Peters Winston: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Peters Winston: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 11 September 2012. Volume:683;Page:5035. Text is incorporated into the Bound Volume.] 
2. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Minister of Finance 
: Does he agree with the New Zealand Manufacturers and Exporters Association the International Monetary Fund and the Reserve Bank of New Zealand that the New Zealand dollar is overvalued? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 We do agree with their level of discomfort about the high level of the New Zealand dollar but we certainly do not agree with the view held by the Manufacturers and Exporters Association that the New Zealand dollar should be devalued to US60c. This would amount to around a 25 percent devaluation implying an exchange rate against the Australian dollar of just 58c. That means a drop in income and living standards across the board in New Zealand of about 20 percent. If they think there is a gap between us and Australia now then following the Manufacturers and Exporters Association call for a 25 percent devaluation that gap would widen into a chasm and thousands of New Zealanders would be leaving for Australia because of its much higher standard of living. 
Rt Hon Winston Peters 
: Does he agree with John Walley Chief Executive Officer of the New Zealand Manufacturers and Exporters Association that the overvalued dollar has cost the exports sector up to $10 billion over the past 3½ years? 
Hon BILL ENGLISH 
: No I do not agree with that. We do agree that the high level of the exchange rate does put a lot of pressure on exporters. The Government is taking every measure it can to exercise its indirect influence on the exchange rate to help our exporters be more competitive. But we do not agree with the view of New Zealand First the Manufacturers and Exporters Association and the Labour Party that the New Zealand dollar should be significantly devalued. That would cut the incomes and the standard of living of all New Zealanders. 
Rt Hon Winston Peters 
: Will he acknowledge that the overvalued dollar is contributing to rising unemployment with hundreds of jobs being lost in the export sector every month—for example the 100 jobs recently lost at Tiwai Point the 120 redundancies at Solid Energy’s Huntly East mine the 100 jobs set to go at the Kawerau mill or the up to 400 jobs that hang in the balance at Spring Creek Mine all because of an uncompetitive exchange rate? 
Hon BILL ENGLISH 
: All of those job losses are regrettable but probably unavoidable. What we owe to the people who have lost those jobs is to continue to support the many businesses that are creating jobs. In the last 2 years this economy has created 50000 net new jobs and over the next 4 years we expect about another 150000 net new jobs. In an environment of relatively low growth rates and grumpy growth some companies will be shedding jobs and more other companies are growing jobs. 
Rt Hon Winston Peters 
: Is it correct that under section 17 of the Reserve Bank of New Zealand Act the Minister of Finance may for the purpose of influencing the exchange rate or exchange rate trends from time to time by notice in writing to the bank direct the bank to deal in foreign exchange within guidelines prescribed by the Minister in the notice which is not certainly you because you have got no experience whatsoever in this area? 
Hon BILL ENGLISH 
: Yes the member is correct about what is in the Reserve Bank of New Zealand Act. However it would be irresponsible of any Minister of Finance of New Zealand to instruct the Reserve Bank to try to achieve what he the Labour Party the Greens and the Manufacturers and Exporters Association want and that is a 20 percent devaluation of the New Zealand currency. That would be extremely risky for the New Zealand taxpayer but worse than that it would cut the standard of living of every New Zealand household by 20 percent. 
Hon David Parker 
: If an inflated exchange rate lies at the heart of our exporters’ problems our external deficit and job losses why will he not do anything about it? 
Hon BILL ENGLISH 
: What lies at the heart of their challenges was the very poor economic policy under the Labour Government where up to 2008 New Zealand lost competitiveness at a rate among the worst in the developed world. This Government is having to work very hard to re-establish that competitiveness. 
Hon David Parker 
: Does he stand by his statement that New Zealand operates “best-practice” monetary policy or does he now accept that the economic objectives of the Reserve Bank should be widened to include more than inflation? 
Hon BILL ENGLISH 
: Yes I do stand by the statement and if the member read the policy targets agreement he would see that it does encompass other economic objectives. 
Hon David Parker 
: I raise a point of order Mr Speaker. My question was whether the economic objectives of the Reserve Bank which are actually laid out in statute should be widened to more than inflation and the Minister has not addressed that part of the question. 
Mr SPEAKER 
: I will allow the member to repeat his question if there is uncertainty. 
Hon David Parker 
: Does he stand by his statement that New Zealand operates “best-practice” monetary policy or does he now accept that the economic objectives of the Reserve Bank should be widened in the statute to include more than inflation? 
Mr SPEAKER 
: Before I call the Minister the Minister actually answered the first part of that question. It is a shame the member did not restrict his question to just the last bit if he wanted that answered. The Minister answered whether he stood by the—[ 
Interruption 
] Order! I gave the member the benefit of the doubt; I should have trusted my initial judgment. 
Rt Hon Winston Peters 
: In the light of the Minister’s first answer and given that he does have the power to do something about the overvalued dollar when will he stop Nero fiddling whilst New Zealand manufacturing New Zealand exporting and New Zealand jobs continue to burn? 
Hon BILL ENGLISH 
: As I have already said the Government is working across a wide range of fronts from infrastructure to skills to supporting exporters in our export markets and to sorting out the allocation and use of our natural resources all as mechanisms to assist the competitiveness of our exporters. However we do not intend to pursue a devaluation of the New Zealand dollar that would cut the living standards of New Zealand households by 20 percent as advocated by the Opposition parties. 
Rt Hon Winston Peters 
: Given the extreme urgency of this issue I seek leave for the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill to have its first reading immediately after question time today. 
Mr SPEAKER 
: Leave is sought for that course of action. Is there any objection? There is objection.