Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): Just before I open in my comments on the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill I just want to briefly note and pay tribute to Harry Leslie Smith the veteran British activist who is beloved of many on this side of the House and who has been a fighter for many years for the rights of working people and particularly for people to have the right to full and dignified employment who died last night. Can I begin my remarks by thanking my fellow members of the Finance and Expenditure Committee for their work on this bill during the select committee stage—it was a thorough and well-contested process—to acknowledge the Minister of Finance for his initiative in putting forward this bill and also to thank officials who worked with the committee on the bill and all of those people and institutions who submitted to us. In preparing for my remarks today I read back in the Hansard the debate around the original Reserve Bank of New Zealand Bill as it was in 1989. The Minister who introduced that bill was the Hon David Caygill. Some things don't change in the Parliament. In that debate one very frequent interjector was Trevor Mallard. But there was a quote from David Caygill which stuck out for me which I think sums things up quite nicely. He said Now to come to the central point made by the Opposition."—which at that time was led by the Hon Ruth Richardson—"It wants price stability in a wider policy environment that will secure jobs and growth." That is the overarching objective of the Government in seeking these changes to the Reserve Bank of New Zealand Act. I do need at this point to take issue with some of the comments of the Hon Amy Adams and other Opposition members in respect of this debate who seem to argue that you have to wait for there to be a problem before you look at improving a policy framework. On this side of the House we believe that that is fundamentally flawed and what we do in progressive Government is look at the legislation look at the frameworks that we have and ensure that it is meeting the objectives of New Zealanders looking forward looking at the international evidence and always saying "How can we make things better?" And that is very much the context in which the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill has been put forward and I believe it will progress. The overarching objective of this bill in my view is to increase the transparency of the Reserve Bank and its operations in respect of key policy issues. The Reserve Bank as the Hon Amy Adams and the Hon Grant Robertson have noted is a key part of New Zealand's economic infrastructure. It makes decisions that have a real effect on the real economy and real people's lives. And it is only appropriate in my view that it takes into account a proper range of factors and that its operations are also transparent and that is reflected in the key changes that are put forward in this bill. The first change that I think is significant is the change to the purpose statement. It was heartening to hear that there does seem to be broad support for that. It's worth just reading this out because it speaks to I think the overarching well-being objectives that underlie this Government's agenda and underlie our objectives in this bill. The amended purpose will say "The purpose of this Act is to promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy by providing for the Reserve Bank of New Zealand as the central bank to be responsible for—"—then we list the objectives which I'll come to shortly. I think if you accept at the outset that that is the purpose it then follows that the Reserve Bank should be taking into account real-world factors in the way that it comes to its decision.And that leads us to the point of broadening the remit somewhat. What we do in that area is in addition to the remit of price stability. Add the important consideration of supporting maximum sustainable employment. There are two things you can say here. The first is that this is an important change—and certainly for us on this side of the House we believe that it is incredibly important in all of the key policy decisions that are made that we have in mind maintaining maximum sustainable employment. Unemployment is one of the great social ills when it reaches levels that are unhealthy in an economy and I believe that all of our decisions should be focused on maintaining maximum sustainable employment.Of course what we also know when we examine the operations of the Reserve Bank since it was set up in 1989 is that increasingly the Reserve Bank has been evolving in this direction anyway. If one reads the monetary policy statements issued on a quarterly basis by the Reserve Bank there is significant analysis about the state of the real economy and significant analysis about the impact on employment levels that flow from decisions that are made from the Reserve Bank.Of course one thing that has been missed in the contributions from the Hon Amy Adams is that we already have a policy targets agreement that adheres to the operations of the bank. In that current policy targets agreement the bank is required to take this into account in the decisions that it makes anyway. So if the members opposite want to construct the argument that widening the remit to include a consideration of maximum sustainable employment will somehow throw the Reserve Bank into chaos will somehow lead to runaway inflation then they need to say why that hasn't happened over the last four cycles that the current Reserve Bank has overseen because that is already in the policy targets agreement and already has to be taken into account by the Reserve Bank.There were two key changes that were recommended by the Finance and Expenditure Committee having heard advice from officials and considered submissions. The first simply related to the implementation date and this will ensure a smooth transition to ensure that we align the implementation date with the issuance of Monetary Policy Statements in early- to mid-2019. The second will ensure that the charter—the charter is the document which will provide more information and guidance about the operation of the monetary policy committee and open it up and make it more transparent—will ensure that the public is consulted on the charter when the charter comes up for renewal and I think that's very positive.It's important to note the charter will give greater transparency so it will do things like outline how the Reserve Bank monetary policy committee might publish its minutes. It will outline things like the extent of information that will be given on how the decision was made—so for example was it a unanimous decision to alter the official cash rate or was it a split decision? I think that provision of information to New Zealanders and to markets will actually be incredibly useful. I don't see why we wouldn't be supportive of that increased transparency in what is a very very important public policy decision.I want to finish my remarks by saying that I think it is perfectly reasonable for political parties in this House to have different positions on this bill but I have to say that the Opposition has really jumped the shark on this one. The suggestion that somehow these evolutionary changes are going to lead to 1970s-style hyperinflation which I've heard and that the operational independence of the bank will somehow be compromised are completely false and completely refuted. If I can refer to submissions made by well-known radicals such as the New Zealand Bankers' Association they say "[The New Zealand Bankers Association] supports the purpose of the Bill and the intent of increasing transparency of monetary policy decisions".This is an evolutionary piece of legislation and it actually brings us more closely in line with many of our major trading partners who have already gone down this route. This is a point which is well made by Michael Reddell well-known New Zealand economist and someone with significant experience in the Reserve Bank.Andrew Bayly: Oh yes—oh is that the only one you can quote? Who else can you quote—who else can you quote?ASSISTANT SPEAKER (Poto Williams): Order! [Interruption] Order! Mr Bayly don't refer to the Speaker please.MICHAEL WOOD: Many many and what I can point out to Mr Bayly who's setting off over there is that in fact the majority of submitters supported the objectives of this bill and supported the creation of a monetary policy committee. Some of them had different ideas about how it could be done or suggestions for change but the majority supported the broad direction of the bill because it is a pretty moderate pretty sensible piece of legislation. Actually for those members opposite who have paid attention to Monetary Policy Statements over the past couple of cycles they will actually see that many of the things in this bill are directions which the Reserve Bank has been heading in anyway. Isn't it actually better to have those transparently set out in legislation that is set by this Parliament?The other area which I think the Opposition just needs to think about in respect of this bill is that you know sometimes the Opposition can disagree with the direction that the Government is taking and offer useful contributions but really setting off in this direction doesn't actually do the Opposition any credit.This bill is a moderate bill. It is a bill which increases transparency. It is a bill which is perfectly in line with international best practice. It is a bill which will ensure that the important objective of maintaining maximum sustainable employment will be considered by the bank and I think that is something that most New Zealanders would welcome. I commend this bill for further passage through the House. Thank you Madam Assistant Speaker."