Staff expenses at the Reserve Bank – which have increased by an average 4.4% a year since 2009/11 – surged by 14.8% in the 12 months to 2018/19.
Total staff numbers increased by an average 3.4 a year during those nine years but shot up by 19 in 2018/19 from 255 to 274.
But wait. We need more – or rather, the governor says he needs more.
The Taxpayers Union reckons we should ignore him.
According to the Dominion-Post, Adrian Orr this week told a parliamentary select committee the bank is anticipating “a much more significant increase” over its next five-year funding period.
“The begging letter is on its way to the Treasury for inspection and then we will be going into our funding agreement discussion with the Minister of Finance in mid-March,” he said.
Orr told Parliament’s Finance and Expenditure select committee he was not comfortable talking about the scale of the possible resourcing increase ahead of those discussions, but said it was “30 per cent perhaps”.
“The biggest percentage change in staff would be in supervision.”
Responding to Mr Orr’s comments before the Finance and Expenditure Select Committee today, Taxpayers’ Union Spokesman Jordan Williams said: “The Reserve Bank’s wage costs are out of control, costing taxpayers 16% more than just 12 months ago. If the Bank is wondering why it’s short of money, it should look in the mirror.”
“It’s not like the Bank is focused at its core business. Instead Mr Orr has launched into bizarre projects such as culturally appropriating tikanga Māori to brand the Bank as ‘Tāne Mahuta’. According to research done by the NZ Initiative, the Bank is ranked the worst performing regulator. It’s difficult to imagine more money will force the bank to focus on what is important.”
So what does the bank do?
Much the same as it did nine years ago, we imagine, although Orr does have his heart set on a programme of acculturation and diversification.
The first information provided in the bank’s 2009/10 annual report (when Alan Bollard was the governor) is that the bank is the nation’s central bank.
It has three main functions, which contribute to New Zealand’s prosperity and advancement.
Under the Reserve Bank of New Zealand Act 1989 (the Act), the Bank is given operational independence to manage monetary policy to maintain overall price stability. The operational details of the Bank’s inflation target are set out in a separate agreement between the Governor and the Minister of Finance, which is known as the Policy Targets Agreement (PTA).
The Act also directs the Bank to promote the “maintenance of a sound and efficient financial system” and to avoid “significant damage to the financial system that could result from the failure of a registered bank”. To achieve these requirements, the Reserve Bank registers banks and operates a prudential supervision system designed to encourage banks and non-bank deposit takers (NBDTs) to manage their risks carefully. The Reserve Bank acts as banker to the banks, providing inter-bank settlement facilities and related payment services. We advise the government on the operation of the financial system. We manage foreign exchange reserves to enable intervention in the foreign exchange market, if required.
The Reserve Bank issues New Zealand’s currency. As required by statute, we control the design and printing of the nation’s currency. We then issue currency to banks, which they, in turn, provide to their customers. We also withdraw from circulation and destroy damaged or unusable currency. The Reserve Bank also provides settlement services to the government and financial institutions. Our internal organisation is illustrated in the chart on page 13. Details of the Reserve Bank Board of Directors are provided on page 14.
The bank had total staff of 243 at June 30 2010.
It spent $26 million on personnel in 2009/10 (including remuneration, direct expenditure on training, and redundancy payments).
The governor (we assume) was paid between $580,000 and $589,999 and 90 staff received $100,000 or more.
One big change in the bank’s 2018/19 annual report, compared with 2009/10, is that the bank is called The Reserve Bank of New Zealand – Te Pūtea Matua
And what does it do?
We’re the Reserve Bank of New Zealand. Our work touches the lives of all New Zealanders and we carry that responsibility with pride. Our people are committed to our vision of being a Great Team and the Best Central Bank. And that involves significant changes to our culture, our capabilities and our communication. Have a read of our Annual Report to see how far we’ve come on this path during the last year.
The bank had 274 staff at June 30, 2019, which was 19 more than at the end of the previous financial year.
Staff expenses amounted to $36.5 million, up from $31.8m the previous year.
Operating expenses totalled $85.9m in 2018-19, $10.1m more than in 2017-18.
The main differences (according to the annual report) included higher staff costs, which related to an increased number of bank staff “across a wider set of projects”.
The top salary (again, we assume this was paid to the governor) was in the $820,000 to $829,999 range.
Total staff receiving $100,000 or more had climbed to 158.
The average age of service of staff in 2019 – by the way – was 7.1. In 2009/10 this was 7.9 but in 2011/12 it had reached 8.8.
So staff expenses are soaring while staff experience is shrinking.
Information included in “the year at a glance” section in 2009/10 was strictly economic and/or financial.
- The Consumers Price Index fell from 1.9 per cent to 1.8 percent;
- The Official Cash Rate was kept stable at 2.5 per cent throughout the year until June 2010, when it was raised to 2.75 per cent;
- The bank started to remove some temporary crisis liquidity measures;
- It released its prudential liquidity policy for banks;
- Regulations were introduced for non-bank deposit takers, making credit ratings mandatory, requiring a minimum capital ratio, and limiting related parties exposure;
- The Insurance (Prudential Supervision) Bill was introduced;
- The Reserve Bank became a supervisor under the Anti-Money Laundering and Countering Financing of Terrorism Act;
- Parliament ratified a new five-year Funding Agreement for the Bank;
- The Bank spent a net $41.2 million on activities covered by its
- A dividend of $290 million was paid to the Crown after balance date.
The 2018/19 report shows the bank’s activities have been expanded to embrace –
- Sharing “our Reserve Bank story” in a new way with the release of The Journey of Te Pūtea Matua: Our Tāne Mahuta;
- The launch of a Relationship Charter that sets out the bank’s commitment to appropriate conduct and culture in its regulatory engagements;
- Embedding a new vision “with new initiatives moving us towards being a Great Team, Best Central Bank”;
- Developing a strategy focusing on how the Reserve Bank can contribute to efforts to mitigate the effects of climate change;
- Beginning to develop and implement its Te Ao Māori strategy as an evolving and responsive way “to engage with the increasingly important and diverse Māori economy”;
- Working on “currency transformation” (The Future of Cash – Te Moni Anamata), and releasing two issues papers for consideration.
In the report Orr says
We have made good progress on our currency transformation work, aptly renamed Te Moni Anamata, ‘The Future of Cash’. The name change reflects the wide range of stakeholders we are co-designing this strategy with and for, and our awareness of the social impacts of our decisions in this area.
And having sorted out the future of cash, we may suppose, he will be wanting more of the stuff to pay his burgeoning staff.