Webb DuncanRESERVE BANK OF NEW ZEALAND (MONETARY POLICY) AMENDMENT BILLSecond ReadingDebate resumed from 29 November.Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you Mr Speaker. I will make some concluding points. This is an excellent piece of legislation of course from the Minister of Finance and what I want to talk about now having talked about the dual mandate—we've talked about the dual mandate previously. I wanted to talk a little bit about the decision-making process. Whilst the Reserve Bank already makes its decisions collaboratively what this does is set that into the legislation by creating the monetary policy committee. Importantly that committee has essentially three elements. It has internal and external appointments and they are important because they ensure the broadest possible range of expertise and knowledge is there both essentially from within the bank but also from within industry. The third element of course is the Treasury observer and that's a very important role because what it ensures is that there is a real connection between Treasury and the Reserve Bank and I understand that already the Reserve Bank has been inviting senior Treasury officials to meetings. So this again enables better coordination between Reserve Bank policy against a background of Government policy. This monetary policy committee absolutely needs to be operationally independent but at the same time it needs to be democratically legitimate and that is why the Minister of Finance has the ability and the power to make appointments to that monetary policy—[Interruption]SPEAKER: Order! Order! Can I ask Ministers to leave the Chamber or to sit down if they're going to have conversations. Thank you. Dr DUNCAN WEBB: Thank you sir. That ability of the Minister of Finance to essentially veto appointments to the monetary policy committee ensures that we strike an appropriate balance between operational independence and important democratic legitimacy. It's also important to recognise that this is a committee that is intended to make collaborative decisions a committee of equals and not a hierarchical committee and that's why it would be inappropriate for the Governor of the Reserve Bank to be making those appointments. So that is broad-based decision making.The second thread that I'd like to talk about is the increased transparency of the conduct of the Reserve Bank. A critical document will be the charter of the Reserve Bank: a document which will essentially set the direction in the operations of the bank and the monetary policy committee and it is a document which must be consulted on—again ensuring that there is democratic legitimacy in this very important if technical area of policy making.Then we have the remit which is essentially the direction set by the Minister of Finance for the bank. That remit must be set with the advice of the Reserve Bank and the Reserve Bank must in turn consult on it. So we are moving from a situation where what the Reserve Bank does is essentially a mystery. It is done in the confines of the bank and all we get are the monetary policy statements and other statements and no one's quite sure how we got there. We're moving into a situation where the machinery of the bank is there in the light of day for everyone to see. Lastly that charter will allow the bank to disclose its meetings and procedures. Exactly how that will be done is going to be left for the development in the charter but what it does mean is that the way the decisions are made—the minutes of meetings and so on—will be able to be put out into the public domain so that people can gain an understanding of what goes on in these monetary policy committee meetings. So what we have really is a set of tools which is both ensuring we have an independent robust Reserve Bank with the best possible expertise having input into those meetings and also a system of democratic checks consultation and appointments which ensures this organisation has the legitimacy to make the important decisions it will be making. For that reason I commend the bill to the House.