Groser Tim: Reserve Bank of New Zealand Amendment Bill (No 3) — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Groser Tim: Reserve Bank of New Zealand Amendment Bill (No 3) — Second Reading In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18223. Text is incorporated into the Bound Volume.] 
TIM GROSER (National) 
: 
 This is a very important substantive part of the bill but it is very much briefer in its coverage than Part 1 and I think we can deal with it fairly expeditiously.  
The core of Part 2 relates to the transparency of the Reserve Bank’s reporting obligations which are set out in very clear language centred on in particular the  
Financial Stability Report 
 and the regulatory impact statements. Although we can safely assume that those reports have a tiny audience it is an audience of great importance to our country as it would be in any country because financial stability rests on having transparency and an information base. Experts in other institutions such as the international financial institutions the IMF and the OECD—which report as they should regularly on monetary policy in New Zealand—as well as overseas investors domestic investors and a whole host of companies do actually need to see very clearly the key bits of the information puzzle. So the legislation around this issue although it is not of general public interest is certainly of immense importance to the general public because it is one of the foundation stones of the financial stability of this country.  
Let us not overlook the fact here that in the midst of the really very very sad tales about people losing their savings in the non-bank financial sector—something we have just discussed at length in relation to Part 1 of this bill—my recollection of the share of total savings in the banking sector as opposed to the non-bank deposit taker sector is that the figure is even higher than the one my colleague Mr Foss gave. I am not 100 percent sure but I believe it is well above 90 percent. But whatever the actual figure is we have to be grateful for the fact that for the most part and so far—and I guess we should be touching wood when we say this—the financial stability of this country is pretty sound. We are tidying up areas here we are strengthening areas here in the non-bank deposit taker sector and we are strengthening the transparency procedures that underlie the whole system. But the fact remains that despite the concern that our banking sector is dominated by Australia I think one would have a hard job to persuade New Zealanders who had just lost their money in a New Zealand financial institution that somehow they were better off because they had lost their money in a New Zealand institution than the people whose assets were being protected in an Australian-owned bank.  
Part 2 is very very technical. If we look briefly into the language used in Part 2 we see there is a requirement that the Reserve Bank report on all matters relating to the soundness and efficiency of the financial system and on other matters associated with the bank’s overall prudential responsibilities. I know that those bank reports are pored over by highly technical people and their assessments of the information contained in them are absolutely critical for the whole operation of our economic system. So the National Party is pleased to be supporting this legislation.  
We also note the changes that have been made in respect of the Reserve Bank’s dividend. Obviously the bank is in a highly privileged position as the sole issuer of currency. It makes seigniorage from that operation. In fact if members go back through time they will find that throughout earlier parts of our antecedent political history that was a traditional source of financing for Governments before the invention of direct income tax. Seigniorage is an ancient form of revenue for the Crown and the principles are now set out even more clearly to determine what the appropriate dividend to the Crown is. I think that matter is extremely uncontroversial and we welcome the slight clarification of it. Thank you Mr Chairperson.