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Brash Resignation: Cullen On Radio New Zealand

GEOFF ROBINSON: Joining us now is the Minister of Finance Dr Michael Cullen, good morning Dr Cullen.

DR MICHAEL CULLEN: Good morning Geoff.

ROBINSON: What are you going to do for a Governor of the Reserve Bank now that Don Brash has resigned.

CULLEN: Well in the meantime the Deputy Governor Rod Carr becomes the acting Governor. He's a very able person, an economist, long been involved in the bank and strong in administration as well as Economics and then the Board begins the process of considering names and I will no doubt be taking advice independently as well about potential replacements for Don in the longer term.

ROBINSON: So they are likely to recommend someone but it's a Government appointment isn't it.

CULLEN: It's a Government appointment at the end of the day that's quite correct. It's not an appointment we're going to rush into. It's obviously something you have to think carefully about and the person you appoint is going to be the Governor for an initial 5 year term, is fully independent obviously as the Governor of the Reserve Bank is and often there's reappointment in this position going from past experience. So it's a very, very important appointment indeed.

ROBINSON: Now Dr Brash in his statement says he wishes to stress his decision is not motivated by any tension with the Minister of Finance or the Government. Were you surprised though that he decided to step down and stand for National.

CULLEN: Oh yes I was. I mean Don's political leanings have been pretty well known I think. He was a National Party candidate in the East Coast Bays byelection in 1980 and there have been no indication of any change in his views certainly not a move to the left in the interim. I'm still a bit surprised perhaps that at this relatively late stage in his career that he'd start entering politics but it will bring I have to say some very welcome maturity to the front bench of the National Party.

ROBINSON: That's assuming as you said in your release he gets high enough on the list to get in.

CULLEN: Yes well I think it would be very strange for the National Party to put him so far down the list that he didn't get in. It would be a very strange thing to do indeed to somebody of Don's level of competence and credibility.

ROBINSON: Richard Prebble has said that the shock resignation raises serious questions about the credibility of your Government's fiscal policies. Was that what you'd expect Richard Prebble to say.

CULLEN: I would expect Richard Prebble to say that. Clearly Dr Brash hasn't said that and indeed the Government's fiscal policies have been pretty supportive of (unclear) policy over the last couple of years. I mean we have stronger operating balance for the current year than previously anticipated. Those operating balances will be rising over the next couple of years so I'm a very conservative fiscal manager indeed.

ROBINSON: Would you expect to be jousting with him across the House then.

CULLEN: After the election no doubt because I assume that he will tend to push his way forward and be the National Party's finance spokesperson, one of them. You would have to feel a bit sorry for David Carter who has been left really holding the baby in the interim.

ROBINSON: Would you expect the National Economic Policy then to change as a result of Don Brash.

CULLEN: I think that's hard to say. I think that over time it might get a bit of a sharper focus than it has at the moment. At the moment it's pretty kind of fuzzy. I would expect Don to bring some greater level of intellectual rigor to National Party economic policy considerations.

ROBINSON: Does the resignation of a long standing Governor, internationally known and respected, raise difficulties for New Zealand.

CULLEN: No I don't think so. I've just been looking at the screen trying to see what impact this has been having on key economic indicators such the exchange rate and so on and it's not been having a huge impact. I think people know that Rod Carr is a very able man, perfectly capable of filling the job as acting Governor and that the Government will obviously be seeking to find a very competent person to take over from Don.

ROBINSON: Will you be looking at the employment agreement that the new Governor has perhaps doing things like changing inflation targets and things of that nature.

CULLEN: No I wouldn't anticipate changing the policy targets agreement. I think we fine tuned that to the point where it should be satisfactory for a new Governor to work with. But no doubt a new Governor would bring somewhat different perceptions, that's inevitably so whoever the person is.

ROBINSON: Thank you for joining us this morning.

CULLEN: Thank you.

ROBINSON: That's the Minister of Finance Dr Michael Cullen.

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