Seymour DavidHon DAVID SEYMOUR (Minister for Regulation): Well thank you very much Mr Speaker. I thought that was another refreshing nugget of honesty in another of Chlöe Swarbrick's speeches where she said at one point—as someone who's spent 6½ hours in this Chamber debating this bill—there'd been no meaningful scrutiny. I mean I think she needs to give herself a bit more credit. I know there's a productivity problem in New Zealand but to spend 6½ hours and then tell the whole world and put in Hansard on the public record that you achieved nothing is really take self-effacement far too far.I'm proud to stand on behalf of ACT and as part of this Government to support this bill. This bill is the right thing to do and the Opposition knows it. And we know they know it and everyone at home can see they know it because they have made such contradictory arguments. We heard from Deborah Russell at one point that if this bill went through and there was no longer an objective of maximum sustainable employment then we would be neglecting people's jobs that people could lose their jobs. I guess the logical response to that is that the Reserve Bank should print as much money as possible to keep people employed! That was an extraordinary thing for Deborah Russell to say and to think that she was the Minister of Revenue responsible for the country's entire tax system—it just makes me glad that we're over that period frankly.But then we also heard from Grant Robertson—who I've got to give credit has a few more chops at least when it comes to the economy and spending money. He was making the argument as was Chlöe Swarbrick that having a dual mandate for the past three years has actually made no difference whatsoever. So we might as well keep the dual mandate we might as well keep the Reserve Bank focused on price stability because it only focuses on price stability anyway. Now if anyone trying to follow along thinks Well that doesn't quite make sense" well they're actually right to think that because it doesn't.If having a dual mandate as we've heard claimed from the Opposition made not a jot of difference to how the Reserve Bank acted the Reserve Bank effectively behaved as though the dual mandate was never introduced then you might ask: what was the previous Government and specific members still on that side of the House who voted for it—what was their justification for introducing the dual mandate?There's a few possibilities. Perhaps they thought wrongly at the time that the dual mandate would have an effect on monetary policy. That's OK—we've all thought things in the past that turned out not to be true. In fact that's actually how knowledge advances: you have a theory you test it sometimes it's wrong you discard it and pick up a new theory—that's fine. But if it's true that they used to think the dual mandate would change the Reserve Bank's behaviour somehow for the better and they've since learnt that it didn't if they were rational people on the Opposition benches they would have changed their position and said "Look we were wrong then it didn't make any difference so we're quite comfortable with getting rid of it." That would have been a logical and sensible approach for the Opposition members to take. But they haven't taken that approach. They've said "We introduced it it made no difference but somehow it should be kept." How they manage to square that circle I do not know.Another variant of that of that argument was made by Chlöe Swarbrick who had read in the regulatory impact statement that there was the possibility the Government could achieve its objectives by changing the remit—that is the direction or the lever from the Minister of Finance to the Reserve Bank Governor—rather than changing the Reserve Bank of New Zealand Act. But once again if that is true that the objectives of the bank set out in the Reserve Bank of New Zealand Act make no difference and can be somehow substituted for or even overridden by the remit then that would have applied just as logically back when the previous Government changed the Reserve Bank of New Zealand Act to introduce the dual mandate. So if they really believe the argument they're making today they could have actually just changed the remit three or four years ago instead of spending all of the time that they spent amending the Reserve Bank of New Zealand Act.That leaves the Opposition in quite a pickle. Were they right then? Are they right now? Is it possible they're wrong both times? Logically it's not but I'm going to tell you which time they were wrong. You see it is a simple fact that if you hold one lever you can only pull it in one direction at a time and if the Reserve Bank holds a lever which is how quickly the printing presses run or not—and I know some people say that's a metaphor and they're right—how easily available do they make credit in the New Zealand economy? Well they can either run the printing presses faster or slower and if they run it faster then at least in the short term that can stimulate economic activity—no question about that. Countries all around the world despots bad rulers—they run the printing press fast and everyone feels rich for a while and woah the economy takes off. But if there's not enough production the prices go up we get inflation and people find that they're actually just running to stand still and it's hard to predict what stuff's going to cost.So you can certainly run it faster and that can have an effect at least in the short run. Or you can run it slower and sometimes that's necessary to make sure that there's not so much cash floating around in the economy and prices are more stable. What the Government was asking the Reserve Bank to do with the previous policy of a dual mandate was push one lever in two directions at once. Well it cannot work and we saw it come out in the debate where some members opposite said "Well maybe there could be two objectives but we could just make it really clear that one was more important than the other." But the question that immediately arises is: how much more important? Does it mean that just sometimes they should push the lever in one direction but most of the time the other according to whether it's employment or inflation that is most important to control? How would they prioritise that one was more important than the other?The fact is that the Reserve Bank has one lever—print money faster or print money slower—and they can only push the lever in one direction at a time. If they try to do both or even if they try to pretend some subterfuge that they're prioritising one over the other then they will find that they cannot be honest and they cannot be accountable because it's logically impossible to answer the question of whether they're doing the right thing. The only available answer will always be "We're doing both because we have to." So moving back to a single mandate is the only way that we can be sure that we will have a Reserve Bank that clearly understands its job that is totally accountable for doing its job that can never say "Well I failed at one but I was doing both." There will be one standard for the Reserve Bank and that is: have they met their single objective which is price stability?For members opposite who say "When will this work and how can it work and did it work before?" well economies and market participants are funny things. You see markets are really about processing information and when new information comes into play people start to take account for it. People start to price in what they expect to happen in the future. I suspect that other things being equal by taking this step today by sending the message we now have a Government that is prepared to put its time and its capital—and a whole lot of Chlöe Swarbrick's time apparently—into making sure it's perfectly clear what our monetary policy objectives are that people are going to start pricing in that a new sherrif is in town and inflation is going to the wall. I just suspect that actually that is going to have an effect on the prices that people pay and they will be lower than they would have otherwise been and people can start to feel some relief from the long hard grinding road of inflation they've been subject to by the previous Government for nearly three years now where inflation has been outside the target band.That's why the leadership being shown by this Government to everybody in the New Zealand economy that price stability and sound money are front and centre is an essential foundation to the economic recovery and the prosperity that this country sorely needs. I support this bill and commend it to the House. Thank you."