6. Question No. 6—FinanceDAVID SEYMOUR (Leader—ACT) to the Minister of FinanceQuestion No. 6—Finance6. DAVID SEYMOUR (Leader—ACT) to the Minister of Finance: Why did the Crown provide an indemnity to the Reserve Bank against losses from the Large-Scale Asset Purchase programme and what is the Crown's maximum liability that it could be forced to pay the bank as a result of the programme?Hon GRANT ROBERTSON (Minister of Finance): The Large Scale Asset Purchase (LSAP) programme was part of a range of measures that the Reserve Bank took in the early stages of 2020. This was done as part of a coordinated fiscal and monetary policy response to the pressing economic conditions that New Zealand and the global economy was facing at the time. The steps that we took to support the economy in the teeth of that crisis were crucial to New Zealand's strong economic recovery from COVID-19. The indemnity was recommended by Treasury because the policy was seen to be in the public interest and to ensure that the policy could be implemented. Interest rates have shifted since that time and as with our fiscal response there are costs associated with the measures that the Reserve Bank took. The latest estimates from Treasury of this cost are around $8.46 billion. However the economic and social costs of not providing that support at the time is something that the member might want to reflect on. The specifics of the indemnity are not set in dollar terms; rather the limits of the indemnity are set by the percentage of bonds on issue in the period of time in which purchases can be made. With the benefit of hindsight the member may disagree with decisions that were taken in 2020 but that is a privilege of those who did not have to make those decisions at the time.David Seymour: With the benefit of hindsight does the Minister who did make the decision regret putting taxpayers on the hook for nearly $5000 per household making good the indemnity he gave the Reserve Bank to buy $54 billion of Government bonds which he then spent?Hon GRANT ROBERTSON: I do not regret the decision that we made. We made the decision because the economic and social costs of not making that decision looked to be things like a 10 percent unemployment rate and more than $100 billion going out of the New Zealand economy. The member may have 2020 hindsight or be Nostradamus and be able to predict what interest rates might have been two years from March 2020. We weren't in that position. I back the decisions we took.David Seymour: Does the Minister agree with the Reserve Bank that New Zealand Government bond yields were at least 0.5 percent and potentially more than 1 percent lower than they would have been without the LSAP programme."?Hon GRANT ROBERTSON: As I said in answer to an earlier question I don't tend to comment on the Reserve Bank forecasts in that regard. They are in a position to make those forecasts. I'd want to contrast them with other economic commentators before I made any specific comment on that.David Seymour: Did the Minister receive advice on the cost of Government borrowing without the Large Scale Asset Purchase programme and if so was it the case that he promised the taxpayer would indemnify the Reserve Bank against any losses to reduce the interest costs of his Government's spending?Hon GRANT ROBERTSON: No in answer to the second part of the question because the reason that we did put the indemnity in place was to make sure that a policy that was regarded as being important to ensure the New Zealand economy withstood a one-in-100-year economic shock was able to be implemented.David Seymour: Has the finance Minister had any advice on how much money was made by brokers who bought Government bonds off the Government's Debt Management Office and then sold them to the Reserve Bank under the Large Scale Asset Purchase programme and if so can he confirm it was over $200 million in profit and that many of the transactions were bought and sold in the same week?Hon GRANT ROBERTSON: In answer to the first part of the question I do not recall any such advice but I would have to go back and check. What I would say to the member is that the Reserve Bank of New Zealand was not alone in undertaking alternative monetary policy responses to this crisis—the Reserve Bank of Australia the Federal Reserve the Bank of England the Bank of Canada. In the case of the latter two they also had indemnities from Government."