Peters Winston: General Debate 
Text is incorporated into the Bound Volume 
Peters Winston: General Debate 
[Sitting date: 19 September 2012. Volume:684;Page:5382. Text is incorporated into the Bound Volume.] 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 There sits a member Amy Adams who is totally oblivious to the explosion in the current account deficit that was announced today. Is there a person in this House who does not believe that the dollar is seriously overvalued in this country? No. Is there a serious economic commentator who does not believe that the dollar is seriously overvalued? No. Yet the Government has its arms firmly folded and is resisting all attempts to reform and update the Reserve Bank of New Zealand Act. The Government is locked into an outdated economic orthodoxy. The fixation is that inflation is public enemy No. 1 and every other economic policy has to be subordinated to that cause. That thinking is from another era. 
Right now inflation is not the No. 1 problem. The main economic issue we are facing is a chronically overvalued exchange rate. That overvalued exchange rate is crippling our international competitiveness and undermining our economic prospects. That overvalued dollar is massively damaging in the area of competitive devaluations as countries around the world strive to protect their export sectors in the wake of the global economic crisis. With a backdrop of global economic uncertainty and weakness countries that rely on exports as we do are exploring every chance and opportunity and mechanism to stay competitive. That is why we seek to amend the Reserve Bank of New Zealand Act—to have an Act that meets the needs of current conditions and removes a brake on our economy. This bill the Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill will mean the Reserve Bank can pursue a balanced macroeconomic policy in which price stability although important is no longer the overriding policy objective. 
In the face of the damage being done by an overvalued exchange rate the Government has its head firmly in the sand. The Government asserts that there is nothing to be done and it cannot take any action. It is sticking to its conventional wisdom that the exchange rate is beyond its power to influence and it is demonstrably wrong as over 50 countries around the world are proving now every day. Meanwhile international competitiveness deteriorates. We are falling behind in our efforts to pay our way in the world and for New Zealand there is a debt time bomb ticking. We need to start the task of defusing that bomb with urgency because the latest figures show that at the end of June—the figures announced today which the member completely forgot about—the deficit is 72 percent of GDP. How is that? Net international debt stood at $148 billion. That is up $12 billion in 1 year—massive figures. 
But how are we going to pay this massive debt while we are eroding our export capacity? From Tiwai Point to Tauranga to Auckland and all points north and south businesses are closing monthly because they can no longer compete internationally. The means we have of eventually paying off the debt are being sacrificed on an altar of economic theory. The export businesses that are closing are not coming back. No magic wand will bring them back now. Instead of tinkering with deckchairs such as the reorganisation of Government agencies the Government should have as its priority creating the conditions in which our exporters can grow. 
This legislation will give the Reserve Bank of New Zealand Act the flexibility it needs to promote growth employment and our export base. Is the bill perfect? No. Can it be improved in the light of debate and scrutiny? Of course it can. The bill does not purport to have every last detail of monetary policy settled. What we seek to do is provide progress towards an exchange rate that reflects New Zealand’s economic fundamentals. It provides for positive action and a way forward and a rational Government would admit that the current Reserve Bank is not working and that change is definitely needed. There will be a change of views on how that change is best achieved. 
But I want to say this to those who have doubts over there today: remember the famous words of Oliver Cromwell when he said “consider you may be wrong.” Consider you may be wrong. We will go to US90c before too long we will go further down the OECD and very soon we are going to be in a trough from which this Government will never take us out. That is when it is going out of power far sooner than it thinks because around New Zealand provincial New Zealanders—country voters—are beginning to wake up to the fact that the party they voted for through all these years and in which they placed their trust does not give a damn about them and cares only for the paper shufflers and the paper movers of Queen Street and of foreign boardrooms.