Editorial: Bollard's legacy under review
WARWICK RASMUSSEN - DEPUTY EDITOR
OPINION: A chapter was turned in New Zealand's economic history last week, when Dr Alan Bollard stepped down as Reserve Bank governor.
To many he may be best known as the guy who every six weeks popped up to say what was happening to the official cash rate; whether it was going up, down, or - most likely - staying the same.
He held the role for 10 years, following on from Dr Don Brash, who went on, of course to lead National, then the ACT party.
While politics would be an unlikely step for Dr Bollard, we need to look at his past instead of his future.
A decade in such a powerful position deserves some scrutiny. The crucial question, which goes some way to defining his legacy, goes something like this: Is the economy in a better or worse state now compared with when he started?
The answer is clearly no.
Yet there are too many external factors to lay blame with Dr Bollard, but the governor's role and the financial levers they can pull do have a significant effect on the economy.
In Dr Bollard's time we experienced a relative boom time of low unemployment, surpluses and a skyrocketing housing market. About halfway through his term the wheels started to fall off. The bottom fell out of the property market and up went unemployment. In recent times, the overpriced New Zealand dollar put the squeeze on exporters.
When he took office, Dr Bollard's main focus was on inflation and keeping it between certain percentage points. But as the country's economy changed, as did the world's, he chose not to bring in more tools to lessen the damage here.
There is no questioning his knowledge of what makes an economy tick, but there seemed to be a real hands-off reluctance to tinker, even though our economy was in the doldrums.
Could he and should he have done something to try and put a lid on the over-valued New Zealand dollar, to protect our economic sector in the past few years? Most people would say yes. Critics would say any "tinkering" would have had little effect, because of all the outside influences on our economy.
Surely it was worth trying something, rather than blaming everything on the property boom and our inability as a nation to save money.
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