Robertson Grant: Motions — Reserve Bank—Ratification of Funding AgreementText is incorporated into the Bound VolumeRobertson Grant: Motions — Reserve Bank—Ratification of Funding Agreement[Sitting date: 04 June 2015. Volume:706;Page:4346. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): I rise on behalf of the Labour Party to support the motion and to support the Reserve Bank getting the funding that it needs. More than ever the Reserve Bank needs this funding because it is having to do the work that the Government is failing to do. It is having to effectively run housing policy in New Zealand today because the Government has abrogated its responsibilities in that regard. Do not let it be said that this is just Opposition parties saying this. What comes before us today is an agreement between the Minister of Finance and the Governor of the Reserve Bank but it has to be set in the context of recent announcements from the bank from the governor himself and from his two deputies around their urging for the Government to do something in the area of housing. It is unprecedented for the governor and his two deputies to launch wave after wave of urging of the Government to do something in housing to do something about the supply of housing and to do something about managing demand issues.In speeches by deputy governors Grant Spencer and Dr John McDermott we have seen the bank taking on the role of housing policy adviser for the Government which is an extraordinary position for the Reserve Bank to find itself in. When we look at what Grant Spencer said in his speech he isolated the Government’s complete failure to manage the question of the supply of housing in Auckland. What we know from the Reserve Bank’s visits to the Finance and Expenditure Committee is that it recognises the 20000 house shortfall in terms of what Auckland needs right now and the failure of the Government to create the supply or support the creation of the supply to reach the target of 10000 houses a year from there currently reaching around 7000 in terms of consent. The bank itself has clearly said to the Government: “You are not doing enough on housing supply especially when it comes to Auckland.” But then the bank also went on to say that in terms of demand issues it was now being forced to act because there was a Government that was unable to manage that demand. It had stuck its head in the sand.I warmly support the idea that the Reserve Bank and the Minister of Finance have reached an agreement on the funding that it needs because that is now needed more than ever if we are actually to have the Reserve Bank fulfil all of the roles that have been left to it. The Government has effectively outsourced housing policy to the Reserve Bank because of the complete failure over 7 years to create a sustainable plan for housing in the Auckland region and for housing policy that affects the rest of New Zealand. Never let it be said that this is not an issue that affects people outside of Auckland. It does. We know that right around New Zealand today people are paying higher interest rates than they need to because of the Government’s failure to deal with the Auckland housing crisis. The Reserve Bank Governor is the person who has been telling us he would like to lower interest rates but he is unable to do so for fear of pouring petrol on the overheated Auckland housing market. That failure by the Government to deal with the Auckland housing crisis has impacts right across New Zealand let alone if the Reserve Bank Governor’s diplomatic language of a sharp correction or as most people would know it the bursting of the Auckland housing bubble were to happen. The rest of New Zealand would then really understand just how little this Government has done and just how dangerous its inaction in the housing area has been.The Reserve Bank has found itself in the position as I say of taking on extraordinary measures to tell New Zealanders that the Government is failing it on housing and that more needs to be done. When the Reserve Bank Governor came to the Finance and Expenditure Committee after his last Financial Stability Report he highlighted the three significant risks to New Zealand’s financial stability two of which directly relate to this Government’s policy failures. The first of those as I have said is in housing. The second of those is in the risk to New Zealand of the massive decline in value from the dairy sector entering New Zealand. Although the Government is not directly responsible for the decline what the Government is responsible for is the failure to diversify the economy in the face of what it knew to be a 5-year glut in global dairy prices. We find ourselves with the dairy auction from this week seeing a 54 percent drop in the value of those dairy prices over the last year and 28 percent since February. This is a sector that makes up a third of our exports and the Government sits there on its hands and hopes for the best. It hopes it will be able to ride out the wave of commodity prices—Mr DEPUTY SPEAKER: Order! This motion is incredibly narrow. The member is wandering a long way away from it. Having read through it myself I am aware of that and so will the member be. So he should stick to the motion.GRANT ROBERTSON: Thank you Mr Deputy Speaker. What I am doing is assessing whether or not the funding agreement struck between the Minister of Finance and the Reserve Bank Governor is sufficient in order to meet the tasks that the Reserve Bank has. As I have indicated to you I do not believe that given that the outsourcing of housing policy from the Government has gone to the Reserve Bank. It would certainly need a high level of money. I see that it is looking at around $49 million for this year in the motion that we are debating. It is a legitimate question to ask—whether that is sufficient when the Government has outsourced housing policy and has left New Zealand’s financial stability exposed by its failure to diversify the economy. So it is a legitimate question for this House to ask whether or not the Reserve Bank is being funded sufficiently to do its job. What I would suggest to you is that the longer the Government goes on failing to do its job the more difficult it will get for the Reserve Bank to do the job that is required of it with the funding that is put forward in today’s motion.If I may move to another matter in this regard—the funding agreement is based around the idea of the policy targets agreement. That is specifically what one of the measures within the funding agreement is about which is to allow the Reserve Bank to implement the policy targets agreement. I want to say that it is in my belief high time for a review of that policy targets agreement and high time for a review of monetary policy in general which I do not believe is covered under the funding that is proposed in here today. We have reached a point where the policy targets agreement is all but meaningless. We heard in the Finance and Expenditure Committee that we are likely to have 6 years outside of the inflation band that is provided for in the policy targets agreement. We find ourselves asking what the point is of such an agreement if we are constantly outside of it. The Reserve Bank Governor himself has said to us that inflation expectations are simply not being met quarter after quarter year after year. Questions have even been raised as to whether or not we are measuring the right things when it comes to inflation.The question for this House is whether the Reserve Bank has the resources in order to be able to assess that. I think it should be funded for a comprehensive overview of monetary policy and of the policy targets agreement. On this side of the House we continue to believe that although we want independence for the bank provided for by this funding and although we want to ensure that the bank has a clear focus on price stability and on controlling inflation if that is all we get the bank to do and it does not meet it then we need to reassess what we are doing. So we want to see an overhaul of monetary policy to ensure that it works for all New Zealanders—that it works for exporters that it ensures and helps to control the exchange rate and that yes it controls inflation but not at the expense of the health of the overall economy.I want to raise one last matter that is relevant to me as a local MP actually and indeed to the operations of the Reserve Bank. This year or possibly early next year will mark the end of the operation of the Reserve Bank’s childcare centre—the creche that operates in the building at the beginning of The Terrace. It is with great regret as the constituency MP that I note that. This has been a service that has been well used by many MPs’ children and by the children of public servants and unfortunately because actually of some of the things in the funding agreement today around the tasks of the Reserve Bank that is no longer possible. It is my understanding that an alternative premises may now have been located and I want to thank the Reserve Bank Governor for his allowance for some extra time for that childcare centre in those premises. But it is with regret that something that has served the people of this city so well provided for by the Reserve Bank does not now seem possible.I want to conclude by saying that the Labour Party will vote for this funding agreement. We support a strong independent Reserve Bank but we cannot sit on the sidelines and let the Government push more and more work on to that bank by failing to have a housing policy that works by failing to diversify the economy and by not actually giving the Reserve Bank the kind of policy targets agreement that would enable a monetary policy that actually supports the exporters of New Zealand.