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Reserve Bank of New Zealand (Economic Objective) Amendment Bill — Third Reading [1]

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Date: 2024-01 

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. It is now many hours on from this legislation being introduced under urgency late last night, and I got to say I still am kind of left quite puzzled in the absence of any meaningful evidence as to the purpose of this very legislation.

I think it's just worthwhile putting on the record once again for the nth time the three reasons as to why the Green Party oppose this legislation. The first is that, as was put forward by the Reserve Bank Governor, Adrian Orr, in the Finance and Expenditure Committee most explicitly in the November 2022 hearing, which the now Minister of Finance was present at—in response to my question of whether that dual mandate had made any difference to decisions that they would have made, had they only had that sole mandate of the focus on price stability, he said, and I quote, "No is the answer. We haven't come across any trade-offs of employment versus inflation. There is no conflict."

I totally take on board the point from the Minister that there could potentially be a point of conflict. But therein lies our second point, that it is unnecessary for this change to come about in law. In fact, the major rationale that's been relied upon in this debate from the Government side of things has been that letter that the Minister received, speaking to the need to explicitly prioritise that dual mandate, particularly, resulting in the primacy, the explicit primacy, of that price stability mandate. And to that effect, as was put in that June 2023 review from the monetary policy committee, there is a way to do that without changing the legislation. This was actually what the Minister's own officials recommended with regard to the ability to simply change the remit. Again, that's reflected in the regulatory impact statement out there for everybody to see.

Thirdly, I have heard throughout this debate that the Minister still wants the monetary policy committee (MPC) to have regard to employment. We're yet to see how that will manifest through the MPC remit. I'm very interested to see that, but it is, I think, a little bit concerning that we're basically being asked to wait and see here as to how that will manifest while this bill passes under urgency and we're left without the evidence to have a meaningful and informed debate on what that remit is ultimately going to shape up to be.

So to reflect on some of the broader points that have been raised throughout this debate, because many have raised the notion of inflation in general and the notion of the economy, I just was reflecting on a meme, actually, that a friend of mine sent to me a few months ago throughout the election period, saying that whenever we're hearing politicians speaking about the economy, you can replace that word, the "economy", with "vibes". And we've kind of heard that in some sense from the sentiments expressed by the Minister of Finance, that what is actually perhaps most important here is perception of market players, the vibes of market players, the confidence of market players.

And again, to that effect, what we're really talking about here is that this economy that all of us so frequently talk about as a stagnant kind of set of rules that are somehow set in stone or concrete is in fact a set of rules created by human beings to govern all of us, our behaviour and activities, to get the kinds of outcomes that we all supposedly want in this society. Because we don't live in a game of Monopoly, which, by the way, was invented in the early 1900s to actually teach children the pitfalls of an economy that is premised on land speculation and luck. Yet, hey presto, what do we have to this day?

I'd just like to quote here from Paul Hawken, who says, and I quote, "We have an economy where we steal the future, sell it in the present, and call it GDP." GDP, of course, was invented by a guy called Simon Kuznets who took it to the US Congress in the 1930s and was, like, "Hey guys, here's a really good way for us to measure economic transactions at a macro scale inside of our economy." But, God forbid, do not use it as a measure of what he called welfare and we now call wellbeing. That's because that baseline measure of just those transactions does not give us any meaningful insight into the value of those transactions, whether we actually want them in the first place, whether they actually benefit people and the planet, nor the distribution of those transactions; that is, who benefits from those transactions. Because the squiggly line of GDP can go up, but we also know full well that so too can homelessness, so too can the desecration of the environmental fundamentals that are necessary for life as we know it. So the kind of premise from the Green Party here is that we can do this economy thing a lot better.

We've heard a lot about how this bill is apparently going to be the magic bullet to deal with inflation. In fact, we've heard some really fascinating things, including in the closing remarks from the Minister of Finance, about how we want to get rid of inflation. The kind of logical consequence of that is probably deflation or stagflation. And again, I'd really like some clarity and perhaps we'll get that in this, you know, magical monetary policy remit, which will come out at some point subsequent to this bill passing under urgency without any meaningful scrutiny, least of all through select committee.

But all of this talk from members of the Government about prices going up for many goods which are provided inside of our domestic economy, largely under a duopolistic kind of behaviour, it seems as though they're actually probably more fundamentally concerned about capitalism and the way that capitalism works. [Interruption] I can see that riled them up and I'm grateful for it, because I'd love them to stand up and to excuse or to make a rationale for those points that they're talking about with regard to inflation and what drives it. Because, in fact, we actually also throughout the election had some great pieces of research coming out from the likes of the New Zealand Council of Trade Unions which showed us that corporate greed was one of the major drivers of inflation domestically. They may bicker with me about that point, but so far the major citation that I have heard from members of the Government about the market players that matter right now, with regard to their perception of inflation, are Business New Zealand. Again, we can have all kinds of debates about the relationships that political parties have with entities outside of this House.

But the fundamental point remains that this bill will not do what it says on the tin and what the Government is promising that it will do. Because again, those three core points that the Greens have stated time and again throughout this debate remain. It is that the Reserve Bank Governor himself has put it on the record, as the Minister well knows, that the dual mandate has not changed the way that they approach or focus on inflation or price stability. So the subtext of what's being put forward today by the Government is that they don't trust the Governor, as far as that goes. The second thing is that it is unnecessary to change the law to do this, as reflected in the regulatory impact statement from the Minister's own officials. "They could do this through the remit", which it appears that they're also still planning to impose some kind of consideration for employment within—so, again, I'm still kind of quite puzzled as to what outcome we're seeking to get here, because they still want the MPC to have regard to employment, if not maximum sustainable employment. And, thirdly, they still want the monetary policy committee to have regard to employment; i.e., they still want some kind of form of this dual mandate. We're just not quite sure how that's going to play out and we're playing a wait and see game which is not a very evidence-informed way to have a debate or discussion or to progress legislation; in fact, it's the opposite of evidence based.

So I am just finally reflecting on all of the other pieces of evidence that have come out, and actually also some of the sentiments as expressed by the Minister about the kind of interrelationship between monetary policy and fiscal policy, because she was making it abundantly clear that her view, the economic orthodoxy's view, of which she and the Government is apparently the arbiter of—but their view is that the sole remit of monetary policy should be that focus on price stability and that it is the remit of fiscal policy; i.e., the things that the Government does, tax and spend primarily, which should be that which focuses on employment. But I would also argue that that's where the Government should also focus on things like productivity and should also focus on things like inequality, should also focus on things like house price stability and otherwise, rental affordability.

To that effect, it would be remiss of me not to mention a landmark piece of research which came out at the beginning of this year from Treasury with subsidiary papers from the IRD, which gave us a pretty clear insight into where the productivity problem is in this country. It's in our tax system. It's in our tax system, which sees right now the top 311 families in this country holding more wealth than the bottom 2.5 million New Zealanders combined. That is not an accident. It is a consequence of a tax system which sees a disproportionate burden placed on those who work for their living versus those who simply accumulate more and more capital.

That can be addressed. That can be addressed whilst also addressing our productivity problem and, God forbid, rewarding hard working New Zealanders for their work. If we were to fix the problem which sees us as the only OECD country without any form of capital gains tax, of inheritance tax, of stamp duty tax, of ghost house tax, or otherwise—you can reduce the burden on working people if you fix our tax system and you can get more productivity out of it in the long run.

We face massive challenges as a country and as a world with the dual crises of the climate crisis and inequality. This bill doesn't touch the sides on either of those things.

[END]
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[1] Url: https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_20231212_20231213_16

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