Formats and related files
Accessible HTML version
Only the Recommendations and Background sections of this Cabinet paper are extracted below in HTML. If you require a full HTML version please contact [email protected] and cite DEV-20-SUB-0073 as a reference.
Cabinet Paper DEV-20-SUB-0073: Reserve Bank of New Zealand 2020-25 Funding Agreement
I recommend that the Cabinet Committee:
- note that, as required by the Reserve Bank of New Zealand Act 1989 (the Act), I have negotiated a five-year Funding Agreement with the Governor for the period 1 July 2020 to 30 June 2025.
- note that the proposed funding profile will see an annual average uplift in the Bank’s operating expenses of $46 million per year over the five-year period. Net operating expenses will increase from $79.9 million in 2019/20 to $123 million in 2020/21.
- note that I have agreed to the removal of certain operating expenses from the scope of the funding agreement. The exclusions include litigation expenses, property management expenses, Security Custodian expenses, bank and broking fees, and provision of ESAS and NZClear services.
- note that I intend to sign the five-year Funding Agreement (see attached) as soon as possible and have it ratified by resolution in the House before it takes effect on 1 July 2020.
- The Reserve Bank of New Zealand (The Bank) does not receive appropriations to cover its operating expenses. Instead, under the Reserve Bank of New Zealand Act (the Act), the Minister of Finance and the Governor are required to enter into a five-year funding agreement to specify the amount of the Bank’s revenue that it can retain to meet net operating expenses each financial year. The current funding agreement covers the period from 2015 to 2020 and is set to end on 30 June 2020.
- The Bank has submitted a proposed Funding Agreement for 2020 to 2025 for my approval and this has been discussed with Treasury officials. It is my intention to sign the Funding Agreement as soon as possible and have it ratified by resolution in the House before it takes effect on 1 July 2020.
- Under the Act, the Funding Agreement must be presented to the House within 12 sitting days of it being agreed or varied. The Funding Agreement must then be ratified in the House by resolution before it becomes effective.