Taxpayers’ Union weighs court challenge over Reserve Bank and debt rules
Monday, 27 July 2026
The Taxpayers’ Union is considering taking two of the Government’s key economic institutions to court – challenging the Reserve Bank’s approach to inflation and questioning whether the Government’s debt settings comply with the Public Finance Act.
Executive director Jordan Williams says the lobby group is seeking legal advice on both matters, although any proceedings would require board approval and are not expected before next year.
The TPU would seek a judicial review of the Reserve Bank's approach to monetary policy, arguing the central bank is failing to properly discharge its statutory obligation to keep inflation within its target range.
The proposal comes as inflation climbed to 4.1%, above the Reserve Bank's 1-3% target band. The Bank's statutory role includes maintaining price stability over the medium term, with a focus on keeping inflation near the 2% midpoint.
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Williams says the Bank's decision to “look through” short-term inflation pressures – a term used by central banks when they expect price rises to ease without a strong policy response – raises questions about whether it is meeting its statutory obligations.
“It is questionable whether the Reserve Bank is doing that when time and time again they look through the short term,” he said. “A better way of putting it is that they say, 'Don't worry, we'll comply with the law, but tomorrow’.”
Williams said the challenge would focus on whether the Bank was meeting its legal obligations, rather than seeking to have a court decide monetary policy.
'We'd be arguing it’s a mistake of law. It’s not they’re misinterpreting their own obligations – it's the obligations that are on them.'
It comes after renewed criticism of the Reserve Bank's inflation approach.
In a column for The Post last week, editor-in-chief Matthew Hooton argued that someone – “perhaps the Taxpayers' Union” – should test in court whether the Bank was meeting its legal obligations.
“It is certainly on our radar,” Williams said. He said the issue had “been floating around for about a year”.
The Reserve Bank rejected the suggestion its approach may be inconsistent with its legal obligations.
A spokesperson said the Bank was not aware the TPU was considering legal action.
“The RBNZ is confident that the Monetary Policy Committee is acting consistently in line with the Monetary Policy Remit, the Monetary Policy Charter and the Reserve Bank of New Zealand Act when making monetary policy decisions,” the spokesperson said.
The Bank did not address whether its interpretation of those obligations could be vulnerable to judicial review.
The TPU is also considering a separate challenge over the Government's debt settings, arguing there may be grounds to claim the Public Finance Act's requirement for prudent debt management has been breached.
Net core Crown debt sits at more than $186 billion. The Government expects that to peak at 46.1% of GDP in 2027/28 before beginning to decline towards its long-term target of 40% of GDP.
However, Treasury's latest Long-Term Fiscal Statement He Tirohanga Mokopuna continues to project that net core Crown debt will pass 50% of GDP by 2033/24, 100% by 2050 and 200% 15 years later.
Williams said the concern was not simply the size of the debt, but whether current settings remained prudent given a more uncertain global environment.
Treasury’s previous advice on prudent debt levels had been based on a lower level of borrowing than what was now considered acceptable, he said,
Williams said geopolitical risks, including China, Ukraine and the Middle East, made the issue more pressing.
“Even if you accept all of the assurances about getting back into surplus, the level of debt still increases,” he said.
Finance Minister Nicola Willis said: “The Government takes seriously its obligations under the Public Finance Act. The Treasury assessed the Government’s latest Fiscal Strategy Report for compliance with the Act and raised no concerns.”