Neil Quigley marched off into the sunset at 5.49pm on Friday. Late enough for the news to miss the TV 6pm bulletin.  It’s an old PR trick. Leaving the shock value to dissipate over the weekend before the start of play on Monday. 

It was evidence to me that successive governments and the Reserve Bank have failed to respect each other or realise that even though they are independent their actions combine and affect all of New Zealand 

In the Covid years the Reserve bank reacted and made money essentially free.  But the Labour government wanted to be seen to be doing something, so they started overspending and throwing borrowed money away.  The result was a superheated economy that crashed spectacularly and spectacularly quickly 

So, then the Reserve Bank made money expensive again to attack the overheating.  But the new Government, this time National, again wanted to be seen to be doing something so they cancelled government expenditure throwing us into a deeper economic funk than anyone had expected. 

In both scenarios the governments didn’t seem to realise what was happening at the Reserve Bank. And the Reserve Bank was too proud to take into account the stupidity of governments. 

Government’s need to heed the advice that they give Council’s.  Stick to the knitting. Their job is to do the basics.  Fund Health, Education and the Police.  And build us stuff to help us do business like roads and rail and ferries. Not to worry about the price of butter or the number of supermarkets.  And keep the borrowing as low as is reasonable

Meanwhile let the Reserve Bank worry about inflation and the big financial stuff. 

That’s how successful governments respected the independence of the Reserve Bank and how the last two amateur governments did not. 

The saga also shows how political Treasury is.  Their advice wavers in the wind of whoever is in power and is not to be trusted.