Nicola Willis: Finance Minister says she's satisfied with the balance struck over Reserve Bank funding

The Finance Minister is confident in the operational funding she's giving the Reserve Bank. 

Nicola Willis has signed the bank up to a new five-year agreement - 25 percent under the billion dollars sought by the central bank.

Willis says she's peeled back the $200 million a year the Reserve Bank had budgeted for - to $150 million.

"Not just - are we taking it back to that figure? But we're saying, we want you to stop this pattern of the number escalating every year. We want that to hold steady."

Willis says the 750-million dollar budget gives the Bank enough to carry out its statutory functions well. 

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Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News talkst Be follow
this and our wide range of podcasts now on iHeartRadio. Heather,
do for see us.

Speaker 2 (00:18):
So, the Reserve Bank's getting a funding boost. Its five
year budget is going to go from six hundred and
forty million dollars to seven hundred and fifty million dollars. Now,
this is interesting because this is the reason that Adrian
Or apparently quit because he wanted more money. Finance Minister
Nichola Willis is with us. Now, Hey, Nikola, Hi, why
are you giving them more?

Speaker 3 (00:36):
Well, that's not quite right, Heather. You're basing that on
our release from the Taxpayers Union and not for the
first time. They haven't got their facts quite in a row.
So the Reserve Bank requested initially a billion dollars for
the coming five years. We've paired that back to seven
hundred and fifty million. Now, when you compare their funding profile,

(00:56):
what's been happening is it's been increasing every year, such
that in the current year they were budgeting to spend
two hundred million. We've said actually next year one hundred
and fifty million, one hundred and fifty millions, twenty five
percent less than two hundred million, it's fifty million less.
And what's more, not just are we taking it back
to that figure, but we're saying we want you to

(01:17):
stop this pattern of the number escalating every year. We
want that to hold steady, but having to require restraint.

Speaker 2 (01:24):
Wasn't the funding agreement for the twenty twenty four to
twenty twenty five year just one hundred and forty nine
million dollars. They just managed to save fifty million dollars
across the previous twenty So it's actually you paed it
back to exactly the same amount as the last financial year.

Speaker 3 (01:38):
Well, what you're omitting is the fact that the agreement
was then increased in twenty twenty three. So in addition
to what they agreed back in twenty twenty, they came
back for seconds in twenty twenty three, added another forty
eight million to the operating budget that year, and then
another thirty million the following year.

Speaker 4 (01:56):
So those did that not take that to one hundred
to fifty that I'm talking about, Well.

Speaker 3 (02:00):
That was additional to what they had previously agreed under
the five year agreement. They came back for more in
twenty twenty three, meaning by the time time they got
to this year, the budgeted spending was two hundred million,
taking the combination of the five year agreement and the
increases that Robertson granted them. So we've said, okay, let's
start again. Let's take that two hundred million figure that

(02:22):
you've got yourselves, to peer it back to something more
sensible one hundred and fifty million, and then let's hold
that steady over time. Rather than continuing this slattin.

Speaker 4 (02:31):
Why not go harder?

Speaker 2 (02:32):
I mean, this is this is consistently the problem that
I have with your government is that you guys, you'd
tinker right, you could take I mean, these guys are
spending three times what they spent in twenty fifteen. Ten
years ago, they were spending fifty million. Now they're spending
one hundred and fifty million. If you wanted to, you
could slash properly.

Speaker 4 (02:48):
Why don't you?

Speaker 3 (02:50):
Well, because they do have very important statutory functions. They're
there to deliver monetary policy, stable inflation.

Speaker 2 (02:56):
They've also had it, but they were making we're going
to be fair financial They were doing it okay, with
two hundred and twenty five employees only six years ago.

Speaker 4 (03:03):
Now they've got six hundred and sixty. That's bloated.

Speaker 3 (03:06):
That is bloated, and that is why I have delivered
a twenty five percent. That is why, Heather, I've delivered
a twenty five percent funding reduction. And to put this
in context, when we negotiated this between the Treasury and
the Reserve Bank Board, their starting position was they wanted
a billion bucks. We've got them back to seven hundred
and even point starting position.

Speaker 4 (03:27):
Ten billion doesn't mean you have to worry.

Speaker 3 (03:28):
Second, the second point that's very important here is that
the Treasury's view was that the lowest number that they
would have comfort with was seven hundred and twenty million.
So we put that to the Bank and they said,
we think that that would curtail our ability to deliver
our very important core statutory functions around financial stability and

(03:50):
monetary policy. I want to look everyone in the eye
in New Zealand and in our international markets and say
the Reserve Bank is getting enough funding to do its
statutory functions. Well, that's an important undertaking for me to
be able to make, and I'm satisfied that this figure
puts me in the position to make that commitment. That's
the balance that we've struck.

Speaker 4 (04:08):
Nicola as always, thank you so much for your time.
That's Nicola Willis, Finance Minister.

Speaker 1 (04:12):
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