Hide Rodney: Reserve Bank of New Zealand Amendment Bill — Second Reading 
Hide Rodney: Reserve Bank of New Zealand Amendment Bill — Second Reading 
[Volume:610;Page:7607] 
RODNEY HIDE (ACT NZ) 
: 
 We have a remarkable occurrence here in Parliament tonight because as I read the situation every political party is voting— 
Dr the Hon Lockwood Smith 
: Are you sure the Greens will? 
RODNEY HIDE 
: Absolutely the Greens will. Rod Donald has come on in leaps and bounds in the Finance and Expenditure Committee under the careful tutelage of Dr Don Brash. Here we have a remarkable circumstance under MMP where every political party in this House supports this amendment to the Reserve Bank of New Zealand Act. For members like Craig McNair who were not born when the original legislation went through this House I tell them that at the time and for some years subsequent the Reserve Bank of New Zealand Act was a hot and highly controversial piece of legislation. It took away politicians’ power to play with the money system in New Zealand for their electoral advantage and it took it across to an independent Reserve Bank governor. Of course the politicians in Parliament—the Minister of Finance—could always direct the Governor of the Reserve Bank to loosen monetary policy. 
John Carter 
: Never! 
RODNEY HIDE 
: The Minister could. All the Minister needed to do was write a note. At the time inflation was running at 13 percent per year although I cannot remember exactly. So people’s savings were worth less and the dollars they had in their back pockets were becoming fewer and fewer. But well-off property developers liked that inflationary environment because it favoured them at the expense of savers. 
The Government and the Governor of the Reserve Bank tamed inflation in New Zealand and that is one of the most dramatic post-war financial achievements anywhere in the world. The inflation rate was 10 to 14 percent—and highly erratic it was —and we got it down to the 0 to 2 percent band. Every political ill social and economic problem and business that did not succeed particularly well was sheeted home to the Reserve Bank of New Zealand Act and in particular to the Governor of the Reserve Bank for being heartless uncaring and unkind. 
There were politicians—[ 
Interruption 
] I am explaining this to Craig McNair because he was not born when that was going on. There were politicians in this House who took the opportunity to lambaste the Reserve Bank of New Zealand Act lambaste the Governor of the Reserve Bank and lambaste the Minister of Finance for the loony idea that the purpose of monetary policy was price stability so that when one went to bed at night with a dollar in one’s pocket and one woke up in the morning with that same dollar it could still buy a dollar’s worth of goods and services in New Zealand. 
John Key 
: In your pyjama pocket. 
RODNEY HIDE 
: That is where I keep my savings. It is hard to imagine now how controversial that proposition was. There was one man in New Zealand travelling the highways and byways—down every rural lane to the commercial hearts of the cities of New Zealand to the rotaries to the farming groups and to the women’s groups—explaining the importance of a monetary policy that was sane rational and stable and the benefits that would deliver to New Zealand not just to business New Zealand but also to household New Zealand not just to the rich but also to the poor not just to the working but also and especially to the retired because the retired— 
Hon Taito Phillip Field 
: What’s that got to do with the bill? 
RODNEY HIDE 
: Mr Field asks what that has to do with the bill. When he spoke earlier it is very clear that all he did was read the notes that Heather Simpson had prepared for him but had not read the bill for himself. It has everything to do with the bill because that one man Dr Donald Brash Governor of the Reserve Bank from 1989 to last year— 
John Key 
: Sounds like a eulogy. 
RODNEY HIDE 
: It is a eulogy for his career as Governor of the Reserve Bank and it is a welcoming of him to this great Parliament. Taking New Zealand from the 1970s where inflation was accepted to a new position was a huge achievement. Muldoon used to blame the unions. Nothing has changed—Winston Peters blames the immigrants for causing inflation. Jim Anderton used to blame big business for causing inflation. But the cause of inflation was always and everywhere politicians operating sloppy monetary policy and with the Reserve Bank the governor and successive Governments committed to sound monetary policy—[ 
Interruption 
] Phillip Field is calling out. He cannot spell monetary policy let alone understand it and if the man sat there and listened he would learn something. 
We come to a time in this House when there is multiparty agreement on the Reserve Bank of New Zealand Act and on monetary policy. We can change Governments and move from first past the post to MMP and still maintain a sound currency for New Zealanders. 
Hon Taito Phillip Field 
: Thanks to the Labour Government. 
RODNEY HIDE 
: I would love to thank the Labour Government for the Reserve Bank of New Zealand Act because it was a Labour Government that passed it. I know that Phillip Field is a great admirer of Sir Roger Douglas and the Hon Richard Prebble who drove that through and of Ruth Richardson who stuck to it through the hard years but I do not remember Phillip Field at the time going around the highways and byways of New Zealand and explaining the significance of a sound dollar. Not at all! But we got there. 
David Benson-Pope 
: Tell us about Fiji. 
RODNEY HIDE 
: After all those hard years we have got to a situation in New Zealand in which even David Benson-Pope supports the Reserve Bank of New Zealand Act sound monetary policy a single objective for the Reserve Bank and inflation targeting. If he had any sense of what it is to be an adult he would stand up in the House and offer his sincerest apologies to Dr Don Brash and admit he was wrong for all those years and to Ruth Richardson because she stuck to the course and said that the Government should get inflation and Government spending down and he would offer his thanks to Sir Roger Douglas and Richard Prebble for having the strength of political purpose in a time of high inflation to put in place the very legislative framework that could give us the best monetary policy in the world. 
I am not holding my breath for Mr David Benson-Pope to do that. I will say that it is enough for members on this side of the House that he supports sensible legislation like this and after all these years even Mr Benson-Pope has come around to supporting the Reserve Bank of New Zealand Act and good monetary policy and the good work of Dr Don Brash as the first governor of the new regime that has achieved so much for New Zealand. I thank Mr David Benson-Pope for his support although I realise that given his politics he cannot say that himself.