Adrian Orr pushed back on Nicola Willis in final meeting, minutes show

Wednesday, 30 July 2025

Former Reserve Bank governor Adrian Orr criticised a budget cut proposal, defended a bank policy and “expressed frustration” about the bank’s relationship with the Treasury in his final meeting with Finance Minister Nicola Willis, according to a document released this afternoon.

There has been considerable speculation over what unfolded at the meeting on February 24, shortly before Orr walked out the bank and just four days after the bank’s chairperson, Neil Quigley, apologised to a senior Treasury staffer for Orr’s behaviour at an earlier meeting.

The Treasury initially refused to release minutes of the meeting, which was also attended by Quigley, then deputy governor Christian Hawkesby, Treasury secretary Iain Rennie and four other officials.

But it has now relented, citing “the passage of time” and the public interest.

The minutes appear to make clear that Orr pushed back against Willis’ expectations for a review of tougher bank capital rules that he is believed to have viewed as an important part of his legacy at the bank, and that a rift had open up between him and the board on the minimum funding the Reserve Bank required.

Hawkesby, and then Orr, left the 45-minute meeting shortly before it ended, but there is no evidence in the minutes that the discussions became heated.

Willis opened the meeting by stating she wished to discuss the Reserve Bank’s bank capital requirements, competition work programme and its next funding agreement, according to the two-page minute.

“The minister noted private sector analysis suggesting New Zealand had amongst the most stringent capital requirements internationally and this would weigh on economic growth.

“The minister asked about the trade-offs and setting of risk tolerance and how the Reserve Bank’s judgements take account of wider economic objectives.”

Quigley responded that it was always intended that its bank capital settings would be reviewed from time to time and that he was open to bringing forward such a review.

But Orr noted there was a significant amount of analysis underpinning the bank’s current settings and that the bank considered them to be “in the middle of the pack internationally”, the document states.

“The governor was confident in the cost-benefit analysis that showed that there were positive net economic benefits from the policy settings,” it continued.

Willis then “wanted to understand” why some parts of a review of the impacts of the Reserve Bank’s policies on competition would not be completed until 2028 and “what could be done to achieve faster progress”.

Orr responded that there were policy and legal reasons for the time frame, according to the minutes, but they show Willis expected further explanation.

“The minister indicated she expected to see further advice from the Reserve Bank on progress with implementing competition initiatives in a timely manner, and explanations of any legal or other impediments to faster implementation.”

The Reserve Bank’s funding arrangements were the third topic discussed at the meeting and may have been the most contentious.

“The governor indicated that management had provided a $900m funding proposal that he supported, however the board did not support this and requested a $750m proposal,” the minute states.

“The governor made it clear that he did not support the Treasury view that funding of around $690m was adequate and he expressed frustration regarding the relationship between the Reserve Bank and the Treasury,” it records.

After Orr left the meeting, Quigley indicated that “the board’s view of the required funding was closer to the Treasury’s assessment than to the Reserve Bank management’s view”, the minutes state.

Quigley told reporters on the day of the announcement of Orr’s departure on March 5 that his departure had been “a personal decision” and that his own relationship with Orr had been very good.

Asked then whether “policy, conduct or performance issues” had been at the centre of Orr’s departure, Quigley — whose tenure as chairperson of the bank is due to end on June 30, next year — said “there are no issues of that type that are behind this resignation”.

Hawkesby was appointed governor of the bank for up to six months, following Orr’s departure.

Willis told The Post on Tuesday that the topic of recruiting a permanent governor was discussed when she had a scheduled meeting with the Reserve Bank last week, but declined to say what she had learnt.

She believed the process was “being conducted well,” she said.

A Treasury spokesperson noted the minute of the February 24 meeting was prepared by the Treasury “for its own internal record-keeping purpose”.

“It is a high-level summary of the main points from the meeting and the Treasury did not consult with other attendees in its preparation.

“Given the document was not approved by other attendees the matters contained in it cannot be safely attributed to Mr Orr,” she said.

The reference to a $690m budget for the Reserve Bank referred to the Treasury’s “preliminary assessment of the operating expenditure” for the bank’s five-year funding agreement, she also noted.

“This was based on a high-level top-down assessment, which estimated that $692.1m would be a sufficient overall opex expenditure limit over the five-year period.

“However, at that point, the Treasury didn’t yet have enough information to carry out a detailed bottom-up analysis of operational expenditure needs. Once we received more detailed information from the Reserve Bank, we were able to perform a bottom-up analysis, which resulted in a revised expenditure recommendation,” she said.