Reserve Bank funding to be cut 25%, job cuts expected

Wednesday, 16 April 2025

Cuts follow abrupt departure of former governor Adrian Orr last month.

Significant job cuts are on the cards at the Reserve Bank after the Government announced it would cut the bank’s funding by about 25%.

Finance Minister Nicola Willis said the reduction in the central bank’s operating funding reflected the need for all government entities to identify cost savings.

The bank had sought just over $1 billion in funding over the next five years, “but the Treasury advised me that that amount did not represent good value for money”, Willis said.

Instead, the bank will be allocated $750m to meet its operating expenses and just under $26m for capital expenditure.

Fleur Fitzsimons, national secretary of the Public Service Association, said the bank was being “knee-capped”.

“This is a Government happy to axe experienced people charged with doing critical long-term thinking and gathering the evidence for making good policy decisions,” she said.

There has been speculation negotiations over funding may have contributed to former governor Adrian Orr’s decision to walk out the door last month.

Finance Minister Nicola Willis says benchmarking suggests the bank’s ‘People and Communications’ teams, in particular, are over-staffed.

However, it is also believed he had a strong difference of opinion with Willis over a review of bank capital rules.

Willis noted the Reserve Bank’s staff numbers had “grown hugely” in recent years, jumping to 660 in January, from 255 in the year ending June 2018.

“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.

“The new agreement will ensure that the Reserve Bank has adequate resources to fulfil its legal responsibilities while promoting heightened cost efficiency,” she said.

“Both the board of the Reserve Bank and the Treasury are of the view the new expenditure limits are appropriate.”

The reduced funding will apply from July.

Reserve Bank Governor Adrian Orr resigns abruptly, with Professor Neil Quigley, Chair of the Reserve Bank Governance Board, confirming there's no misconduct involved. Orr opts not to address the media.

A spokesperson for the Reserve Bank would not disclose when cuts on that scale were first discussed with the bank.

Willis has been contacted for comment.

The Reserve Bank said it was too early to say how the cuts would be implemented or what the possible impact on staff numbers might be.

The bank’s annual reports show staffing costs account for about half of its overall operating expenses.

Reserve Bank chairperson Neil Quigley said its priority in the coming months would be to “redesign our way of working to optimise our resources while continuing to deliver on our mandate”.

“To achieve this, we will need to look closely at our capital and operational expenditure, as well as our spend on personnel,” he said.