Smith Damien; Robertson GrantDAMIEN SMITH (ACT): Minister I think we should accept tonight that these are new rules of Gotham City or it feels like they've been constructed by yourself and Mr Shaw in your youthful days and now they've come to pass and so as I said the last time maybe it's the Sons of Anarchy—it's following the trilogy. But let's be honest and straight up about the fact that this is now going to give sweeping new powers to the bank and the Government. I quote from Gareth Vaughan at interest.co.nz. He said the days of our idiosyncratic light handed financial regulator [are] numbered. The RBNZ is being moved into international regulatory [system]." That is one of the points that I think this bill is missing which is the recognition that in 2017 one of the drivers of this reaction was the IMF assessment of New Zealand's financial capabilities. So five years on it's going to happen again I guess in terms of benchmarking and I'd like to see somebody on the monetary policy committee apart from Mr Orr who can get up to speed with all of that and be found as a policy board member and actually execute that. So I guess the point we're making here is that in the next review we should actually recognise that on top of all of this is an international system that we're abiding to. Maybe it's worth contemplating that that in itself will provide some indicators around the capital framework risk management the nature of the board and the nature of the Government's mandate and we think that the approach of least regret or wait and watch—the direction of travel can happen and change pretty quickly in this modern financial system. To all intents and purposes the Government is providing an underwrite and from my banking experience whenever you underwrite something you want to make sure that everybody knows what they're up for and what they're in for. We believe that the Reserve Bank has to have a policy committee that actually is up for that task and in that sense we agreed with the National Party in terms of some of its elements around efficiency in the nature of that relationship. Let's be really honest: again there'll be no more parliamentary oversight into the various elements of this bill which will be a very strange departure and how can we all be held accountable if we're governing or we're asked to vote on something that's beyond our control? To me I just feel and the ACT Party feel that this should have cross-party consensus. It doesn't at the moment but we're not far away from that with a couple of minor changes. The Government's choosing to drive these reforms through without the support of the other side of the House yet we believe that that is an area that's not as insurmountable as we expect.One of the key things about the Reserve Bank—I remember the good old simple days when I only had a couple of things to do. They did lots of lunches and you know everybody talked a good game. But I actually don't think in ways this bill is modern enough. I think we need to look at all the frameworks. I mean if you look at it now 85 percent of our banking system is owned by Australia; 60 percent of insurance is owned by the Australian companies as well yet the Australian Prudential Regulation Authority as the regulator has a shadow presence when they come to review banks and financial institutions in this country and we believe that should be tighter. We like the idea around the United Kingdom and what has happened there. So even though the instinct might be to drive this forward I would like the Minister just to spend a bit of time on really the fact that we are in the international system now and what that means for this bill.Hon GRANT ROBERTSON (Minister of Finance): I thank the member Damien Smith for his comments and I do accept the point he's making which is that we are indeed part of an international system in the sense that we're trying to apply a set of prudential rules that stand up to scrutiny internationally. I think his point around the role of the Australian Prudential Regulation Authority is an interesting one in that regard. It's not the subject of the bill but I'm happy to have it as a conversation with the member because I think it's incredibly important that New Zealand does set its own rules there for the operation of those entities in New Zealand. We try as much as we can to make sure they're consistent with what happens in Australia but our sovereignty around setting those rules is very significant and important I think.But in terms of his broader point yep he's absolutely right. The IMF came here. They made a series of recommendations about what New Zealand needed to do to ensure that we were not only at best practice but in line with the various Basel Committee rulings. We have attempted to do that over a succession of changes and the bank itself has attempted to do that over a succession of changes. That included elements of capital as he mentioned which are covered in one part of this bill and obviously in the bank's work that it does with trading banks. Also good forms of decision making and the kind of governance that would be expected were part of that as well. So absolutely it is an attempt to do that. Where I would differ from the member is in his description around what this means in terms of how the bank operates and its transparency and so on. The balance we have tried to strike here and in every bit of our reform of the Reserve Bank is to maintain the operational independence of the Reserve Bank. That remains a very important principle to me. What we however have got from feedback as we've gone out and done our consultation is the importance of us setting out clearly our expectations our criteria and our parameters as a Government and that's what we've done. So we've got the monetary policy remit the financial policy remit that is in here as well and the rules around the way in which the bank finances itself as well or we finance the bank and it makes its decisions. We get to set the parameters; they get to decide on the actual operations. So that constant balance is the thing that we are trying to seek through the full suite of reforms and I think occasionally that's where some of the other amendments that Mr Bayly's putting up I think just lose a bit of that balance when they do that. Finally I'd say yeah it would be ideal from my perspective if we could get cross-party support on this. We didn't on the first of our reform bills. It may be that we don't on this but I do believe the direction of travel is right and I know that this is the result of extensive public consultation and so I don't feel that we're somehow out on a limb in this piece of legislation. I think it's important it's institutionally sound—this bill—and I do want to make sure that we continue to debate this bill. I think it's fine in a purpose clause debate like this to have a slightly wider debate but there are a lot of matters that are about the operation of the Reserve Bank that are either dealt with in other bits of legislation or which are simply not dealt with in this bit of legislation."