Treasury pushed for steeper Reserve Bank cuts
Thursday, 4 September 2025
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The Treasury suggested cutting the Reserve Bank’s total operating and capital budget to $719 million for the five-year period ending in June 2030, before Finance Minister Nicola Willis struck a slight compromise with the bank’s board, newly-released documents show.
Treasury suggested the $719m total budget on February 13, at a time when the bank’s board appeared to be seeking just over $1b in funding over the five years.
It said it did not support the bank’s proposal because of “significant value-for-money concerns”.
Its more specific objections included the bank not sufficiently considering cuts to activities the Treasury viewed as not core to its business, an assumption its costs would be impacted by a 3.6% inflation-rate, and a request for $22m for what Treasury deemed “ambiguous contingencies”.
The Treasury queried a $119m bank bid for “maturity uplifts” on grounds that were redacted from the documentation.
Former Reserve Bank chairperson Neil Quigley emailed a senior Treasury staffer a week later acknowledging former governor Adrian Orr had lost his cool with him during a meeting when the budget was being discussed.
Orr formally agreed to resign on March 5 following an apparent breakdown with the board, triggered in part by disagreement over the depth of the cuts the bank should agree.
The documents released on Thursday indicate the Reserve Bank then revised down its total funding request to $800m and the Treasury revised up its suggestion to $756m, before Willis eventually agreed a total five-year budget of $776m with the bank’s board, with Treasury’s approval.
The bank is expected to cut about 142 roles as one result of the budget cut, reducing its workforce by about a fifth.
A Reserve Bank spokesperson said it expected to release full details of its restructure next month.
“We are committed to handling this process with care and consideration. The wellbeing of our people remains our top priority as we work towards ensuring we have the skills, capabilities, processes and systems needed to deliver in our new operating environment,” she said.