Willis Nicola; Robertson GrantNICOLA WILLIS (National): I want to draw the committee's attention to the purpose statement for this bill which is set out in this Part 1 which says very clearly that the purpose of the Reserve Bank bill is to promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy." In that context I want to ask the Minister to what extent he directed his officials or he himself considered how well the objectives set out in this bill actually marry up with that purpose statement. The context for my question of course is that we have seen very clearly in the past 12 months the impact the Reserve Bank's actions and its monetary policy remit can have on the prosperity and wellbeing of New Zealanders. There are New Zealanders across the country who feel that their wellbeing and prosperity has been detrimentally impacted by soaring house prices by asset price inflation and by the bank's own admission that its actions in relation to interest rate cuts have directly impacted on that and therefore have had potentially intergenerational impacts.The reason this matters in terms of the objectives that are set is that the status quo for the Reserve Bank bill as other members have outlined is to very clearly set out that the bank must achieve and maintain financial stability of the financial system but must also do so in way that is efficient and that maintains efficiency. That concept of efficiency is very relevant when we look to the purpose statement because the interpretation of what economic efficiency is has long been understood to be a judgment and a balancing of what the costs and ramifications are of actions that the Reserve Bank may take within its financial stability mandate. So if we look on the one hand that the bank could do absolutely everything in its power to ensure financial stability we must also consider the ramifications that would have for wellbeing and prosperity. It was the view of many submitters on this bill who we heard during the select committee process that the inclusion of the efficiency objective ensured some tension in those two things and ensured a better balancing of them because otherwise—now without that efficiency constraint the bank may take a "least regrets" approach in which it narrowly sees its objective in terms of financial stability.I note that during the first round of consultation on this bill this particular issue which I'm addressing now in relation to the purpose statement and the efficiency objective was something that around half of respondents supported retaining. The reasons for that that have been raised are about the fact that that efficiency inclusion actually leads the banks in the direction of minimising and justifying the regulatory burden that it puts in and that potentially creates some constraint around its actions as they relate to the distributional impacts which have been large in recent months; as they relate to innovation and dynamism in the financial system and the need not to cramp on those too much.So as I said at the beginning of this contribution I ask the Minister: to what extent that purpose statement was tested against the provisions of this bill to ensure that they are truly carrying out that purpose of ensuring the prosperity and wellbeing of all New Zealanders?Hon GRANT ROBERTSON (Minister of Finance): I thank the member for her contribution. I have covered the efficiency question in several of the earlier interventions. But to take a step back to answer her specific question and again I had covered this as well what we are trying to do here—and again this comes back to best practice internationally around regulators of setting high-level objectives or a high-level purpose which she has read out and then the objectives: yes they do support that. So the answer to the question is yes. What this bill does however is actually give us far more tools to be able to ensure that that happens and that in particular in this bill is the creation of a financial policy remit. Given the member's interest and reference to the housing-related questions that is now the extra tool that we have to actually drive outcomes that go to whatever a Government of the day may decide are the important matters that it wants to see dealt with in financial policy. Those will need to be ones that protect and promote the stability of New Zealand's financial system as the objectives line out but actually now having that remit is the tool that will be useful. The Government found itself in the position in the absence of a remit of needing to use section 68B of the Act to be able to effectively ask the Reserve Bank to take a matter into consideration. Now we're going to be able to connect the objectives and the purposes much more clearly there in what we'll do with the financial policy remit. So I think actually this bill does do the thing that the member is concerned about.I would note that in the issue around efficiency non-efficiency and its importance and whether or not it would play a role in that there is sort of an internal contradiction there which is that the problem the member has alluded to around the impacts of house price inflation and so on happened under the rules that we've had. So I don't think it is a question of us removing that. I actually think we are strengthening our ability to have some influence over that via the financial policy remit."