In the new season of Juggernaut 2: The Story of the Fourth National Government<\/a>, Ruth Richardson says that the sense of urgency around kickstarting the economy after the controversial \u201cmother of all budgets\u201d in 1991 prompted her to send a messenger to Don Brash, the governor of the Reserve Bank, underlining the urgency of the situation.\u00a0<\/p>\n \u201cI signalled through an emissary to Don Brash it was red alert,\u201d she said on Juggernaut 2. \u201cHe had better start to reflect in the monetary policy settings what we were doing on the fiscal side.\u201d She did so in the knowledge that Brash was philosophically aligned. \u201cDon, as much as I was, was fully invested in the integrity of the reforms,\u201d she said. \u201cDon and I had a very good understanding. But I thought he should know.\u201d<\/p>\n The essence of the message was that were action not taken that led to a fall in interest rates and growth in the economy, the wider reform programme was \u201cin jeopardy, at risk\u201d. It was true, she accepted, that \u201cit\u2019s close to the line for me to send an emissary to say \u2018red alert\u2019.\u201d<\/p>\n When we put the comment to Brash, he said: \u201cI do recall a message from Ruth at some stage \u2026 that things were a bit tense, and she hoped monetary policy wouldn\u2019t be too long in getting some stimulus into the economy.\u201d<\/p>\n But, he added, there were mechanisms in place that would have made it hard for him to bow to political pressure. \u201cThe Reserve Bank publishes, and has done for a long time, quarterly assessments of the inflation outlook, and it\u2019s very hard to do those in a way which justifies an easing if the whole market can\u2019t see that evidence,\u201d he said. \u201cIt really is a system which makes it difficult for hanky-panky, if you like, for political influence on the bank. And that\u2019s the way it was designed \u2026 It would have been difficult for me to say, \u2018goodness, Ruth is worried, I better start easing policy,\u2019 unless I could demonstrate plausibly that the inflation output really was coming into line. And of course, fortunately, it was.\u201d<\/p>\n The official cash rate was not introduced until the end of the 90s but at the time the Reserve Bank, with its remit to achieve price stability as measured in an inflation rate between 0% and 2%, had a range of monetary tools at its disposal that in turn impacted interest rates. And its independence from the influence of politicians was for Richardson of critical importance \u2013 so important that she had previously staked her job on the principle.<\/p>\n In the second term of the fourth Labour government, Roger Douglas had advanced what he regarded as a defining piece of legislation, the Reserve Bank Act. The 1989 statute \u2013 which inspired lawmakers around many parts of the world \u2013 established the central bank as an autonomous institution, tasked with keeping a lid on inflation.\u00a0<\/p>\n With memories of the highly interventionist rule of Rob Muldoon, who was simultaneously prime minister and finance minister, still fresh in minds, this would \u201cmake it certain that no future politician can interfere with the bank\u2019s primary objective\u201d, said Douglas.\u00a0<\/p>\n Ruth Richardson, then National\u2019s finance spokesperson, had to stare down her colleagues to get National MPs to vote in its favour. Muldoon \u2013 whom Richardson had entered parliament determined to \u201cbury\u201d, she told the Juggernaut podcast \u2013 was the most vigorously opposed. He said at the time that Richardson\u2019s position showed she was \u201cstill in the economic kindergarten\u201d. Jim Bolger, Bill Birch and Winston Peters were also reluctant to back the bill, Richardson said.\u00a0<\/p>\n The bill was a matter of such principle, she said, that she staked her position on it. Had the caucus not supported the legislation, \u201cI would have resigned my finance portfolio, and I would have conducted a major public campaign against Bolger and Birch.\u201d<\/p>\n In August 2025, Christopher Luxon clarified comments around airing his perspectives on monetary policy by saying<\/a> he spoke regularly with the governor, but while they \u201cshare our respective observations and views on the economy \u2026 I want to be under no illusions. I do not direct the Reserve Bank. Its independence is sacrosanct.\u201d<\/p>\n Arthur Grimes, who worked at the Reserve Bank at the time and was involved in monetary policy decision-making, said he was unaware of any \u201cred alert\u201d warning, \u201cso Don must have kept it to himself\u201d. Grimes, who later became chair of the bank, told The Spinoff via email: \u201cI doubt he would have taken it on board so it didn\u2019t affect decisions. While unusual, there is no restriction on ministers stating their views, but the bank is free to ignore those views completely and Don obviously did.\u201d<\/p>\n Listen to Juggernaut 2 \u2013 the story of the fourth National government<\/a>\u00a0on Apple Podcasts<\/a>,\u00a0Spotify<\/a>\u00a0and all other podcast apps.<\/p>\n","protected":false},"excerpt":{"rendered":"Exclusive: In the year of the \u2018mother of all budgets\u2019, the finance minister sent an \u2019emissary\u2019 to the…\n","protected":false},"author":2,"featured_media":129548,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[492,89647,42,89648,89649,43,135,89650,40,38,41,39],"class_list":["post-129547","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-comments-enabled","tag-don-brash","tag-headlines","tag-juggernaut-2","tag-mother-of-all-budgets","tag-news","tag-politics","tag-ruth-richardson","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/129547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=129547"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/129547\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/129548"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=129547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=129547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=129547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The front page of the NZ Herald, the morning after the mini-budget of December 19, 1990<\/p>\n