There can only be the barest handful of New Zealand economists who have had a career that is both as distinguished and varied as that of Don Brash. His career has spanned that of a research economist, an international bureaucrat, an orchardist, a corporate chief executive, a company director, the chair of important government task forces, a central banker, a Member of Parliament and Leader of the Opposition.
It is especially fitting that this award is being conferred in Christchurch. Don grew up here and received his schooling and graduated from the University of Canterbury. His father was a Presbyterian minister, who played a leading role in church governance. He served as General Secretary of the National Council of Churches and as moderator of the Presbyterian Church in New Zealand. Don’s grandfather, TC Brash, had been one of the very first lay moderators of the Presbyterian Church. So with his ecclesiastical antecedents it would not have been surprising had Don chosen a career in the church, so depriving us of his contributions as one of this country’s leading economists.
In fact it was a close call. Undoubtedly under some influence from his father, Don did consider a calling to the church. However he told his father (no doubt most respectfully) that God seemed to have an ample supply of ministers, but lacked Christian economists. And furthermore the thought of having to compose two sermons each Sunday did not appeal. One can only speculate whether Don subsequently called on divine inspiration when composing his Monetary Policy Statements every 6 weeks during his long term as Governor of the Reserve Bank.
Don performed well academically throughout his schooling. We can gain insight into his early appreciation of economics from the story of how he withdrew from a school essay contest, after learning that the prize was not 100 pounds as he had thought, but merely the interest on 100 pounds. This keen understanding of the role of incentives was to characterise many of his later approaches to economic policy.
An undergraduate arts degree in history and economics followed with an A in every paper. At the same time he was a leader in the Student Christian Movement, and keenly concerned for the welfare of others, whether in New Zealand or globally. But his left wing leanings and inclinations to the Labour Party were often the source of internal conflicts for the young undergraduate. In the words of Alan Blinder, he was seeking to combine a hard head with a soft heart.
Don arrived at the Reserve Bank in November 1961 and by March 1962 had completed his thesis for an MA in Economics. His supervisor at Canterbury was Wolfgang Rosenberg whose Marxist views had influenced Don’s early thinking about economic issues. The thesis was awarded first class honours. What is notable is the view he espoused in that thesis: that New Zealand’s reliance on foreign capital was a prescription for being exploited by foreign corporations.
After a short subsequent spell on the staff of the Reserve Bank, Don set off for the ANU to do a PhD thesis further pursuing the question of whether foreign investment was really desirable. The outcome was a reversal of his earlier views and a study which underscored the benefits to Australia. Notable is the fact that this was published by Harvard.
It was at this point that Don launched into what was to become an outstanding career as an economist. His appointment to the elite Young Professionals Programme of the World Bank was another early indication of the qualities that others were quickly recognizing.
In the ensuing years, Don gained an enormous amount of experience and recognition at very high levels, including working closely with Lester Pearson on the Commission on International Development and in Robert McNamara’s staff department at the World Bank. At this point all indications were that he seemed set for a meteoric career in international development. But a young family and tempting offers from home drew him back to New Zealand and the banking sector.
His interest in politics was always latent, and in 1980 and 1981 he unsuccessfully contested the East Coast Bays electorate, ironically perhaps as a National candidate and even more ironically defeated by Social Credit.
His subsequent career took him through senior leadership roles in the corporate, export and banking sectors. While in every case Don distinguished himself, perhaps more notable was that these years were punctuated with a large number of committee appointments both under the Labour and National administrations. It was here that Don maintained a close interest in and detailed knowledge of public policy issues, across a wide spectrum of economic policy.
This included taxation in the rural sector, accrual taxation, taxation of life insurance, inflation accounting and the design of the GST. He still regards his role as chairman of the committee which designed New Zealand’s GST as one of his most important contributions to public policy in this country. His roles also extended to chairmanship of the Economic Monitoring Group, which provided independent advice to the government, and as a member of the Planning Council.
But from his career in economics, it is surely the 14 years as Governor of the Reserve Bank that must stand out as a major highlight. On his watch we saw the RBNZ pioneer a radically new approach to independence, become the first central bank in the world to formally adopt inflation targeting, and set up a new form of contractual relationship with government. But above all we saw the inflation rate come down and recall Don constantly contributing to the economic policy debate and reminding us of the pernicious and regressive effects of high inflation.
From the perspective of the Association, it is Don’s contribution to economic policy that alone establishes his claim for this award. This contribution is not only confined to the obvious field of monetary policy. It extends far more widely. When taken in conjunction with his contribution to tax policy, a freer trade policy, exchange rate policy and banking regulation, Don is surely a very worthy nominee for recognition by the Association as a Distinguished Fellow.
Grant M Scobie