Robertson Grant: Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Annual Review Debate — In Committee[Sitting date: 29 April 2015. Volume:704;Page:3067. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central):It is a pleasure to take a call in what I guess we would call this grab bag of portfolios that fall under this final item. I would actually encourage members who want to take a look at the estimates document if you do want to get a flavour of the Finance and Expenditure Committee’s consideration of these matters to take a look at page 295 which is the annual review of Solid Energy and in fact the transcript of the exchange between the Solid Energy board and Clayton Cosgrove MP. It is well worth a read if anyone wants to have a look at it and it certainly indicates to this side of the Chamber a topic that should we have had a little more time we could have got into which is the way in which the Government managed to run a State-owned enterprise like Solid Energy into the ground.But I want to talk about the review of the Reserve Bank of New Zealand which is contained under this particular set of annual reviews. I want to make two particular points. The first of those is a general one that emerged during the committee’s hearing. Throughout the period covered by this annual review and indeed for years prior and now we learn for years to come the Reserve Bank has not met and will not meet the target that it has for inflation within the policy targets agreement it signs with the Government. This is a policy targets agreement that has covered both sides of the House. It has been slightly tweaked by both Labour and National Governments at different times. But the reality is that the Reserve Bank is actually going to fail to keep inflation within the 1 to 3 percent band which Governments of both hues have decided is what is good for New Zealand. Now when the Reserve Bank came to the committee it was clear with the members that it saw that objective as something that happened over the medium term. We had a discussion about what the medium term might mean—but the reality is that it will not meet that agreement.I think the time has come to review the policy targets agreement to ensure that while we do what all New Zealanders would want us to do which is to keep inflation under control we look at the overall mandate of the Reserve Bank. It is high time in my view that we have monetary policy in New Zealand that not only looks at the control of inflation and not only looks at price stability but looks at employment outcomes looks at whether or not in our country we are generating the kinds of jobs that New Zealanders would want to see and looks at how exporters are performing. Although there might be some around New Zealand who want to have a party to celebrate parity with the Australian dollar—and if you can afford yourself a trip over to the Gold Coast it might make you feel good when your spending power is a bit better—the reality is that our exporters who will drive growth in the economy are the ones who are suffering as the dollar remains as the Reserve Bank Governor told us at this review at an unsustainable and unjustifiably high level.We clearly in this country need to look—it is what he said Dr Coleman. He says it every time he gives his Monetary Policy Statement. He will say it again tomorrow. And tomorrow when he says it—Hon Dr Jonathan Coleman: What’s the right level?GRANT ROBERTSON: Well that is the point. I am not going to say that I am the person who should justify that but if the Reserve Bank Governor is telling New Zealanders that if exporters right around the country are telling New Zealanders that Mr Coleman then we need to make sure we listen to those people.Tomorrow when the Reserve Bank Governor makes his in-between Monetary Policy Statement he will leave the official cash rate at 3.5 percent. He has given a clear signal of that. But the reason that he will leave the rate at 3.5 percent is the fear of what will happen in the Auckland housing market if he were to cut those rates. That is clearly what is on the mind of the Reserve Bank Governor because right around the world central banks have been lowering their official cash rates and lowering interest rates. Here in New Zealand we now have the highest interest rates from a central bank of most Western countries. The reason he cannot lower that rate is because of the failure of this Government to deal with the Auckland housing crisis.Grant Spencer the Deputy Governor of the Reserve Bank made a speech the other day that was quite extraordinary in the history of this Government—quite extraordinary. Having come to the select committee on various occasions to tell us that it was not his job to talk about managing the demand side of the Auckland housing market the deputy governor came out and said that not enough is being done—not enough is being done by this Government to manage that. That is the clear message from the Reserve Bank Governor and the clear message to this Government that it has failed.