Nicola Willis: Finance Minister on the independent review into the Reserve Bank's performance during Covid
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What does the independent review say about the Reserve Bank’s Covid‑era decisions?
So the independent review of the Reserve Bank's COVID response got released, told us what we thought they blew it and we paid the price basically for the last six years or so. Nicola Willis has got her phone on on on the right noise now and is with us morning.
Good morning, Mike. Great to be on the show.
Now uh I could have written this myself. What's the value in this?
How does the single‑inflation‑target mandate act as a guardrail for the Reserve Bank?
The value in this is it affirms some important decisions this government's made. One, that having a single inflation busting mandate for the Reserve Bank is an important guardrail in keeping them focused on their task. Two, the changes we made to the Reserve Bank Charter to allow deliberative, accountable voting and positions from members on the Monetary Policy Committee is an important guardrail and introduces more accountability to the decision making. And finally, that going forward, the Reserve Bank can keep getting better if it has an attitude of ongoing improvement because the report still has recommendations about things they could do better in the future. So all of that matters. We're about to have an election.
Why were changes to the Reserve Bank charter and voting rules introduced?
Labour, New Zealand First, their position is let's get rid of that that single mandate, let's go back to adding extra things to the mandate that make things sound good, but actually have in very recent history resulted in dire consequences to
P We. Take the double mandate out for a moment though and look at the overarching rules. What's your assessment of the overarching rules versus the individuals in the room?
Well, the report is quite specific on that. It says we think even with a different group of people in the room, because of the lack of guardrails and the flexibility that had broadly been introduced for the Reserve Bank, the same mistakes could have been made even if you had better individuals in the room. Now, I personally also have a view that with different personalities in the room, you wouldn't have s had such a drive in one direction.
What risks do dominant personalities pose to Monetary Policy Committee decisions?
No.
Uh and you wouldn't have had such a drive to consensus. But we've put an actual rule in place now that stops that happening with the voting on the monetary policy committee. Was
or a bully?
Well Uh uh, there would be no evidence for me to give you in this report that supports that conclusion. 'Cause
that's the conclusion I came to because I couldn't explain it any other way.
How will the report’s recommendations improve the Reserve Bank’s future performance?
You had Robertson who was compliant and complacent, or both. Uh you had or who had an ego and you had a monetary committee who seemed to just go along with them despite the fact that people all over the world were looking at this going, This takes no sense to us.
Well, put it this way, when I look at what's happened in recent history with recent individuals, I think it's really important that Parliament protect against dominant personalities always getting their way on the Monetary Policy Committee. It's why I was keen to introduce those voting records, those accountability measures. And I do think you have to protect against that. To be a governor of a reserve bank, you have to be a pretty strong personality, but you, in my mind, are they going to be way better at the job if you're open to alternative views and you can be persuaded by fact.
Appreciate your time, Nicola Willis, who is the uh the finance minister of course.
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Chapters
5 chapters
1
What does the independent review say about the Reserve Bank’s Covid‑era decisions?
0:00–0:16
2
How does the single‑inflation‑target mandate act as a guardrail for the Reserve Bank?
0:16–0:56
3
Why were changes to the Reserve Bank charter and voting rules introduced?
0:56–1:46
4
What risks do dominant personalities pose to Monetary Policy Committee decisions?
1:46–2:08
5
How will the report’s recommendations improve the Reserve Bank’s future performance?
2:08–3:03
Speakers
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