential supervision, rather than hiring a Maori Cultural Capability Advisor, says the New Zealand Taxpayers’ Union.
Taxpayers’ Union Executive Director Jordan Williams says “The Reserve Bank has a specific and exclusive job of managing the health of New Zealand’s monetary system. For the sake of New Zealand’s economy, it is important that the Reserve Bank takes this job very seriously and invest its limited resources effectively. There is simply no need for the Reserve Bank to have a cultural capability team.”
“The Reserve Bank Governor’s regular description of the Reserve Bank as Tane Mahuta – a Maori Tree God – is now a punchline in Wellington and in the business media. The Bank’s doubling-down on expensive feel-good PC box-ticking puts the Reserve Bank’s reputation even more at risk.”
“Teaching Bank economists about Tane Mahuta when the Bank’s reputation is following that of The Treasury is a waste of money. The Bank should stick to its knitting.”
Highlighting the shortcomings of the Point of Order Trough Monitor – and other monitoring agencies – Reddell makes this observation about the squandering of the revenue collected from our pockets by the government:
Our taxes – explicit or otherwise – pay for the whims and initiatives of politicians and public servants. One might like to think that these people would spend our money at least as abstemiously as they would spend their own – rather more so, one might hope, since they know they’ve taken it from us coercively. For those given to personal extravagance we might hope they’d be particularly conscious of the need to avoid taking the same approach with other people’s money.
But the incentives are all wrong aren’t they? It is not their own money, so why would they be anywhere near as careful with it as they would with their own?
At least politicians are in the public spotlight (even if the OIA still doesn’t apply to MPs), visible in their local communities. Ministers face possible questions in the House each week, and all politicians face the threat of loss of office, perhaps loss of job altogether. Elections do something to sharpen the focus of accountability.
And Cabinet ministers are accountable for government departments, themselves funded by annual parliamentary appropriation, a cornerstone of the protections for citizens built into our system.
There are no such protections when it comes to the Reserve Bank. All spending (and other management) decisions are made by one unelected official, not even directly appointed by a minister.
Reddell reminds us that the Governor of the Reserve Bank is the most powerful unelected person in New Zealand.
He further notes
- The Governor is, notionally, overseen by the Bank’s board of directors – but historically they’ve seen their primary role as championing the governor, not protecting the interests of citizens.
- There are no annual appropriations. By law, the bank can spend whenever it likes – and, after all, it “prints” the stuff (electronic and physical).
- The law provides for a (voluntary) five-year funding agreement, and if such an agreement is signed it is subject to ratification in Parliament. But the bank discloses the same level of detail about its plan for spending over the following five years as, say, the SIS does. Unlike the SIS, not even that one line number is binding.
- It is all but impossible to get rid of the governor, which means there is little or no effective accountability around their stewardship of our money.
As to the need for “a cultural capability advisor Maori“, Reddell notes that none of the Reserve Bank’s three main jobs has a race component – but he acknowledges there is a handful of other functions.
They can intervene in the foreign exchange market (one dollar for all), and they operate a wholesale payments system (NZClear), but it doesn’t alter the picture. There is just no specific or distinctive European, Maori, Pacific, Chinese, Indian or whatever dimension to what the Bank does (or what Parliament charged it with doing).
Finally, Reddell questions what Orr hopes to achieve with his “Te Ao Maori strategy … designed to build a bankwide understanding of the Maori economy”?
Given his statutory responsibilities, he asks: what makes the so-called “Maori economy” any different than the “European New Zealander economy”, the “Asian economy”, the “British immigrant economy”, the “Pacific economy” and so on, for Reserve Bank purposes and policy?
Monetary policy operates in much the same way whatever the skin colour or culture of the agent. Bank notes are as useful to us all. And financial sector regulation shouldn’t be any different.