Tabuteau FletcherFLETCHER TABUTEAU (Deputy Leader—NZ First): Ha ha! Thank you Madam Assistant Speaker for this opportunity to speak to the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill 2018. Look I just want to start out by saying this has been a 30-year journey and we are actually slightly past the time that we needed to take a grip of 30-year-old legislation and modernise it essentially.I just wanted to acknowledge the contribution from the previous speaker Judith Collins because as is the duty of Opposition they put in some doubt and some questions into the motives and perhaps even the outcomes of the legislation as they are particularly good at doing. So I just want to assure the previous speaker that in this legislation there is no mission creep. There is no attempt to change the fundamental structure of the relationship between the Reserve Bank the Reserve Bank Governor the Government and the finance Minister. I just wanted to allay those fears of the previous speaker.But I wanted to then acknowledge the contribution from the shadow spokesperson. I just wanted to acknowledge it because it was a fair and considered contribution from the Opposition. So in that I congratulate the shadow spokesperson for the earnest and thoughtful contribution and I do agree that the select committee process will be an interesting and important part of the evolution of this legislation.Of course I cannot proceed without first acknowledging the Minister of Finance. As has been noted in all contributions thus far this is an important undertaking between the Labour Party and New Zealand First and rightly noted the Greens have had the same angst and concerns about this 30-year-old legislation which we're seeking to modernise—modernise being the key word here. So I think whilst perhaps I wouldn't say timely but in terms of this Government and this coalition arrangement actually kudos to the Minister of Finance. In the first two weeks of his role he came out and said This is exactly what we're going to do. This is the work that we're going to work towards." and here we are now.Hon Ruth Dyson: So he said he was going to do it and then did it.FLETCHER TABUTEAU: He said he was going to do it we made a commitment as a coalition to do it and here we are.Now this is the first phase and this legislation arises from that first part of phase one of the review of the Reserve Bank of New Zealand Act. So I think I'll say it again because it's worth noting for the Opposition: this is about a modernisation about amending some of those objectives of the monetary policy to require consideration of maximum sustainable employment. That is perhaps the main driver although the second part is to institute a monetary policy committee in that decision-making process. To be fair to the contributions from the Opposition actually the Reserve Bank have had quite a formal process of consultation and engagement using a committee process. You asked the question: why are we here? Well actually it was optional for them to do so. This amendment bill seeks to put that committee approach that committee decision-making process into that committee rather than what we have now where we have good and due consideration by the Reserve Bank Governor of those who are appointed to be considered and make that due decision on the official cash rate which is the primary tool we're talking about here but then can actually independently choose to ignore that advice of the committee.Now what we have seen from research and actual practical application around the world is committee decision-making has been proven to obviously be more diverse and considerate of a wider range of factors in that decision-making process and actually—let's be fair—although there has been no case that I can think of in New Zealand what that has meant is that there can be no extreme thinking by one person that will determine what it is the rate should be.So I think we need to be cognisant of that and so it is a simple but important change. What we are trying to do is make sure that we're focusing on price stability but making that commitment to full employment and then making sure the process of the committee is a full and proper one. Actually what I should say is that we had the Minister announce phase two of this process last month and I just wanted to point out where to from here. So phase two will consider the framework for financial stability to ensure the Act is fit for purpose and aligned with what the Government considers will provide a strong flexible and enduring regulatory framework that enjoys broad public and industry support. Actually I just wanted to note that that is what the Reserve Bank in its mandate is actually required to do.I just wanted to touch on the history of the Reserve Bank in New Zealand because I'm not sure too many people will be aware but in 1989 when it was established it was actually a world first. It was established at a time of quite high inflation at a time of quite extreme fluctuations in those prices and so New Zealand very wisely and ahead of its time decided that the best way to do that would be through this regulatory framework the Reserve Bank of New Zealand Act of 1989. Originally it was designed to cope with the extremes of pricing in the New Zealand market and so originally the target was zero to 2 percent so we were actually trying to eliminate inflation at the time. That was kind of the mandate back in the day.I think about seven years later—I'm not quite too sure of the timing but not too long later—we realised actually inflation in and of itself isn't the problem; it is the maintenance of price stability and so the target was actually changed to what it is that we have now: 1 to 3 percent. And so the economists and the Government of the time said "Actually inflation is OK. What we want for business is that confidence to know that we're not going to get those huge fluctuations in prices so that we can make good long-term decisions in investments over time." and hence the 1 to 3 percent. So I probably—I hadn't realised it's like being back in a lecture theatre. I have spent way too long giving a history of inflation and the Reserve Bank's formation itself. But to put that in context that we were ahead of the time then and unfortunately we have fallen by the wayside is perhaps the best segue to finish my contribution this afternoon. This is 30-year-old legislation. New Zealand First and the Rt Hon Winston Peters have spoken to the inadequacy of the Reserve Bank of New Zealand Act in its current form and what a great start we have here in terms of phase one in this legislation. So of course this has the full support of New Zealand First and we look forward to it progressing through the House. Thank you very much."