Funding for the Reserve Bank will be reduced, the Finance Minister says.
Both the government and the central bank board agreed to the reduced budgeted operating expenses, Finance Minister Nicola Willis said.
“The bank initially sought funding of $1.03 billion for the coming five years, but the Treasury advised me that that amount did not represent good value for money.
“The new agreement allocates the bank operating expenses of $750 million and capital expenditure of $25.6 million for the period.
“That equates to average operating expenditure of $150 million a year, 25% less than the bank’s $200 million operating expenses budget for the current financial year.”
Reserve Bank of New Zealand (RSNZ) said the five-year funding agreement has been set at $750m, with some elements of RBNZ’s spending excluded from the agreement.
Board chairperson Neil Quigley said the new budget “presents an opportunity for RBNZ to shape ourselves for the future”.
“Our priority in the coming months will be to work with our people to redesign our way of working to optimise our resources while continuing to deliver on our mandate,” he said.
The new agreement reflects the government’s push to identify cost savings and demonstrate value for money across all departments.
In her statement, Willis said the number of full time equivalent staff had grown at the Reserve Bank in recent years, up from 255 in the 2017/18 year to 660 in January this year.
“Benchmarking analysis performed by the Treasury shows that several of the Reserve Bank’s non-legislative functions, particularly in the People and Communications teams, appear overstaffed,” she said.
“Both the board of the Reserve Bank and the Treasury are of the view the new expenditure limits are appropriate,” Willis said.
The new agreement will apply from July 1, 2025.
The announcement follows Adrian Orr’s abrupt resignation as the Reserve Bank’s governor last month.
The reasons for his departure have yet to be made public.
