Robertson GrantHon GRANT ROBERTSON (Labour): It might be helpful for the House to go back to where the provision that's being repealed tonight came from. It really began for me in 2014 when the then Governor of the Reserve Bank Graeme Wheeler began hiking the official cash rate (OCR) even though at that point in time inflation was actually only running at 1.5 percent and unemployment was 5.6 percent. And I remember sitting on the Finance and Expenditure Committee and trying to understand why Graeme Wheeler would actually do that. He ended up increasing over that period of time the OCR from 2.5 to 3.5 percent and in doing so given how low inflation was all he actually achieved was unemployment going up. And actually we almost got to deflation towards the end of 2015. So if members opposite want to know where this conversation came from it's that actually yes of course we must keep inflation under control and of course that is an important role for the Reserve Bank but if we leave that completely unfettered we then run the risk that we end up going in completely the opposite direction. And so the process began from then to say Well is there another way to do this?" It's not as if New Zealand was some kind of outlier in picking this up. The United States Federal Reserve has had a dual mandate for many many years. The Reserve Bank of Australia has had a mandate that includes employment and in fact the Australian Government just last week updated that—Nicola Willis: Tell the full story now. They had to water it down you know that. They had to water it down—Hon GRANT ROBERTSON: —to reaffirm employment as part of their mandate. Now the member opposite says "They had to water it down." The member opposite needs to remember: she's getting rid of it. She's getting rid of it completely. The Reserve Bank of Australia the Federal Reserve are both completely able to manage these two things together. So that is the reason why we began this process. Of course we want inflation to be kept under control but we also think that the Reserve Bank has a role in the real economy of making sure that we do keep New Zealanders in work.Now I've heard from members opposite that this is a particularly dangerous thing to have these two objectives that somehow or other the perfectly capable people that we employ at Reserve Bank and on the monetary policy committee couldn't possibly handle two thoughts in their head at one time. Consistently over the period of time since this dual mandate has been in place the Governor of the Reserve Bank and those involved in the Reserve Bank making these decisions have said that it did not alter one iota their focus on inflation.Now I've given the House an example of a time where I think the dual mandate would have come in handy to make some different decisions. But in the period of time we're talking about the Reserve Bank have been absolutely clear: they knew that their focus needed to be on inflation as it spiralled out of control around the world. When we look at the countries that have a single mandate they all saw inflation go up. So the member opposite cannot have it both ways. Inflation was rising in those single-mandate countries well beyond the bands and the target bands that they have because that was a global trend. Rightly the Reserve Bank said our job has got to be to make sure we bring inflation down. You know what? It is not inconsistent with also making sure that we look after Kiwis and keep them in jobs. So this bill that the Government has bought to the House is a solution in search of a problem. It is not evidence based. There is no relationship between the speed at which central banks have responded to rising inflation and their monetary policy mandate. Also long-term inflation expectations which the member opposite Nicola Willis mentioned just before she sat down haven't actually changed significantly since the dual mandate came in. Five- and 10-year inflation expectations are in fact almost exactly where they were before we went into the dual mandate process. That's because people understand that it is possible to keep these two thoughts in our head at the same time. What might trigger concern if I quote the regulatory impact statement is that changes to the statutory framework "may trigger market concern". Stability is important in the way that we go about monetary policy. That's why at this point in a normal process of a bill we would be talking about what had happened at the Finance and Expenditure Committee. We would be talking about the submissions that had come forward. I think when we come to later stages of the debate we will be bearing in mind the fact that we haven't had the chance for New Zealanders to come forward and say why this mattered. When we made the change we heard from representatives from working people in particular just how important it was that there was now a conversation about employment and keeping people in jobs alongside the important conversation we have about making sure that we keep inflation under control and we keep price stability. As we went through COVID one of the things that I am the most proud of is that we kept New Zealanders in work; that when we were faced with forecasts of unemployment up into the double digits we worked hard across Government across all the parts of Government in making sure we did the things we needed to to keep them in work—the fiscal measures like the wage subsidy scheme and so on—but also what was done in terms of the monetary policy response. That actually has now served us well as we've entered into a time of higher inflation and pressures on the cost of living. Because and I think Liam Dann wrote about this in the New Zealand Herald recently if you really wanted to see what would go wrong in a period of high inflation and high interest rates it would be if people didn't have jobs. Because if they didn't have jobs you'd be seeing those mortgagee sales more and more and more. And so when we're talking about what we want from the economy we want all the parts of the economic apparatus working towards the overall wellbeing of New Zealanders. That's why when we made this change we also changed the purposes of the Reserve Bank of New Zealand (Monetary Policy) Amendment Act 2018 to make sure it was actually about the overall economic wellbeing of New Zealanders. I notice that's not being changed and I don't actually think the objectives of the Act now fit the purposes that we've changed them to but we recognise that there was an important role for monetary policy in making sure that we did look after New Zealanders and their overall wellbeing. We need to remember: jobs and stable prices are two of the essential elements of making sure that people can live their lives well. As I said before this Act passed in 1989—the original Reserve Bank Act. In communities across New Zealand in the 1980s it was the twin evils of high inflation and high unemployment that really drove New Zealand—Nicola Willis: He's living in the past.Hon GRANT ROBERTSON: —and in the 1990s—I'm living in the past? She's the one taking us back to 1989. We modernised this legislation to put it right up there with what was going on around the rest of the world in modern monetary policy and this is the Government that wants to take it backwards. There is another possibility that occurs here and that is actually now returning to the single mandate—and Lord forbid if the National Party actually take up the ACT Party's idea of getting rid of the concept of the medium term because I can tell you what will happen then: you will see interest rates rise rapidly and often. That actually will be the consequence of this legislation. It'll all be about making sure that we respond instantly to a change in prices and then you'll see interest rates rise and they'll rise often and they'll rise regularly. So members opposite might want to think very very carefully about what they're actually doing today. Because what they're actually doing today is taking away the focus on jobs—on one of the critical things that we often hear from the Government about what they think is important—and putting us back in the position as we were back in 2013 and 2014 when Graeme Wheeler decided that it was a good idea to ratchet up the official cash rate even though inflation was down around that 1.5 percent. This is about getting a balance right. It's about making sure we give a focus to all parts of the economic apparatus on looking after people looking after their jobs and keeping them in work. The Minister of Finance said that we needed to make up our mind about what the bill was. I can tell her this: it's wrong and it also won't do what they say it will do. The last speaker in the first reading from the Government Katie Nimon said this needs to be passed before Christmas so it can make a difference to the cost of living for people. It won't do a thing before Christmas and actually the main thing it is likely to do is cause damage over the long run in terms of how monetary policy operates. This bill is wrong and we will be opposing it at all stages."