Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Madam Chair. I just want to go back to that answer the Minister provided before. I think there are three questions. The first thing: is he suggesting that a contingent liability is a capital item? Hon Grant Robertson: No.ANDREW BAYLY: Well I think that's what he was implying. So is a derivative a capital item?Hon Grant Robertson: Clause 205A(2)(c): set out the Minister's expectations [of] financial risk management." ANDREW BAYLY: So I looked at clause 205A(2)(c)—so if he's clear that he sees a contingent liability as a—because you know that's what derivatives have. They're interest rate swaps and by the way you've had to appropriate $3 billion to cover the hikes—the expected costs—of all the large-scale asset-purchasing arrangements to cover the interest costs. These are real things so if he's implying or stating that a contingent liability or a derivative is a capital item then I accept his argument that under clause 205A it is covered. But I don't think that's the definition of a derivative because a lot of those things—even under tax laws some might be classified as capital and some might be classified as income. That's why I think the proposition that the Minister has been putting forward is actually wrong because in fact a lot of those instruments aren't deemed capital.So even if I did apply his second response to my question which is that it could be covered under clause 206 when I look down the list in clause 206 that the Minister referred to under the funding agreement there is no explicit mention of anything to do with contingent liabilities or derivatives which is the exact point of what I included in our Supplementary Order Paper which is the level of direct or contingent liabilities the bank can incur and other matters relating to instruments or securities that the bank may acquire or hold and which may pose a risk for the Crown's financial position. So that's my point. It's a point of definition and I want the Minister to be very clear that he thinks a derivative is a capital item because if he doesn't and if it isn't then his argument falls away and there is a glaring gap here.Hon GRANT ROBERTSON (Minister of Finance): I don't accept the member's point. What I have said from the beginning—and this is now me repeating this for the third time—is that the approach being taken here is the same one that we've taken with the bank over many years and in a number of different parts of its operation to set the parameters and then have the bank operate within those parameters. There is scope in clause 205A to be able to both define capital but also set out expectations around the bank's financial risk management. I accept that the member wants a greater degree of control or involvement in that—I accept that point. What I am saying as I come back to my very first intervention is that there is a philosophical difference there.ANDREW BAYLY (National—Port Waikato): OK. Thank you and I appreciate the Minister responding. I suppose the issue if you go back up a level with the large-scale asset purchase scheme that the Reserve Bank put in place and has just finished last week does he accept that if the bank hadn't come to him as the Minister of Finance for an indemnity could they have done that and it would be refreshing to know from the Minister how much the bank has actually gone out and spent. I think it's in the order of about $60 billion so it'd be interesting to get the response on that.Hon GRANT ROBERTSON (Minister of Finance): Madam Chair we're probably getting a little away from the discussion on the bill and the member is asking me for my opinion. The reason I smiled at him when he asked that was that was in the height of COVID one of the conversations that we had. It was whether or not the bank could carry us. Andrew Bayly: Why didn't they put it in under the legislation? Hon GRANT ROBERTSON: Hang on yeah—whether the bank could carry us. Ultimately the discussion we had—and I take advice on indemnity matters from Treasury as the member would understand. Ultimately the view was that for the overall financial stability and security of New Zealand an indemnity was justified in these circumstances. But that to me doesn't—I don't feel the need given the way that was resolved to alter this clause to be able to deal with that. Again we're not going anywhere in this discussion. You either want the parameters set and the independence inside it or the member wants more control which is interesting given that his colleague was accusing us of taking more control here. This is a clause that maintains the independence of the bank but gives the Minister the say over the parameters. I believe that's the right approach."