Reserve Bank of New Zealand (Monetary Policy) Amendment Bill

Thank you, Mr Chair. Well, I was just starting out and now I note we’ve got the Minister of Finance in the chair, which is very good. The point I was making last time is that the Reserve Bank of New Zealand and its framework is world-renowned for being independent, for being robust, and, actually, over time it has proved to be very, very successful.

I think the reason why international commentators look at New Zealand and go “That is a great model to follow.” is that they know that the Reserve Bank has a very clear mandate—and I’ll talk about that in a second—that it’s highly professional, and that it lacks any politicisation of the way it operates. That is the greatest travesty of this bill, in my view. At the moment, the Reserve Bank’s primary mandate, because it has some other roles, is, essentially, around how it conducts monetary policy. Of course, it has an objective to achieve price stability and the general level of prices over the medium term, and we know we’ve got this target of 1 to 3 percent. What this bill does is introduces a second target: namely, that the bank is now required to also have consideration of the maximum sustainable employment of New Zealand. Of course, that now cuts to the core of the clarity around the bank’s objective.

The first question is: why do we need this change? I said before that, actually, there is no one calling for this change. There is no one internationally calling for this change, and until we had the new Minister of Finance take over this role last year, we had no one baying for that change except for, perhaps, Treasury. The Reserve Bank, in my view, doesn’t want this change, and there is no real reason why we need to have this change.

The thing about this that I find most upsetting is that whilst it sounds good, the Reserve Bank already has regard to sustainable employment when it is considering official cash rate changes. The issue is that during times of recession, when the Government starts to get into problems and the Government wants to see certain financial outcomes or monetary outcomes from the Reserve Bank, it can influence—I’m not saying it will, but I’m saying there is now a process for it to influence—through either the remit position or the charter system. That is through the Minister of Finance actually specifying to the Reserve Bank Governor or the Reserve Bank what the arrangements are and what the objectives are for the Reserve Bank.

So when we have long periods of recession, how do we know that the Minister is going to start writing out changes and try to put more emphasis on one outcome, such as reducing unemployment levels, as opposed to maintaining price stability? I think that is one of the crucial parts of this bill that I find most offensive. I think the other thing about this is the Reserve Bank has absolutely no influence over unemployment rates.

Thank you, Mr Chair. I want to follow on from my colleague Andrew Bayly and pick up some of the same themes that he’s mentioning, because there are a number of matters in the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill, and in Part 1, which we’re on, that are of significant concern to the Opposition, and they are worth just taking a moment to reflect on, because the Reserve Bank of New Zealand Act and the Reserve Bank are a fundamental pillar of our economic and financial system. And, actually, we’ve got even Michael Cullen, back in his era as finance Minister, making the point that it’s so important that changes to the structure of the Reserve Bank and the Reserve Bank of New Zealand Act be made only with bipartisan support, and we don’t have that in this case, because these changes will weaken the independence and the clarity of function of the Reserve Bank that have served us so well for such a long time.

I would urge the current Minister of Finance to heed those words from Sir Michael Cullen and reflect on the fact that when you are making changes to legislative instruments like the Reserve Bank, to do so without bipartisan support is a serious error because it makes the Reserve Bank, frankly, a political football. And that is one of the major concerns about this legislation that this side of the House has been expressing repeatedly and without, frankly, any interest or involvement or willingness from the Government to take on board our concern. This legislation runs the risk of seriously weakening the independence of the Reserve Bank, and even Adrian Orr, the current governor, has made the point on a number of occasions that a central bank’s independence is critical to its operation and to its success.

Now, when you have a situation where the monetary policy committee is made up entirely of appointments made by the Minister of Finance and is able to be removed by the Minister of Finance, you lose the very purpose of having a decision-making committee, because a decision-making committee, when the only reason for having it is being better than an individual making the decision because you get diversity of thought and diversity of opinion and contestable ideas and a real contest of the issues, when the appointment process is such that it can all be products of the same ideology, that very purpose is destroyed. Not only do you then have a committee and a governor who are appointed and owe their tenure entirely to the Minister, you’re now going to have a senior Treasury official—in fact, we understand it will be the most senior Treasury official to begin with, the Secretary to the Treasury—sitting and partaking in all monetary policy committee meetings.

Now, again, the Government has said, “Well, it’s so that the Reserve Bank can be better informed.” but there’s no evidence that the Reserve Bank has any issue getting information about Treasury’s or the Government’s policies. In fact, both officials and the bank have been quite clear with us that there is no problem to be solved. The only reason to have such a senior Treasury person in those meetings is clearly to influence the Reserve Bank—to influence their view of Government policy. Treasury are bound to give effect to the Minister’s and the Government’s policies. They’re bound to put the spin on things that the Government wants. And now they are very clearly trying to reach their tentacles of control into the Reserve Bank to stop issues like we’ve seen with KiwiBuild, where the Reserve Bank dares to come out with an opinion that cuts across the Government narrative. Well, this Government doesn’t want that. So what do they do? They ensure that they have full control over the processes of appointment of the Reserve Bank and that they have a Treasury person sitting in the room making it very clear the message that the Government wants to see return. That is not an independent central bank. That is not going to serve the institutions of this country well.

I would say to the Minister that to have a situation like this, where there is, as I say, total control from the Minister in terms of the Reserve Bank board, the monetary policy committee, and the governor—and, yes, I know there is interplay with recommendations between them, but when the Minister controls the appointments of all of those, that interplay is very quickly shown for what it is, which is a complete fallacy. Then, even if the Minister carries out those roles responsibly and with good ethics and impartiality in seeking contestability of views—even with that—the perception will always be there of political influence. Now, I worry deeply that the perception will go further than perception and we’ll actually see a drive to politicise the Reserve Bank and see people put in place for 10 years, which will quite possibly survive this Government. But even if that isn’t the case, then I would say to the Minister that perception matters, and the perception, under this legislation, is a clear watering down of the independence of the Reserve Bank. It is not done on a bipartisan basis. There is no clear evidence of a problem they’re trying to solve. This is a very, very poor way to go about reforming what is a crucial piece of our legislative framework.

Now, the Minister, early in the process, certainly reached out to me, and I appreciate that and I acknowledged that in my first reading speech. I indicated that the Opposition would work constructively with him and try to find good changes, and we think there are good changes to be made. I’ve told the Minister my view that I see there is merit in a monetary policy committee. I think there are changes that can be made. This is not a case of the Opposition opposing the legislation because it’s Government and we’re Opposition. I think there are absolutely areas where we could have worked together to come up with a good suite of reforms. But, while I’m happy to work with the Minister, of course, that doesn’t guarantee our acceptance, and, unfortunately, the changes in these two respects go further than this Opposition is able to agree to.

The second aspect of that is around this dual mandate. Now, you know, I’ve been in umpteen meetings with officials and hearings and briefings where we have asked time and again: what is the problem we’re trying to solve? What isn’t working well with the mandate the way it is expressed at the moment, bearing in mind that the Reserve Bank has, for many years, already taken into account a basket of wider economic considerations in setting their monetary policy framework? They already do this. In fact, when we’ve asked the governor—and we’ll ask him again tomorrow, no doubt, at select committee—he has said repeatedly, “It’s not going to change much. We can already do this.” So what is the point of making the change?

Here’s the risk, however, of making the change. First of all, you’re playing with a framework that is well established and that has held New Zealand in very, very good stead for a number of years. There have been a number of reviews of our monetary policy framework since the 2000s, and they have found that New Zealand has best practice set up in our framework. So why would you take a system that has served New Zealand well, that has delivered a very stable economic environment, and that has been held up as best practice worldwide and change it with no description at all of what the problem is you’re trying to solve and the bank themselves saying it won’t change the way they operate?

Actually, the risk goes further than that, because not only is it a case of uncertainty and “What might this do?” and “Why do we need it?”, actually, you now have the very real risk, and, again, officials have confirmed this, that the Minister will now be able to direct the Reserve Bank not only to treat price stability and maximum sustainable employment on the same level—which we think is risky enough, because how on earth do you reconcile them if they pull in different directions?—not only will that be permissible; the Minister will be able to direct the Reserve Bank to prioritise employment over price stability. In fact, the Minister could go so far as to direct the Reserve Bank, through Order in Council, to ignore price stability totally for a period of time.

Now, what would that do to our monetary policy framework? This is a very real risk that the Minister has made no case for and, actually, will create further uncertainty and weakening in our economic framework. We’ve already got a business environment where there is rampant uncertainty, and to now pull a rug out from one of the few non-political, well-functioning, bipartisan, non-argued pieces of our economic framework without any real reason is sheer madness. I really think it is sheer madness. What on earth will world markets make of a situation where our monetary policy framework can be reversed and thrown on its head by the direction of the Minister of Finance without reference back to the Houses of Parliament?

I mentioned before that there is no clarity in the legislation or in anything officials have been able to give us on exactly how a governor or a monetary policy committee can and should reconcile those two competing aspects of their mandate should they find themselves in conflict. And it’s interesting, isn’t it, because right now you could say we have a situation where the inflation forecasts over the forecast period in the latest monetary policy statement show that the bank expects inflation to be higher than the 2 percent midpoint. So they’re almost forecasting that they’re going to fail to meet that target, and yet no move in the official cash rate. So then you start saying, “Well, why is that?” Well, the question will always be there: is it because the governor now feels obliged to run the economy a bit hotter to keep the employment numbers up? Well, who knows? I can only speculate, of course, what’s in the governor’s mind, but that question will always persist. Is this the best thing for price stability and the stability of the economy, or is the Reserve Bank now going to be delivering on its political imperatives?

Thank you, Mr Chairman. I have quite a number of questions for the Minister, but first I want to say how saddened I am that we’ve even got this legislation before the House. The Reserve Bank of New Zealand Act is 29 years of age. It is well regarded all around the world, and I think the aspect of it that is most well regarded is its true independence. It is independent of politicians and it’s independent of the Government of the day.

My first question to the Hon Grant Robertson is: why change? What’s the problem that we’re trying to fix? Now, I know that every election campaign, New Zealand First has always argued on changes to the Reserve Bank of New Zealand Act, and they’ve always argued for a dual mandate—one that focuses on inflation and the other one that focuses on the exchange rate. So my second question is: why hasn’t the Rt Hon Winston Peters got his wish—or has he now realised there’s a nonsense in trying to have a dual mandate of exchange rate and inflation?

Then my third question to the Minister is: what is meant by maximum sustainable employment? During the select committee process, I asked the now Governor of the Reserve Bank, Adrian Orr, what is meant by maximum sustainable employment. He honestly answered and said that he didn’t know what was meant by maximum sustainable employment. So it’s a worry when we’re giving a new law to the Reserve Bank when it’s almost impossible to define what maximum sustainable employment is.

The fourth question, I think, is around the politics or the politicisation of the Reserve Bank of New Zealand Act. The dual mandate will mean that at some stage, there will be potential conflict between focusing on inflation and focusing at the same time on maximum sustainable employment. So in that situation, Mr Minister, what’s going to win? Are we going to then focus more on maximum sustainable employment rather than focusing on inflation, because if they are in conflict, in that situation, Minister, you can’t ask the Reserve Bank or the monetary policy committee to try and grapple with two targets. One will have to win. So I’d like the Minister to rise to his feet.

The final point—and I think there’s about six questions, so this is the last one, but I’ll look forward to them—is that the Minister of Finance, under this legislation, will have the power to appoint the board of the Reserve Bank and the power to appoint members of the monetary policy committee. I want an absolute assurance from the Minister in the committee tonight that as he goes through his process of selecting suitable people with expertise, we’re not going to end up with political appointments in those positions, because—

💬 Hon Damien O’Connor: Oh, ha, ha! Ha, ha!

Well, the Hon Damien O’Connor laughs, and he probably has already lined up three or four dairy properties for Westland, who are enjoying huge largesse from the Government already—we’ve bailed all the Westland dairy farmers out. But he’s probably got a few mates who will be put on the monetary policy committee, and I just want to know whether they’ve got the expertise to do the job, because it’s not a job for lackeys, Hon Damien O’Connor.

So those questions are important. I look forward to the Minister being involved in this discussion tonight. Rather than us on the National side raising genuine concerns and genuine questions, we will have a far better debate if the Minister’s prepared to get to his feet and answer legitimate questions that I didn’t feel were satisfactorily answered by officials as we went through the select committee process. At the end of the day, Treasury has been trying to take over and dominate the role of the Reserve Bank from the time the Act was passed in 1989. I think this is an occasion when they’re finally going to get their wishes, and that is a shame.

Thank you, Mr Chair. I do have a couple of questions for the Minister as well.

💬 Rt Hon David Carter: Well, I hope he answers them.

I’m sure, Mr Carter, that the Minister will stand—and I’m not going to go over the same questions, but my question is: why employment? Alongside price stability and inflation target, why employment, as opposed to, say, GDP or GDP per capita, which the Minister talks a lot about, or where the level of currency is at at a particular time, whether it’s against the trade-weighted index or against the US dollar or against the Australian dollar, or the renminbi, for example—our trading partners—or whether it should be something else that is important to the livelihood or the well-being of New Zealanders?

But the Minister has chosen employment, and I know why he hasn’t chosen GDP or GDP per capita or immigration or any of these other things, and it’s because the Reserve Bank Governor can’t control those things directly, or even slightly—indirectly—because those things are a consequence of a whole lot of other factors. They’re a consequence of policy, they’re a consequence of business confidence, and they’re a consequence of global economy and global confidence.

So my question is: why full employment when full employment—that factor, that number—is a derivative, like those others, of a whole bunch of other stuff, whether it’s employment policy, whether it’s industrial relations, or, particularly, whether it’s the amount of immigration that we have coming into New Zealand? For example, a loose immigration policy should see increasing unemployment and a lower employment rate. That hasn’t been the case, but one would expect that to be the case, all things being equal.

So my question is: why employment instead of all these other things when the Reserve Bank Governor cannot control the rate of employment? He cannot control what an employer is thinking when the employer takes on another employee, because that is what affects the employment rate. The employment rate is only affected by—it has to be affected by—the employer. They’re the only ones that can change the employment rate, because they decide on whether to take someone on or not. As I say, all those things that go through the employer’s head before they take on an employee affect employment. The Reserve Bank of New Zealand (RBNZ) and the setting of interest rates is only a sliver, a very small fraction, of what is in the employer’s mind.

So I think I can say that I’ve demonstrated that employment is not a good measure for the RBNZ to measure itself when, and we’ve already talked about—even if it was, this is not about the conflict that those two things might have. This is just about the fact that employment, in my view, is just an inappropriate measure, when, particularly, we want incomes per capita to rise—put that in as a target.

The second question is: what is full employment? It’s already been touched on. David Carter talked about it. What is it, and what happens when it gets to 72 percent? Is the economy necessarily too hot, and do we need to raise interest rates because of that? But that would be a mistake. If imported inflation was higher and if deflation was occurring in the economy because of lower offshore prices, that would be a mistake. So that demonstrates the conflict that the RBNZ Governor has when measuring those two factors, and we still haven’t heard which is more important. Is it price stability and targeted inflation, or is it the employment rate? I’d be interested to hear from the Minister.

Oh, thank you, Mr Chair—what an excellent choice, might I say. Look, I would like to follow on from that excellent contribution from Alastair Scott MP, and I think one of the reasons that I’d like to continue with that—

💬 Kieran McAnulty: Ha, ha! Say it like you mean it.

CHAIRPERSON (Adrian Rurawhe): Order! When—

💬 Kieran McAnulty: I apologise.

CHAIRPERSON (Adrian Rurawhe): I haven’t said anything yet. How can you apologise? And he will be apologising. Don’t bring me into the debate. The Hon Judith Collins.

Thank you, Mr—

💬 Alastair Scott: I raise a point of order, Mr Chairperson. Is he going to stand, withdraw, and apologise, or not?

CHAIRPERSON (Adrian Rurawhe): I didn’t ask him for—the Hon Judith Collins.

Thank you, Mr Chair. I must say, we’re getting lots of knee exercise. Well, I think one of the things that I would like to speak about tonight is the fact that this bill is even being discussed in Parliament. In the National Party, we oppose this bill, because I think we should always work on the basis that if something is not broken, then why would we try to fix it?

So, tonight, we’ve been hearing from the Government about the need for us to fix the Reserve Bank of New Zealand Act, and the reason for doing this, they say, is for things like unemployment. Well, unemployment is at historically low numbers, and that is thanks to an excellent amount of work that was undertaken in nine years of a National-led Government and the fact that this Government has now inherited that. So one would have to ask oneself why this is such an important issue for the Government? Why would they want to now get the Reserve Bank to take into account unemployment when they’re setting interest rates and everything else that they do—what is it? Well, the answer would have to be because that’s what New Zealand First wanted. It has nothing to do with fixing unemployment or the Reserve Bank acting in a way to help unemployment or to decrease unemployment, because it’s already at historically low levels, so what’s the point?

When I think about this bill, particularly Part 1, I think about the fact that this is a meddling bill. It is a bill put together for a constituency that has been fooled into thinking that there’s something dreadfully wrong with the Reserve Bank. Some of us on this side of the House will well remember a certain candidate for a certain political party saying that the Reserve Bank was owned by foreigners. Well, some of you might remember that one. I think it may have been a candidate from New Zealand First, anyway, saying that this was a bank owned by foreigners. I well remember that New Zealand First and the new Government, they said, were going to buy it back. Well, to that person I’d say, “Would you like a bridge I could sell you?” They are truly, truly ridiculous to think that. The Reserve Bank of New Zealand (Monetary Policy) Amendment Bill—

💬 Hon Members: You’ve got Bridges to give away?

💬 Kieran McAnulty: What price for Simon Bridges?

That would be a singular not a plural, Mr whatever your name is over there. Ha, ha!

I think it is really very important to remember that this House and the very valuable time that the taxpayers are paying for should be used for bills and discussions that make a difference. This bill is going to make not one scrap of difference other than to enable Treasury and the Minister of Finance to be able to interfere in the very careful deliberations of the Reserve Bank of New Zealand.

When we think back to the times before we had things like a National Government in the 1990s, when in fact interest rates were around 18 percent, or 28 percent if one was borrowing for business, those are the days when, actually, if only the Reserve Bank had been allowed to get on with their job, they might have been down to the rates that they are now. But, instead, there was a lot of political interference with the Reserve Bank. What I’m concerned about, and on this side of the House we are, is the level of political interference that may well come to the Reserve Bank now.

They are always people who are trying to do their best. They are the experts. I wonder at the level of political interference that’s going to be meted out to the Reserve Bank and to have the Reserve Bank not able to make the decisions that it needs to make without having to wonder whether the Ministry of Finance is going to be happy. Actually, that shouldn’t be their role.

It’s a pleasure to take a call in this debate and respond to some of the questions that have been raised by members of the Opposition.

The first thing I’d like to say is there is a bit of a logical flaw in the questions that have been asked, which is either—this is something in terms of the monetary policy objectives—considering maximum sustainable employment alongside price stability is something the Reserve Bank is already doing, or it’s a total catastrophe that is going to end the world. Those arguments are being advanced in the same speeches tonight by Opposition members, and so it is a little difficult to unpick that particular logical flaw.

What we are trying to do here in terms of broadening the objectives of the bank is ensure that the thing that has indeed served New Zealand well over many years—the fact that we have a greater level of price stability than we would if we didn’t have a clear objective in the principal Act to maintain price stability—is added to by what, as we’ve already heard from members tonight, has in fact been part of the practice of a flexible inflation targeting approach, which is to take into account the impact of monetary policy on the real economy. What we’re interested in doing is codifying that and ensuring that it is part of the objectives of the bank, lest there be any doubt that monetary policy does have an impact on the real economy.

We only needed to see in the wake of the global financial crisis—and one of the earlier speakers on the other side asked where the calls for this were coming from. In the wake of the global financial crisis, right around the world people began debating the role of monetary policy in a situation where the economic cycle turns the way that it did. We picked up on that, and it is vitally important for all members of the House and those listening tonight to understand that New Zealand, in taking on a second objective for our Reserve Bank of New Zealand Act, is actually doing what the United States does, what to an extent Australia does, and what to an extent Norway does, among others—countries that have been perfectly able, through their monetary policy, to balance these two objectives.

A question asked by a couple of members has been, “Well, how do we do that? How does that happen?” That is dependent on the circumstances of the time and the ability of the bank and its decision makers. It, again, is somewhat contradictory, because it’s asking us as politicians to say, “How do we do that?” That would be interfering in the independence of the bank if I were to sit here and say, “This is the way in which it will be balanced.” It is up to the Governor of the Reserve Bank and the monetary policy committee (MPC) to make those decisions. One of the pieces of work that we looked at when we were preparing this policy was a study done by the Reserve Bank of Massachusetts, I think it was, who looked at who was better at controlling inflation: those countries with a dual mandate or those countries with a sole mandate. And actually, it turned out that countries with a dual mandate were generally doing better at controlling inflation than those with a single mandate. So I don’t believe that the concerns being raised on that are at all legitimate.

💬 Rt Hon David Carter: Rubbish.

No, it’s not rubbish. I’ll get the Rt Hon David Carter a copy of the report. I might have this wrong, but I think the author’s name was Eric Rosengren, and so I will get hold of a copy of the paper for David Carter so that he can rest assured on that.

We want to make sure that maximum sustainable employment is part of the decision-making process. Just as with price stability, that gets defined in time by, in the previous incarnation, the policy targets agreement; in this incarnation, the remit that will be agreed. What we know and what is fully acknowledged in all of the documentation building up to this bill is that the role of the Reserve Bank is to help, through its monetary policy, influence maximum sustainable employment. There’s a reason why we didn’t put a rate of employment or a rate of unemployment in this bill, because we absolutely recognise that the direct control of that does not lie entirely in the hands of the bank. But by signalling that maximum sustainable employment—not the same thing necessarily as zero unemployment, because it’s about a number of factors in the economy being weighed against each other. By making sure that when we have sustained periods of unemployment, when there are times in the economic cycle when there is pressure on those areas, that being considered openly and outwardly in the decision making of the Reserve Bank is, I believe, a very, very important thing for us to do.

The other major set of concerns being raised by members of the Opposition in their questions is around the question of independence. It is vitally important we maintain the independence of the bank in making the decisions it makes on monetary policy. That has been an important part of the stability of our economy, and it’s maintained by this bill. What this bill does is set up a committee to make the decisions for monetary policy—again, completely commonplace around the world, and, in fact, something the Reserve Bank itself, again, in practice, has been doing internally inside the bank.

This is actually a change welcomed, I think, pretty much across the board, perhaps apart from the Opposition. In terms of the way people are appointed to that committee, if there’s somehow a suggestion that the Minister of Finance making those appointments on the recommendation of the board is somehow a terrible outrage in terms of independence of the bank, that’s exactly the process for appointing the Governor of the Reserve Bank right now.

💬 Hon Ruth Dyson: Is that new?

No, it is not. It is not new. It has been in place for the whole time that the Reserve Bank of New Zealand Act has been there, and so if there’s some huge problem with the role of the Minister in appointing the MPC, it’s the same process as appointing the governor, and I’m sure members of the Opposition are not arguing that the Reserve Bank Governor is somehow or other not independent, or beholden to the Minister, when they are quite clearly not.

The other issue being raised is the question of the Treasury observer on the monetary policy committee. To be clear, that observer has no voting or decision-making rights. They are there to be able to contribute to the discussion, to be able to make sure that the different parts of economic policy, the fiscal policy and monetary policy, are communicating with one another. The Bank of England does this. It is, again, a perfectly normal way of ensuring we’ve got better communication and more understanding of those two parts of the way in which our economic policy works. It is a guarantee that there will be the governor, who will be the chair of the monetary policy committee, the deputy governor, and two members of the Reserve Bank staff on the monetary policy committee—that is a guarantee that is written into Part 1 of this bill—and three external appointments. So the majority decision-making remains, but we get diversity of voice at the table.

Again, when we go to places like Australia and visit the Reserve Bank of Australia, they make the point that the diversity of voices at the table makes for better decisions. It connects the Reserve Bank better to the real economy, and I think in time we will see that, with the protection of the fact that the majority of members of the committee are those inside the board.

So I think I’ve answered the questions that have been raised. It’s quite clear that the scaremongering here around independence has absolutely no basis whatsoever, and if that argument has been advanced, then perhaps the Opposition should be proposing wide-ranging amendments to the Reserve Bank Act to change the way the Governor’s appointed, if they think that this somehow or other limits the independence.

These are amendments that modernise the operation of our monetary policy. Something done in 1989 isn’t necessarily, completely and fully, still the best thing we can do in 2018. We do have to make sure we modernise monetary policy while maintaining the important independence that has been put through under the Reserve Bank Act. This piece of legislation maintains that balance.

Thank you, Mr Chair. It gives me pleasure to take a short call on the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill, and I want to comment on one or two things before getting into a bit of detail on one or two pieces of the bill. You know, if you think about life in my electorate, for some time now, or some years ago—for three or four years, in fact—every farmer in New Zealand was calling for changes to the Reserve Bank of New Zealand Act and the way it operated. I can assure you, none of them have been calling for that in the last three years, because the world’s changed. But the point I’m making is that we go through cycles in life and we always seem to come back to the same spot. The Minister of Finance just said a minute ago that this Act’s been in place since 1989 and the world’s not the same, but, fortunately for us, the people running the Reserve Bank are not the same either. So I think that’s an interesting point. They, of course, bring themselves up to date pretty quickly.

We’re opposing this bill not because we don’t think change is appropriate but because I think we’re probably a little uncertain as to whether the changes proposed will, in fact, have a positive impact or not. As I said earlier tonight on a previous bill, the problem with changes like this is you don’t really know the impact they’re going to have, and I guess that’s the excitement of life, but when you’ve got something that appears to be working pretty well, I think that, perhaps, changing those things isn’t always a sensible thing to do. So whether it makes sense for us to alter the conditions under which the Reserve Bank acts or not will remain to be seen.

I guess that the point the Minister just made as well was that, in fact, the people who are making the decisions in the form of a committee are very much the same people who will have been feeding into the information that arrived at those decisions anyway. So there wouldn’t be a great deal of change there; it’s just formalising a committee and, of course, making it accountable to the Minister. I guess one of the fortunate things about that is that if we’re introducing Treasury to this equation, the Government doesn’t have a great track record of believing what Treasury tells them anyway, so we’re probably half safe there. So perhaps the information that’s fed into that committee won’t necessarily make a great deal of difference.

Now, there’s one other thing that I think is interesting—and I’m not saying it would happen, but if you think about the last year or so, the security of the Reserve Bank decision-making process is very important. I just hope that by extending the number of people involved in this—and it’s certainly no aspersion on the people involved, but, none the less, it’s a very important issue. I wouldn’t mind the Minister answering a question or perhaps having a comment on that, because the security of the Reserve Bank decision-making process is absolutely vital for New Zealand and for the future of that decision-making process to have integrity. I just hope that by extending the mandate and extending the number of people involved in this, that has an impact, and that it, in fact, will retain its integrity as it moves forward.

Now, I don’t know whether including employment in the Reserve Bank decision-making will, in fact, have an impact or not. We don’t know the impact it will have on the eventual decision. We don’t know whether the impact of introducing any other measure around foreign exchange rates or whatever may have an impact on where the Reserve Bank gets to in the future. What we do know is that aside from the fact I mentioned earlier in my contribution tonight, about the fact that there are sectors of our economy over the years that have wanted change to the Reserve Bank Act, it’s come back to where it was originally and they no longer require those changes. Whether those changes are positive or not for the future, we don’t really know that.

So that’s my brief contribution, and I think the thing that I’ve introduced, probably, that no one else to date has, is whether in fact having a large group of people involved in the decision-making process, as opposed to where we’re at at the moment, will impinge on the security of that decision-making process, and whether that integrity’s going to be retained. Thank you, Mr Chair.

The question was put that the amendments set out on Supplementary Order Paper 176 in the name of the Hon Grant Robertson to Part 1 be agreed to.