6. Question No. 6—FinanceANDREW BAYLY (National—Port Waikato) to the Minister of FinanceQuestion No. 6—Finance6. ANDREW BAYLY (National—Port Waikato) to the Minister of Finance: Did he set out a clear expectation to the Reserve Bank Governor that the Funding for Lending Programme should be designed to target the productive sectors of the economy rather than further boosting lending for housing; if not why not? Hon GRANT ROBERTSON (Minister of Finance): Since 1989 the Reserve Bank has had the function of formulating monetary policy independently and this has been understood by Ministers of Finance including Ruth Richardson Michael Cullen and Bill English. Having said that my view—which I communicated to the governor as part of the consultation process—was that the Reserve Bank should consider targeting the Funding for Lending Programme for the real or productive sectors of the economy. Andrew Bayly: Why did he ignore Treasury advice to set out his expectations in writing to the Reserve Bank of New Zealand? SPEAKER: Order! Order! The member's going to just rephrase it: did he". There's no authentication for that. Andrew Bayly: Did he ignore Treasury advice to set out his expectation to the Reserve Bank Governor as to the design of the Funding for Lending Programme? Hon GRANT ROBERTSON: I didn't. Andrew Bayly: You didn't? OK. When the Reserve Bank sought his endorsement to implement the Funding for Lending Programme what conditions did he place on ensuring that the funding to banks was directed at the more productive elements of the economy? Hon GRANT ROBERTSON: As I said in my primary answer the Reserve Bank has a longstanding operational independence when it comes to the setting of monetary policy. I gave my views about the importance of targeting during the consultation process. What the member is now suggesting is that we overturn the Reserve Bank of New Zealand Act 1989 and go back to good old Rob Muldoon's view that the National Party should run monetary policy—Nicola Willis: You're responsible. Hon GRANT ROBERTSON: —and fiscal policy. That got us in a power of trouble and we don't want to see that again. SPEAKER: Order! Order! No. Can I just ask that interjections not be in the second person. I am not responsible for that. Chlöe Swarbrick: What fiscal policy actions is he considering to address the vast inequality fuelling the housing crisis as exacerbated by monetary policy intervention like the Funding for Lending Programme? Hon GRANT ROBERTSON: As has been covered by my colleague Carmel Sepuloni in an earlier question we have already put a significant amount of resource in into lifting the incomes of the lowest-income New Zealanders. We know that there is more to do and we will continue to work on issues across all of the things that we can do to reduce inequality including in housing and in income support areas. Andrew Bayly: Under what circumstances would he set out his expectation to the Reserve Bank Governor given house prices have increased by $120000 over the past year? Hon GRANT ROBERTSON: The member will be aware that the way that the Government sets out its expectations for the Reserve Bank in the case of monetary policy is through the monetary policy remit. He'll be aware that I wrote to the Reserve Bank Governor about that late last year. The Reserve Bank Governor has written back and in due course we will come to a conclusion on those matters. But the remit is the way we set out our expectations. Andrew Bayly: Does he accept that as Minister of Finance it is his responsibility to ensure our economic policy settings contribute to the wellbeing of New Zealanders and that an increase in house prices of $120000 over the past year does not achieve that? Hon GRANT ROBERTSON: We've said many times on this side of the House that the rates of house price increases that we're seeing at the moment are unacceptable. We are moving on both the demand and the supply side. On this side of the House we acknowledge New Zealand is facing a housing crisis. It's a pity that for nine years the National Party denied that ignored it and did nothing."