The appointments suggest a potential change of tune by the RBNZ board, which recommends who the finance minister should appoint to the MPC.
Back in 2019, when the MPC was first established (previously the governor was solely responsible for setting the OCR), the RBNZ board was cautious about appointing monetary policy researchers to the committee, as it was worried they could pose conflicts of interest.
Documents released under the Official Information Act show there was a lot of confusion among RBNZ and Treasury staff, as well as in the wider economics community, over whether experts in monetary policy had effectively been banned from joining the committee.
RBNZ board chair Neil Quigley said, in an email to a Treasury official, there hadn’t been an agreement to exclude researchers, and he was unaware of a 2019 Treasury report that said there had.
However, a former board member Chris Eichbaum in September told the Herald the board was very mindful of conflicts and did in fact “err on the side of saying ‘No, we won’t appoint people whose day jobs involve the very activities that the MPC is involved with’”.
Eichbaum said it was important external MPC members adhered to the principles of “confidentiality” and “unanimity”.
He said the board favoured “non-combative” and “non-adversarial” applicants, to ensure the MPC was functional. The board wanted members to robustly debate issues among themselves, but ultimately own the decision taken by the committee.
Come 2023, the RBNZ went to great lengths to highlight the fact researchers were in fact welcome to apply to join the MPC.
Gai hasn’t had any restrictions placed on what he can write while he works at the university.
However, he will need to adhere to the MPC charter, which prevents members from speaking out publicly about monetary policy matters without checking with other committee members first.
The issue is that the RBNZ doesn’t want members to go make comments that are contrary to the committee’s stance. This could confuse the market and undermine the effectiveness of the MPC’s policymaking.
Nonetheless, Willis and the RBNZ board are still conscious of conflicts of interest.
Willis said Capital Strategic Advisors will not undertake any work for financial sector clients while Hansen is a member of the MPC.
“As Carl Hansen is also an advisor to Meridian Energy, he will not participate in any discussion relating to Meridian Energy’s fixed-interest funding arrangements.”
Hansen was formerly the chief executive of the Electricity Authority and a special adviser to the Infrastructure Commission. He’s also worked for the RBNZ, Treasury and New Zealand Business Roundtable.
He describes himself on LinkedIn as being a “Regulatory economist with expertise in regulatory, network and infrastructure economics (with in-depth knowledge of the electricity and water sectors) and expertise in innovation, productivity and economic growth policies.”
Gai is a Financial Markets Authority board member, Deutsche Bundesbank senior research fellow and Bank of Canada academic adviser.
He previously held senior advisory roles at the central banks in Canada and England, and has worked at universities around the world.
Gai’s Auckland University profile says his academic work “applies ideas from network and game theory to understand the causes and consequences of financial crises”.
Quigley said Gai and Hansen would add fresh perspectives to the MPC’s discussions.
Both the RBNZ and Willis thanked Harris and Saunders, who have expertise in labour market and agricultural economics, for their contributions to the MPC.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.
