Tremain Chris: Reserve Bank of New Zealand Amendment Bill (No 3) — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Tremain Chris: Reserve Bank of New Zealand Amendment Bill (No 3) — Second Reading In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18223. Text is incorporated into the Bound Volume.] 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to take a short call on Part 2. Like my colleague Tim Groser I can move through this part expeditiously. Part 2 has two key parts: firstly it deals with the determination of the Reserve Bank’s annual dividend back to the Crown; and secondly it deals with the timing of financial stability reports and the importance of them. 
In terms of the first part which deals with the bank’s annual dividend at present the bank calculates the dividend in accordance with a legislative formula. I take this opportunity to say to the Minister in the chair the Hon Shane Jones that given his financial background and the time he spent as chair of the Finance and Expenditure Committee I am quite keen for him to take a call to give us a feel for what that legislative formula entails so that we can learn a little bit more about it. I ask the Minister in the chair to seek a call so that he can define how the Reserve Bank calculates its dividend in accordance with a legislative formula. 
The formula-based determination does not always reflect changes to the bank’s balance sheet market and accounting and in recent years it has not accurately reflected the amount that should be available for distribution back to the Crown. The committee has changed the provision to make it clearer. The amendments we recommend would allow the bank to determine the principles—which must be published in its statement of intent—upon which it would recommend the dividend. That is quite a change. The bank will have to define how that dividend will flow back to the Crown and it will have to consider how its own balance sheet has changed because of the impact of the financial markets on it rather than the dividend just being calculated in accordance with a formula—which I am hoping the Minister will take some time to define for us before we close off the debate on this part. 
R Doug Woolerton 
: Shane will sort it out. 
CHRIS TREMAIN 
: I am just acknowledging that the previous chairperson of the Finance and Expenditure Committee is a wise member of the House. I look forward to his call. 
The second part of Part 2 which I will briefly touch on is new section 165A in clause 19. It deals with the financial stability reports and the timing of those reports. We have allowed more flexibility around the timing of them. Previously they had to come out every 6 months on a specific date. The section has been changed to state that “The Bank must not less than twice in every calendar year” publish one of these reports. They are critical reports. They are used by many financial organisations around the world to consider the state of the New Zealand economy; the likes of the OECD and various global financial credit agencies look at them in detail. Making sure that the reports come out in a timely fashion is important for our wider financial credit ratings and I guess that it is important in relation to our OECD rankings as well. That particular amendment is a small change but it takes us forward. 
That is the end of my speech on Part 2 of the Reserve Bank of New Zealand Amendment Bill (No 3). Thank you for the opportunity to speak Mr Chairperson.