Cunliffe David: Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Cunliffe David: Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill — First Reading 
[Sitting date: 17 October 2012. Volume:684;Page:5949. Text is incorporated into the Bound Volume.] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to support the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill. It is really interesting that we have this bill as a member’s bill because this is one of the bills that will be remembered as a turning of the course of economic history in this country. It may not get up but the debate is showing already that the old orthodoxy is crumbling. John Banks—and the word “Banks” does not mean he is an ATM even though you wonder—said that he wants “investment growth and jobs”. Is not that what we all want? Is not that what we all want? All around this House we want investment growth and jobs. The question is on the facts is the current Reserve Bank of New Zealand Act delivering? The answer is patently no. Here is what it has delivered. It has been extremely successful at inflation control and in the last 2 weeks we have had the new data—0.8 percent inflation this year; 0.8 percent. It is well below the new target the Government has brought in of 2 percent. It is even below the bottom end of the range of 1.3 percent. We have overdosed on inflation control. 
Meanwhile what is going on in the real economy? Well let us take the financial economy. The ratio of New Zealand dollars being traded to our actual external trade and investment flows is 400:1 More dollars are speculated in the Kiwi dollar in a day than it takes to finance our trade in and out for a year. Is it any wonder when we are a speculator’s plaything that our exchange rate is climbing and climbing and climbing? It is 83c 84c against the US dollar and it is 73-odd cents on the trade-weighted index and it is killing our exporters. There have been 40000 manufacturing jobs gone since 2008 when this Government took office—40000 manufacturing jobs. They are high-value manufacturing jobs. Nobody has told Bill English and Steven Joyce. Today Bill English stood in this House and virtually misled the House. I say “virtually” because he was using different statistics. He said that there is no crisis in manufacturing. Well here are the facts. Simply transformed manufacturing export value declined 14 percent in the last 4 years and elaborately transformed by over 10 percent. It is on its way down—that is in real terms. In real terms it is sliding and the jobs are going. That is not an accident. It is a direct function of the settings of current policy. If we want to change the outcome we change the policy. 
This is actually a moderate bill. This bill just says to change the objectives of the Act. It says nothing about quantitative easing. That is a complete straw man argument by John Banks. It is not Labour’s policy to have mandated quantitative easing. That is a matter for the Reserve Bank’s good judgment. It is good enough for the United States it is good enough the United Kingdom it is good enough for the financially literate Swiss Government it is good enough for half of Europe and it is good enough for Asia. Well who knows whether it is the right thing for New Zealand but we say leave it to the qualified experts. But do not rule it out National just because it is not part of your ideology or your orthodoxy. Do not hamstring the bank and do not tie the bank to a set of objectives that belong to the days of the credit bubble before the great global financial crisis in a different world. 
I do not know who it was who said “A reasonable person when confronted with new information changes their mind. What do you do?”. The world has changed. The bubble has burst. We do not have an inflation problem. Inflation is below the target range. We have an employment problem. We have the world’s second-highest current account deficit—by next year the highest current account deficit—in the world. That is a crisis. That will take a coordinated policy response and changing the Reserve Bank has got to be part of that response because when David Parker and I tour around manufacturing and exporting businesses as Andrew Little and others of our colleagues have done every time—every time—they tell us: “For God’s sake the exchange rate is killing us. Help us to earn a decent day’s wage. Help us to take New Zealand forward. Give us a level playing field. Please change the Reserve Bank of New Zealand Act.” This bill does.