Stephenson ToddTODD STEPHENSON (ACT): Thank you Mr Speaker. I rise to speak in favour of this bill which ACT will be supporting. We do need to return the single economic objective to the Reserve Bank's mandate. While it's existed since 1934 it was the passing of the Reserve Bank of New Zealand Act in 1989 which actually made this primary objective of price stability and it was great to hear Mr Robertson actually talking about a bit of history because there's actually nothing wrong with going back to 1989 when this was put in place and it worked. This same Act also established the operational independence of the Reserve Bank. You're right: it was in the 1988 Budget that the then Minister of Finance and ACT co-founder Sir Roger Douglas announced his intentions to reform the Reserve Bank in a way that would actually set this single mandate. When that Act came into force in 1989—in fact in February of 1990—New Zealand was the first country to have this formally adopted inflation target as we know it and it worked. Providing the Reserve Bank with a single objective rather than a laundry list which was actually discussed at the time in the 1980s actually meant that the bank could achieve its mandate by contributing and focusing on one thing and getting that objective right. At the time it was clear that the primary function of the Reserve Bank was to formulate and implement monetary policy directed to the economic objective of maintaining price stability and that's what we want to see returned. It was acknowledged that general price stability was the greatest contribution that monetary policy could make to New Zealand's economic wellbeing and that is what this Government is focused on. It recognises the limitation of monetary policy over the medium term and by having a clear objective on price stability we want to make sure that the Reserve Bank continues to focus on that single objective. It's part of this Government's economic plan. I would note actually that when the first policy targets agreement was signed by the Government in 1990 inflation was running at 7 percent. That's not too dissimilar to the circumstances we find ourselves in today and that target did actually deliver the reduction in inflation that we're looking for. The previous Government has muddied the waters by providing the Reserve Bank with a dual mandate and we want to stop that. Now if that wasn't bad enough by muddying the waters the previous Government also went on to grow the size of Government spending over 70 percent more and this large increase in Government spending has had consequences. Let's have another famous Milton Friedman quote tonight—you can never get enough of Milton Friedman on this side of the House. Milton Friedman said Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output." The last Government's output certainly didn't match the amount it was spending. We had hundreds of millions of dollars wasted on unproductive projects. What we've seen is a huge increase in inflation and—as the honourable member on this side talked about—that's affecting households with increases in mortgages and petrol prices and grocery prices. So ordinary Kiwis like the people of Southland are worse off in real terms. This new Government which ACT is a part of is determined to get inflation under control as quickly as possible and what we are doing here tonight in moving this amendment is to do that. We're also going to tackle Government spending and ensure that the Reserve Bank once again has a sole focus. By returning to the sole focus we can make sure that the Reserve Bank continues to be a world-leading institution and to play its part appropriately in turning around this economy. That's why ACT will be supporting this and we commend it to the House."