Reserve Bank lifts lid on what made Adrian Orr quit

Wednesday, 11 June 2025

The Reserve Bank has released a raft of documents shining the first real light on the sudden departure of its charismatic former governor Adrian Orr.

The documents show Orr did not believe the central bank could adequately fulfil its functions in light of budget cuts agreed between the Reserve Bank’s board and Finance Minister Nicola Willis.

Orr announced he would leave the bank on March 5, weeks before the Government and the Reserve Bank announced the bank’s funding would be cut by about 25%.

His resignation also came amid ongoing demands from Willis for the bank to review the rules surrounding how much capital banks should hold to cover their loans, but the Reserve Bank said that documents indicated that was not a significant factor behind his resignation.

At the time, the Reserve Bank was left to explain his absence in a short press conference a few hours after a brief statement was sent out.

Chairperson Neil Quigley at that time had little to say, except that it was “a matter for Adrian”.

“He's decided that he's on leave, and he's comfortable with that decision and with me being here to talk to you,” Quigley said on the day of the shock announcement.

Willis was equally tight-lipped but in a statement today said she did not “view it as proper for me to speculate on that matter when I was not a party to the employment discussions that led to his resignation”.

“It has now become clear that it is the Reserve Bank’s view that [Orr’s views on funding were] what precipitated Mr Orr’s resignation. It is my view that it would have been appropriate for the bank to share that information earlier.”

In April, former deputy governor Christian Hawkesby was confirmed as Orr’s temporary replacement for a term of up to six months.

The bank said today Orr and Quigley attended a meeting with Willis and Treasury officials on February 24.

“By then it was clear that the board was willing to agree to a considerably lesser amount than the amount Orr thought was the minimum necessary.

“This led to Orr’s personal decision that he had achieved all he could as governor of the Reserve Bank and could not continue in that role with significantly less funding than he thought was viable for the organisation,” it said.

Orr and Quigley “entered discussions which led to Orr’s decision to resign”, it said.

“The matter was distressing for Orr. Both parties engaged senior counsel to negotiate an appropriate exit agreement. In the circumstances, an immediate departure and special leave for Orr was appropriate, although he agreed to provide handover support.”

The bank later amended its statement to say it was at a board meeting on February 27 that the board’s stance on the budget cut became clear.

The Reserve Bank did not release any information on the conduct or specific outcomes of the February 24 meeting between Orr, Quigley, Willis and Treasury officials, such as correspondence that may have flowed from its conduct or minutes of that meeting, despite those being within the scope of The Post’s information request.

A bank spokesperson said some information had been withheld under Section 9(2) of the Official Information Act which sets out a variety of reasons for allowing non-disclosure, including protecting people’s privacy and the risk of discouraging people from providing information in future.

Correspondence released by the Reserve Bank under the Official Information Act indicates Orr was willing to accept a 16.5% cut from its own initially proposed budget and the loss of about 100 jobs, which would have left the central bank with annual funding of $900 million and 585 roles.

However, its board eventually accepted annual funding of $750m to meet its operating expenses and just under $26m for capital expenditure.

Orr wrote to the bank’s board on February 14 revealing some of the stresses he was experiencing.

“The bank is under continuous pressure from lobby groups, and decisions made in the short-term or with no or misleading analysis,” he wrote.

In what could be read as a criticism of the finance minister he described the forthcoming February 24 meeting with Willis, at which he noted the bank’s budget and bank capital rules would be discussed, as “a current manifestation of this continuous challenge”.

His challenge was producing a budget proposal that the Crown “may want to hear” but which the bank’s board believed best met its strategic goals, he told the board.

“These options differ significantly.”

Willis, in a statement to The Post, said she was advised on February 27 that employment discussions had begun between the bank’s board and Orr.

“As is appropriate, I was not involved in those discussions about an employment matter … While I have always been able to speculate that Mr Orr’s views on funding may have contributed to his resignation, I did not view it as proper for me to speculate on that matter when I was not a party to the employment discussions that led to his resignation.

“It has now become clear that it is the Reserve Bank’s view that that is what precipitated Mr Orr’s resignation. It is my view that it would have been appropriate for the bank to share that information earlier.

“I am satisfied that the Reserve Bank’s funding agreement is sufficient for the bank to meet its statutory obligations. Both the Reserve Bank board and the Treasury advised me that the new expenditure limits were appropriate,” she added.

Prime Minister Christopher Luxon, asked about the reasons for Orr’s exit on Wednesday, said it was an employment matter for the Reserve Bank to deal with.

“It's no secret that our Government has expected value for money, and we expect all government agencies and entities to manage money well, and, you know, make savings where they need to make savings. And they actually have budgets that are fit for purpose and able to get on and do the core job they need to do.'

Reserve Bank chief economist Paul Conway told The Post last month that Orr was a much-loved governor who was missed, but that it had been business as usual since his departure and that it had been “a very smooth transition”.

“I think this institution is bigger than even Adrian Orr,” Conway said.

“There's a real sense of the ‘show must go on’, and it really has. We miss Adrian. It is a bit less fun around the place, less jokes going on — probably more appropriate jokes.”