Smith DamienDAMIEN SMITH (ACT): First of all it's an absolute honour to be in the presence of the future finance Minister from the Labour Party tonight. I can see that coming. The Government has chosen to pursue these reforms without majority support. The relationship between the Reserve Bank and the finance Minister is critical to the functioning of a modern economy. The roll-back of independence of the Reserve Bank is extremely concerning for the functioning of the New Zealand economy and the sound economic consensus which has proven to be kept with low inflation and a stable operating environment for business.Something's been bugging me since our last Finance and Expenditure Committee meeting. I locked myself away in a room in a padded cell and then spoke to my advisers and then to caucus and we came up with the conclusion that this bill is out of step and that the finance Minister in this Government is determined to bring us back to the 1980s to the Muldoon economic period. A diagram presented here which from my research over the last five days has shown these are the new rules of Gotham City—this is the love child of Grant Robertson and James Shaw: Batman and Robin. And surely from the formation stage from inflation in the good old days to bullying the Reserve Bank into potential stagflation today if it's not Batman and Robin it's as my colleague would say potentially the Sons of Anarchy.Control of monetary policy foreign direct investment high borrowing micro-management of the economy it looks like as of tonight these are all going to be front-page issues that Mr Robertson wants to be our natural daily digest and that's not what a functioning efficient economy and banking system should actually be promoting; it should be not seen but unheard. Any change to this monetary policy and foundation should reflect the broad consensus and not just that of one or two parties. It's that important.National and ACT have raised a limited number of important concerns with this bill which have been ignored. No one's come back to talk to us. We proposed solutions to a number of these issues through questions to Treasury and I have to agree with my learned colleague who has said that they seem to operate in a way that is different to the way we normally operate in the real world. We think that they would significantly improve the bills acceptability to the key stakeholders and would better serve the current and any future finance Minister because these things have to endure long before and after we're gone. We both consider that the removal of the efficiency elements from the revised financial stability objective is poorly supported by analysis and by policy analysis and does not improve the Reserve Bank. We should be reinserting efficiency". And even the Bankers' Association in a memo that I've received whilst supportive of the Act and its micro-views see this as a major concern. This would address the significant concern for us and for those who made public submissions.Moving on to accountability under the new arrangements the board takes on an executive role rather than acting in an oversight capacity which is common with non-executive boards. So we question under the rules of Gotham City the new rules whether governance is actually at the forefront of what is being thought about. This is a fundamental change to the model of decision making in respect of prudential policy and oversight of deposit takers and insurers. The proposed model relies heavily on finding suitable candidates to operate at an executive level on the board and these people are hard to find with global views and simultaneously being able to understand what's going on in New York and Frankfurt. Given the important role that the Reserve Bank plays in setting the country's economic settings ACT considers that Parliament should have a greater degree of oversight over the monetary policy remit and funding agreement.I'd like to put it on the record that all parliamentary oversight on this bill at an MP level and at a select committee level will evaporate and that is a very serious issue that we need to talk about at the committee stage. Such oversight need not impinge on the ultimate power of the finance Minister in issuing remit we're not against that. But we acknowledge that the cross-party interest in the central bank's monetary policy objectives needs to be refined. Similarly ACT considers that the Minister of Finance and the Reserve Bank should both have the ability to initiate changes to the functions of the Reserve Bank. However in this bill this may only occur upon request of the Reserve Bank but is subject to agreement by the Minister of Finance. In our view that changes its function. It should be subject to some oversight by Parliament that such occurs with an Order in Council is also a confirmable instrument.ACT also considers that the proposed measures which were introduced during the select committee process have not been publicly consulted on and something of this magnitude should have a second round of public consultation. To enable the Minister of Finance to manage the fiscal risk to the Crown associated with the Reserve Bank's activities we think it falls short of what the Minister would require to properly manage the risks to the Crown's financial position. Modern monetary theory which seems to be upon us tells us that it is possible for central banks now like the Reserve Bank of New Zealand (RBNZ) to print money indefinitely with little consequence. RBNZ money printing has seen house price inflation rising 20 percent in a year. It supported the Government borrowing to spend money it does not have and net Government debt relies on interest rates falling yet the Minister expects them to be raised in a recent statement in the press at the weekend peaking at $180 billion in 2025.This bill is out of step from this Government and the finance Minister who is determined to bring us back to an era where him and Mr Shaw decided that they would change the model to go beyond the business cycle management to looking at a remit that would place some emphasis and heavy scrutiny on the board of the Reserve Bank and it is fundamentally different to what is anticipated. So tonight we'd like—the ACT Party—to put on the record where we think the thought process is coming from and we look forward to the committee stage for working out the mechanics and the details. We would really love to see some conservative policy-making being reinjected back into this and even though we supported this at the first stage after hearing what we've heard and after hearing and reading what we've seen in the press recently we will be opposing the bill at this reading."