Willis was told she might need to remove Orr; it’s lucky it never came to that

Friday, 12 September 2025

Finance Minister Nicola Willis appears to have navigated the departure of the Reserve Bank governor and its chairperson largely unscathed, given we now know it could have been even more messy.

ANALYSIS: The penultimate missing piece in the jigsaw puzzle of Adrian Orr’s shock departure from Reserve Bank in March seems to have been filled in and it is an interesting titbit.

Treasury chief executive Iain Rennie texted Finance Minister Nicola Willis late on February 27 to say he’d been told by Reserve Bank chairperson Neil Quigley that an employment process was under way and one possible outcome was the bank might recommend she remove Orr as governor.

Willis responded: “Thanks for the update. I trust they have good legal advice”.

It would be going too far to suggest the text showed that — rather than walking out the door of the Reserve Bank in a fit of upset over budget cuts at the bank — Orr was instead pushed.

Based on previous OIA disclosures a lot had happened by the time Rennie sent that text to Willis.

By then, Orr had lost his cool with a Treasury staffer, walked out of a meeting with Willis and the Treasury early, told the board they were at an impasse and said he’d be out the office and that Christian Hawkesby was acting governor.

So it would be fair to conclude the text simply confirmed what we already knew, which is that there was a breakdown in the relationship between the former governor and the bank that centred on the board’s willingness to accept about a 25% budget cut and Orr’s unwillingness to stomach that.

Full details of Adrian Orr’s exit agreement with the Reserve Bank have yet to be made public.

By the time the bank told the Treasury that Willis might need to sack Orr, the breakdown in that relationship was already pretty much complete.

Should Willis, as Labour finance spokesperson Barbara Edmonds has suggested, have disclosed more of what she knew about the breakdown in the relationship between Orr and the Reserve Bank’s board, earlier?

In her defence, Willis made it clear when Orr’s departure became public on March 5 that she expected the Reserve Bank to front up.

But after Quigley then appeared to mislead people at a hastily arranged media conference later that day by saying Orr’s resignation was a “personal decision” and affirming there were no policy, conduct or performance issues behind it, Willis did tell The Post, via her spokesperson, that she was satisfied with the explanation Quigley had given.

Later though, she signalled concerns about whether the bank had been complying with the Official Information Act. And she appeared to encourage the Treasury to release a minute of a meeting she had with it and the Reserve Bank on February 24 that hinted at the breakdown between Orr and the board that we now know was then under way.

Willis would have had no obvious reason to have wanted to obfuscate the circumstances of Orr’s departure, especially given that it has more recently been revealed that the Treasury was pushing for deeper cuts to the Reserve Bank’s budget than she ultimately sanctioned, giving her cover.

It may be reasonable to accept her explanation that her earlier reticence to shed more light on the goings-on at the Reserve Bank was motivated by not wanting to say anything “that could be seen as politicising a sensitive employment process”, especially given the extent to which she had locked horns with the former governor when in Opposition.

There’s room for debate. But, overall, Willis appears to have helped rather than hindered the fuller facts going on record, while not at any point seeming to defend the Reserve Bank’s own miscommunications.

Quigley does not come out so well from the revelation that the bank thought on February 27 that Orr might need to be removed by the minister, given his later denial that there were any policy, conduct or performance issues behind his resignation.

Quigley stepped down from the bank’s board at the end of August after Willis left him little choice but to resign, and if there was any doubt that was the right decision on his part, there probably shouldn’t be now.

Willis would be entitled to breathe a huge sigh of relief that it never came to her actually having to force Orr from his role, given their often testy past relationship and the sensitivities around the independence of central banks.

The final missing piece of the Reserve Bank saga may be the details of the agreement Orr negotiated with the bank that prevented that scenario.

With the appointment of the next governor expected “imminently”, Willis must be crossing her fingers that the tenure of the next Reserve Bank governor throws up far fewer dramas.