Peters Winston: Questions for Oral Answer — Questions to Ministers Questions to Members 
Text is incorporated into the Bound Volume 
Peters Winston: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Sitting date: 19 September 2012. Volume:684;Page:5364. Text is incorporated into the Bound Volume.] 
4. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: What did he mean in his reported statement “we’re considering what we can do to resist a rising exchange rate” and how does he reconcile this statement with that given by the Associate Minister of Finance on behalf of the Minister of Finance yesterday to the effect that the New Zealand Government has absolutely no way of influencing the New Zealand dollar down? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 I meant that the Government is taking a number of steps to help take pressure off the exchange rate and to help the economy adapt to a relatively high currency. They include getting back to fiscal surplus so that the Government is not borrowing heavily and pushing up interest rates encouraging households to save and putting the right settings in place to help New Zealand firms become more competitive. The Associate Minister correctly referred to the fact that with a floating exchange rate there is nothing the Government can do to permanently bring down the value of the dollar without also having undesirable effects show up elsewhere in the economy. 
Rt Hon Winston Peters 
: Has he considered any alternative counter-inflationary measures to curb excessive bank lending and thereby ease the pressure on the exchange rate caused by interest rates? 
Rt Hon JOHN KEY 
: My understanding is that Alan Bollard in his capacity as Governor of the Reserve Bank has actually moved in that area. There have been quite a number of changes over the last few years whereby the Reserve Bank now has much greater capacity to limit the loan-to-value ratios that banks have and their capital requirements under Basel III. 
Hon David Parker 
: Does the Prime Minister agree with the outgoing Governor of the Reserve Bank that if the objectives of the Reserve Bank of New Zealand Act were wider and included more than giving primacy to inflation like the level of a competitive exchange rate the decisions taken by the Reserve Bank would be different and the exchange rate—and these are not his words; they are mine so I do not want to attribute them to him—might be lower? 
Rt Hon JOHN KEY 
: With the greatest respect to that member I think he is actually misquoting Alan Bollard. The member will be aware that Alan Bollard as Reserve Bank governor was before the Finance and Expenditure Committee. In fact what he said about the current legislation is that it is “completely fit for purpose”. So in my view and knowing a number of discussions I have had with the governor in the 4 years I have been Prime Minister he has concluded that in fact New Zealand has world-leading legislation when it comes to the way that we manage the exchange rate and inflation targeting. Interestingly enough also that member will know that because he was part of a Government that had Charles Chauvel chair the Finance and Expenditure Committee in 2008 and what that select committee found was the following. It found that New Zealand’s monetary policy approach is now standard among small open developed economies and is regarded as “world’s best practice. We are advised that there are more than 20 countries now using a similar approach to monetary policy.” 
Hon David Parker 
: I do not deny the Prime Minister’s quote but I was not referring to that quote. I seek leave to table the transcript of Dr Bollard at the select committee where he acknowledged the point that I made in my question. 
Mr SPEAKER 
: I understand that this document is publicly available from the select committee. 
Hon David Parker 
: I raise a point of order Mr Speaker. My other point of order would be then that the Prime Minister obviously has not addressed— 
Mr SPEAKER 
: No no. Order! The Prime Minister absolutely did address the question. He answered it quite explicitly in that he—[ 
Interruption 
] Order! The member in asking his question acknowledged towards the end of his question that he may have used words that were not exactly Dr Bollard’s words. In answering the question the Prime Minister pointed out what Dr Bollard had said to the select committee and although it may not be exactly the answer the member expected it is certainly an answer to that question. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. It goes to the availability of the transcript. My understanding is that the transcript is not available until the report back from the select committee— 
Mr SPEAKER 
: Let me just check that fact. 
Hon Trevor Mallard 
: —and it has not been reported back yet. 
Mr SPEAKER 
: I accept the member is correct there and therefore I will put it to the House. Leave is sought to table that document. Is there any objection? There is objection. 
Rt Hon Winston Peters 
: Having regard to the Prime Minister’s marvellous ideological theory of doing nothing about the soaring New Zealand dollar rate at US82c or US83c has he considered the use of capital controls as a means of reducing the inflow of “hot” money which is causing our high dollar? 
Rt Hon JOHN KEY 
: Look I think from time to time it would be fair to summarise that the Reserve Bank and Treasury always look at those broader issues as they look at the general view about whether the policy targets agreement that is set between the governor and the Minister of Finance is working appropriately. What I think the general conclusion is—although I might have to go back and have a look—is that it is very difficult to put capital controls on a country like New Zealand which is a large capital importer and relies on that capital to fund so much of its domestic investment. It may be possible in places like Singapore. It is actually not possible in a place like New Zealand I think easily. 
Rt Hon Winston Peters 
: That being the case why did he say that the Government is “considering what it can do to resist a rising exchange rate” when it is clear from his previous three answers that he never intended to do anything whilst on average 100 manufacturing jobs are being lost every week and the high dollar has cost exporters a total of over $10 billion since 2009? 
Rt Hon JOHN KEY 
: I accept the member does not have it because he got that out of a  
Wall Street Journal 
 approach but if the member wants me to give him the full transcript of the entire conversation that I had with the  
Wall Street Journal 
 I am more than happy to do that. What I went on to actually say or did say as part of that overall discussion with that journalist was that I do not believe that intervention is a mechanism that works and that New Zealand is broadly happy with the policy targets agreement that we have got. What I basically said was that there are only certain things that the Government can control. They are the things like the inputs for businesses. Whether it is reforming the Resource Management Act tax reform or employment law reform all of those things do take the pressure off our exporters. And the reality is that if the member really thinks that he can get the New Zealand dollar down while it remains a floating exchange rate then he needs to go away and read a few books. I will give him a clue: it does not work. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. With the greatest respect I have read a few books including about Merrill Lynch— 
Mr SPEAKER 
: Order! Order! The member will resume his seat. I cannot for the life of me see what that has got to do with the proceedings of this House. That is not a point of order and the member will not pursue—he cannot disagree with the Prime Minister’s answer by way of point of order. The Prime Minister answered the member’s question in a very fulsome way. He referred to the quote that the member had used in his question and he went on to explain how that quote fitted into an interview the Prime Minister had given. I think he probably went a bit far at the end there but you cannot litigate the answer by way of point of order. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I am not litigating the answer at all. The answer was fine until he started recommending that other members of this House read books. That was when he was out of order. 
Mr SPEAKER 
: Order! I accept that he should not have done that indeed but worse things happen across the floor of the House than that unfortunately. But I accept the member’s point. The Prime Minister should not have added that. [ 
Interruption 
] Order! I am on my feet. Interjections from—the honourable gentleman is better than some of his interjections today. [ 
Interruption 
] Order! I cannot hear what the right honourable gentleman is seeking. Is this a supplementary question? 
Rt Hon Winston Peters 
: No. I wish to table a document given that the Prime Minister disputed what my authority was. I wish to table this  
National Business Review 
 dated 17 April 2012. 
Mr SPEAKER 
: Order! No we do not table press clippings from newspapers.