Brash Don: Questions for Oral Answer — Questions to Ministers 
Brash Don: Questions for Oral Answer — Questions to Ministers 
[Volume:613;Page:9787] 
1. Dr DON BRASH (Leader of the Opposition) 
 to the  
Minister of Finance 
: In making his statement yesterday that he is “not without options” to combat the rise in the New Zealand dollar was it his intention to signal possible changes to the Reserve Bank of New Zealand Act 1989 changes to the floating exchange rate or intervention in the currency market; if not what was he hoping to achieve? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 My intention was to signal that the Government is not without options. No specific conclusions can be drawn from that statement and it would be most unwise to do so. 
Dr Don Brash 
: Given that the rise in the New Zealand dollar is putting very considerable pressure on much of the export sector why does the Government persist in dumping additional compliance costs on exporters like yesterday’s announcement of a new $20 million trade tax and proposing still further cost increases by mandating additional paid annual leave? 
Hon Dr MICHAEL CULLEN 
: I bow to the member’s superior knowledge about lifting New Zealand’s exchange rate. However on the basis of the logic of the National Party if increasing compliance costs reduce economic growth that will actually lead to a reduction in the New Zealand exchange rate over the long term. 
Rodney Hide 
: Is it not the case that the Minister has no options on the level of the New Zealand dollar and he is actually just pretending that he has; if that is not the case why is he not prepared to share what he thinks his options are with the public of New Zealand? 
Hon Dr MICHAEL CULLEN 
: No the ongoing activities of the Government impact on the exchange rate in a whole host of ways but no specific conclusions can be drawn from my comments. 
Rt Hon Winston Peters 
: Can he recall the inaction of the Labour Government in March 1985 when the dollar rose to US72c and would he contemplate doing something this time rather than doing nothing as he did the last time he was in Government? 
Hon Dr MICHAEL CULLEN 
: I do not think I was the Minister of Finance at that point in the history of the Labour Government and therefore I am not responsible for what it did. However I can point out to the member that the Government is not without options but no specific conclusions can be drawn from that at this time. 
Rod Donald 
: Why does the Minister now appear to be interested in the exchange rate and balance of payments blowouts when in 2001 in answer to a question from me in this House he claimed that our much larger balance of payments deficit was not a cause for long-term concern and does he agree that exchange rate and balance of payment policies are long overdue for New Zealand? 
Hon Dr MICHAEL CULLEN 
: At that point the New Zealand dollar was falling and in a highly competitive situation which led to a strong correction in the current account deficit. 
Dr Don Brash 
: Has the Minister seen the assessment by Westpac’s currency strategist Johnathan Bayley reported in this morning’s  
New Zealand Herald 
 that he was “simply trying to jawbone the New Zealand dollar lower” and can he tell the House whether by the end of yesterday there was any sign at all of that being achieved? 
Hon Dr MICHAEL CULLEN 
: Yesterday was a good demonstration of the irrational exuberance of financial markets. On the back of the Australians lifting their interest rate the markets decided to mark the New Zealand dollar upwards despite the fact that the interest rate differential between the two countries therefore disappeared. That suggests one should not listen too closely to currency strategists from banks about rationality. 
Rt Hon Winston Peters 
: What does the Minister of Finance think the advantageous effects are for the export community of this country—the people who actually pump wealth into this nation—of a dollar that is ever-escalating in the face of a Minister of Finance who refuses to do a thing about it? 
Hon Dr MICHAEL CULLEN 
: So far in question time I seem to have been accused by some parties of doing nothing and by some parties of doing far too much. That suggests that I must have it about right. 
Dr Don Brash 
: Is the Minister aware that the Japanese authorities have also been trying to prevent their currency rising against the falling US dollar with intervention in the foreign exchange market rumoured to be in excess of US$100 billion and interest rates very close to zero but with absolutely minimal effect on the yen - US dollar exchange rate; given that why does he have any confidence at all that he will be able to achieve a better result? 
Hon Dr MICHAEL CULLEN 
: I can confidently say that the Government does not have US$100 billion to spend in that kind of area at all.