Willis NicolaThird ReadingHon NICOLA WILLIS (Minister of Finance): I move That the Reserve Bank of New Zealand (Economic Objective) Amendment Bill be now read a third time. This bill makes clear that for New Zealand's new Government inflation is public enemy number one. New Zealanders have elected a Government who has what it takes to address the cost of living crisis that was allowed to fester by the outgoing Government. We understand that for so long as inflation remains out of control then New Zealanders will continue to suffer. They will continue to suffer from price increases that erode the value of their savings. They will continue to suffer from price increases that eat away at the money in their bank accounts. They will continue to suffer with price and rent increases that make it impossible for too many to get ahead.So what this bill does is it realises our commitment that in our first 100 days we would return the Reserve Bank to a single focus on inflation. This bill gives the Reserve Bank and its monetary policy committee absolute clarity about its role in our economy; it needs to focus on the principal objective of price stability because that is the best contribution that monetary policy can make to our economic and social wellbeing. Because without price stability all of the other things that members of this House wish for whether it be sustainable employment well-paying jobs good opportunities none of that can be delivered without the foundation that price stability provides.And be there no doubt about the scourge that is inflation because the past three years have laid bare what happens when inflation gets its grip on an economy. We have had a cost of living crisis that has seen people across our community suffering. Loose monetary policy contributed to an asset price spike on a scale not seen for many many years that had the direct impact of widening the gap between the haves and the have-nots. Inflation has been particularly hard on low-income earners as wages have struggled to keep up with increased price pressures. And in the debate about this bill we have had some rather fatuous arguments from the other side who have tried to question whether we on this side believe jobs matter. Well let me be clear: jobs matter very very much and actually on this side of the House we understand what's required to create them and sustain them. We have studied enough economics to know that monetary policy is not the primary determinant of the level of employment because actually structural factors—the tax system the regulation of the labour market the level of skills in the economy all of those things must be considered. We are a Government that will take responsibility for our role in creating the conditions for employment by ensuring that businesses have the confidence to invest they have the confidence to create jobs that they'll give people a go and create opportunities. And I would note that actually the former finance Minister was advised himself in May 2018—when he took advice on whether he should fiddle with the Reserve Bank Act he was advised of that very thing that actually the monetary policy was not the primary determinant of the level of employment and in fact that price stability low stable inflation is the precondition on which employment sits. There have been questions in this House about why we would amend the Reserve Bank of New Zealand Act. Confused questions because some members have sort of been saying this is a terrible awful bill—and we had the former member for Wellington Central waxing lyrical about the 1980s and 1990s; we got to occupy that part of his mind that lives in the past—but then we also had them saying that the bill would have no effect whatsoever. Well the fact is this: without amending the Act the monetary policy committee would still be required to have regard to maximum sustainable employment. So in order to achieve our objective and the promise that we have made to New Zealanders—which is to ensure that single focus for the monetary policy committee—we must amend the Act and that is what we are doing today. The value here is that we ensure greater focus than we could through doing things with the remit alone. And I have to say was it a low point in Mr Robertson's career when he used a filibuster in the House today to question whether the Governor-General should really be able to offer assent to bills at all? It felt like a bit of a low point to me.The benefits of this bill are not only that it gives clarity in how the monetary policy committee operates but also that it will give clarity for those rare circumstances which economists agree could occur where the two goals of maximum employment and price stability could be in conflict. With this Act we will make clear that price stability should be the objective. It will also have an impact on perceptions of the role of the Reserve Bank of its decision-making processes and of its objectives. The Reserve Bank itself has noted—itself has noted including in a letter I have tabled in this House—the need for that priority of inflation busting to be made clear to everyone to be made clear to decision makers to be made clear to market participants to be made clear to New Zealanders. With this bill we will ensure that price setters—that is the people who are setting the prices for the goods in the shops that New Zealanders are buying—will be thinking about what inflation is going to look like in the future. And when they're thinking about those questions over the coming months they should think about this: we have a Government now that is crystal clear it wants inflation out of this economy. It wants price stability back. It wants inflation gone. They can be crystal clear when they're thinking about where inflation is going that we have equipped the Reserve Bank with the singular focus it needs to drive that goal. So where we are today with the passage of this legislation is we are marking a return to economic fundamentals. We are marking a return to proven economic orthodoxies that have delivered for New Zealand in the past. We are marking a return to clarity and purpose in the action of Government where confusion has reigned for six years. We have gone through as a country a period of economic experimentation; six years of failed experimentation that led to worse results for New Zealanders. We have had a Government that threw a thousand priorities at the wall that made multiple aspirational statements on everything from a nuclear-free moment through to a hundred thousand KiwiBuild houses through to eliminating child poverty. Carl Bates: Fantasy!Hon NICOLA WILLIS: We've had a Government full of fantasies a Government that added objectives and priorities willy-nilly across our statute book that considered the signal of virtue more important than the realisation of deed. In this Government we now have a crew who are committed to clarity of purpose objective and with this bill we make clear that fighting inflation sits number one on that list because without inflation under control Labour's cost of living crisis will go on. And here's the thing: this is a basic step but if you don't get the basics right the words—all of those words—amount to nothing. And so today in passing this bill the Government makes clear our priorities our expectations and our grounding in economic fundamentals. Because for too long New Zealanders' living standards have been sacrificed on the altar of good intentions. And that's all that the six-year experimentation with the changed Reserve Bank of New Zealand Act was; it was a mishmash of good intention and good intentions without the foundations of basic economics amount to nowt. So with this bill we make clear that we wish to eliminate inflation. We are using all levers—Hon Grant Robertson: Eliminate!Hon NICOLA WILLIS: Eliminate high inflation get it back within the target between 1 to 3 the midpoint of 2. Because at the end of the day you can't deliver for people with words you do it with action.ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to.