Woolerton R Doug: Questions for Oral Answer — Questions to Ministers Questions to Members 
Woolerton R Doug: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:641;Page:11264] 
8.  
R DOUG WOOLERTON (NZ First) 
 to the  
Minister of Finance 
: What recent reports has he received regarding an accepted consensus on monetary policy in New Zealand? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I think the conventional consensus since certainly the passing of the 1989 legislation is that the monetary policy framework does not have an impact on long-run growth. As I commented last Thursday I am concerned that this view probably no longer holds in New Zealand because of the way in which monetary policy has interacted with the exchange rate and confidence in the exporting sector. 
R Doug Woolerton 
: Does the Minister agree with the reported comment of the New Zealand Exchange Chief Executive Mark Weldon that New Zealand should move from a strict inflation-targeting regime to a framework that targets long-run price stability and output to ensure that exporters are not damaged by the fight against inflation? 
Hon Dr MICHAEL CULLEN 
: No I probably would not agree with that view but I accept that the views expressed by Mr Weldon are well-thought-out. Indeed his submission to the Finance and Expenditure Committee was one of a number of submissions that people put considerable effort into. Clearly it is useful for the committee to engage with those submitters and report back to the House. I regret the fact that Mr English continues to regard this as some kind of useless exercise. 
Hon Mark Gosche 
: Has he seen reports setting out competing views on monetary policy? 
Hon Dr MICHAEL CULLEN 
: I have seen two quite conflicting reports. The first states that the Governor of the Reserve Bank should not have increased interest rates on the last two occasions. The second states that the Government “has been saying too much and not doing enough”. These conflicting reports came firstly from John Key and secondly from Bill English who as always disagree on monetary and fiscal policies. 
Hon Bill English 
: For how much longer does the Minister of Finance intend to keep suggesting that he might change monetary policy only to have every suggestion he makes be knocked over by the Prime Minister and still believe that he can be credible? 
Hon Dr MICHAEL CULLEN 
: The member is actually quite wrong on that. The difference between him and me on it is quite simple: we both probably support the general framework of monetary policy but I am willing to discuss ideas about how its operation can be improved. He seems to think that the last word on all of this was spoken sometime in the mid-1980s and nothing has changed since then. Well life has moved on I say to Mr English. 
R Doug Woolerton 
: What support has the Minister seen for moves to address the issues relating to our monetary policy including that a single focus on price stability has the effect of crippling the export sector on which New Zealand depends; and does the Minister agree that it is time for some rational debate on our monetary policy framework such as that sought by New Zealand First when we attempted to table our Reserve Bank (Amending Primary Function of Bank) Amendment Bill a move that was blocked by the National Party? 
Hon Dr MICHAEL CULLEN 
: All rational suggestions from New Zealand First are welcomed and should be broadly debated. My own view remains that a single focus on price stability is probably still preferable because when there are multiple objectives the bank is placed in the position of deciding from time to time which objective it is trying to meet and that can lead to quite confused accountabilities. 
Hon Bill English 
: Can the Minister confirm that the real reason he keeps raising issues about monetary policy is that he realises that New Zealand households are facing among the highest interest rates in the developed world and with the dropping dollar reduced purchasing power and that is bad news for the Labour Government which has mismanaged growth and he is trying to find some way of blaming someone else for it? 
Hon Dr MICHAEL CULLEN 
: No. What the member should perhaps realise is the fact that interest rates have had to be ratcheted up so high for so long a period and the exchange rate has been so high for so long a period might raise some interesting questions about the operation of monetary policy and that an intelligent open-minded person would not be afraid of discussing them. Welcome to the world of intelligent rational debate I say to Mr English.