Treasury Secretary Alan Bollard appointed RB Governor

By NZPA

Thursday 22nd August 2002

Treasury Secretary Alan Bollard has been appointed Reserve Bank Governor, the Government said today.

Dr Bollard has been with Treasury for four years and is considered something of an outsider choice.

He replaces Don Brash, who stepped down before the election to take up politics and is now National's finance spokesman.

Acting Governor Rod Carr had been considered a strong contender.

Dr Bollard was nominated by the non-executive directors of the Reserve Bank Board and the nomination has been accepted by the Government, Finance Minister Michael Cullen said.

"Although I am obviously very pleased that the board has chosen someone of such high ability, it was with mixed feelings that I accepted their recommendation because it means I will lose Dr Bollard as Secretary to the Treasury," Dr Cullen said.

"He has been enormously successful in changing the culture of the Treasury into a more open and outward looking organisation and was always a pleasure to work with."

Confirmation of Dr Bollard's appointment will be subject to the conclusion of a contract of employment and to the negotiation of a new Policy Targets Agreement (PTA).

The Government wants monetary policy outcomes to move closer to those of Australia, Dr Cullen said.

That means he wants the RBNZ to be more flexible in implementing the bank's target of keeping inflation between zero and 3 percent.

"I am confident Dr Bollard and I will be able to negotiate a PTA which is satisfactory to each of us and to the broader financial and business community and which will serve New Zealand well," Dr Cullen said.

Dr Bollard was appointed as Secretary to the Treasury in February, 1998.

He was chairman of the New Zealand Commerce Commission from 1994 and before that, was director of the New Zealand Institute of Economic Research, a position he held for seven years.

Dr Bollard, 51, has also worked as an economist in a variety of positions in Britain and the South Pacific.

The primary function of the Reserve Bank is to deliver "stability in the general level of prices".

Although appointed to Treasury while the National Party was in power, Dr Bollard has overseen a transformation in the Government's financial and taxation watchdog from a market-driven organisation to one that sees a much larger role for Government in financial affairs.

Dr Bollard is married to investment banker Jenny Morel, one of the country's leading venture capital specialists.

He was the first outsider appointed Secretary to the Treasury since World War 2. At the time of his appointment, he said he favoured incremental change rather wholesale, sudden change.

Among those who Dr Bollard beat to the job were two former RB deputy governors, Peter Nicholl and Murray Sherwin.

Others considered to be contenders include Reserve Bank chief economist David Archer, ANZ managing director Murray Horn and Deutsche Bank chief economist Ulf Schoefisch.

Dr Cullen went on the offensive before the election, criticising the central bank for rigid operation of monetary policy by aiming for the mid-point of the 0 to 3 percent inflation target.

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