Reappointment of Orr as RBNZ Governor Evokes Chorus of Criticism

The Ardern government has reappointed Adrian Orr for a second five-year term as governor of the Reserve Bank of New Zealand.

Finance Minister Grant Robertson said the RBNZ board unanimously recommended his reappointment.

He said the central bank had been going through considerable change during Orr’s first term and his reappointment would make sure the changes were bedded in.

But the reappointment has brought a chorus of criticism from Opposition parties. National’s  deputy leader Nicola Willis says

National is “appalled” by the Finance Minister’s decision to re-appoint  Orr without first completing an independent review of the Bank’s performance.

“In recent years, Adrian Orr as the Chair of the Monetary Policy Committee signed off on an extraordinary programme of money printing and cheap lending that pumped tens of billions of dollars into the economy. That programme directly contributed to house prices rising 28% in one year, inflation rising to a 32-year high, and record bank profits”.

ACT leader David Seymour was equally fierce in his denunciation of the reappointment.

“Despite a term of poor leadership, poor focus and poor outcomes, Adrian Orr has somehow been reappointed for another term as Reserve Bank Governor,” says Seymour.

“In September I sent Finance Minister Grant Robertson an extensive letter outlining the many reasons we can’t afford another term of Adrian Orr in the role.

“He has shown poor leadership throughout his term, punctuated by high staff turnover and a failure to accept any responsibility for these issues”.

However  the  Finance Minister defends  the  reappointment and  says in light of global conditions, it is a time when stability and continuity are paramount for the Bank.

 Robertson says Orr has demonstrated the skills, knowledge and experience to help steer the financial system through the 1-in-100 year economic shock of the pandemic.

“I am happy to endorse the recommendation of the Board. I have full confidence that he will continue to display the same integrity and leadership in performing his duties as Governor in what is still a challenging environment.”

Orr was appointed in 2018 to succeed Graeme Wheeler and his term was set to expire in 2023.

He is a former head of the NZ Super Fund, chief economist at the Reserve Bank, Westpac and National banks, and has worked at the OECD and Treasury.

Orr has overseen the RBNZ expanding its scope, with monetary policy widened to include employment as well as inflation targets, taking climate change into consideration of policy, making banks hold more capital, tougher regulation of banks and insurance companies, and a broader engagement with te ao Māori.

Critics  have  directed  fire  at the RBNZ for its bond buying, and cheap finance for banks as fuelling the hot housing market and current spike in inflation, and the subsequent response of ratcheting up interest rates.

Orr has responded that the RBNZ has taken a “least regrets” approach opting to do run the risk of doing too much rather than too little to support the economy and households.

Critics  also  note that when appearing in front of the Finance and Expenditure Committee last week Orr refused to accept the Reserve Bank had got anything wrong, despite massively overstimulating the economy, causing consumer price inflation, asset price inflation, inequality, and now higher interest rates.

A report on the RBNZ’s handling of monetary policy over the past five years is due out shortly, and the central bank is also consulting on the remits it operates under.