Reserve Bank of New Zealand (Economic Objective) Amendment Bill

I present a legislative statement for the Reserve Bank of New Zealand (Economic Objective) Amendment Bill.

DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon NICOLA WILLIS: I move, That the Reserve Bank of New Zealand (Economic Objective) Amendment Bill be now read a first time.

It is a highly symbolic and important act that we take today because we are remedying one of the greatest stains of the outgoing Government, and that is the stain of the cost of living crisis they have left behind them. Under the watch of the previous Government, inflation was allowed to ramp on unchecked, out of target, for 2½ years and that is far too long and has left New Zealanders suffering. So we, in this new Government, are committed to taking the actions needed to address the cost of living, and we understand that inflation is our enemy. It is our economic enemy, it has corroded the living standards of New Zealanders, it has taken pay from their bank accounts, it has made their lives more expensive. We cannot have good employment outcomes; we cannot have a good economy unless we get inflation under control.

So today, in this bill, we will be focusing the Reserve Bank on that objective: the economic objective of stability and the general level of prices. To do that, we will undo the experiment that the past Government embarked on. That was an experiment which they decided to embark on after 30 years of successful monetary policy in which, with one mandate, the Reserve Bank had kept inflation under control. But members opposite decided to make a change and introduce a dual mandate, and today we will remove that dual mandate; we will remove the economic objective in this Act to support maximum sustainable employment. That will return the Reserve Bank to a single mandate for monetary policy of achieving and maintaining stability in the general level of prices over the medium term.

Now, I want to acknowledge the ACT Party because both the National Party and ACT Party policy programmes for this Government set out our intention to introduce legislation to remove this dual mandate and to get the Reserve Bank focused on putting the lid back on inflation. We have committed to introducing this legislation within our first 100 days in Government, to make our intentions crystal clear, and I intend for this bill to be passed under urgency to amend the Act before Christmas.

When the dual mandate was added in 2019 it undid success in the past and, as we’ve seen, inflation in recent years has been consistently well above the Reserve Bank’s target of achieving and maintaining annual inflation between 1 and 3 percent over the medium term, as measured by the Consumers Price Index. That persistently above-target inflation is negatively impacting hard-working New Zealanders who are trying to meet their day-to-day living costs. We need to ensure that monetary policy decision makers have no doubt that busting inflation is our goal, and to do that they must have a much stronger focus on achieving price stability. I believe that having a dual mandate clouds monetary policy. By returning to a single objective, focused on achieving and maintaining price stability, the task of the monetary policy committee (MPC) is clearer, simpler, and therefore more likely to be met.

It is perhaps characteristic of the outgoing administration that where there could be one priority they tended to pick nine; that where there were three things that could have been achieved, they tried nine and achieved none. Under a single mandate approach it is also easier to determine when the monetary policy committee has or has not fulfilled its primary function. Now, I anticipate some of the comments from the members opposite, and I say that it’s important to note that returning to a single mandate will not require the monetary policy committee to discount the impacts of monetary policy on the real economy. Flexible inflation targeting, whereby the MPC has regard to the impact of monetary policy on the broader economy when determining how quickly to return inflation to target has been central to New Zealand’s successful inflation targeting regime for many years, and was the case prior to Robertson’s dual mandate hitting the books, regardless of whether there is a single or dual mandate, that remains the case.

Chlöe Swarbrick: What does Orr say in your meetings? What does Orr say?

Hon NICOLA WILLIS: So the member opposite, Chlöe Swarbrick, asks, “What does Adrian Orr say?” This is what he says in a letter that he has written to me. He says that “The Reserve Bank is supportive of your intention to amend the Reserve Bank Act to focus the economic objective of the monetary policy committee on achieving and maintaining price stability.” And he says, “The intended focus is consistent with the views we expressed in our recent monetary policy committee remit review, published in June 2023.” And I’d encourage the member opposite to read that review which made clear the Reserve Bank’s view that there needed to be a clearer statement of priority on the inflation objective.

The Reserve Bank goes on to say, “Giving the inflation objective priority will assist the credibility of the inflation target.” Because let’s face it, while the Labour Government were in charge, the credibility of that target was eroded. That’s not in the Reserve Bank piece; that’s my editorialising. “Maintaining the flexible inflation targeting approach”—I return to the Reserve Bank’s comments—“will best minimise unnecessary instability in output, interest rates, and the exchange rate, and simplifying the remit will clarify the Reserve Bank’s operational independence.”

Chlöe Swarbrick: Can you table the letter, Nicola?

Hon NICOLA WILLIS: I’m very happy to table that letter for the member.

Document laid on the Table of the House.

It is my intention, upon this bill passing in this House, that I will also publish a revised remit and charter for the Reserve Bank, which is necessary given the changed mandate. Let the message be very simple and very clear, let there be no confusion: ours is a Government which is going to get inflation under control. The Reserve Bank have the primary instruments for achieving that, and so we ask that they have that clear objective. But we know that we too must do our bit, that monetary policy needs mates. We know that the fiscal policies of the outgoing Government directly contributed to the inflationary position we are in today, and so this is but the first step in an agenda from our Government to get the cost of living under control, to strengthen the productivity of our economy, and to deliver better economic outcomes for all New Zealanders. Thank you, Madam Speaker.

E te Māngai, point of order. I just wanted to clarify that that letter will indeed be tabled and disseminated for the sake of the argument that we’ll be having under urgency over the next few hours.

I believe the Minister clarified that when she spoke.

Well, welcome to episode one of the new Government’s version of Back to the Future. Here we are taking us back at warp speed to 1989. In 1989, I was in seventh form, Ronald Reagan was still in the White House, the Berlin Wall was coming down, the thing called the World Wide Web was in Tim Berners-Lee’s mind, and it was also a period of time in New Zealand where, indeed, we had seen periods of extraordinary inflation. I remember growing up in the 1980s and seeing inflation at levels in double digits consistently and seeing the impact that that had on society. The Reserve Bank of New Zealand Act of 1989 was a direct response to that. It was also, in large part, a response to the actions of the then just-departed National Party Prime Minister Sir Robert Muldoon, who ran riot as both the Prime Minister and the Minister of Finance and put New Zealand in a position where we almost went broke, where the Reserve Bank was required to make sure that it went to ambassadors overseas and asked them to draw down foreign currency on their credit cards because New Zealand’s foreign reserves had been drawn down so badly. So, in 1989, the Reserve Bank of New Zealand Act was indeed world leading, but 30-odd years later, without a review of any substance, it was no longer world leading. It had slipped behind, and that is why the previous Government announced a review of the Reserve Bank Act on coming into office.

I think it’s very telling that the first two bills that this Government brings to the House are actually focused, deliberately focused, on taking away the focus on jobs and wages. They’re the two things—the first actions of this Government are to take us back to 1989 and to take the focus off jobs and wages, because that is what this legislation and, indeed, the next bill that is to come do.

This is an unnecessary, short-sighted bill. It is not evidence based. It won’t do the things that the National Party are telling New Zealanders it will do. They tell them it will reduce the cost of living, and we will find as we go through this debate today that that is in fact not the case. This is a bill that is designed simply to take us backwards to a time that has long since passed in New Zealand.

The other point I’d like to make at this point in the debate is to indicate that, obviously, the Labour Party will be opposing the bill, but also our very, very deep concern about the fact that this bill is not being referred to a select committee at this point. When we made the change to go the other way, we had a full public consultation process run by an independent panel and then we came back and then we put it through the House and put it through a select committee. That is what should be happening in this piece of legislation, and members opposite, who have often called for bills to go to select committee, might actually want to reflect on that.

The issue here is that this is not evidence-based policy, and to pick up just one of many of the comments that the Minister made in introducing it, there actually has not been a relationship between a country’s inflationary trajectory and its central bank mandate over the last couple of years. Let’s just look at it. For New Zealand and Australia, who both have dual mandates, our inflation peaked at either 7.2 percent or 7.8 percent, but in the UK, which has got a central bank with a primary price stability mandate, inflation peaked at 11.1 percent. So there’s no correlation there, as the member opposite might like to say.

It is important in the economy to make sure that people can do two things at once. I know it’s hard for the Government, but it is important. Mary Daly, who was a member of the US Federal Reserve, put it this way: “The enduring lesson of my childhood is that people need both jobs and stable prices. That is why a dual mandate is not a choice between two desirable things. It is a balance meant to deliver on a singular goal—a sustainable and expanding economy that works for everyone. That is the foundation of economic security.” That’s what the Reserve Bank should be doing: contributing to the overall economic wellbeing of New Zealanders. We changed the purpose of this Act, we changed the objectives of this Act to do two things: keep prices under control and keep people in work, and that is a laudable goal—

The member’s time has expired.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. It’ll come as no surprise to members opposite that, of course, the Green Party of Aotearoa New Zealand opposes this bill. We oppose this bill for three really, really simple reasons, and we’ve got five minutes to lay it out for the members opposite. The first, as was elucidated by the former Minister: this actually makes absolutely no difference whatsoever. The second is that it is unnecessary to change the law to actually get this outcome, as the Minister says that she wants to achieve, as reflected in the regulatory impact statement. And the third is that the Government still seem to want to have the monetary policy committee (MPC) have regard to maximum sustainable employment. This is unnecessary. It is unnecessary to change the law, it makes no difference, and they still want the monetary policy committee to have regard to maximum sustainable employment.

What that means is that what we are currently debating is largely, as far as I can kind of ascertain, something which oftentimes those who are sitting on the Government benches allege us of, which is empty virtue-signalling. Virtue signalling is defined, basically, as saying that you deeply care about something and then engaging in an action to ostensibly achieve that thing, oftentimes knowing full well that the evidence is not on your side.

I think it’s worthwhile to just unpack a bit of those three points, given that we’ve got the time to do so and given that we’re in urgency. I’m looking forward to the committee of the whole House, where I’ll be able to put a number of these questions to the Minister, but also, hopefully, by which point in time we’ll have that letter as referenced earlier disseminated for all of us to be able to debate fulsomely. Just on the point of this making absolutely no difference, the Minister of Finance—congratulations—will be aware that when we were sitting in the Finance and Expenditure Committee, oftentimes actually working together to try and get more information out of the Government of the time, we had a hearing from Adrian Orr and, obviously, the Reserve Bank of New Zealand on 24 November 2022 where I put to the Governor the question of whether that dual mandate had made any discernible difference in their decision making with regard to monetary policy. He said, on the record, “No is the answer.” I quote: “We haven’t come across any trade-offs of employment versus inflation. There is no conflict.” Therein lies the first premise: this is unnecessary because it makes absolutely no difference whatsoever to how the monetary policy committee is approaching its inflation-taming mandate.

The second thing is that it is unnecessary to change the law to achieve this outcome that the Government apparently wants, and that is outlined very clearly in the regulatory impact statement, which has just been tabled and is therefore available to any members of the public who may be punishing themselves, tuned into Parliament tonight. It says—and I quote; this is obviously from Treasury—“Owing to the value of an enduring and stable legislative regime for the Reserve Bank, the Treasury’s preference is for a new MPC Remit (only) to be issued, although it is recognised that issuing a new MPC Remit without amending the Act cannot fully meet the Government’s commitment to remove the dual mandate.” What is laid out there in public service workers’ language is basically that the Government cannot achieve its commitment, which is relatively nonsensical in the first place, unless it passes this legislation, but it can achieve the ends that it is trying to achieve without the means of needing this legislation and wasting hours of the House’s time in passing that legislation.

The third point is that we just heard outlined in the Minister’s own speech that she and the Government still want the monetary policy committee to have an eye on maximum sustainable employment, which I think, by the way, it’s worthwhile unpacking that we still don’t have a meaningful kind of definition for—but, none the less, the Government still want the MPC to have regard to that point.

So, therefore, the question really remains what the point is of this law that we are now debating in the House tonight and that we will spend hours working through and wasting time on to do something that could simply be achieved by the Minister putting forward that new MPC remit based on her own advice. Madam Speaker, this is a waste of time and the Greens oppose it.

Just before I call the next speaker, I just want to clarify for those that have been in the House for a while that under the Standing Orders, the first reading is now five-minute calls, apart from the first call—just if there are some people that haven’t been aware of that.

Thank you very much, Madam Speaker. In a rare burst of honesty, we just heard a Green member finish her speech by saying this is a waste of time. I completely agree with her and that was a good description of the speech she gave.

We heard from Grant Robertson, and the most interesting thing in his speech was that he said he made it to seventh form—not something I would have guessed—but I think we can be pretty sure that he didn’t do maths or economics, because he tried to argue that because Australia has a dual mandate and England doesn’t, and England had higher inflation than Australia at one point, the argument of removing the dual mandate is wrong. Now, no one that’s thought for a moment about these things would say that there’s a correlation from two data points. But I assume that Grant Robertson spent his seventh form doing art history and other things that didn’t equip him for being the Minister of Finance.

Back here in the real world, we know the history of monetary policy. In fact, we know it a long way back. Some people say that men spend too much time thinking about the Roman Empire. I don’t know anything about that, but what I do know is that the Roman Empire collapsed in part because of hyperinflation and debasement of its currency.

We know that some of the most horrific events of the 20th century were in part precipitated by hyperinflation across Europe. We know that when the Governments around the world went overboard with hyperinflation, or at least excessive money printing after the global financial crisis (GFC), we saw political instability. We know that when Governments printed too much money and created stagflation in the 1970s, we had economic and political instability that led to the reforms of the late 1970s and 1980s.

What we know on this side of the House is that Government has one simple job when it comes to monetary policy and that is to maintain price stability. It’s to give the people reassurance that a dollar in your pocket this year will be worth a dollar next year. And as soon as you take away that certainty, people realise that their efforts don’t make a difference, that some people who are asset-rich get wealthy as the Reserve Bank prints too much money. They realise that their savings aren’t worth as much as they used to be, that their wages aren’t worth as much as they used to be, as the thief in their pocket called inflation erodes the value of their savings and ensures that their efforts to earn their money don’t buy them as much at the end of the week.

The latest episode in that long historical story of Governments neglecting currency, from the denarius and the Roman Empire leading to its collapse to the GFC and the problems that we’ve had over the last decade with political instability and populist movements around the world—well, they’ve had a more recent episode right here in New Zealand. Grant Robertson, he of the seventh form art history but no mathematics—he is the guy who was responsible for printing far too much money under the monetary policy that said, “Hey, Reserve Bank, you don’t have to maintain price stability. You can do it kind of in the medium term. You can kind of print more money. If you do something with employment or maybe house prices, then that’s all OK.” The Reserve Bank took the initiative, and they printed dollar after dollar. In fact, pretty soon they were printing billions.

What New Zealanders saw all up and down the country was they saw the value of their savings and their wages eroding. They saw people getting stupendously wealthy, with a massive increase in house prices through the COVID period. And all of a sudden people realised that if the Government couldn’t look after the value of a dollar in their pocket, it couldn’t do much else.

That, Madam Speaker, is why the people of New Zealand have put the empty rhetoric of the Chlöe Swarbricks and the Grant Robertsons over there and put the Government over here. That’s why the Government now, in urgency, is sending a very clear message that we know the lessons of history, that we know the value of a dollar to the hard-working people who earned it. We’re going to preserve the value of that dollar by making very clear that the Reserve Bank of New Zealand has one job, one job above all others, and that is to make sure that the value of a dollar in your pocket today is worth a dollar this time next year or very, very close to it, so people can have trust in the State, trust in New Zealand, and trust that their own efforts make a difference.

That’s what it’s about. Isn’t it great this country’s under new management that gets the basics right. Thank you, Madam Speaker.

Thank you, Madam Speaker. It is a pleasure to be back in this House and I’d like to first congratulate you on your appointment, Madam Deputy Speaker.

I’d like to speak on behalf of New Zealand First in support of the Reserve Bank of New Zealand (Economic Objective) Amendment Bill, and on that note, I commend it to the House.

Tēnā koe e te Pīka, otirā, tēnā tātou e te Whare. I rise on behalf of Te Pāti Māori to speak to the first reading of the Reserve Bank of New Zealand (Economic Objective) Amendment Bill. Te Pāti Māori will also be opposing this bill. The decision in 2018 that required monetary policy to be conducted so that it contributes to supporting maximum levels of sustainable employment within the economy was welcomed and long overdue. Previously, the Reserve Bank was only mandated to control inflation, which it does by changing the official cash rate, which is the interest rate at which banks can borrow money. Banks use this to help set the interest rates on loans as well as savings accounts.

Limiting the amount of information that the Reserve Bank can consider is ridiculous. It makes absolutely no sense. Get our country back on track? This change takes us back to 1992. It takes us back in regard to the campaign slogan in the 2023 elections stated by National and the New Zealand First parties. This is the first legislation of “taking us back” to a period where the few control the many. This is what outdated legislation looks like. It is no longer 1992, for goodness’ sake. We must shape legislation that ensures decision making has outcomes positive for all communities, not just a few rich that fund those in Government benches. Therefore, we are disappointed that this new Government has set a bonfire to its commitments by repealing the mandate which allows the bank to look at employment when making its decisions.

We know this change will disproportionately impact tangata whenua. Why? Because members opposite, in regard to this legislation and the looming Order Paper are taking us backwards, having no regard at all for vulnerable populations. Not only will this adversely affect Māori, but you can spray a fire hose across this House and not hit any Pasifika whānau. The Government benches are a disgrace in not having the voice of our Pasifika whānau endeavouring to blunt the brutal legislation.

Māori unemployment stubbornly sits at double that of general unemployment. Māori unemployment has risen to 7.6 percent in the year to 30 September 2023—up 1.2 percentage points. There is a clear ethnic divide between those more likely to be in insecure employment. Māori and Pasifika peoples have been heavily hit by manufacturing downturns stretching back into the 1980s. Māori and Pacific workers, in particular, are disproportionately represented in precarious, temporary, and seasonal work. It’s often these same workers who are having to work two, three, or sometimes even four jobs just to scrape by.

This repeal knowingly locks out people into the last hired first fired category, and this takes us back to a period of overt known consequences and the Government benches take great delight in these known consequences. There is nothing efficient or sensible about limiting the data and inputs that inform monetary policy decisions. We must also be clear that it is very unlikely that this bill would lead to lower inflation. Where is the modelling? Where is the evidence that this repeal will have the material effect on inflation that members opposite believe will appear by petition? It is one thing to argue the cost and benefits of legislation; it is another thing to merely repeal it to pay back a few billionaires who will do well under neoliberal economics.

This repeal is being rushed through under urgency in the knowledge that the majority of citizens in Aotearoa believe Governments would never move legislation that locks in disadvantage—the ability to achieve a brighter and better future for all citizens.

This is the first piece of legislation that sheds a shining light on a Government that is anchored by coalition agreements inspired by the advocacy of clear targeted dislikes of matters Maōri in regards to foreseeable consequences. So many people across Aotearoa are trying to survive this cost of living crisis, which for Maōri and working people is on top of the entrenched poverty crisis that they have been surviving for decades. Instead of urgently implementing policies to help people get into secure homes, put food on the table and pay the bills, this Government is doing the exact opposite. Kia ora tātou.

Thank you, Madam Speaker. I’m proud to stand on this side of the House as part of a Government which is totally committed to reducing the cost of living and reducing inflation. The commitment to beating inflation starts with ensuring the Reserve Bank is returning to a single mandate of keeping down inflation.

At the moment, hard-working New Zealanders can’t get ahead because everything costs more. The weekly grocery bill, the weekly petrol, the weekly rent—it’s a struggle for so many families. High inflation is prolonging the cost of living. As the MP for Tukituki, I represent a rural electorate. Hawke’s Bay is a food producing region. Hastings is the fruit bowl of New Zealand. Our economy is driven by agriculture and horticulture, but our farmers are dealing with the highest level of on-farm inflation in 40 years. Farming confidence is low. Our growers are facing tough times. We need to restore confidence back into our primary sector. At the moment, it’s costing so much more to grow and export a box of apples—the costs of the trees, the cost of the fertiliser, the cost of the petrol, the labour costs, the shipping costs, the logistics costs; they’ve all gone up because inflation is so high, but growers aren’t getting more for that box of apples in the market. Our Hawke’s Bay growers are losing our competitive advantage as other countries can produce the same box of apples for less because their inflation is less.

On top of this, our region is having to rebuild after a cyclone. But everything costs more—billions of dollars. High inflation is taking its toll on these costs and our rebuild. The rising cost of building means the roads, the bridges, the houses, they’re all costing more. For some growers and farmers it’s become unsustainable. This has a huge knock-on effect to the wider economy as everyone is tightening their belts and provincial New Zealand is going backwards. We need to get the wheels moving on our economy once again by getting inflation under control.

This bill is a solid start to tackling inflation and reducing the cost of living for everyday Kiwis and businesses and strengthening our economy. I commend this bill to the House.

One would think that when a Government comes into power and declares that it has a 100-day plan to take steps that are urgent and that are needed, that every single step they take would have an immediate impact. One would think that the first piece of legislation that a Government put into the House—the very first piece of legislation—would make a tangible difference right from the start. But this bill will not put a single cent more in people’s pockets by Christmas. It simply won’t happen.

The Minister of Finance said that it was a highly symbolic piece of legislation. I put it that if it is a symbolic piece of legislation, it is full of empty symbolism that achieves nothing. And let me tell you—let me tell the speakers on the other side of the House exactly why this is a largely empty bill and why it’s pointless.

First of all, inflation is heading down. The Treasury’s forecast predicts that it will be back within the 1 to 3 percent range—which has been our range for a long time now—in a few months, within a few months in 2024. The need for lower inflation has already been met. That particular target is being met and it will be achieved. So this bill is not needed for that purpose, and that is because inflation worldwide is trending down. Inflation was never ever a problem only in New Zealand; it was a worldwide problem in the wake of the global pandemic and like everywhere else it is now heading down.

So there is no need for this particular measure. But then if we look at the substance of the bill, if we look at the action—this is our first look in this House at what is actually in the bill. Now, the clauses in the bill that do the work are clause 4, which amends section 9 of the Reserve Bank of New Zealand Act, and it takes out the objective of achieving maximum sustainable employment. That’s the first clause that does some work. But there is a second clause that does some work in this bill, and that’s clause 11 of this bill. I’m going to ask the members on the opposite side of the House to actually read that clause and, more importantly, to read the section of the Reserve Bank of New Zealand Act which it amends, because it amends section 125 of the Reserve Bank of New Zealand Act. And the interesting thing about section 125 of the Reserve Bank of New Zealand Act is it enables the Governor-General, by Order in Council, to direct the monetary policy committee to formulate and implement monetary policy for one or more economic objectives for a period not exceeding 12 months.

In other words, on the advice of the Minister of Finance, the monetary policy committee could set aside one or more of its economic goals for a short period of time in order to achieve a short-term objective. This objective of saying that maximum sustainable employment should rank differently from price stability could have been achieved through section 125 of the Reserve Bank of New Zealand Act. That is the second reason why this bill is mere empty symbolism—there was no need to repeal this objective.

The third reason as to why this bill is mere empty symbolism is something that my colleague Chlöe Swarbrick has already referred to. If we look at the regulatory impact statement, because at least this bill has one, it says that Treasury itself, while it could support this approach, would prefer to do it through the monetary policy remit, through the Reserve Bank remit. There was another mechanism available to do this, but that Government, banking on symbolism and on empty symbolism at that, has chosen to put this ridiculous bill into the House. It’s its first piece of legislation and it achieves absolutely nothing.

Thank you, Madam Speaker, and can I also congratulate you on your appointment to Deputy Speaker. It’s a pleasure for me to stand for the first time in this House to talk to a bill.

What does inflation mean to you? I ask that question because it touches every single one of us, whether it’s through the daily cost of buying groceries or when you fill your car up, pay the power bill, pay for insurance—increases, by the way, in recent times—or what really is hurtful for many is actually paying our mortgages each and every week or fortnightly. Everybody is suffering. Everybody. Not just Māori; everybody.

There are thousands of hard-working individuals across our country who simply have to find hundreds of dollars extra every week just to pay their mortgages. High inflation is the tyranny of any country. Milton Friedman said inflation is one of the forms of taxation that can be imposed without legislation. So it should not come as a surprise that a reasonable Government such as this National-led coalition Government has this bill as the first piece of legislation being introduced to the House in this term. It is a high priority to get the Reserve Bank’s focus back solely on getting inflation under control, but also maintaining it under control once you’re in the desired bandwidth.

Inflation has been out of control for far too long. The second requirement of the Reserve Bank was introduced back in 2019, right before the country was about to hit its highest level of inflation in decades. The Reserve Bank has been struggling ever since to get it under control.

Labour’s experiment of including an additional focus for the Reserve Bank has failed and we’re all paying for it—literally. Cost of living is out of control, everybody knows that. And to help, this bill will amend the very important economic objectives of the Reserve Bank. They will no longer have to answer to two key performance indicators, two masters, two objectives.

The bill removes the Labour Party’s introduced target of maximum sustainable employment. It’s an applaudable target, but clearly trying to deliver it via the Reserve Bank is the wrong place and it needs to be corrected. “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man”—that was quoted by Ronald Reagan, a very wise man, back in the day. So I am very happy to commend this bill to the House. Thank you.

Thank you very much, Madam Speaker. When a new administration comes down to the House with its first flush of a legislative package, it tells you something about them. The first three pieces of legislation we’re seeing in this period of urgency are about removing a focus on jobs and wages for ordinary New Zealanders and rolling back action on climate change. This speaks to the priorities of this Government and what it sees as its focus.

I can only but feel for members on the Government benches—that they’re coming down with the excitement of being in Government to pass legislation, and all it is to do is to repeal; to undo. Not to put forward a vision, not to put forward a positive change that they want to see for New Zealand, but to say what they’re going to undo and not what they’re going to do. I will put that against our first package of legislation where we brought in a healthy homes guarantee, a winter energy payment, a Best Start payment, and paid parental leave—all before Christmas in 2017. That is what a Government of action and what a Government with a vision looks like.

I would, before I get on to the substance of the bill, like to take a moment to acknowledge the work of my friend and colleague, the Hon Grant Robertson, as his time as finance Minister of New Zealand. Not only did he want to modernise our monetary policy and not drag it back to 1989 like our current Government wants to do but he was a finance Minister that saw New Zealand through its darkest days of a global pandemic in better shape than most countries. Not only did our economy do well but also did our people.

But one of the things that we know is that this is symbolic. So this is a Government that has chosen its first act of symbolism to be something it’s not going to do rather than what it is going to do, and telling us what we are going to see from a Government that is intent on dragging New Zealand backwards—as my colleague said, “Back to the Future”.

It is a Government that says it’s going to be evidence based. Well, all of the evidence, the one regulatory impact statement that slipped through to the keeper under this Government and probably caused the end of them for the package of legislation that we’re about to see, states incredibly clearly that this is not the optimum way to do it. In fact, we have never seen price stability as something that we didn’t want to achieve through the monetary policy of the Reserve Bank. But for us, in our core Labour DNA, ensuring that we are also making sure that is in lock step with people having jobs and a decent wage is something that we are incredibly proud of. There is no evidence that these two things do not work in alignment. There is simply no evidence, and the regulatory impact statement that the Minister saw made that incredibly clear.

Dan Bidois: The election!

Hon Dr MEGAN WOODS: I will take a moment as we’re hearing a chorus from the backbench of the Government benches that we don’t need regulatory impact statements because we had an election. Well, newsflash: elections don’t give you ultimate power. There still are requirements for you to do policy work, and our Government did all the way through. This is a Government that has said it will not do the analysis; it will not put itself through the scrutiny required by a regulatory impact statement.

This is a non-problem; this is a symbolic act. But what it does is it shows that this Government is removing that focus on jobs and wages for New Zealanders. I will finish with a quote from an opinion piece from a former Reserve Bank board member who says: “Just what the benefits of acting on a ‘non-problem’ ”—the non-problem being what we’re doing here tonight—“are [is] a matter for speculation. Perhaps if you crave a muscular reputation in the face of weakness elsewhere in your programme, then making much of a ‘non-problem’ may be beneficial.”

Debate interrupted.