Bayly AndrewANDREW BAYLY (National—Hunua): Thank you Madam Assistant Speaker. It is I think good to be speaking on this bill the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill although I've got to say I do not support it for a moment. And I was just wondering who in this House has heard the loud chorus of those people saying The Reserve Bank is failing. We need to reform it. Armageddon is happening in New Zealand because the Reserve Bank is not doing its job." Have we heard that loud chorus? I'm afraid it is the case that we have heard nothing. And that is the issue.We've got this bill that the Labour - New Zealand First coalition wants to ram through this House because for some reason our new Minister of Finance thinks it's a good idea. And I think this is in the context where people around the world look at the Reserve Bank of New Zealand and say "That is an excellent institution." In fact it is at the forefront of Reserve Bank operational frameworks that most central banks around the world look at and go "I like that model. I like that model. New Zealand did a good thing." And here we've got this new Minister who goes "We need to make these substantial changes." And I think that our new Minister of Finance is rather green—green on the issue of this and actually a soft touch.I think the only one who actually wanted this—and we've known this for many many years—is actually Treasury. We know the Reserve Bank didn't want these changes. They didn't ask for them. They never asked for them. It was only the Treasury that's pushed it. And guess what? They found a Minister after all those years of waiting to be able to push through these reforms and they found the right Minister the soft Minister who's prepared to pick that up. And this is the second example of this that I've seen with this Labour - New Zealand First Government. The last one was the Commerce Commission granting those wider powers and of course the new Minister of Commerce and Consumer Affairs picked that up after years of waiting to get their hands on it.So the thing about this that the people—when they look around and look at New Zealand—like about the Reserve Bank is first of all it has a very clear mandate. It is explicitly clear. The second thing is it is very professionally managed and run. And the third thing is it lacks politicisation or in other terms it is totally independent—totally independent. And that for a central bank is probably the greatest thing the greatest aspect or attribute that you want to see in a central bank. And the trouble with these changes is that it cuts to the core of these issues. The first issue that I want to talk about is the mandate. At present as I said the mandate is to maintain and achieve price stability over the medium term. And of course we know this target is 1 to 3 percent. This bill obviously introduces the second aspect which is namely to require consideration of maximum sustainable employment. As the Government members have noted the Reserve Bank already takes into account employment issues when it decides on its monetary policy settings. It already takes them into account—in fact it's part of the holistic approach towards working out what are the aspects you'd need to have regard for when you set the official cash rate (OCR). During times of recession—this is where I don't think this has been thought through—if you've got a dual mandate which becomes the priority? And actually it becomes quite difficult for Governments because during periods of recession sometimes you have high inflation and you have high unemployment and you want to reduce the unemployment rate because during recessionary times that is the focus to get people back into work. But under this new mandate the Minister of Finance whoever he or she is can actually directly influence the prioritisation of that through this new remit and charter system. They can sit there in their office up in the Beehive and write out and dictate to the Reserve Bank which should be given priority. That is a loss of independence and a politicisation of the process of the Reserve Bank and that cuts to the core of why these reforms are not needed and shouldn't take place. And the other thing is why ask the bank to look at a matter their issue of employment when it has no direct influence on it? It can influence price inflation through the setting of the OCR but it cannot in the long term change employment rates. And so we've asked the Reserve Bank to have a mandate that it's got no direct levers to be able to influence. The next thing is around the appointment of the members of the board and the monetary policy committee. Now just to be clear the new Minister now has the right to determine who sits on the board of the Reserve Bank. In his divine right he has the ability to determine who sits on that board. That board then has the obligation to recommend to the Minister who should sit on the MPC or the monetary policy committee. So the same people that the Minister has appointed then recommend who sits on the monetary policy committee. The Minister then appoints the people to the monetary policy committee. That is undue political interference. The best analogy is the issue around the appointment of the last person to the bench of the Supreme Court in the US. We had that big scrape between President Obama and President Trump in terms of the political parties who had that right. And the thing about this is the members of the monetary policy committee have terms of four to five years. I am not saying that the Minister will appoint a whole lot of old Labour hacks but the issue is the Minister could potentially appoint a whole lot of Labour hacks to that board and ultimately to the monetary policy committee.Hon Andrew Little: Pathetic—pathetic.ANDREW BAYLY: Now I am only just saying that but that is the issue and perception perception perception is the issue. That is the perception. And what we have done Mr Little is create an environment that has cut to the core of that independence just by that process alone.Hon Andrew Little: The member's wrong.ANDREW BAYLY: No I'm not wrong. And so I believe that independence is absolutely the worst thing.The third thing that I have an issue with is the issue around transparency. We asked what is going to happen because one of the nice fluffies that came out of the process was that how the monetary policy committee that sets the OCR is going to operate is yet to be determined. But what was discussed was that this group its decision-making process and how its votes are recorded—and the previous member just talked about this—how it's published how it's made transparent is up for grabs. And the thought that we should move away from a situation where we have one governor who makes the pronouncements in a controlled environment to one potentially where you might have multiple members of the monetary policy committee standing up and making pronouncements in the public domain is absurd. Also the question of whether in fact their decision—whether it's unanimous majority or whatever—might be made transparent is again totally absurd because you may have had a situation where it is likely the OCR is going to drop. That will directly impact on interest rates and it will directly impact on currency movements. And if you were to have one situation where it was unanimous that there would be no change and the next time you have a majority decision—to the market commentators and particularly the foreign exchange markets they will watch that like a hawk and they will anticipate what's going to happen. All you've done is signalled what future Reserve Bank policy will be and it will be through signalling whether the decisions are unanimous or majority control. And that again just shows a Minister who does not understand how foreign currency markets—ASSISTANT SPEAKER (Poto Williams): I apologise to the member. Your time has expired. I understand this is a split call—Kiritapu Allan."