Williams Andrew: General Debate 
Text is incorporated into the Bound Volume 
Williams Andrew: General Debate 
[Sitting date: 12 September 2012. Volume:683;Page:5143. Text is incorporated into the Bound Volume.] 
ANDREW WILLIAMS (NZ First) 
: 
 Tomorrow New Zealand First is releasing a report from Business and Economic Research summarising the case for amending the Reserve Bank of New Zealand Act. The Business and Economic Research report concludes that New Zealanders’ lives will benefit from an amended Reserve Bank of New Zealand Act. In alignment with the Business and Economic Research report there is now a broad consensus on the need for an amendment to the Reserve Bank of New Zealand Act. The International Monetary Fund exporters manufacturers many leading economists and commentators and even our own Reserve Bank are all agreed. 
No serious economist will deny that our exchange rate is overvalued but yesterday in this House when the Minister of Finance was asked whether he agreed with the overwhelming weight of expert opinion on the overvalued dollar he fudged it. Today in this House he fudged it once again. I quote the Minister’s comment yesterday: “We do agree with their level of discomfort about the high level of the New Zealand dollar”. So that is all right then is it? It is all right that there is a level of discomfort and the Minister even today cannot disclose or give us any more information on how that level of discomfort is out there. 
“Discomfort” is such a nice word—an inoffensive and euphemistic word. But ask the workers in Kawerau ask the workers in Bluff and ask the workers in Timaru in South Auckland and throughout New Zealand who have lost their jobs because the business they work in no longer is competitive due to an overvalued dollar if they are experiencing “discomfort”. Are they experiencing “discomfort”? Most certainly they are. If you ask them that question you will get a very blunt answer. 
The plain fact is that the current Reserve Bank of New Zealand Act is seriously flawed. The focus on inflation is having a dire impact on New Zealand’s international competitiveness. The current Act dates from 1989—a whole different epoch. The fixation on a narrow inflation target may have been appropriate in the past but is now creating a major headwind in the form of an overvalued New Zealand currency creating a great competitive disadvantage for our economy. Globally inflation is not the threat it was back in 1989. 
Today we face a different threat to our economy: cut-throat competition in our export markets the very basis of our survival as a developed trading nation. What the current Act has given us is a chronically overvalued exchange rate and the result is that every week businesses are closing markets are in jeopardy and jobs are being lost. The New Zealand public is now asking why there is no urgency why there is no action from this Government and why there is no resolve. 
The basic economics are straightforward. Our currency should reflect New Zealand’s economic fundamentals. Instead we have a persistently overvalued exchange rate. That has served the interests of international currency speculators—the so-called carry trade the people from the likes of Merrill Lynch and other money traders—who have done well out of trading currency in this country. Our overvalued exchange rate has encouraged people to park money here simply to earn higher interest rates. That has led to all manner of distortions. The facts and consequences of an overvalued exchange rate are not in doubt. The facts on the ground are stark. The loss of competitiveness is costing us markets costing us jobs and losing us many major employers. 
So the time for prevarication and passivity over the Reserve Bank is over. The damage needs to be stopped before more irreparable harm is done to our economic capacity. The bill that New Zealand First has introduced to amend the Reserve Bank of New Zealand Act will mean the Reserve Bank can pursue a balanced macroeconomic policy in which price stability although remaining important is no longer the overriding policy objective. We will have an amended Reserve Bank that is fit for purpose and will promote growth jobs and more important exports. So in summary everyone agrees the dollar is overvalued— 
Hon Dr Jonathan Coleman 
: No! What should the value be Andrew? 
ANDREW WILLIAMS 
: Everyone agrees the dollar is overvalued—the Minister of Finance said as much this week. The damage to our economy is now widespread and growing. We are undermining our economic capacity in the country day by day. The Government is stuck in passive mode.