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Speaker 1: Now the Finance Minister has revealed that there was some

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Speaker 1: top level legal advice that was sought over the Reserve

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Speaker 1: Bank's battle with Treasury, and this was overfunding. Nikola Willis

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Speaker 1: revealed it this morning. She found some of the bank's

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Speaker 1: accounting methods questionable.

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Speaker 2: I became aware that the Reserve Bank had engaged in

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Speaker 2: a practice where it was bringing forward under spins which

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Speaker 2: had the effect of ramping up its effect of budget.

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Speaker 1: Janetib Trainy is The Herald's Wellington Business editor and with

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Speaker 1: us Hey Jana Hey, seems like a reasonably significant step

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Speaker 1: to get that legal advice and doesn't it Well, I guess.

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Speaker 2: There was a pretty big debate that went on at

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Speaker 2: the Reserve Bank and with the Treasury. The Reserve Bank

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Speaker 2: gets an envelope of funding every five years from the

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Speaker 2: government effectively, and you know, there are a couple of

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Speaker 2: ways you can look at that. Look at that. You

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Speaker 2: can say, well, it can spend that envelope over the

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Speaker 2: five years as it wishes, or you can divvy up

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Speaker 2: that envelope year by year and then if you know,

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Speaker 2: if it underspends one year, it can carry that underspin

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Speaker 2: forward to the and spend more that year. So that's

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Speaker 2: what the Reserve Bank had done and Nikola Willis didn't

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Speaker 2: like that. And now under the new funding agreement that

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Speaker 2: takes effect next month, they can't carry forward underspends.

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Speaker 1: Okay, so yeah, now did she get any questions about

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Speaker 1: Neil Quigley.

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Speaker 2: She did, and actually, I would just go back to

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Speaker 2: this funding thing. I thought it was interesting she appeared

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Speaker 2: before Select Committee and Labor's Barbara Edmonds decided to focus

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Speaker 2: on this underspend issue. She sounded like she, you know,

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Speaker 2: was empathetic to the perspective that Adrian or had around this,

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Speaker 2: and you know, his his big argument was that the

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Speaker 2: government shouldn't get so involved with the Reserve Bank and

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Speaker 2: that the independence of the Reserve Bank was really important.

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Speaker 2: And you know, Adrian authought that the government was you know,

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Speaker 2: flexing a bit too much by trying to control how

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Speaker 2: it used its funding. So it was interesting that that

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Speaker 2: Barbara Edmonds kind of, you know, it seemed like she

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Speaker 2: was sort of had had some empathy for that perspective.

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Speaker 2: I'm not sure how well that that view would resonate politically,

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Speaker 2: you know, in terms of politicians always try to get

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Speaker 2: a few hits in these committees. But yes, she did

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Speaker 2: also ask about Neil Quigley, that's the chair of the

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Speaker 2: Reserve Bank Board, you know here that you've talked about

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Speaker 2: this a lot on your show. The way he handled,

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Speaker 2: you know, communication around Adrianaw's resignation was pretty terrible. Nikola

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Speaker 2: Willis has continued to say that she thinks the Reserve

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Speaker 2: Bank should have talked about, you know, not withheld information

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Speaker 2: about Oh's resignation for as long as it did. But

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Speaker 2: she hasn't gone so fast to say she doesn't have

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Speaker 2: confidence in Neil Quigley. She sees she still has confidence

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Speaker 2: in him, and you know, he's got an important job

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Speaker 2: to do because they need to appoint a new.

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Speaker 1: Governor totally and so obviously you need a little bit

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Speaker 1: of stability. So there is a case for him to

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Speaker 1: stick around for a little bit. I can see that.

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Speaker 1: But the Reserve Bank itself doesn't appear to have learned

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Speaker 1: anything about being more transparent. Hasn't because it's being weird

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Speaker 1: and cagey.

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Speaker 2: Well, you know, this is the thing. It sort of

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Speaker 2: shot itself on the foot because of the way it

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Speaker 2: handled Adrianaw's resignation. It didn't just tell us on the day, Look,

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Speaker 2: this is what happened, or it didn't tell us soon after. Look,

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Speaker 2: this is what happened. It's not that this is not

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Speaker 2: some big scandal. Because of that, you know, we are

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Speaker 2: now paying more attention to everything the Reserve Bank does.

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Speaker 2: And one of the members of its Monetary Policy Committee,

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Speaker 2: that's the committee that sets the OCR, Prisana Guy, he

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Speaker 2: did a speech at an Auckland Chamber of Commerce event

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Speaker 2: a week ago. This speech was newsworthy in my perspective

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Speaker 2: because it was only the second time that an external

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Speaker 2: member of that committee gave a speech. It's also newsworthy

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Speaker 2: because Prosana guy is someone who some people think might

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Speaker 2: be the next governor of the Reserve Bank. We wanted

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Speaker 2: to go along to listen to what he had to say,

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Speaker 2: and the Reserve Bank said no, They said no. Media

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Speaker 2: They published some slides that showed what Prisana talked about,

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Speaker 2: but the speech wasn't live streamed or or broadcast. So

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Speaker 2: you know, that has raised a few eyebrows because whatever

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Speaker 2: anyone on that committee says can be market sensitive. You know,

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Speaker 2: they might give insight into you know, what the committee

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Speaker 2: might do next with the OCR. It is good practice

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Speaker 2: for that information to be widely available now I have

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Speaker 2: no reason to believe Prasana said something that was, you know,

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Speaker 2: that would give some people information they could trade on.

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Speaker 2: But it all just does amount to this sort of

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Speaker 2: picture of the Reserve Bank being particularly cagy unnecessarily KG.

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Speaker 1: Perhaps it's weird in cag Jene. Thanks very much, appreciate it,

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Speaker 1: Jane to Pirani, The Herald's Wellington Business editor. For more

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Speaker 1: from Heather Duplessy Allen Drive, listen live to news talks

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