Cullen Michael: Reserve Bank of New Zealand Amendment Bill — In Committee 
Cullen Michael: Reserve Bank of New Zealand Amendment Bill — In Committee 
[Volume:610;Page:7891] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I briefly acknowledge Mr Hide’s comments and thank him for those. This is an area where great attempts have been made over the years to achieve a high level of first of all bipartisanship and then—at a somewhat lower level of human existence—multi-partisanship in support of this legislation. I want to pay particular tribute tonight to someone whom I do not think the member mentioned. David Caygill was the person who was really responsible for the passage of the original legislation rather than Roger Douglas and I think that needs to be put clearly on the record. 
Dr Brash was the inaugural governor under the Reserve Bank of New Zealand Act. By and large every effort has been made to maintain a bipartisan approach as far as possible. There were previously some instances where there were things I disagreed with particularly with regard to some rather strange creature called the monetary conditions index but Dr Brash saw the light on that eventually and we reverted to standard international practice. The reality is of course that however well monetary policy is managed we are not going to avoid some difficulties particularly in the exchange rate area. We are seeing that in New Zealand at the present time where circumstances outside our control are holding the exchange rate up above the level that the tradable sector would like but the strength of the domestic economy has actually reduced the amount of room for manoeuvre in terms of the operation of monetary policy. We saw that effect occurring at times in the mid-1990s as well and that makes life difficult in terms of the overall objectives. 
This bill is amending legislation. It is not insignificant; it does a number of quite important things. 
Rodney Hide 
: Uninsignificant? 
Hon Dr MICHAEL CULLEN 
: No that would be a horrible word which I hope I did not use. It would be not insignificant—which is very much a historian’s way of phrasing life; it covers one’s tracks in terms of possible criticism further down. It is an area where I think we have been in advance of the world at times though I think we are probably pretty much up with the play at the present time in terms of monetary policy. 
I particularly recognise the work done by the Finance and Expenditure Committee which I think came to grips well with the issue of the vexed question of the use of terms “bank” and “banking” and so on. It is important not to get overly restrictive and to make life impossible for non-banking financial institutions but equally it is important to make sure that financial institutions which are not banks are not holding themselves out to be banks as far as the public perceptions are concerned. So I look forward to the passage of the legislation. 
It is possible that with an IMF visit coming up in terms of financial institutions and a related practices review we may want to discuss some of the results of that when it is completed with parties in the House. I suspect that the IMF will be raising some issues about some of our oversight mechanisms within New Zealand but we can certainly stand up in international company in terms of much of what goes in on those areas and of the history continuity and degree of consensus that we have achieved in New Zealand in those areas as opposed to some countries.