Bayly Andrew; Robertson GrantANDREW BAYLY (National—Port Waikato): Thank you Madam Chair and thank you to Minister Robertson for responding to that issue. I think I'd just like to take a little bit of issue with that response which I didn't find incredibly compelling but I'm sure that the Minister will warm up in time.I think there's two issues at play with regard to setting a financial framework for the bank. The first one relates to how the bank is funded. The second one relates to the nature of expenditure that the bank may get into and undertake. I accept the need for independence around how the bank if it's funded adequately should be empowered to be able to go and do what it does in the best interests of New Zealand. So there is no issue around the bank independently spending what has been allocated to it but there's the issue—and this bill strikes at the issue—of what is the appropriate framework for the bank to work within.I think—as my colleague Nicola Willis quite rightly pointed out—this is not an unusual thing. First of all the Australian and the Canadian Reserve Bank equivalents have similar arrangements that are a lot more crystal clear in terms of what the bank is able to do and what types of liabilities it is able to accept. Also the Bank of England is operating under a similar mechanism.I think the key point Minister is the focus of the legislation is only on setting a minimum capital level. The proposition I've put to you previously—and again I've tried to set it out very clearly in the bill—is that there is sophistication around the types of activities that a bank should be able to undertake and that are actually happening even now with current arrangements with swaps interest rate arrangements and—heaven forbid if we're trying to do this for 30 years—setting up a bank with a new structure for 30 years which you've previously talked about and then there are a whole range of sophisticated financial instruments. Simply this bill does not cater for those adequately. So my question is: why wouldn't we be doing what other established reserve bank frameworks in operation around the world are doing? Why are we so special and why are we so simplistic in our approach? That's the key difference I think we have between this bill and the one that's been proposed in the Supplementary Order Paper.Hon GRANT ROBERTSON (Minister of Finance): Again I come back to my opening statement to Nicola Willis which is that in many ways this is a philosophical point. I note the member's media release from earlier today accusing me as the Minister of Finance of variously involving myself too much in the affairs of the bank. This is in fact an attempt to make sure that we have a process by which parameters can be set but that the bank can work within those.The Supplementary Order Paper (SOP) that the member is proposing potentially could see a framework agreement going into a lot of detail that I am not sure actually is useful for the bank's operations or for the level of accountability that the member wants to do. For example are we talking about what kinds of instruments or securities the bank might acquire. Is that the kind of thing that member wants us to be discussing because if it is the level of detail required for that I think is disproportionate to the value that we would gain from the kind of arrangement that SOP 46 requests. So again I repeat it is my view that setting out an ability for the Government or the Minister to be able to have a level of fiscal control but have the operational independence has served us relatively well in this context.In terms of the member is question around other jurisdictions there's a variety of arrangements and I understand the point the member is making—that the Bank of England has a particular style of this—but we have always had our own arrangements and they're the ones that work for us best. We look around the world and we see what works for us but there are a variety of arrangements for how this is done.ANDREW BAYLY (National—Port Waikato): So just to be clear can the Minister just tell me exactly what are the arrangements or parameters he can place on the bank because as I understand it minimum capital is the key requirement. But if there are others it would be nice for him to highlight those.Secondly what are the requirements or imposition he can place on the Reserve Bank if they do get into contingent liabilities derivatives etc.? Does he have the ability to place any restriction on those?Hon GRANT ROBERTSON (Minister of Finance): Within the broad boundaries we can make some decisions about what we feel comfortable with. When it comes to the types of securities or the types of arrangements the bank might make within those boundaries then no those are their decisions.ANDREW BAYLY (National—Port Waikato): I think the Minister is being pretty unclear so let me just be very clear: what boundaries can the Minister set under the current bill to manage derivatives and contingent liabilities? They are in fact—Hon Grant Robertson: I'll come back to the member on that question.ANDREW BAYLY: OK good.