The Reserve Bank’s operating budget for the upcoming year has been reduced by approximately 25%. This spending cut, seemingly influenced by a rise in staffing levels, has been mutually agreed upon by both the central bank and the government.
Finance Minister Nicola Willis stated that the central bank had expanded immensely in recent years, with full-time equivalent staff increasing from 255 in 2017 and 2018 to 660 as of January 2025.
Compared to most government agencies that rely on annual funding through the budget process, the Reserve Bank negotiates five-year funding agreements directly with the Minister of Finance, who is advised by the Treasury.
Finance Minister Willis noted that both the bank’s board and Treasury considered the newly established expenditure limits to be appropriate.
“The bank initially sought funding of $1.03 billion for the coming five years, but the Treasury advised me that that amount did not represent good value for money,” Willis said.
The new agreement allocates $750 million for the bank’s operating expenses and $25.6 million for capital expenditure over the five-year period.
“That equates to average operating expenditure of $150m a year, 25% less than the bank’s $200m operating expenses budget for the current financial year,” Willis added.
“Benchmarking analysis performed by the Treasury shows that several of the Reserve Bank’s non-legislative functions, particularly in the People and Communications teams, appear overstaffed.”
“The new agreement will ensure that the Reserve Bank has adequate resources to fulfil its legal responsibilities while promoting heightened cost efficiency,” Willis said.