1. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
Did he consult Rt Hon Winston Peters prior to reappointing Dr Bollard and signing an unchanged policy targets agreement earlier this year; if not, why not?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
No; because Mr Peters is not part of the Cabinet and is not bound by Government policy or decisions on matters such as that.
Does the Minister believe he still has the confidence of the Government’s coalition partner, when its leader has stated that the Reserve Bank governor, whom Dr Cullen has just reappointed, is not fulfilling—
Rt Hon Winston Peters Link to this
I raise a point of order, Madam Speaker. We surely do not need to have to inform the former leader, now the deputy leader, of the National Party that there is no such coalition between the Government and New Zealand First. It is a confidence and supply agreement, and I would hope that he would come up to date with the 21st century and the evolving forms of democracy that are helping New Zealand today.
Madam SPEAKERIs the Minister aware that the Rt Hon Winston Peters has stated Dr Bollard is not carrying out the terms of the policy targets agreement, and does he believe that his reappointment of Dr Bollard is consistent with the confidence and supply agreement with New Zealand First?
Why did the Minister agree by prearrangement with Mr Peters yesterday to assist him in introducing into the House a bill to amend the Reserve Bank of New Zealand Act?
Hon Dr MICHAEL CULLEN Link to this
First of all, the word “prearrangement” is not quite loaded with the devilish intent the member seems to ascribe to it. It is quite normal for parties in this House to talk to each other before things happen in the House. I frequently talk to Mr Brownlee in the morning about what is to happen in the House, and despite that he still gets it wrong often when he gets in here at 2 o’clock in the afternoon. On the second point, I am not afraid of discussion of ideas and alternatives. I recommend that possibility. While the member is grinding around at the bottom of the National Party, his leader is bouncing from cloud to cloud with all kinds of ideas that the member does not seem to know about.
R Doug WoolertonHas the Minister considered using the powers of the Reserve Bank of New Zealand Act to direct the bank to formulate and implement monetary policy for different economic objectives?
Hon Dr MICHAEL CULLEN Link to this
Under section 12 of the Reserve Bank of New Zealand Act there is the power to suspend the policy targets agreement and to incorporate objectives other than the primary objective outlined within the Act. I have given no specific consideration to that matter, but the section is clearly there for a purpose and as Minister of Finance I would never rule out its potential use.
Gordon CopelandIs he continuing to investigate ways to cool the housing market through, for example, increasing the land supply for new housing subdivisions or ending the tax advantages now enjoyed by property investors, to supplement the policy targets agreement, thus creating some scope for lower interest rates and a more favourable exchange rate?
Hon Dr MICHAEL CULLEN Link to this
There is still a range of work occurring within that area, and I will be happy to report to the House on it at the appropriate time.
Does Dr Cullen’s previous reply—that he is open to ideas and to discussion about the Reserve Bank of New Zealand Act itself—mean that Labour has now moved away from 20 years of consistent bipartisan support for the Reserve Bank of New Zealand Act as it is now?
Hon Dr MICHAEL CULLEN Link to this
No, it does not, but I am quite happy for a matter such as that to be discussed. I am quite confident about what the conclusion of that discussion would be, but, unlike the member, I am not afraid of discussion.
Gerry BrownleeRt Hon Winston Peters Link to this
Well! I think it is quite churlish to ridicule the protocols and values of another culture, such as that of Samoa.
Rt Hon Winston Peters Link to this
That is what I would expect from the Dominion Post. But I would not expect members of Parliament to take that arrogant, ethnic, prejudicial attitude towards Samoa.
Please be seated. Members who make such interjections are coming close to creating disorder in the House. So you are warned. I now ask the member to complete his question.
Rt Hon Winston Peters Link to this
Thank you, Madam Speaker. Could the finance Minister advise us as to whether he is aware of any other OECD country that has seen huge depressions, fluctuations, and rises in the value of its currency to the extent that New Zealand has seen in the last 20 years, since the Reserve Bank of New Zealand Act came into effect?
Hon Dr MICHAEL CULLEN Link to this
I think a range of countries have seen wide fluctuations in their currency values. The Australian currency has not fluctuated quite as much as New Zealand’s, but the difference is definitely not one that is of an order of size. There have been very strong fluctuations in its currency. The most freely floating currencies have seen wide variations over that period of time.
If, as the Minister says, he is sticking by Labour’s position that it supports the Reserve Bank of New Zealand Act as it is, then why did he not block Mr Peters’ attempt yesterday to introduce an amendment to it—or is he just treating Mr Peters as a kind of plaything?
Hon Dr MICHAEL CULLEN Link to this
It is definitely not the latter. I would remind the member that he signed up, in the select committee, to a discussion of the operation of monetary policy. The terms were agreed with the National Party, and then it said it was not part of it. That is the way National usually behaves on anything to do with Parliament, at the present time. It is part of it but not part of it—some kind of strange transcendent experience, in terms of Parliament. [ Interruption] National has to get off the clouds and get back down to grinding again, in that regard.
Rt Hon Winston Peters Link to this
Can the Minister tell us which other OECD country’s currency has appreciated in value to the more than 100 percent extent that the New Zealand currency has done in the last 5 years, and how that would affect any exporter with a long-range sales programme; and has the Minister received any reports as to who, yesterday, when offered a chance to rectify, by discussion and perhaps resolution, the serious damage that is being done to our exporters, opposed such a motion?
Hon Dr MICHAEL CULLEN Link to this
On the last point, my recollection is that the only person who said no was actually Bill English, which was a change from Tony Ryall being the only person to say no on something of importance to the country. On the former matter, I do not have the comparative figures in front of me. Clearly, the New Zealand currency has been highly volatile over that period of time; it has been for the last 20 years. But as a small, relatively illiquid currency, it is always going to be relatively volatile as long as it is freely floating. New Zealand does not possess the kinds of levels of overseas reserves that would enable it to directly intervene all the time, as say, for example, the Singaporean central bank does.
Can the Minister tell the House once and for all whether he supports New Zealand First’s proposed amendment to the Reserve Bank of New Zealand Act, and if he does not support it, what kind of silly game is he playing in humouring Mr Peters by pretending that he might let it in the House even though he is against it?
Hon Dr MICHAEL CULLEN Link to this
I am not in the least afraid of that bill going to the select committee for an intelligent discussion. Unlike the member, I actually believe that that discussion would lead to confirmation of the broad outlines of the current Reserve Bank of New Zealand Act, including section 12. The point I made in the House yesterday was that section 12 gives some of the flexibility that Mr Peters was seeking by changing the Act.
Rt Hon Winston Peters Link to this
Is the Minister aware of the prevailing economic opinion that says that had the Government taken some steps such as establishing the Cullen fund and the KiwiSaver fund earlier, this country would be in somewhat the same position as Singapore when it comes to our currency, and that being the case, is he aware that the National Party has now offered to New Zealand First, should it present its motion again, to back a debate in this House on that matter—it is all over the place, every second day?
Hon Dr MICHAEL CULLEN Link to this
I would not be surprised by the latter. Given the nature of two or three conversations I have had with Mr Key about the trans-Tasman therapeutic goods agency, that would not surprise me at all.
Can the Minister confirm that the little ploy of pretending that New Zealand First might have an amendment that he might entertain and might send to a select committee will go down the drain in exactly the same way as the mortgage interest levy, the capital gains tax, the ring-fencing of housing investment losses, and the select committee inquiry into monetary policy, all of which are attempts by him to avoid any responsibility for the highest interest rates in the OECD and the highest exchange rate the country has ever seen?
Hon Dr MICHAEL CULLEN Link to this
It is interesting that the member thinks that an exchange rate of about 79c to the US dollar is the highest rate we have ever seen. It used to be about three times that, at one point.
Does the Minister agree that the credibility of his economic management is shattered; and when every time he proposes another way of avoiding responsibility it gets trashed and interest rates and exchange rates go up, will he please stop doing that?
Hon Dr MICHAEL CULLEN Link to this
Actually, the most important thing the Government is doing in that respect is to increase New Zealand savings, to be a net saver itself, and to promote savings by New Zealanders. All of that has been opposed by the National Party at every point along the way. It is a purely destructive party with not a single idea for the future, except going back to the past. That man is the Macaulay Culkin of New Zealand politics.
Rt Hon Winston Peters Link to this
I seek leave to table two pages from the Oxford Dictionary—one describing the word “conservative” and the other one describing the word “reactionary”.
Hon Trevor Mallard Link to this
Is it the Minister’s view that section 12 is in the Act for very good reasons, and is he prepared to indicate to the House now that he will never rule out its use?
Hon Dr MICHAEL CULLEN Link to this
Section 12 is clearly there for very good reasons. It was put in by the fourth Labour Government, though I should note that the National Party at the time had great trouble in making up its mind whether to support the passage of the Reserve Bank of New Zealand Act. I would certainly not rule out the use of section 12.