Peters Reserve Bank Bill Debated And Defeated

by Desk Editor on Wednesday, October 17, 2012 — 9:10 PM

Winston Peters proposal to amend the primary focus of the Reserve Bank away from inflation control was defeated in Parliament tonight.

The bill would have broadened the Bank’s primary function to include other macro-economic factors such as the rate of growth, export growth, the value of the dollar, and employment as well as price stability.

The Reserve Bank of New Zealand (Amending Primary Function of Bank) Amendment Bill was defeated by 61 to 60 with National, ACT, and United Future opposing.

Peters said the Reserve Bank’s primary focus on controlling inflation was causing economic damage and was absurd as the New Zealand dollar traded at high levels hurting manufacturers and exporters.

The strength of the dollar had cost billions of dollars and thousands of jobs and the bank should use tools to bring it down.

Central banks around the world were intervening in their currency and New Zealand should follow suit.

The Reserve Bank had the ability and powers to intervene but chose not use them, he said.

It was wrong that the Government would not allow the bill to even proceed to select committee.

Finance Minister Bill English said Peters speech was full of extravagant rhetoric that suggested the bill had a radical policy change in it, when it did not.

The bill proposed minor tinkering in one area where it could not work as the interest mechanism could not influence the exchange rate.

There was no “free lunch’’, he said.

Labour’s David Parker said the days of inflation targeting were numbered and National were out of line with international best practice

Earlier in the evening the second readings of two Private Bills – the Mount Maunganui Borough Reclamation and Empowering Act Repeal Bill and the Riccarton Bush Amendment Bill were both completed on a voice vote

A vote was then immediately held on the first reading of the Local Government (Council-Controlled Organisations) Amendment Bill, It was defeated by 61 to 60 with National, ACT and United Future opposing.

Following the Reserve Bank bill MPs began debating the first reading of the Income Tax (Universalisation of In-work Tax Credit) Amendment Bill.

The bill would extend the In-work Tax Credit paid to low income workers with children to beneficiaries with children.

National, ACT and United Future have indicated they will vote the bill down at its first reading, but did not get a chance as debate was interupted when the House rose at 10pm.

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