Our second reaction was to wonder exactly how it intends strengthening this supervision.
The answer is that a new five-year funding agreement with the Reserve Bank will provide it with an annual average budget of $115 million, up $35 million from this financial year.
The bank expects staff levels to rise 58% to 468 during that period. To do what?
Not only does the government intend protecting our financial wellbeing, however. It also aims to boost the finances of some people by introducing a law change to make it easier for forgotten funds in institutional accounts to be returned to their rightful owners.
Revenue Minister Stuart Nash has introduced an amendment to the Unclaimed Money Act 1971. It will update the rules controlling forgotten sums of money held by banks or other financial institutions and professional bodies.
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”.
Acculturation – the cultural modification of an individual, group, or people by adapting to or borrowing traits from another culture or a merging of cultures – is increasingly evident in this country’s public agencies.
The Reserve Bank of New Zealand has not escaped the process. In July 2018, soon after Adrian Orr became the governor, the Otago Daily Times reported the new head of the country’s august central bank was planning to shift the mindset of the institution towards better embracing the rich cultural diversity of the country.
Since he had taken up the post (the ODT reported)
… phrases like tikanga Maori and te reo have begun to feature prominently on its priority list.
The roll of drums sounded for many months — but the Reserve Bank’s call on how the country’s banks could withstand a one-in-200-year financial crisis landed with less of a bang, more like a whimper, last week.
At least, that’s how the markets interpreted the decision of the Governor, Adrian Orr, whose early belligerence had struck terror into the boardrooms of trading banks, particularly those with headquarters across the ditch.
By Monday, economists decided the changes, being softer than originally proposed, would prove less of a headwind to the economy than initially envisaged.
Michael Reddell, on his Croaking Cassandra blog, has scolded the Reserve Bank Monetary Policy Committee about its prowess – or lack of it – in the communications department.
His concerns were raised by the committee’s decision – announced yesterday along with the latest Monetary Policy Statement – to lop the Official Cash Rate by 50 basis points to 1 per cent.
As Westpac commentators noted:
“This was a stunning decision – in the history of the OCR, the only times the OCR has been cut by 50bps or more have been after the 9/11 terrorist attack, during the GFC, and after the Christchurch earthquake. We are very surprised that the RBNZ decided to cut 50bps in today’s environment.”
Pressure may be mounting for a broad inquiry into the banking industry following recent incidents involving the biggest trading bank in NZ.
Agriculture Minister Damien O’Connor said this week banks are “bullies” (according to a Radio NZ report). It’s a sentiment shared by many New Zealanders.
This sentiment has been rekindled by the departure of ANZ’s CEO David Hisco who, it had been found, passed off charges for chauffeur-driven cars and the cost of storing his wine collection as business rather than personal expenses.
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.
A single focus on price stability had generally served New Zealand well over those decades, he said. But the New Zealand economy and monetary policy practices had changed substantially since it was enacted.
The new agreement accordingly was modified to require monetary policy to be conducted so that it helps to support maximum levels of sustainable employment within the economy. The US Federal Reserve has long had employment among its monetary policy considerations.