Supplementary Order Paper No 176

No 176

House of Representatives

Supplementary Order Paper

Tuesday, 4 December 2018

Reserve Bank of New Zealand (Monetary Policy) Amendment Bill

Proposed amendments

Hon Grant Robertson, in Committee, to move the following amendments:

Clause 2

In clause 2(1), replace Schedule 1 (page 3, line 6) with Schedule 2.

Clause 5

In clause 5(1), delete the definitions of economic objective and formulating (page 4, lines 33 to 36).

After clause 5(1) (page 5, after line 6), insert:

(1A)

In section 2(1), insert in their appropriate alphabetical order:

economic objective means an economic objective set out in section 8(1) (or in an Order in Council made under section 12)

formulating, in relation to monetary policy, has the meaning set out in section 8(3)

Clause 9

In clause 9, replace new section 19(2)(b) (page 9, line 6) with:

(b)

request that the operational objectives be amended or replaced.

In clause 9, replace new section 19(4) (page 9, lines 8 to 13) with:

(4)

If a notice is given,—

(a)

the MPC and the Bank are not required to give effect to the existing operational objectives:

(b)

the Minister must, within 1 month after the notice is given,—

(i)

make a recommendation under clause 6 of Schedule 2 for the purpose of replacing a remit to amend or replace the operational objectives; or

(ii)

give advice under section 12 for the purpose of amending or replacing the operational objectives in a remit that is included in an order in force under that section.

Clause 17

After clause 17(5) (page 13, after line 21), insert:

(5A)

In section 49(2)(h)(iii) and (iv), replace “an interest” with “an ownership interest”.

Clause 18

After clause 18(6) (page 14, after line 8), insert:

(6A)

In section 50(2)(d)(iii) and (iv), replace “an interest” with “an ownership interest”.

Clause 20

After clause 20(5) (page 15, after line 6), insert:

(5A)

In section 53(3)(f)(iii) and (iv), replace “an interest” with “an ownership interest”.

In clause 20(6), new section 53(4)(d)(iii) and (iv) (page 15, lines 22 and 24), replace “an interest” with “an ownership interest”.

Clause 29

In clause 29, new section 63J(2)(d), after “regulating” (page 21, line 14), insert “or prohibiting”.

Clause 34

In clause 34, new section 178(1), after “Bank” (page 22, line 25), insert “or the MPC”.

Schedule 3

In Schedule 3, new Schedule 2, after clause 6(6) (page 32, after line 36), insert:

(7)

Subclause (6) does not prevent the operational objectives in a remit from being amended or replaced as referred to in section 19(4)(b).

In Schedule 3, new Schedule 2, delete new clause 20(3) and (4) (page 37, lines 9 to 14).

Explanatory note

This Supplementary Order Paper amends the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill to make minor technical amendments, including—

  • to correct minor errors relating to the commencement of the Bill. In particular, 2 new definitions should only come into force on the main commencement of the Bill under clause 2(2) (see the amendments to clauses 2 and 5):

  • to clarify the process that applies if the Governor considers that giving effect to a direction under section 17 or 18 of the Reserve Bank of New Zealand Act 1989 (relating to dealings in foreign exchange) would be inconsistent with 1 or more operational objectives set out in a remit (see the amendments to clause 9). The Bill currently allows new operation objectives to be set under new clause 6 of Schedule 2. However, this process does not work if an Order in Council that sets different economic objectives is in force under new section 12. The amendment in the SOP allows the Order in Council in force under new section 12 to be amended in this situation in order to amend or replace the operational objectives in the remit. A consequential change is made to new clause 6 of Schedule 2 (in Schedule 3 of the Bill):

  • to clarify certain provisions relating to when the Governor or the Deputy Governor can be removed from office on the basis that they have an interest in a registered bank, a licensed non-bank deposit taker, a licensed insurer, or a bank carrying on business outside New Zealand. The amendments clarify that the interest concerned must be an ownership interest (see the amendments to clauses 17, 18, and 20):

  • to clarify the provision that allows rules about conflicts of interest to be included in the code of conduct for members of the monetary policy committee (the MPC). The amendment in the SOP allows the rules to prohibit participation of an interested member in decision making (currently the provision refers only to regulating participation). See the amendment to clause 29:

  • to amend new section 178(1) (as inserted by clause 34 of the Bill) to provide for evidence of the MPC’s decisions (which is consistent with the approach to evidence of the Bank’s decisions):

  • to remove clause 20(3) and (4) of Schedule 2 as inserted in Schedule 3 of the Bill (which provide for notice of removal of a member of the MPC). These provisions are unnecessary because the removal is made by way of an Order in Council under new clause 19 of Schedule 2.

Departmental disclosure statement

The Treasury considers that a departmental disclosure statement is not required to be prepared for this Supplementary Order Paper.