Bayly Andrew; Dean JacquiANDREW BAYLY (National—Port Waikato): Well that is what we're worried about Mr Robertson: what you're going to concoct next!It is my duty to talk on this third reading of the Reserve Bank of New Zealand Bill. I think I just want to start out by saying that there are elements of the Reserve Bank of New Zealand Bill that we're discussing that we have absolutely no problem with. Just picking up on the Minister's last comment around the Council of Financial Regulators those types of provisions we're very happy with. There's a lot of good in this bill; however that's not to say that we do not have some fundamental issues with this bill. We have sought to work collaboratively with the Government to try and address these issues because I think it's particularly important that as the finance spokesperson and shadow Treasurer for the National Party at least we as the major Opposition party—the major Opposition party—have the ability to help actually formulate a new framework for the Reserve Bank that will be enduring. And that is the issue with the process that's been adopted: that there are some fundamental issues that should have been debated more that should have been taken into account and I think what went on in the committee of the whole House actually showed up some weaknesses in terms of understanding particularly of the Minister around certain elements.So we put forward five Supplementary Order Papers (SOPs). The first one was the issue of efficiency. We've just heard the Minister talking about this. This is in relation to when the Reserve Bank goes about setting financial stability objectives whether in fact efficiency should be one of the main elements of that. We believe it is crucial. The reports and the submissions from many in the industry thought also that it was very important. We totally disagree with the concept that it should be subsumed into a secondary role as the Minister has just noted. The second SOP that I put up was that the board needs to appoint people of the appropriate calibre and the weird thing is that we have adopted—and the Minister has talked about this and Treasury officials have talked about it—the lowest sort of issue or framework for providing guidance on who could be appointed to this most august and in my view most significant economic entity in New Zealand in terms of its role in our financial markets. So the bill is full of stuff about what you can't be to be a board member. It says if you've got a criminal record". You can't be a serving politician. You can't have been adjudicated to have been in receivership at some stage—a whole list of absolutely mindless silly things that if you even were to put that into your CV or had any chance of being in that situation these people would not be or should not be even contemplated as having any of the skills to be even contemplated to be put on the board.What we were proposing was that it was very important that this board—which has changed under the new arrangements that Mr Robertson has brought in—now has an executive role. There are four key aspects of the executive role—namely the issue around financial stability. So we need people on that board who actually understand what financial stability is how it will be implemented how it will be managed through the Reserve Bank. The second one is about prudential policy in the sense of how it is managed and how banks are managed. It requires deep understanding. Again the bill does not set any parameters as to the types of skills we should be seeing on this board. The fourth one: macro-prudential policies as well—another key aspect of the Reserve Bank that most people have no understanding of what I'm talking about but it's a crucial aspect of the Reserve Bank. Was that included in the bill? No.The other one is the ability to manage crises and we have them. We have them from time to time—Asia flu crisis; we've had lots actually out of Asia—where periodically we have major financial meltdowns around the world that seriously impact on the financial performance of New Zealand. And those are the four ones that we said "Fine you should be looking for a board that has diversity has different skill sets but there are some crucial skills that should be on that board and you should be explicit about it." Because what we don't want to do is to see retired politicians—and yes retired politicians can be appointed to the board. We don't want to see a whole glut of different types of people that do not really understand the core requirements of the operation of the Reserve Bank. And that is crucial because of the part that this entity plays in our financial system.The third SOP I put up was around making sure that if there is a change to the remit—and the Minister talked about implementing section 68B after I asked him to use it and after he called me Muldoon including the Prime Minister calling me Muldoon subsequently did it I think 10 days later. He used that power to actually instruct the Reserve Bank under the new bill—under this bill there was a new process; it's called a remit process. We said that if that is to take place that should be debatable in this Parliament. And the missed opportunity with section 68B is that I should have requested of the Speaker a special debate on it. Unfortunately because I didn't there was no opportunity for anyone in this House to actually debate a major change to the remit of the Reserve Bank one imposed by the finance Minister. And that is the type of thing that should be open and transparent and subject to debate so at least the Minister has the opportunity to explain why he—and I'm talking about Mr Robertson in his case—did that change and make sure that it is transparent for people and that industry and everyone hears why that has been put in place. We said it should be subject—the Minister should still be able to make those changes in a remit but it should be confirmable in Parliament which means it is subject to debate. Unfortunately Mr Robertson chose not to follow that advice.The fourth SOP I put up was the change regarding the issue of the functions of the Reserve Bank. Now I've been pushing for the Reserve Bank to take a much more active role on cryptocurrencies and the Reserve Bank Governor has been reluctant to—this pre-dates the introduction of this bill. In this bill they have put in a specific clause that they're going to monitor cryptocurrency. In my view there are times when the Minister of Finance should be able to say to the governor as an executive role and possibly to the chair of the board now that he or she should have the opportunity to require them to have a particular look at some aspects because it may impact on the Crown. And you may have a governor or a board that chooses not to do it. Now under the current bill arrangements a change in the functions of the Reserve Bank can only be requested by the Governor of the Reserve Bank. We think that is appropriate but we also think there should be the opportunity for the finance Minister to request a change in the functions. So there should be a two-way street to it. It doesn't change the right of the governor or the board to request the change but it should be a two-way street. And again Mr Robertson chose to ignore that advice.The fifth thing and this was an element of much discussion at the committee of the whole House here on this floor is changes to the capital structure of the Reserve Bank. We have ended up with in my view a very unsophisticated approach in this bill and the case in point is that the Reserve Bank has been out buying billions of dollars' worth of Treasury stock Government stock from the market. And the only reason that the Reserve Bank Governor went to Mr Robertson as the finance Minister was that he thought it would be advisable—he had absolutely no requirement to—to go to the Minister of Finance and seek an indemnity. And because he did that that gave Mr Robertson the opportunity to put some parameters around the nature of that spending. Now if he hadn't gone to him there would have been no ability for the Minister of Finance to put in place some controls around the Crown balance sheet. We said that there should be a much more sophisticated approach. We actually provided the wording from the Bank of England and there's another example from the Canadian central bank that we provided to the Minister that they recognise that things like derivatives contingent liabilities should be able to be captured but unfortunately Mr Robertson showed on the floor at the committee of the whole House he does not understand this. This bill is deficient in that regard.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to."