Robertson Grant; Williams Arena; Willis Nicola; Kuriger BarbaraHon GRANT ROBERTSON (Labour): Thank you very much Madam Chair for the opportunity to take a further call on this part and ask a couple more questions of the Minister. Firstly just before I do that I want to go back and refer to the Minister's comments that she made around Dr Woods' amendment in terms of finding a place for the voice of workers. It is very clear to members on this side of the House that having removed the dual mandate Part 2 of this bill offers the opportunity for the Minister—for the Government—to be able to actually give some evidence to the fact that they still think that the Reserve Bank should have the opportunity to consider matters of employment or the labour market generally when it comes to setting monetary policy. The Minister in an earlier contribution mentioned the flexible approach being maintained—well that's actually not the same thing. What we're talking about here is how do we compensate now for not having the dual mandate in question? So that was the purpose of Dr Woods' amendment to find a way of doing that.We have in fact offered a number of opportunities for the Minister to take up ways in which Part 2 could be used to ensure that actually employment and other economic objectives could be taken into account be it in the remit or be it in the reporting arrangements or the review arrangements—there are amendments on the Table in colleagues' names on all of those matters. This is the opportunity and as Minister Dr Woods—former Minister Dr Woods just said if not these amendments then what? Because if we are left in a position where the Reserve Bank is now being told by the Government it shouldn't be considering employment or labour market matters at all we are in a very difficult and dangerous position.The second point in question I wanted to put to the Minister in this particular call is around the amendment in clause 11 of the bill to section 125 which is the section of the Act as it currently stands that allows for a different economic objective or objectives. Now this clause exists in the Act as it stands today in order to give flexibility to the Reserve Bank should a set of circumstances occur in which they require to do more than the objectives as they currently stand. So just one objective now after the decisions in Part 1 on the bill.I want to ask the Minister what her intention is if for example we come to a period where there is for some reason or other a massive spike in unemployment? And in the old days this used to be called the foot and mouth clause" which is that if there was a massive outbreak of something like foot and mouth—which would be an absolute disaster for New Zealand—it would of course have a massive effect on employment in the rural sector in New Zealand and resulting in our rural communities. So the question I'm really asking the Minister here is: does she believe that the power should still exist to add objectives? I think she does. I think that's what this means and if so wouldn't it be better to take up one of the amendments of the Government that would make clear that employment and labour market matters are still the ones that we would primarily be concerned about? Should we be needing to use section 125 as contained in clause 11?So just to recap for the Minister I'm continuing to want her to answer the earlier questions that have been asked about whether or not she believes that the bank should continue to have regard to employment and labour market matters and monetary policy and then if that is the case what would she propose to ensure that that happens if it is not adopting the amendments that have been put forward by my colleagues?ARENA WILLIAMS (Labour—Manurewa): Thank you Madam Chair for the opportunity to take the committee through my tabled amendments. There are eight of them so I will turn to them in a second. I'm considering an amendment to the amendment moved in the name of the Hon Megan Woods that would be an amendment to the amendment but I'm seeking some clarification from the Minister before I do that.So you'll know that the Hon Megan Woods has proposed an amendment which would effectively allow someone with a focus on unemployment and the effect that would have on working people to contribute to monetary policy. And I think it's relevant since this bill has not had a stage in select committee to turn to some of the submissions by people who would fit that bill—who have expertise and the experience of working people.So I'll turn the committee's attention to the submission of the Council of Trade Unions (CTU) made on 7 September 2018 to the Finance and Expenditure Committee. This submission was on the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill at the time but the comments made in that submission are directly relevant particularly in this part which deals with the Minister's contention that you know it might be contrary to what the Reserve Bank of New Zealand (RBNZ) is trying to do—to have a representative with this expertise contributing to monetary policy. The comments of Sam Huggard the secretary are: "We also wish to make it clear that unions and workers recognise the damage that can be caused by high inflation." That points to an imperative that the CTU recognises where the RBNZ should be focused on inflation. "The purchasing power of wages is easily eroded by rapidly rising consumer prices. Our criticism in the past of the application of monetary policy due to the adverse effects of employment output and the exchange rate does not imply that we disagree with price stability. The issue is more that at low levels of inflation the costs of extracting the last bit of inflation out of the economy can outweigh the benefits."This is an important view because it really nicely captures the tension that we always ask the RBNZ to manage. It points as well to where you don't have a dual mandate you're constantly asking the RBNZ to also have in the back of its mind the impact on working people's experience of the economy low-wage earners' experience of the economy and stabilising that for them. He goes on to say "Also the rigid application of a target over too tight a time frame can damage employment prospects for workers." And here we get to the nut of the issue that the CTU was submitting on where they were criticising the previous approach of the RBNZ as being too focused on inflation during the period prior to 2018. If I bring the committee back to my comments on Part 1 of this bill that is not the situation that we are in now. In fact there is no evidence that has been presented to this committee by the Minister or any of the contributors from the Government side that the dual mandate actually had an effect in the last three years on inflation. The RBNZ was never asked to choose between its focus on unemployment and on curbing inflation.I'll also turn the committee's attention to a letter to the Finance and Expenditure Committee dated 7 December 2018 from the secretary of FIRST Union Robert Reid. This is another expert within the field of the experience of working people and the economy. He said "The employment of our members has been particularly affected in periods where the Reserve Bank has run high interest rate policies in order to keep within a relatively low inflation window." What he's pointing to there is the effect on unemployment when you have an RBNZ that has set out to essentially extract the cost of a period where the economy is hot from working people rather than from those people with savings. He goes on to say "We have seen these policies choke off growth" and there he's talking about the effect on the productive economy. Not only working people but our hard working exporters—people within the rural sector who rely on the official cash rate to export their goods at a price that is competitive overseas. He says "directly and also indirectly through increasing the exchange rate which has made our exports dearer and caused employment loss in New Zealand."So what Robert Reid from FIRST Union was saying there is that those workers in the rural sector who he represents were negatively affected by RBNZ's single-minded focus on inflation in the period before 2018 in a way that affected not only those workers but those rural towns—those regions that rely on New Zealand's competitiveness overseas. He was pointing to the need for someone with expertise of representing those people within those sectors to have a mind to those monetary policy issues and to be able to contribute to the monetary policy committee's decisions around where we should be pitching this.Madam Chair I only have four more seconds. I wonder if you would give me another five minutes to go through my Amendment Papers?Hon NICOLA WILLIS (Minister of Finance): I want to acknowledge the Hon Grant Robertson for being one of the few members who's had the courtesy to actually refer to Part 2 in any way during this stage of the debate. And I want to answer his question about the foot and mouth clause and to confirm that section 125 of the principal Act continues to provide for an Order in Council to set a different economic objective or objectives for the Reserve Bank. It remains the Government's intention that the Act remain laser focused on inflation and that other matters be set out in the remit.CHAIRPERSON (Barbara Kuriger): Just before I take the next call I'm just going to refer to Speaker's Ruling 125/8. Because we are in urgency and this has not gone through a select committee I am allowing detailed questions about the provisions of the bill to the extent that it's relevant to the bill and they become debating points within the whole debate on this bill. It's up to the Minister you know whether she addresses what is relevant or not but I also want to just make people aware at this stage that there are a number of amendments and some of them are contrary to the objects and provisions—the principles of the bill. So we just want to be careful when we are moving amendments to amendments that it might not all happen at the end of the day."