Brownlee GerryHon GERRY BROWNLEE (National): That speech is the first time since the Rt Hon Mike Moore left the House that I've heard a Labour member speak glowingly of the changes that were introduced to the New Zealand economy post-1984. And I congratulate the member—Dr Deborah Russell—for recognising that that was a good time and I would suggest that she spends more time with her colleagues bringing them up to speed with exactly how important those reforms were.As a consequence of that at the end of that period the member was right the then finance Minister the Hon David Caygill brought the Reserve Bank of New Zealand Act to the House. And it has endured since that time—some nearly 33 years—and done an extremely good job for New Zealand. The question that sits in my head is: what is broken about that that requires the law to change now? What is so all-important about this change that will make the banking system more secure in New Zealand that will protect our monetary and fiscal systems and that will ensure that there is an oversight on the monetary side of our economy away from a Minister? And I can't see it.So the idea that we are strengthening the Reserve Bank by removing the authority of the governor and placing that authority of an appointed board—a board appointed by the Government; a board appointed by the Minister—is somehow protecting preserving and enhancing the independence of the governor. Now I think there are a number of little changes in here that the Finance and Expenditure Committee has sort of worked on but I think underlying it all they must themselves have wondered whether or not the purpose of the bill was truly to do that: provide for the enhanced independence of the governor. It's not evident that the governor having to go to his board and go through the board process where the great and good who are appointed by the Government of the day—in this case Minister Robertson—will tell him whether or not they are on the right track—that's not an enhanced independence; that is enhanced oversight from the Government of the day nothing surer than that. And when you look through the various other parts of the bill as I'm sure you have there are aspects to this where there is a long verbiage in the preamble to the bill the commentary that is essentially not justifying anything nor is it setting out a case for taking any particular kind of action. It's one of those sort of situations where you're left when getting to the end of it wondering exactly what the bill was setting out to do in the first place. And that leads you right back to the supposed purpose of the bill which I've already explained can't possibly be justified.So the question that we've got is: if there was a need for a change to the Reserve Bank of New Zealand Act then why wasn't there a process for considering what that change might have been or could be or if it was necessarily that was not just something cooked up over in Treasury? Because I notice sadly that Treasury gets an enhanced role in the oversight of the Reserve Bank. My views on Treasury are very well known and very well stated. I think they are an organisation that has massively overinflated their own importance to the system. They are bookkeepers and bookkeepers are no good at telling you how to run a business; bookkeepers simply tell you whether or not the ideas behind the business are producing good results.So the Government in this bill is handing over a role for the bookkeepers to get alongside the bankers and tell them how they should be running their operation. Two extra layers of supervision being put on the Reserve Bank: firstly the board and secondly the Treasury's new enhanced role. The question is in my head who was it inside the Reserve Bank organisation that annoyed the finance Minister so much that he felt he needed to bring in under the guise of enhanced independence this massive level of oversight? Maybe it is because in the last few years we've had an absolute runaway with housing prices. And the Government will be wanting to say Well it's largely due to low interest rates" without recognising that when there is a shortage of supply price rises. So rather than taking some responsibility for their own derelict action in creating opportunity for greater numbers of houses to be built they simply want to change the law here and blame the Reserve Bank. That will be one of the things that comes out of this. So we look forward to the committee stages of the bill where we can—Hon Phil Twyford: Gerry are you saying credit doesn't matter?Hon GERRY BROWNLEE: I beg your pardon?Hon Phil Twyford: Are you saying the supply of credit doesn't matter in housing?Hon GERRY BROWNLEE: No. Now there you go. So there is a really interesting question put to me as an assertion—put to me as an assertion. He is asking me whether I disagree that the supply of credit has an effect on house price. Well I tell you what Madam Speaker what Mr Twyford needs to understand—this is the architect of KiwiBuild that magnificent failed programme!—is that supply drops price—supply drops price—and with the supply there's demand. And in that case there will be an effect on interest rates. It is very very simple; it is not hard to understand. Although the four-year record of this Government with regards to housing would indicate that they've got no idea of how that system works. So thank you for the question and in that question exposing what the real problem was behind getting the KiwiBuild programme off the ground!So we look forward in the committee stages of the bill—[Interruption]—No hang on. No please if you don't mind. I hope you're taking the next call because I am just going to be riveted by every word that the member has to say—every word.So we look forward in the committee of the whole House stage to hearing the explanations clause by clause part by part whichever way we decide to go from the Minister about how he sees this making such a huge difference to the arrangements that we've got at the present time. We'll be trying to explain to him through that process how we think it is a massively significant change in the way the relationship works between the Minister of Finance and the bank—huge.One question will of course be: how often will the board report to the Minister of Finance? No one over there seems to know so that is something for them to think about over the next couple of weeks as we move towards that committee stage; I'll bet that it is frequent. So rather than the discussions that might occur between the independent Governor of the Reserve Bank there will now be the chairman of the board hauled into the Minister's office to explain what is going on and to hear the Minister's theories—Dr Duncan Webb: Oh you're making it up. Where are you getting that from?Hon GERRY BROWNLEE: —of what would be good to have happen. Now Dr Webb over there unfortunately—he's a great guy and I think he's next up in the Labour Cabinet. My colleagues agree with me; they are all nodding their heads—oh and so are his own colleagues; they're very encouraging. Next up and when he gets there he will know that Ministers can have quite an influence on their departments and this is changing the Reserve Bank into a department supervised by the Minister of Finance. It is you would say proved by the fact that my dear friends in Treasury now have a much-enhanced role in this particular structure—and that I'm afraid will not be good for this country."