RBNZ says it’s underfunded and understaffed

On Thursday, Finance Minister Grant Robertson will outline his five priorities for next year’s Budget, but the minister was blindsided on Wednesday, firstly by the leaking of these Budget priorities and then by a public plea from the Reserve Bank for extra funding. 

Deputy Governor Geoff Bascand told a select committee the Government had been told the bank was short 15 full-time staff in the team that looks after banking regulation.

The concerns aren’t new. The under resourcing of the regulatory wing was raised by the International Monetary Fund when it conducted a review of the stability of our financial sector. 

The report was based on research conducted before April 2017. Then, the IMF recommended increasing the bank’s resources for regulation, and advised that this should be a short term priority. 

But the select committee was told today that the bank hadn’t even started addressing the personnel deficit.

Governor Adrian Orr told the committee that the bank had looked at “reprioritisation” before staffing. The bank also looked at “thematic reviews” of the industry.

This included, “stress testing of the banks and capital adequacy because we’d rather a much higher fence at the top of the cliff, rather than having to clean up the mess at the bottom”.

But opposition finance spokesperson Amy Adams says that’s not good enough. Today she called on Orr to request more money from Robertson.

“If he thinks he’s that under-resourced he should go and tell the Government and tell them he needs more,” she said. 

Adams said the fact that the main banking regulator was under-resourced was a big issue for the Government. 

“When you say you’re significantly under-resourced in looking after our banks and insurance industries, it’s pretty significant.”

National MP Andrew Bayly said the cost of an additional 15 staff was minuscule in light of the $450 million dividend the bank returned to the Government. 

Orr himself said that now was the time to resource-up and ready the bank for a crisis. 

“The time when under-resourcing most shows up is generally during a time of crisis and we aren’t in one of those times,” Orr said.

“But hence it’s when you want… to put the roof on the hay shed while the sun is shining,” he said. 

The issue of staffing levels is currently being looked at as part of the second stage of the Reserve Bank Act Review, which is currently underway. 

Adams told the committee she hoped there would be no crisis before Phase II of the review is completed with the introduction of legislation in 2020.

Robertson said he was aware of the bank’s issues around staffing, but the bank would have to line up alongside other agencies that were also requesting extra resource. 

“I've certainly had issues around Reserve Bank staffing raised with me from time to time and we’re taking a look at that,” he said. 

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