Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2)

I move, That the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2) be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

💬 Mr DEPUTY SPEAKER: Is the member going to speak?

I most certainly am. I was just making sure that you had the time to write down my proposal. This is a critical piece of legislation. Indeed, no other single economic policy initiative could deliver so much in terms of benefits to the New Zealand economy. In fact, there is no more important piece of legislation that would benefit the rank and file provincial voters who hitherto have been voting for the National Party. That will surely wipe the smiles off those members’ faces tonight.

The intention of the bill is clear and compelling. The bill’s purpose is to give the Reserve Bank the flexibility it needs to promote growth, exports, and employment, as well as price stability. The reasons why an amended Act is urgently needed are straightforward. As we predicted, the NZ$1 is now nudging upwards, again way above US80c, and New Zealand is not paying its way. No amount of flimflam written by the National Party’s research unit and given out every Wednesday afternoon for National members to repeat will alter these fundamental facts.

In 2013 the fundamental economic problem we face is a deep current account deficit. For the year ended June 2013, the current account deficit totalled $9 billion—equivalent to 4.3 percent of GDP. As at 30 June 2013 New Zealand’s international liability position was—listen to this—$151.3 billion. That is a whopping 71.1 percent of GDP. Those figures used to frighten the PIGS of Europe—that is, Portugal, Italy, Greece, and Spain—and they should be frightening us. As a nation we are simply not earning enough and not saving enough. Instead, we are getting deeper and deeper into debt and again resorting to selling assets to foreigners because of a persistent current account deficit. We are persistently pursuing policies that will not work, and shortly there is a bill coming up after this bill that seeks to change industrial legislation in this country. My message to all those exporters out there in New Zealand who are watching tonight’s speech—because they will be watching it to see whether there is some glimmer of hope of getting the National Party backbencher’s member’s bill up—if they are a farmer, and a dairy farmer at that, they will know that they will be possibly losing $125,000 to $130,000 a year because of a massively overvalued dollar. My message to those people in “Export New Zealand” is when will they ever learn that the very people whom they are voting for and giving praise to are their worst economic enemies.

There was a time when the National Party would never have contemplated this. In the time of Hamilton, Holland, Holyoake, Marshall, and people like that, they would never have contemplated these sorts of measures—that is, playing up to the financial markets of downtown Queen Street and the bankers and internationalists, and forgetting the people who generate the real wealth of this country. So tonight’s speech is to them as well, for it is time for them to wake up.

The main factor underlying the current account deficit is a grossly overvalued dollar. We are getting deeper and deeper into debt and again resorting to selling assets to foreigners as some sort of panacea for our problems because of a persistent current account deficit. It is causing serious and deep harm to our export base. Many exporters are going out of business because they cannot compete internationally. Look at the rural towns around New Zealand, and now the small rural cities, the provincial cities, and see how many shops are closed and how much there is a lack of action. National members say in this House: “Oh, but we’ve got growth.” Well, we had growth for a hundred years, but the question is what is the quality of the growth and what is happening to the people who could save this country.

Within recent weeks we have seen the closure of the Shannon fellmongery and a Rotorua sawmill, with large job losses—more and more closures all the time. Virtually every week a business goes under because of a chronically overvalued dollar. Just recently, Independent Fisheries confirmed that it will close its Christchurch processing plant, resulting in 200 job losses. This is a colossal loss. No—what does the Government do? It prefers that overseas fishermen catch New Zealand fish, take it off overseas and can it, and sell it in New Zealand supermarkets. And the Government calls this sound economics!

💬 Denis O’Rourke: It’s a tragedy.

It is a tragedy—an absolute tragedy. The former National Party, which used to believe in great conservative principles, would never have contemplated it. But this crowd today are just obsessed with one thing: power at all costs. And whoever gets the money to finance the National Party’s campaign, the party is on that person’s side. It is high time that provincial “Export New Zealand” simply woke up to where their real friends in this Parliament lie.

A sensible, rational, authentic exchange rate—and I say “authentic exchange rate” because everybody says that the current exchange rate is too high, but this Government will not do a thing about it. An authentic exchange rate would have given those businesses a real chance of survival. The result of an overvalued dollar is persistent economic malaise, characterised by low growth and high unemployment. Therefore, the primary objective for the Reserve Bank bill that we have, the Reserve Bank bill that we propose, and the Reserve Bank operations that we support should be to put in place policy decisions that will increase export earnings, improve our international competitiveness, and give us a chance to go back up the world’s competitive record list, and not head down to the bottom, where we have constantly been going, particularly under the National Government.

The flow-on impact will be more jobs and a more productive economy. It will give the Reserve Bank the responsibility to frame its monetary policy settings so that the New Zealand dollar can be restored to a competitive level. The Government says that nothing can be done. You know, that is just utter humbug, and all sorts of economists would tell you that. I just read a recent commentary out of Australia about its problems with the high dollar as well. This commentator said: “The high dollar cannot last forever. But there is a limit to how long companies can go on losing money while waiting for the dollar to fall. We are allowing a temporary over-valuation to shut down economic capacity permanently.”—it will shut down and never open up again—“This is not how the successful Asian economies operate.” And, boy, how much that man is right. That is not how the successful Asian economies operate.

We need to ensure that the Government does something, that it stops saying that it cannot do a thing. It is all in the lap of the powerful markets, it says. It has its head firmly stuck in the sand. We have got money called international commodity. Europe, Japan, the UK, the United States—under 1 percent home mortgage rates. What are you paying—sorry, what are your colleagues paying? What are the constituents paying? Well, they are paying 5.5 percent, and it is going upwards as I speak. So if it is an international commodity, why are we not being charged international prices? [Bell rung] How many more minutes to go, Mr Deputy Speaker? Two? Excellent. Even in that short time I should be able to get some sense through to certain members over there, particularly the one who competed in Ōhariu last time and pulled all the hoardings down—unbelievable, actually. I cannot believe that these people are in the House.

The economic consequences of an overvalued exchange rate are being felt by businesses throughout New Zealand. Export businesses lose markets and profitability. Employees pay with their jobs, which is why trade unions like the Amalgamated Engineering, Printing and Manufacturing Union and exporter groups like New Zealand manufacturing and export associations are supporting amending this Act. All I am asking the National members over there tonight is what is wrong with letting the bill go to a select committee. What is wrong with letting it go to a select committee and letting the exporters and, dare I say it, Federated Farmers have an epiphany for a change and come along to support what helps their members? What is wrong with having a debate before the select committee, rather than just shutting things down so that no light of day occurs in this case?

One last message to the National Party is this. A number of you are on your way out of Parliament. And when you are out, on that night, when you feel dismal and miserable because you thought you might have been able to stay—

💬 Dr Paul Hutchison: Ha, ha!

No, not Mr Hutchison. Mr Hutchison knows that the game is up. He is jumping out of the ship. He is swimming to shore right now. He is a smart man, Mr Hutchison. He should be the Minister of Health. He was the only qualified guy there, but, no, no, they gave it to somebody who was a bank teller. So I am saying to the rest of them that the day of reckoning is coming and it is very soon. When that night happens and you have lost, and you know you should not have, think back to nights like this, when you ignored common sense and fairness and transparency. But do not ever say that a former National Party person, who has been around for a longer time than you and knows a bit about the game, did not try to enlighten you and warn you of your terrible fate because of your ignorance, stubbornness, and taciturn, non-political brains. Thank you.

It is always a pleasure to follow the member who used to be the member for Tauranga, Mr Peters. We do need to remember that he came into Parliament in the 1970s. I am not saying that there is anything wrong with that. Parliament should have experienced people. He is the same age as my father. I am very fond of my father, and I listen to him and I receive his wisdom, and that is quite right. But it is interesting to note that Bata Bullets are making a comeback at the moment—the Bata Bullets are making a comeback. Mr Peters is from the same era, but, of course, he never went away. He has been here the whole time, so he cannot make a comeback. But it is interesting that he is still promoting policies from that era, from the 1970s, when monetary policy was run by the Minister of Finance, his good friend Mr Muldoon. They would sit around in their crimplene suits, they would work on their typewriters, they would drink their gin and tonics at 3 o’clock in the afternoon, and they would figure out what to do with monetary policies. It was all essentially about—

💬 Rt Hon Winston Peters: I raise a point of order, Mr Speaker. It would be very obvious to you what was against parliamentary rules and Speakers’ rulings. I shall tell you what it is.

💬 Mr DEPUTY SPEAKER: Order! I have got the member’s point of order. [Interruption] Order! The member was casting a slur upon members, with implications of imbibing. I would ask the member to withdraw that comment and continue.

I withdraw that comment.

In essence, it was all about a little bit more inflation, and so when the economy was struggling the Minister of Finance would turn the monetary taps on and the result would be more inflation, down the line. The consequences of all that policy that Mr Peters is now supposing we should return to was that the savings of the hard-working people of this country were destroyed by inflation. The savings of a generation were destroyed. They would work hard all their lives, they put their money in the Post Office Savings Bank at 3 percent interest, locked away for 10 years, and then they found that that money was worth nothing, compared with what it had been, because of inflation, because of these sorts of policies. This political control of monetary policy fuelled the industrial relations nightmares that we had in the 1970s. It fuelled the speculation in asset prices around housing, and eventually it led to high interest rates. We reaped the whirlwind of those polices in the 1980s, when people who were trying to buy houses had to pay interest rates of up to 22 percent in Auckland. Just imagine how you could have survived. [Interruption] It was under the Labour Party, which had to deal with the pent-up inflation that had been built up over generations, built up over the decades of high inflation policies that now Mr Peters espouses.

The strategy of the 1970s, which we are dealing with here again today, was to steadily lower the value of the dollar. We started off at the start of the decade where US$1 bought about NZ$1.25, so we had a stronger currency than the US dollar, and over the decade we were lower and lower and lower. I have never quite understood the logic of what Mr Peters is saying, that somehow the road to prosperity for New Zealand is to have a lower dollar, so we can get rich by making our currency weaker. That is a very strange policy. What you need is an economy that can sustain a strong currency. It is true that overall people argue that the New Zealand dollar may be a little bit overvalued, and it swings, through circumstances. But you do not go around getting prosperity by lowering your currency in the long term. Did exporters do so well back then, when we supposedly had this high-inflation policy and a lower dollar? Well, all the exporters relied on supplementary minimum prices for their sheep and subsidies for their exports. Fletcher Building, which I wrote a history of, in 15 years never paid any income tax because of the export subsidies that it enjoyed. So how was that good?

Now we have got a strong export economy. Let us look back over the past 5 years, or at least let us just take a broader issue. The idea that has been supposed by Mr Peters is that something is drastically wrong with the New Zealand economy. Well, let us just look over what we have achieved in the past 5 years. Since 2008, when this Government was brought in, it was guided by two goals. One was to give New Zealanders a sense of security in difficult times, and the second was to set the economy on a growth path. When we looked around, we would tackle the issues that were holding New Zealand back, before the global financial crisis began. So under this Prime Minister’s strong and decisive leadership we have seen good progress, and we are heading in the right direction finally. The economy grew by 2.5 percent in the past year, and the forecasts are for growth around that level and perhaps a bit higher over the next couple of years. That sounds modest by historical standards, but it would leave us amongst the world’s strongest developed economies.

Businesses are more confident than they have been for a while, and that is important for rebuilding investment intentions. Last week we saw unemployment coming down further, against a background of increasing participation in the workforce, which is pleasing. However, unemployment is still higher than we would like. We believe that families and households have shown considerable resilience over recent years and the indications are that confidence is picking up. They are enjoying low interest rates—still the lowest in 50 years—relatively low costs of living, and moderate wage increases, and this is starting to show through in growing consumption. The Government is getting its own books in order. We are on track for surplus in 2014-15 and we will have choices, once we get to surplus, about repaying debts, and other priorities. New Zealanders are getting better public services, with improving results in difficult areas like educational achievement, and in welfare dependency, where this Government in the past 5 years has done more than anything that Mr Peters has achieved in 30 years in Parliament for vulnerable children and law and order. When we look at the ledger of what has been achieved in welfare reform in the past 5 years, it is magnificent.

We are now in a position where over the next 2 or 3 years we have the opportunity to test how much more we can improve on those indicators of a healthy community. How many more young people we can get across the line for National Certificate of Educational Achievement level 2, how many more vulnerable children we can put into early childhood education, how many more vulnerable families we can keep out of welfare and get into work, and—

💬 Rt Hon Winston Peters: I raise a point of order, Mr Speaker. This is the first reading of a very important bill, and if you examine that speech, particularly this part now, this member has never addressed one part of the bill at all.

💬 Mr DEPUTY SPEAKER: Order! That is a debating point. It is not a point of order.

I cannot expect a person of his seniority to understand the complex argument that I am building here. The complex argument I am building is that ultimately there is no foundation for this Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2), which is being put forward. The fundamental idea of this bill is that there is a major problem to be fixed. What I am trying to outline to the member, and I appreciate that I have to be a bit careful and slow in my articulation, is that this Government is doing an exceptionally good job in the economy, in difficult times. If you have got that situation, why would you then leap off into this wild area of speculation and return to the policies of the 1970s?

Let us just see what this bill proposes. This bill proposes that—[Interruption] It chokes me up, just to think of it. The bill proposes that the Reserve Bank of New Zealand Act 1989 should be amended to ensure that the primary function of the Reserve Bank is broadened to include other critical macroeconomic factors, such as the rate of growth, export growth, the value of the dollar, and employment, as well as price stability. I can tell you what that means. What that means, in code, is let us just have a little bit more inflation, and somehow that is going to fix all our problems. Somehow, if we just allow a little bit more inflation, everything will be solved. As we saw in the 1970s, that does not work.

Can I just outline some of the risks that were highlighted to the New Zealand economy today by the Reserve Bank in the Financial Stability Report. Although this Government has made good progress in difficult times, it would not be a good idea at this moment when, as the Reserve Bank has articulated today, we have an imbalance in the housing market, which is a risk to financial stability. We have high levels of external debt, particularly in the dairying sector. There is external indebtedness. There are risks of a downside in the global economy. We have only to look at whether or not the Chinese economy will continue to be as robust and as strong it has been. There is further financial stress in Europe. There is a sharp increase in long-term interest rates and a transition to a higher, tighter global monetary policy. There is also the risk of political intransigence in the US surrounding the public debt ceiling negotiations. So would this be, in any logical outline, a good time to change course on what we are doing at the moment, and leap off into some retro Bata Bullets - style policies of the 1970s, as has been proposed by Winston Peters? I do not think so.

I think that is why, drawing to a conclusion where we have got to in this speech, the National Party does not support this legislation and does not support what Mr Peters is trying to do. We do encourage him, in the strongest possible terms, to read his history and to look back over the experience of New Zealand in the past and realise that it is one thing to live it, and it is another thing to understand it, to realise what went on in New Zealand, and to rethink this bill and, in fact, to withdraw it. We will not be supporting it. Thank you.

We move to 5-minute calls.

I suppose the most notable thing about that speech from Mr Goldsmith was that he said the currency is a little bit overvalued—a little bit overvalued. Last year this country had the worst current account deficit in the developed world, according to the IMF. This year, and for the next 3 years, to the end of the projection period, it will have the worst in the developed world, according to the IMF. According to the OECD, it is the second-worst in the world, because they include Turkey—the OECD includes Turkey.

Mr Goldsmith, the problem with some historians is that they can never look forward; they can only ever look back. That speech was such an edited view of the past. He pretended that the Rt Hon Winston Peters’ Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2) took us back to the 1970s, a time when we did not have an independent Reserve Bank and when we did not have a floating currency. Mr Peters’ bill leaves us with an independent Reserve Bank, leaves us with a floating currency, but also tries to address this fundamental hollowing-out of the New Zealand economy caused by our prolonged current account deficit, a contributor to which is our overvalued currency.

💬 Paul Goldsmith: You’re going to support this?

We are supporting this bill. We are supporting this bill. After 25 years of the current Reserve Bank of New Zealand Act, it is time to have a look at it again. There are some wording changes I would make. I would prefer to look at an external balance objective, rather than an exchange rate objective, but we should be talking about this.

Last year I did a study tour of various notables on monetary policy. I believe that Winston Peters is right that we have got a problem. I saw, amongst other people, Jeffrey Frankel at Harvard University. He said two things that stuck in my mind. He said, firstly, that no one system of monetary policy is right for every country in the world. There is no universal principle there. Secondly, he said no one system of monetary policy is right for any one country all of the time.

After 25 years of this current iteration of monetary policy, it is time to look at it again. It is not sacrosanct. It is not writ by Moses on some ancient stone tablet, as Mr Goldsmith would have us believe. It is an area of policy that the Government should take responsibility for. He says that in the old days we used to have house price inflation. Well, actually, we had house price inflation that ran at roughly the same rate as general inflation. Now we have got house price inflation that runs way ahead of general inflation. We have got unaffordable house prices in Auckland to such an extent that the Reserve Bank is worried about the financial stability of the financial sector, and the Government has effectively delegated housing policy to the Reserve Bank. After the abject failure of its own policy, the Reserve Bank has been forced into a corner and has introduced loan-to-value ratios, which hurt most first-home buyers. We in Labour say that is an indication of how poor this Government’s policy is.

There is no doubt that New Zealand needs to broaden our export base. We need to get the investment going into the right place through a capital gains tax. We need to increase the depth of our capital markets by having a universal KiwiSaver scheme so that we have got more capital to invest in our own businesses. But we also need to look at whether we are hobbling our exporters and our import substituters by inappropriate monetary policy that drives the exchange rate and holds the exchange rate higher than it should be.

Who warned New Zealand that under current monetary policy we would end up with structurally higher interest rates than the rest of the world? No one. But we have done—but we have. We have got higher interest rates, which mean that when a New Zealand company hits a bump it is more economic for an overseas buyer to buy that company than a New Zealand company.

We should be looking at this issue. It is an important issue. I am surprised that the National Party is so narrow-minded, so defensive, that despite a decrease in exports outside of the primary sector it will not consider helping our export sector by introducing a broader objective and more tools for the Reserve Bank. It does need more tools. It is not giving up on the inflation objective, but it needs to do more than just say it can look only at inflation, not the exchange rate. The Government then says it can do nothing about the exchange rate because it is all delegated to the Reserve Bank, and no one takes responsibility for the developed world’s largest current account deficit and the rising debt and foreign ownership that accrues from it.

I rise to speak to the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2). The member’s bill is in the name of New Zealand First leader Winston Peters, and it is set down for its first reading.

Well, guess what? I am a fan of recycling, but the member takes it too far—too far. Once again, it is his old hobby horse. We have seen it emerge years ago. Let us just get the Reserve Bank, turn it on its ear, add on a whole lot of extra tasks, have someone else to blame, and have a lot of Trojan horses around it—again, the New Zealand public, as they have many times before, are not about to be taken in by these show pony antics.

This economy, under the careful stewardship of our Minister of Finance, Bill English, is in safe hands. To even acknowledge that there are any points of value in this bill would be to negate the great work that is being done at the moment. We have, under this administration, wages growing. Cost of living increases have been modest. Interest rates are at 50-year highs. These are not to be denied, even by the great detractor himself. Getting on with the job and building a stronger economy is where New Zealand needs to be. We need to have safe stewardship and sensible ideas and notions.

This is all stuff and nonsense. There is not too much stuff in the bill, actually, because it lacks substance, much like the member who proposes it. When I look at what I have here, it takes us back 20 or 30 years. The member who spoke earlier is entirely right. These are failed old policies of the past. They will not work and cannot be countenanced.

New Zealand is doing better than so many other countries. This is the kind of divisive measure and foolishness, really—I mean, we had the Reserve Bank Governor in this morning. We were talking at the Finance and Expenditure Committee about what is going on with the economy, and the Reserve Bank talked to us about the things that it feels are going well. To broaden out its mandate in the way that this bill is seeking to do is abject foolishness. It will not work, it cannot work, it has not worked in the past, and it will not work again.

This member has been bellowing at others over the course of the last few hours, saying that they do not get to the point and do not address it. Of course, we saw a stunning example of that in the member’s own call on the Kaipara District Council legislation, which had nothing whatsoever to do with the bill. I will take my leave from that member briefly and concentrate on the good things that we are doing with this economy.

We are taking New Zealand forward by building a more competitive economy based on higher savings, less debt, and much healthier Government finances. We are not about the borrow-and-boom bust, the nonsense, and the failed measures of Labour—9 long years. Where is the parrot? Where is he? No, he is not there at the moment. Nine long years of a Labour Government, and where did it get us? A very bad financial situation.

The borrowing, the nonsense, and the failed policies of Labour have come together perfectly, actually, under this bill. I am not surprised that Labour supports it because it is the same nonsense. Next we will have the Greens standing up and talking about printing money, because that is actually what they would rather be doing, rather than having strong fiscal management and having to be disciplined and restrained around spending. Frankly, what is it—$8 billion minimum that Treasury has been trying to cost out? Some of the bribes—oh, I mean the arrangements—that Labour would have to come to if it got into bed with the Greens, such as the ridiculous notion that it is going to stop Transmission Gully. One of those members over there wants to get on her bike and stop everybody travelling out of Wellington in a safe and timely fashion—

💬 Rt Hon Winston Peters: Ah, Mr Deputy Speaker?

💬 Mr DEPUTY SPEAKER: Sorry, is this a point of order?

💬 Rt Hon Winston Peters: Yes. It is to do with the rules—

💬 Mr DEPUTY SPEAKER: Order!

💬 Rt Hon Winston Peters: I raise a point of order, Mr Speaker. [Interruption]

💬 Mr DEPUTY SPEAKER: Order! Points of order will be heard in silence.

💬 Rt Hon Winston Peters: Precisely. Thank you, Mr Deputy Speaker. There is a requirement that the issue of debate be relevant, and there is no way that this last little diatribe remotely refers to the bill. We have heard about the Greens—

💬 Mr DEPUTY SPEAKER: Order! Order! That is not a point of order. The member was debating. The member who raised the point of order may not be happy, but the member should not interrupt a speaker.

💬 Louise Upston: Point of order, Mr Speaker.

💬 Mr DEPUTY SPEAKER: I have already ruled on it. The point of order was out of order. Maggie Barry, you have just over a minute.

When we look at what is happening with the federal bank in Australia—let us look at how we compare internationally. The Reserve Bank monetary policy frameworks around the world amount to inflation targeting. This is what our Reserve Bank needs to concentrate on. This is what needs to happen if we are to continue to succeed as a nation.

I would not commend this bill to the House in any way, shape, or form. No word or policy in it is new, workable, or viable. It is doomed to fail. It is absolutely an abject piece of nonsense. It is with great pleasure that I have spoken, to kick it into touch, because that is what it deserves. It is arrant nonsense, to quote someone from the other side of the benches. I think that, much like the member itself, its time has not come, it is not relevant, and it will not add anything at all to our country. That is why I do not commend it or recommend it in any way, shape, or form to the House. Thank you.

I rise to speak on the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2). The Green Party does think that this bill is a worthwhile bill and we welcome its introduction into the House and its first reading, because the reality is that, despite what the previous speaker, Maggie Barry, was saying, New Zealand is a in a pretty delicate situation. Our current account deficit is the worst in the developed world. Our current Minister of Finance, Bill English, used to talk about rebalancing the economy. In 2010 he said that one of the factors that was the biggest threat to the New Zealand economy in the medium and long term was our external imbalances. We no longer hear National talk about the external imbalances; it has completely given up on that. Our current account deficit is forecast to increase to 6.5 percent over the next few years, which is going to leave us extremely vulnerable.

It is a problem that has persisted in New Zealand because we are a small country, but it is one that ultimately is leading to a hollowing out of our economy. We get into a downward spiral, where our exchange rate is overvalued, which leads to it being more difficult for our exporters to compete. We have heard from manufacturers and exporters that the currency is hurting them. At the same time we are importing more because our currency is too high, and what ends up happening is that we actually become more and more indebted to the rest of the world. That is the situation that we are in, even though the National Party would like to pretend that it is not. It is actually leading us down an unsustainable track, so the Green Party does support this bill.

The Labour Party will be supporting the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2). In fact, it is a policy that Labour announced 4 years ago. I want to quote Winston Peters. I heard him say earlier this week that imitation is the highest form of flattery, so I thank New Zealand First for that flattery—and the man has just come in.

I am one of the few members who were in this House in 1984 when we inherited an economy left by 9 years of a National Government. It was the Muldoon economy. The problem with Sir Robert Muldoon was that he applied ideas that he gained in the 1940s to the 1980s, when they were no longer applicable. Although the Reserve Bank of New Zealand Act, which Labour passed in 1989, was a splendid piece of legislation for its time—it did succeed in bringing 8 or 9 years of double-digit inflation back to low inflation—the ideas of the 1980s are no longer applicable in the 21st century and in 2013. We know that inflation is now not the problem that it was. We have got very low inflation; it is at the lower end of the Reserve Bank target.

What we do have are other severe problems. We have got the problem of unemployment, which has persisted above 6 percent, when John Key said 5 years ago that it was on its way down rapidly. It was not; it has persisted at a high level. We have got a current account deficit that the International Monetary Fund says is the highest in the developed world—the highest. It says that our dollar is overvalued by 15 percent. We see the price of that. We see the price of our manufacturing industry in decline. We see the price of our film industry suffering the biggest downturn in two decades. We see international education, a $2.6 billion industry, actually in decline. We see declines in our tourist industry, which is also an important source of employment. These things are aggravated by applying the wrong economic mechanisms to the problems of the 21st century.

We cannot go on spending more money, as we have for four decades, than we earn from our exports. But the high dollar at 15 percent over what it should be is killing our exports. We are borrowing to pay the difference and we are selling off our country because we owe that debt to the people we are borrowing from overseas. That is a serious problem. It will not be resolved by applying the solutions of the 1980s. It will be resolved by adopting the policy that is standard across the developed world of ensuring that our exchange rate does not kill our productive industries. That is why Labour is supporting the bill, and I commend it to the House.

The people of New Zealand need to understand that if any person on that side of the House promotes this policy of interfering in the Reserve Bank process, then we are going to send this country back to where Mr Peters and Mr Muldoon had it—straight up against a wall, broke, kaput. Having listened to Mr Goff talk about the state of the economy that he left this country in 5 years ago, can I just remind him that at that time the current account deficit was almost 9 percent of GDP. Today it is 4.3 percent. Net external debt had blown out to 84 percent of GDP. Net external debt now is 71 percent. Inflation was running at 5.1 percent under Mr Goff and Ms Clark. Now it is down to 1.4 percent. Food prices had gone up 11 percent in Labour’s last year of 2008. Food prices have gone up only 1.2 percent in the past year. The economy had been going backwards for four quarters when we came to take power in this country. In the last year it has grown 2.5 percent, and, as the Governor of the Reserve Bank said this morning, it is likely to go at 3 percent for the next year.

I would like to remind members across the House that in 2000, when they were all in this Parliament, Professor Lars Svensson, who did a review of our monetary policy, concluded that “monetary policy in New Zealand is currently entirely consistent with the best international practice of flexible inflation targeting, with a medium-term inflation target that avoids unnecessary variability in output”—

💬 Dr Rajen Prasad: Who said that?

—“interest rates, and the exchange rate.” I know that you will not understand what that means, but I can also then draw you to a similar study done by one Charles Chauvel. Some of you in the Labour Party across the House might remember who Mr Charles Chauvel was. He undertook a review when he was chair of the Finance and Expenditure Committee, and his review endorsed the current system. It found that “New Zealand’s monetary policy approach is now standard among small, open, developed economies, and is regarded”—by our advisers, the committee’s advisers—“‘as world’s best practice’”.

💬 Rt Hon Winston Peters: Where was the dollar then?

You were a part of the Government, Mr Peters—

💬 Mr DEPUTY SPEAKER: Order! The member will be careful about the pronouns he uses.

We were advised that more than 20 countries are now using a similar approach to monetary policy.

There is absolutely no need for this bill, the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2). While Labour, the Greens, and New Zealand First keep trying to talk our economy down and promote more taxes and spending, this Government is getting on with the job of responsibly managing the country’s finances and helping to build a more competitive and productive economy. And we are seeing results, as I have outlined. Our economy is one of the strongest growing of the advanced economies. Interest rates are low and inflation is under control. New jobs are being created and our public finances are improving, with a deficit halved for the second year in a row, and a surplus now within reach for next year, 2014. This bill would put all of these gains at risk. It would send inflation soaring and interest rates soaring. We do not want this outcome.

This bill came before the House a year ago and it was kicked for touch then. Winston Peters has recycled his hobby horse, and it should be kicked out for touch once more. New Zealand First, the Labour guys, and the Greens just do not get it. I will not be supporting this bill to be passed on for review by a select committee. It is an absolute nonsense. Thank you.

The Reserve Bank of New Zealand Act 1989 is now a quarter of a century old. It came into being in a generation prior to the internet, prior to email, prior to ATMs, and prior to all the electronic functions that we now have, such as mobile phones and all sorts of other electronic things that we are now accustomed to. And you would think that after 25 years such a fundamental Act as the Reserve Bank of New Zealand Act should be subject to at least some form of review to see whether that same Act that suited the 1980s is still applicable in the year 2013, heading to the year 2014.

For any Government of this country, regardless of your political persuasion, to put up an argument and say that after 25 years there is no justification at all to review one of the fundamental cornerstones of our economy, then, quite frankly, that Government is not acting in the best interests of the people of New Zealand. That Government is not acting in the best interests of the people of New Zealand; that Government is acting in the best political interests of its own self-serving financial fundamentals.

In that respect, I have been in export for the last 35 years, and I can assure you that there are exporters out there absolutely hurting in the meat industry, in the fishing industry, in the forestry industry, in manufacturing, and in all sorts of industries, because they say that our dollar is well and truly overvalued. They say that it is time that the Reserve Bank of New Zealand Act is reviewed, and that it is time that this Government woke up, took some responsibility, and became a mature, responsible Government on behalf of its people. It is time it actually said: “Let’s send this Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2) to a select committee, let’s give it the light of day, let’s let the businesses of New Zealand and the people of New Zealand have some say in this, and let’s hear what the people of New Zealand have to say about an Act that is a quarter of a century old and that has such a huge impact on the daily lives of the people of this country.”

And the politicians—the 59 of you in the National Party—next year, in 12 months’ time at the election, need to stand on the hustings and you need to justify to the voters of New Zealand and say: “We weren’t prepared to at least review it, to at least see how there could be some fundamentals changed, to see how we could assist export growth in this country, to see how our economy could perhaps thrive and move at a faster rate than would otherwise be the case under the current situation.” This is an appalling situation. This should not be a political situation; this should be a situation where you are all New Zealanders. You are all New Zealanders. Wake up and be New Zealanders for a change, and realise that New Zealanders out there, of all political persuasions, are at least saying that we should review this Act, see whether the Reserve Bank is working for the best interests of New Zealand, and let us do what is best for the country.

I rise to take a short call to support this bill, the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2).

💬 Rt Hon Winston Peters: Take a long one.

Indeed, Mr Peters—certainly. Coincidentally, the New Zealand Herald is today celebrating its 150-year anniversary. As its Asian affairs reporter in the early 1990s, the celebration in itself has certainly brought a sense of reminiscence to me to some extent. The then editor, Mr Gavin Ellis, was my very first employer in New Zealand, and the New Zealand Herald was owned by the Wilson and Horton families—proud Kiwi families. How time flies, and times have changed. This is very relevant to this current bill, because times have changed. It was 1989 when the Reserve Bank of New Zealand Act was enacted, and the global financial crisis has changed the rules of the game. The Reserve Bank of New Zealand Act will have to be updated for the 21st century. I commend this bill to the House.

Tonight is something that many politicians would look at as the luckiest day of their lives. To have the turkey shoot of the whole New Zealand First Party sitting in this House with a dumb, stupid bill, the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill (No 2), that we can just take and take to them, is the best thing that any politician could ever want to have. Five minutes of taking New Zealand First and Winston Peters down a peg or two is what we love to see. This is the turkey shoot we have been waiting for. Look at them sitting there. Who have we got? We have got the leader himself, but we will come back to him—we will come back to Winston. Asenati—Asenati does not know the difference between macro and microeconomics. Do you, Asenati? What is the difference? She does not know. She will not know the difference between macro and microeconomics. The difference is that macro is what Richard Prosser says in your caucus; micro is what—

💬 Rt Hon Winston Peters: I raise a point of order, Mr Speaker. In this House, as we well know—I know that some members may have been here for only 5 minutes, but they have learnt one thing, even on the day of induction here, which is that every member is an honourable member, and you cannot go shouting out all sorts of epithets and calling members by their first names. It is just unthinkable. Look, I know there has been a lowering of the standards in the last 5 years, but I am asking that you make sure that this member behaves himself, uses the Standing Orders properly, refers to members properly, and does not make a speech that is even worse than his tie.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you, Mr Peters. He made a good point.

For all those people listening, Winston Peters, the old member of Parliament, always makes an interruption when he is losing a debate. When he loses a debate, he raises a point of order. He will raise another couple of points of order during my speech, because he knows he is going to get done over like a dog in this debate. OK, Asenati, the difference between macro and micro is that macro—

💬 Le’aufa’amulia Asenati Lole-Taylor: I raise a point of order, Mr Speaker.

Oh, here we go. They are all learning off their boss now, are they not? Follow the leader—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! There is a point of order on the floor.

💬 Le’aufa’amulia Asenati Lole-Taylor: I understand that everyone should be referred to by their full name in this House, and to be called “Asenati” not once or twice but four times tonight is unacceptable after the Rt Hon Winston Peters has spoken about it.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. The member is quite right. Can I just say to the member that I know he is really hyped up. I understand that. [Interruption] Order! I am on my feet. The member will be seated. The member will use a member’s full name. It is respectful and it is a courtesy towards others.

OK. Thank you, Mr Assistant Speaker. The next one is Denis O’Rourke. Denis O’Rourke represents the youth wing of the New Zealand First Party. Denis O’Rourke does not understand that this bill is about the dollar. He still thinks we are talking about pounds and shillings, do you not, Denis? What is the difference, Denis, between the dollar and pounds and shillings?

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Order! The member has done it again.

Mr O’Rourke, yes. Behind him we have Richard Prosser. When Richard Prosser heard that Winston Peters was bringing in a Reserve Bank bill, he thought it was to do with the army. He thought there was going to be compulsory conscription of all people between the ages of 55 and 65. All the New Zealand First members would have to come and serve in the military—that is what Richard Prosser thought when he heard about this bill.

Then there is Barbara Stewart. I call her Barbs and there is no offence. I am not going to say anything about Barbs that is negative—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member is now trifling with the Chair. [Interruption] There will be order when I am on feet or someone will walk. The member is trifling with the Chair. He has been told once already that he must use the full name of members. If he does it again, he is out.

Barbara Stewart is a very, very solid member of New Zealand First. I have a lot of time for Barbara Stewart, and I will not say anything other than that.

But the real leader of New Zealand First is not here. Where is Brendan Horan when you need him? Where is Brendan Horan—the man who understands what Winston Peters means to the New Zealand First Party, the man who stared him in the eye and won? All the other members of New Zealand First are sitting there, loyal, diligent, and supporting. I did not talk about Andrew Williams. Andrew Williams does not actually want to vote for this bill. Andrew Williams is so hacked off that Tracey Martin got the deputy leadership that he does not actually want to vote for this bill, do you, Andrew Williams? You want to come to this side. I know. It is OK. It is all right.

The New Zealand First Party—this is the party that will keep New Zealand honest. Those people over there are the kinds of people who will keep New Zealand honest, and they are quiet as lambs—quiet as lambs on their boss’s big day out. Is it not so, so good to see the New Zealand First Party members where they should be: sitting there quietly, waiting for their leader’s next move? The leader does not know what to do—[Bell rung] But the leader—

💬 Hon Members: No!

I will keep going. I will keep going.

💬 Hon Members: Point of order.

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Order! I know that the member sat down, but no one else took the call.

💬 Iain Lees-Galloway: I raise a point of order, Mr Speaker. It is that the member took his seat and he should not be able to continue his call.

💬 Hon Todd McClay: It is clear that the member did not sit down; he dropped his notes.

No, no—now the member is trifling with the Chair. [Interruption] Order! We are going to move on.

💬 David Bennett: Oh, Mr Assistant Speaker! I have got 1 minute left.

The ASSISTANT SPEAKER (H V Ross Robertson): No, the member has already had his call, and he has resumed his seat. His time has run out anyway.

💬 Rt Hon Winston Peters: Well, Mr Speaker—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member has not called yet.

💬 Rt Hon Winston Peters: Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. I call the Rt Hon Winston Peters in reply.

I have got 5 minutes—this is 5 minutes, is it not?

💬 Barbara Stewart: Yes.

I will just take a brief time in my 5 minutes to point out that the National Party was so bereft of an argument that it put up a whole lot of lightweights and one heavyweight. First of all, National put up the man from Epsom, a man called Goldsmith, whose most famous act in politics—

💬 David Bennett: I raise a point of order, Mr Speaker. The member should use the member’s full name. I know that member has been here 5 minutes, but—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! [Interruption] Order! I know it is Wednesday night, I know it is members’ night, and I also know that we have a debate on the floor. I would ask members to show some courtesy to members speaking. Remember, courtesy is contagious.

National put up Paul Goldsmith, and right then we realised that the National Party had no defence to one of the soundest bills ever presented in this House in the last 20 years. The next person National put up, although they did not speak strictly in this order, was someone who used to specialise in weeds and how to grow flowers in wintertime, on Radio New Zealand and Television New Zealand—

💬 Le’aufa’amulia Asenati Lole-Taylor: And pot mixes.

—and pot mixes—and what not to do most of the time when the sun is not shining.

💬 Maggie Barry: I raise a point of order, Mr Speaker. I take offence at what was said about me.

The ASSISTANT SPEAKER (H V Ross Robertson): Sorry, I did not hear what was said about you, Ms Barry.

💬 Maggie Barry: Well, I did, and I found it offensive and I was hurt by it.

The ASSISTANT SPEAKER (H V Ross Robertson): Well, can I just remind members that—[Interruption] Order!

Speaking to the point of order, I find it very hard to believe that someone could be hurt by someone rising in the House and saying that when they were doing this job, which was befitting their talents, they did a brilliant job doing it. I cannot see how you could possibly be offended by that.

💬 Tim Macindoe: I raise a point of order, Mr Speaker. The right honourable member is now trifling with the Chair. When a member takes offence at a comment, irrespective of what that particular speaker might think, that member has a right to lodge her offence, and the usual thing is for it to be responded to appropriately by the speaker, not to be dismissed in that way by the person whose call was interrupted.

The ASSISTANT SPEAKER (H V Ross Robertson): Can I just ask members to relax, and when you are relaxed, relax even more, all right? The reality is that contributions in the House will be made with respect for the traditions of the House as enshrined in the Standing Orders. I ask members, and I crave your understanding, for that. An offence has been taken. I ask the member to withdraw.

I withdraw. We are very, very sensitive tonight, clearly.

Maggie Barry got up and told us everything she did not know about economics. It was a through-the-looking-glass speech—everything she said was a mirror image of how she behaves. Everything she talked about was a mirror image of what she believes.

But the plain, blunt fact is that the only one who was making any sense, but only in a vicarious, unusual way, was Mr Hayes. The member for Wairarapa got up and he spoke with the least amount of conviction I have ever seen him speak because he knows that, internationally speaking, what he said was ridiculous, and that is why he focused on the year 2000 and the year 1984.

But here is the fact: the last one, who came up from Hamilton, of course—his speech was so devastating that he collapsed before his argument did. He personally collapsed into his chair before his argument did. He had an epiphany and thought he could rise again for the closing 45 seconds.

I have got to tell the National Party this one thing: if those members think that in 2014, as the people go to an early election—for there will be one—they are not going to feel sorry about tonight’s debate, they are so wrong. There has been a huge sea change in New Zealand, and it has affected a lot of conversations and a lot of meetings around this country. One of the principal things that I am picking up, and I do travel this country extensively, to places where those members would never go, and what most of the people in the business world are saying—

💬 David Bennett: Like the races yesterday.

Yeah, I know—the Rivertons, the Kūmaras, and a whole lot of country towns like Dargaville, which those members have never seen or heard about. But the people are saying about the National Party: “These guys don’t do anything.” That is their principal complaint. “The National Party promised a brighter future. For whom?”, they are asking.

National will not do anything, and when a thing like a grossly overvalued currency, which the IMF says is overvalued by 20-plus percent—it is not a little bit overvalued, as Mr Goldsmith said. When the IMF says it is overvalued by 20 percent, and when somebody comes down as the head of the Reserve Bank and, like some Haitian witch doctor, pores it over in his mind and does not know what to do next—“Oh, maybe I’ll put the loan-to-value ratios in Kaitāia and Invercargill, and that’ll stop house price inflation in Auckland.”—and when you see people of great training desperate to be let out of the constrictions that the National Government has got them in, you know it is time to change the law.

Make no bones about it. I have seen in the past parties sitting there like that, cocky as anything, but this is its fifth year in office, and now there is creeping doubt. I will give those members some advice: do not believe what the cabal in Cabinet are telling you, because those members do not care.

💬 Maggie Barry: Not from us, there’s not—we’re doing fine. Worry about your own tribe.

They will not care about that member’s destiny, they will not care about the backbenchers’ destiny; they will be concerned only about their own destiny. And when that happens, it will all be sadly—

💬 Maggie Barry: Much like yourself.

Maggie Barry, it will all be, sadly, too late, even for you on the North Shore. Look at the parade of people who have been through that seat lately. What will save her?

Order! I am on my feet. Can I just remind members that when votes are being taken, they are supposed to be taken in silence, because any comment can be taken as intimidation and it can actually lead to a breach of privilege if someone should wish to lodge one. Thank you.