Robertson GrantHon GRANT ROBERTSON (Minister of Finance): Madam Chair thank you very much. Part 2 does cover the substantive matters of the bill. The first of those is that it sets out the bank's objectives functions and core powers the Minister's role the board of the bank its members and how they come to be there the role of the governor of the bank and the Monetary Policy Committee. A significant number of provisions in this part are as I've alluded to in my contribution earlier substantially similar to provisions in the Crown Entities Act 2004. However as Mr Bayly and others have pointed out the bank itself is not a Crown entity under that Act but it is a model of governance that people are not only familiar with but also I think can see the merit in in most cases but as noted earlier there are some exceptions to that.If I just work through in this call what I see to be the most significant elements of this particular part. Obviously there is clause 8 which has the continuation but clause 9 does set out those main objectives. As I mentioned in my response to Nicola Willis earlier the financial stability objective is the one that I think does have pretty widespread agreement and that is the objective of promoting and protecting the stability of New Zealand's financial system. As I've said a number of times in earlier contributions on this bill this is the bit that has evolved the most in terms of the bank's role but has had the least attention from the point of view of legislative comment and in terms of structure that is designed rather than that which has evolved and so that is an important thing to get clear. The functions of the bank are covered under clause 10 and obviously these will be very familiar to people including the roles of acting as prudential regulator and supervisor monitoring the financial system monitoring the needs of the public for bank notes and coins—a matter I know that Mr Bayly is concerned with in some areas—work with overseas regulators the provision of relevant information keeping the law under review and performing or exercising functions that can be imposed upon it.There is a matter here where differing views were raised within the debate that is in clause 11 which is allowing the Minister to direct the bank to perform any additional function that is consistent with the bank's objectives following a request from the bank. I know that this is a matter that the Opposition have concerned themselves with. This is an example of what I said to Damien Smith earlier about how we protect the operational independence of the bank and one where it creates that balance within what we do. I think Ministers creating additional functions for the bank willy-nilly would not be good for the bank in achieving its objectives as laid out elsewhere.We go then through the various subparts. Subpart 3 gives the Minister's role and gives some clarity around that and includes as I mentioned earlier the significant additional role of the issuing of a financial policy remit to guide the financial policy work of the bank. It also—to Damien Smith's earlier point—gives directions to the bank relating to its minimum level of capital and financial risk management. This is the parameter-setting exercise that I mentioned before within which the bank operates independently.Subpart 4 covers the issue of the board—who is a member of the board and how the board comes to be there. We are talking about a board of not fewer than five and not more than nine members with the governor as a member reflecting—as I said earlier—their role as a coordinator between monetary and financial policy. The remaining members of the board are appointed by the Governor-General on the recommendation of the Minister and I am proscribed as the Minister in how I can appoint people. They have to have the appropriate skills knowledge and experience to assist the bank in order to do its job and there are number of other rules around who can do what including areas in which the governor cannot apply himself or herself to where those matters are directly relating to the governor. We cover off the collective duties of the board. These are the matters that are drawn from the Crown Entities Act and put into this legislation here. We then move through the process for appointment non-appointment reappointment and so on of all of those members and that includes also the governor. The governor is appointed by the Governor-General on the recommendation of the Minister and—here's an important one for the member opposite—following nomination from the board and consultation with other parties in Parliament. So that's now codifying the importance of Opposition parties having a role in the appointment of the governor and I'm sure the member will be pleased that we've taken that decision to do that.Hon Member: We will consult with you Minister!Hon GRANT ROBERTSON: You will consult with me. Is that right Mr Bayly? Maybe maybe not. Obviously we go on through into Part 7 where we look at the various Monetary Policy Committee elements that now need to be drawn into the legislation now that we've had it operating.So it is a wide-ranging part—I accept that—but it is the most substantive part. It does establish new governance arrangements which as we've covered off in the discussion on Part 1 I think are modern and fit for purpose and give the bank clear lines of accountability from the board through the governor with the Minister there reporting back via the various measures to this House.