New Zealand economic and financial chronology 2014 - 1982

This chronology lists key economic and financial events for the period January 1982 to December 2014. Annual chronologies for earlier periods can be found in successive Reserve Bank Bulletins (generally published the month or quarter following the end of the year in question).

2014


28 July 2014

RBNZ Deputy Governor Grant Spencer appointed chair of an international central bank group: the Executives' Meeting of East Asia-Pacific Central Banks Working Group on Financial Markets.

25 August 2014

New Banking Forum set up to coordinate the work of several Government agencies that regulate banks involving RBNZ, Treasury, Financial Markets Authority and the Ministry of Business, Innovation and Employment.

1 December 2014

25 years since the Reserve Bank of New Zealand Act (1989) came into force. The Act established the independence of the Reserve Bank in respect of monetary policy, and specified price stability as the single monetary policy objective.

17 December 2014

The Reserve Bank is changes the way it calculates the trade-weighted index (TWI). The number of currencies included in the TWI increases from five to 17 and the weights for each currency are based on the two-way trade in goods and services between the foreign currency and New Zealand.

2013


12 February 2013

Geoff Bascand appointed Deputy Governor and Head of Operations of the RBNZ.

30 June 2013

A new anti-money laundering regulatory regime comes into force under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

30 June 2013

Open Bank Resolution regime comes into force. OBR is one option for responding to a bank failure. The regime allows the bank to be open for business on the next business day after being placed under statutory management. This means customers can gain full or partial access to their accounts, while an appropriate long-term solution to the bank's failure is identified.

23 July 2013

Dr Rod Carr elected Chair of the RBNZ's Board of Directors, replacing Dr Arthur Grimes, who stepped down from the Board after 11 years as Chair of the Board.

9 September 2013

RBNZ issues licences to 99 insurers under the Insurance (Prudential Supervision) Act, which is designed to ensure a sound and efficient insurance sector and to promote public confidence in the insurance sector.

1 October 2013

RBNZ introduces restrictions on high loan-to-value ratio (LVR) housing mortgage loans. Banks are required to restrict new residential mortgage lending at LVRs of over 80 percent to no more than 10 percent of the dollar value of their new housing lending flows. Constructions loans are exempt.

4 December 2013

Parliament passes the Reserve Bank of New Zealand (Covered Bonds) Amendment Act 2013, which provides greater certainty and transparency for covered bonds issued by banks. The Act provides for covered bond programmes to be registered and monitored by the Reserve Bank.

RBNZ exempts construction loans from the Loan-to-Value Ratio (LVR) ‘speed limit' introduced in October 2014.

4 December 2013

Parliament passes Non-bank Deposit Takers Act 2013, which introduces a licensing regime for Non-bank Deposit Takers (NBDTs), such as finance companies, building societies, and credit unions. The Act also gives the Reserve Bank new powers to detect and intervene should an NBDT become distressed or fail.

2012


26 June 2012

APEC appoints RBNZ Governor Dr Alan Bollard as head of the APEC Secretariat for a three-year term starting 1 January 2013.

7 September 2012

Government announces that Graeme Wheeler will take over as RBNZ Governor and chief executive when Dr Alan Bollard's second five-year term expires on 25 September 2012.

20 September 2012

New Policy Targets Agreement signed, setting targets for maintaining price stability.

The agreement continues to require the RBNZ to keep CPI inflation between 1 per cent and 3 per cent on average over the medium term. Within this target, the new agreement now requires the Bank to focus on keeping future average inflation near 2 per cent.

11 December 2012

RBNZ releases final capital adequacy standards, which apply to locally incorporated registered banks in New Zealand and implement the Basel III capital requirements.

The bulk of the new standards take effect from 1 January 2013 and set higher minimum requirements around how much regulatory capital must be held by registered banks, along with which financial instruments may be treated as regulatory capital.

2011


1 January 2011

The tobacco excise tax rises by 10 percent.

11 January 2011

Three quarters of Queensland is declared a disaster zone due to severe flooding. Thirty-five people are killed with a huge cost estimated to the Australian government. This temporarily disrupts activity and leads to ongoing disruption in mining operations.

20 January 2011

Statistics New Zealand figures show the CPI increased 2.3 percent in the December 2010 quarter, bringing CPI inflation for the year to December 2010 to 4.0 percent. Without the increase of GST from 12.5 percent to 15 percent in October 2010, the CPI would have risen by 0.5 percent in the quarter or 2.1 percent for the year to December 2010.

21 January 2011

The Reserve Bank announces a regulatory limit will be applied to the issuance of covered bonds by New Zealand banks. The limit will be set at 10 percent of the total assets of an issuing bank, with this limit calculated on the value of assets encumbered for the benefit of covered bond holders.

27 January 2011

The OCR remains unchanged at 3.0 percent. The outlook for the New Zealand economy remains consistent with December predictions.

22 February 2011

Canterbury experiences a 6.3 magnitude earthquake striking at 12.51pm. The earthquake causes widespread damage in Christchurch and the Canterbury region. One hundred and eighty-five people lose their lives, making it the second deadliest natural disaster recorded in New Zealand. The government declares a state of national emergency which stays in force until 30 April 2011.

10 March 2011

The OCR is reduced by 50 basis points to 2.50 percent. The Christchurch earthquake caused substantial damage and immense disruption to business. While it is difficult to know exactly how large and long-lasting these effects will be, it is clear that economic activity, in Canterbury and nationwide, will be negatively impacted.



11 March 2011

An 8.9 magnitude earthquake hits Japan with numerous aftershocks. There is a 10 metre tsunami and Japan declares an emergency at a nuclear power plant. Significant uncertainty surrounds how long-lasting and severe the impact of disruption to Japanese manufacturing will be for global growth.

14 March 2011

The Reserve Bank releases a consultation paper on pre-positioning requirements that banks will need to comply with for the Open Bank Resolution (OBR) policy to be an operational and effective option. The OBR policy aims to provide a tool for resolving a bank failure quickly. The aim is to ensure the bank stays open for business, while minimising stress on the overall banking and payment system.



24 March 2011

Statistics New Zealand figures show economic activity increased by 0.2 percent in the December 2010 quarter, with GDP growth of 1.5 percent for the year ended December 2010 compared with the previous year.

29 March 2011

The Reserve Bank releases its Sector Risk Assessment to help banks, non-bank deposit takers and life insurers prepare to meet upcoming requirements under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. The Reserve Bank will be responsible for supervising compliance of these organisations with this new legislation coming into force in 2013.



31 March 2011

Reserve Bank announces that Bank of India (New Zealand) Limited has been registered as a bank in New Zealand.

1 April 2011

The minimum wage is changed from $12.75 to $13 an hour before tax.

18 April 2011

Statistics New Zealand figures show the CPI rose 0.8 percent in the March 2011 quarter, bringing CPI inflation for the year to March 2011 to 4.5 percent. The CPI would have risen by 2.6 percent for the year to March 2011 without the October 2010 increase of GST from 12.5 to 15 percent.

The People's Bank of China (PBOC) and the Reserve Bank announce the establishment of a reciprocal currency arrangement (swap line) to support the settlement in Chinese Renminbi (RMB) of trade transactions between New Zealand and Chinese businesses.

28 April 2011

The OCR remains unchanged at 2.5 percent. The outlook for the New Zealand economy remains very uncertain following February's Christchurch earthquake.

11 May 2011

The Reserve bank releases the May Financial Stability Report. New Zealand's financial system is more resilient and positioned to support economic growth but still faces a volatile and uncertain environment. The global economic recovery is now broader, and strong growth in Asia is supporting commodity producers like New Zealand and Australia. However, global wholesale funding markets remain fragile, given stretched fiscal positions and banking sector problems in some European countries.

19 May 2011

The 2011 Budget is announced. It included the announcement of a $1.2 billion reduction in new discretionary spending over the coming four years in order to limit the accumulation of debt. A $5.5 billion recovery fund is established to help pay for rebuilding Christchurch. Changes will be made to KiwiSaver, Working for Families and student loans to make them financially sustainable and better targeted. Also included is significant infrastructure investment including ultra-fast broadband and KiwiRail.

20 May 2011

The IMF announces a three-year facility for Portugal to support a programme involving fiscal consolidation and measures to facilitate orderly adjustment in private sector balance sheets. The package will involve loans from the European Union amounting to €52 billion and a €26 billion IMF facility.

27 May 2011

Ratings agency Moody's downgrades New Zealand's four major banks by one notch, following an equivalent downgrade of their Australian parents. This is due to their relatively high reliance on wholesale funding and the difficult conditions in funding markets. There is very little market reaction to the news, suggesting it was largely expected and had already been reflected in interest rates.

9 June 2011

The OCR remains unchanged at 2.5 percent with the outlook for the economy improved since the publication of the March Monetary Policy Statement. Although firms and households especially within Canterbury continue to be adversely affected, the negative effect of the earthquake on economic activity throughout the rest of the country appears to be limited. Despite some continuing signs of weakness in the world economy, commodity prices remain very strong and firms expect to increase their hiring and capital investment.

30 June 2011

The Reserve Bank releases the Statement Of Intent an annual document outlining the Bank's plans for the three years ahead and its budget for the year ahead. It demonstrates the Bank's focus on maintaining stability despite shocks from devastating earthquakes and continuing world financial and economic uncertainties.

The Reserve Bank's new capital adequacy requirements for farm lending take effect, requiring New Zealand's four largest banks to hold regulatory capital that better reflects risk in their rural lending portfolios.

1 July 2011

Banks now face a minimum Core Funding Ratio of 70 percent under the Reserve Bank's liquidity requirements, increased from 65 percent.

14 July 2011

Statistics New Zealand figures show the economy grew by 0.8 percent in the March 2011 quarter, with GDP growth of 1.5 percent for the year ended March 2011 compared with the previous year.

18 July 2011

Statistics New Zealand figures show the CPI rose 1.0 percent in the June 2011 quarter, bringing CPI inflation for the year to June 2011 to 5.3 percent. This includes the effects of the October 2010 rise in GST to 15 percent. Excluding the GST increase, inflation was 3.3 percent for the year to June 2011.

28 July 2011

The OCR remains unchanged at 2.5 percent. The economy has grown more strongly than expected. However, global financial markets are fragile.

4 August 2011

The Reserve Bank publishes the Solvency Standard for Life Insurance Business, the first of the insurance solvency standards. A solvency standard measures the capital sufficiency of an insurer and it is an important prudential requirement issued under provisions within the Insurance (Prudential Supervision) Act 2010. This is later followed by the Solvency Standard for Non-life Insurance Business – AMI Insurance Limited, the Solvency Standard for Captive Insurers Transacting Non-life Insurance Business and the Solvency Standard for Non-life Insurance Business.

5 August 2011

Ratings agency Standard and Poor's downgrades its credit rating of the US Federal government from AAA to AA+. This is the first time the US government has been given a rating below AAA.

9 September 2011

The official opening ceremony for the 2011 Rugby World Cup is held in Auckland.

22 September 2011

Statistics New Zealand figures show GDP increased 0.1 percent in the June 2011 quarter, with an annual growth of GDP of 1.5 percent for the year ended June 2011 compared with the previous year.



9 September 2011

A new Council of Financial Regulators, established to foster cooperation between financial and prudential regulators in New Zealand, holds its first meeting. Permanent members include the Reserve Bank and the Financial Markets Authority (FMA). Associate members are The Treasury and Ministry of Economic Development.

15 September 2011

The OCR remains unchanged at 2.5 percent. The New Zealand economy has performed relatively well, and headline inflation has increased. However, global economic and financial risks have also increased.

30 September 2011

Ratings agency Standard & Poor's (S&P) announces the affirmation of New Zealand's AA+ foreign currency long-term sovereign credit rating and revises the outlook on this rating to negative from stable. This revised outlook reflects a reassessment of sovereign risks in light of recent global developments that have brought into focus underlying vulnerabilities in New Zealand's external position.

3 October 2011

The Reserve Bank releases its 2010-2011 Annual Report. The Reserve Bank has focused on the resilience of the New Zealand economy and financial system, while staying on top of inflationary pressures. Governor Alan Bollard says the developed world is struggling to cope with the aftermath of the global financial crisis, and we have a slow grind ahead.

25 October 2011

Statistics New Zealand figures show the CPI rose 0.4 percent in the September quarter, bringing CPI inflation for the year to September 2011 to 4.6 percent. Excluding the GST increase, CPI inflation was 2.5 percent for the year to September 2011.

As from the September quarter release, the CPI has been reweighted using the 2009/2010 Household Economic Survey and other information. The reweighted CPI results in the decreased relative importance of the purchase of new housing, professional services associated with buying and selling houses, furniture, household appliances and cars. The relative importance of food, rentals for housing and electricity all increased. The CPI was last reweighted in 2008.

26 October 2011

The Reserve Bank announces that PSIS Limited has been registered as a bank in New Zealand and will be changing its name to The Co-operative Bank Limited.

27 October 2011

The Reserve bank leaves the OCR unchanged at 2.5 percent. Domestic activity has continued to expand at only a modest pace and business confidence has fallen. Given the ongoing global economic and financial risks, it remains prudent to keep the OCR unchanged.

2 November 2011

The Federal Open Market Committee (FOMC) states that it still expects to maintain ‘exceptionally low levels for the Federal Funds rate at least through mid-2013' and also leaves open the possibility of additional measures.

8 November 2011

The Reserve Bank releases a consultation paper on the implementation of Basel III capital adequacy requirements in New Zealand. The Reserve Bank is proposing to adopt most of the Basel III proposals into its standards.

10 November 2011

The Reserve Bank releases its November Financial Stability Report. Risks to New Zealand's economy and financial system have increased in recent months and financial systems in many countries remain under stress.

26 November 2011

The National Party wins the largest share of the party vote in the 2011 New Zealand general elections. Leader John Key is sworn in as Prime Minister on 14 December 2011.

8 December 2011

The OCR remains unchanged at 2.5 percent. Global conditions have deteriorated and continuing difficulties related to sovereign and bank debt in a growing number of European economies have resulted in high levels of volatility in financial markets. There has also been a softening in international economic activity, including in the Asia-Pacific region. There remains a high degree of uncertainty around the global outlook and there is a risk that conditions will weaken further.



2010


19 January 2010

Finance Minister Bill English announces two new appointments to the Reserve Bank's board of directors. They are Victoria University Professor of Economics, Neil Quigley, and Auckland-based consulting research economist Kerrin Vautier. The new directors replace Alison Paterson who is leaving after completing three five-year terms and Sir John Goulter who has completed two.

20 January

Statistics New Zealand figures show the CPI fell 0.2 percent in the December 2009 quarter, bringing CPI inflation for the year to December 2009 to 2.0 percent.

28 January 2010

The OCR is unchanged at 2.50 percent. The New Zealand economy continues to recover. Business spending remains weak.



28 January 2010

The Reserve Bank confirms its temporary liquidity swap line with the Federal Reserve will expire on 1 February 2010 in coordination with other central banks. This facility, established to counter pressures in global funding markets, has not been used by the Reserve Bank and is no longer needed given the improved functioning of financial markets.



2 February 2010

The Reserve Bank releases a consultation paper on policy options for liquidity requirements for the non-bank deposit taking (NBDT) sector. Options aim at decreasing liquidity risk in this sector. The sector includes finance companies, building societies and credit unions. This is part of the NBDT prudential regulatory regime the Reserve Bank is introducing to improve resilience.



23 February 2010

The Injury Prevention, Rehabilitation, and Compensation Amendment Bill 2009 (now known as the Accident Compensation Amendment Act 2010) is passed by Parliament. It is expected that increases in ACC charges along with other factors will push CPI inflation toward the top of the target range. The primary purpose of the act is to improve flexibility in the ACC Scheme, help contain rising costs to provide value for money services, and encourage closer working relationships between government agencies and ACC.

27 February 2010

Chile suffers an 8.8 magnitude earthquake which disrupts world commodity supply and commodity prices.

1 March 2010

The Reserve Bank announces that credit ratings are now mandatory for non-bank deposit takers. Credit ratings are a key component of the new prudential regulatory regime for deposit taking finance companies, building societies and credit unions.



11 March 2010

The OCR remains unchanged at 2.50 percent. New Zealand's economy is recovering broadly and growth is predicted to pick-up further through 2010. The Reserve Bank expects to begin removing policy stimulus around the middle of 2010.

25 March 2010

Statistics New Zealand figures show GDP increased 0.8 percent in the December 2009 quarter with GDP for the year ended December 2009 contracting by 1.6 percent compared with the previous year.

1 April 2010

The minimum wage is changed from $12.50 to $12.75 an hour after tax.

20 April 2010

Statistics New Zealand figures show the CPI rose 0.4 percent in the March 2010 quarter, bringing CPI inflation for the year to March 2010 to 2.0 percent.

28 April 2010

The excise taxes on cigarettes and loose tobacco were increased by 10 and 25 percent respectively. Further increases of 10 percent each are planned for January 2011 and 2012.

29 April 2010

The OCR remains unchanged at 2.50 percent. The recovery is expected to be slightly faster than that projected in the March 2010 Monetary Policy Statement. In line with that assessment, the Reserve Bank still expects to begin removing policy stimulus over coming months.

30 April 2010

The New Zealand Wholesale Guarantee Facility closes, while the separate Retail Deposit Guarantee Scheme continues to operate. The wholesale facility was set up to help banks operating in New Zealand access funding during the liquidity crisis that affected global financial markets. International market conditions have improved, and continue to improve in 2010, and New Zealand banks are now raising wholesale funding without using the guarantee, which was always envisaged as a temporary measure for extraordinary times.

9 May 2010

The IMF announces a three year arrangement for Greece as part of a package involving the European Union and amounting to €110 billion over three years, €30 billion of which will come from the IMF.  The focus will be on addressing large fiscal imbalances and making the economy more competitive.   

19 May 2010

The Reserve Bank releases its May Financial Stability Report. The outlook for the financial system has improved in recent months, reflecting a recovery in the NZ economy driven by stronger trading partner activity and a sharp lift in the terms of trade. However, global financial markets remain fragile.



20 May 2010

The 2010 Budget is released which includes provisions to increase the rate of GST from October 2010, reduce personal income and company taxes, and change the tax treatment of buildings. The overall aim of the tax reform is to shift the focus of taxation from income-based taxes to consumption-based taxes. The reductions in personal tax rates more than fully compensate earners at all levels of income for the increase in GST. Beneficiaries and superannuitants will also be compensated for the change in GST.

10 June 2010

The OCR is increased by 25 basis points to 2.75 percent. The economy has entered its second year of recovery with growth becoming more broad-based.



20 June 2010

The New Zealand government, following an investor complaint to the Securities Commission, places Allan Hubbard, his wife Jean Hubbard and his business Aorangi Securities and seven charitable trusts into statutory management.

24 June 2010

Statistics New Zealand figures show economic activity increased by 0.6 percent in the March 2010 quarter, with an annual decrease of 0.4 percent in GDP for the year March 2010 compared with the previous year.

25 June 2010

Deposit Takers Regulations 2010 are gazetted and will come into force on 1 December 2010. Deposit taking finance companies, building societies and credit unions will be required to maintain a minimum capital ratio, and limit the amount of credit they provide to related parties.



30 June 2010

The Reserve Bank releases the Statement of Intent which is an annual document outlining the Bank's plans for the three years ahead and its budget for the year ahead. It shows the Bank will continue to advance the implementation of the new Non-Bank Deposit Taker regime, concurrent with the gradual rationalisation of the finance company sector. Also among the priorities is to continue to develop and implement the new prudential regime for the insurance sector.



1 July 2010

Stationary energy, industrial processes and liquid fossil fuels are added to the Emissions Trading Scheme.

16 July 2010

Statistics New Zealand figures show the CPI rose 0.3 percent in the June 2010 quarter, bringing CPI inflation for the year to June 2010 to 1.8 percent.

20 July 2010

Parliament ratifies a new five-year funding agreement ensuring the Reserve Bank has resources for its existing and expanding roles, while reflecting tight controls of underlying costs.



29 July 2010

The OCR is increased by 25 basis points to 3.0 percent. Economic growth has softened but it is still appropriate to continue to reduce the level of support implemented during the 2008/09 recession.



6 August 2010

The Reserve Bank invites submissions on proposals to change the current disclosure regime for registered banks. A key objective is to reduce compliance costs associated with current disclosure requirements.



31 August 2010

On 31 August 2010, South Canterbury Finance Limited (SCF) is placed into receivership by the Company's Trustee, Trustees Executors Limited, at the request of the company's directors. Trustees Executors Limited had previously agreed that South Canterbury Finance had to have completed a recapitalisation of the company on or before 31 August 2010. SCF was unable to achieve this. The receivership of SCF is the largest and most complex receivership in New Zealand's corporate history and is further complicated by the various official investigations underway. SCF is the only New Zealand finance company receivership where the company and its subsidiaries have continued to trade.

3 September 2010

The Reserve Bank and the Securities Commission announce that the newly established NZCDC Settlement System has been declared a designated settlement system. This gives statutory backing to the finality of settlement and netting of transactions through the system so that in the event of a failure by a participant, transactions cannot be unwound.

4 September 2010

A 7.1 magnitude earthquake hits Canterbury at 4.35am. No one is killed. The earthquake does significant damage to buildings and infrastructure.



7 September 2010

The Insurance (Prudential Supervision) Act 2010 receives the Royal Assent, whereby the financial strength of the insurance industry is subject to appropriate prudential regulation by the Reserve Bank in order to protect policyholder interests.

16 September 2010

The OCR remains unchanged at 3.0 percent. While global and domestic economies continue to recover, the outlook has weakened since June. The earthquake that struck Canterbury on 4 September has significantly disrupted economic activity.



23 September 2010

Statistics New Zealand figures indicate a decline in GDP of 0.2 percent in the June 2010 quarter, with GDP increasing 0.7 percent in the June 2010 year compared with the previous year.

1 October 2010

The rate of GST increases from 12.5 percent to 15 percent, personal tax rates are reduced and changes are made to tax depreciation rates.

8 October 2010

The Reserve Bank announces two developments regarding non-bank deposit takers (NBDTs). The first is a consultation paper on a second NBDT Bill which gives the Bank powers covering: licensing; fit and proper person requirements for directors and senior office holders; the ability to place restrictions on changes of ownership; and distress and failure management. The second is the implementation of liquidity regulations for NBDTs.



11 October 2010

The Reserve Bank and NZX announce agreement on the provision of clearing and settlement services to NZ's capital markets. The Bank and NZX have agreed to maintain separate, competing systems but with full interoperability. The agreement is formalised in a Memorandum of Understanding.



12 October 2010

The Retail Deposit Guarantee Scheme ends (with the exception of an extension for a limited number of companies on tighter terms). The Scheme was a temporary measure designed to give assurance to New Zealand depositors.

The Reserve Bank releases its 2009-2010 Annual Report. The Reserve Bank is one of the few OECD central banks to retain a full range of central banking functions – monetary policy, financial stability, foreign reserves management, bank regulation, payments and settlements, and currency management – in one organisation. This broad coverage was hugely useful during the financial crisis and recovery. It also meant that the Reserve Bank was able to assess how the recent Canterbury earthquake affected the financial system and economy, and identify the appropriate policy response.

15 October 2010

The Reserve Bank releases a consultation paper on the introduction of the regulatory framework for the development of covered bond programmes by NZ banks. Covered bonds are debt securities backed by the cash flows from a specific pool of mortgages or other loans. This will benefit the NZ banking system through a broadening of international funding sources.

18 October 2010

Statistics New Zealand figures show the CPI rose 1.1 percent in the September 2010 quarter, bringing CPI inflation for the year to September 2010 to 1.5 percent.



28 October 2010

The OCR remains unchanged at 3.0 percent. The medium term outlook is broadly in line with what was assumed in September. Domestically, recent data have turned out weaker than projected.



29 October 2010

The Reserve Bank publishes non-binding liquidity guidelines for non-bank deposit takers (NBDTs). Under the regulations, quantitative liquidity requirements that are appropriate to the individual institution must be in NBDTs' trust deeds by 1 Dec 2010.



3 November 2010

The US Federal Reserve announces the second round of Quantitative Easing (which becomes known as QE2). It plans to continue reinvesting principal payments on securities already purchased and to purchase a further $600 billion of longer term Treasury securities.  The additional purchases are subsequently completed by the end of June 2011, after which the policy of reinvesting principal payments continued.  The goal, as with the first round of such purchases, was to promote recovery while keeping inflation in line with the Federal Reserve's mandate.

9 November 2010

The Reserve Bank announces the removal of the last remaining temporary liquidity facility (the Tuesday Open Market Operation, which involved repurchase transactions for maturities of up to three months) put in place during the financial crisis.



10 November 2010

The Reserve Bank releases its November Financial Stability Report. New Zealand's financial system has benefited from recovery in the global economy, with banks now better positioned to meet future credit demand and support economic growth. Domestic rebalancing is proceeding but upward pressure on the New Zealand dollar are not helping.

19 November 2010

The Reserve Bank finalises the main policy decisions in its review of disclosure requirements for registered banks. The main changes to the existing regime include: dropping the quarterly key information summary and supplemental disclosure statement, introducing a single quarterly disclosure document, cutting the size of the half-year disclosure document and further rationalisation of information across all time periods.



7 December 2010

The Reserve Bank releases a consultation paper proposing a new policy for locally incorporated registered banks considering making significant acquisitions, investments or business mergers. The paper proposes that banks should have to obtain a notice of non-objection from the Reserve Bank before undertaking such transactions.



9 December 2010

The OCR remains unchanged at 3.0 percent. While interest rates are likely to increase modestly over the next two years, for now it seems prudent to keep the OCR low until recovery becomes more robust and underlying inflationary pressures show more obvious signs of increasing.



16 December 2010

The IMF announces a programme for Ireland as part of a wider support package to help address concerns about fiscal and financial sustainability.  The overall package would amount to €85 billion over three years, with €22.5 billion coming from the IMF and the rest from the European Financial Stabilisation Mechanism (EFSM), European Financial Stability Facility (EFSF) and bilateral loans from the UK, Sweden and Denmark, as well as Ireland's own contributions.

22 December 2010

The Reserve Bank releases its new corporate governance requirements for registered banks. This includes imposing a minimum board size of five, requiring half of board directors to be independent and half of those to be New Zealand residents, tightening the definition of an independent director and providing guidelines around knowledge and experience required from boards.



23 December 2010

Statistics New Zealand figures show GDP fell by 0.2 percent in the September 2010 quarter, with an annual growth of GDP of 1.4 percent for the year to September 2010 compared with the previous year.



2009




6 January 2009

The Reserve Bank announces that Australia and New Zealand Banking Group Limited has been registered as a bank in New Zealand, will operate as a branch and will not affect the status and lending activities of the ANZ National Bank Limited.



13 January 2009

The Reserve Bank releases details of a change to the daily Open Market Operations (OMOs). From 20th January 200, the Tuesday OMO will accept as collateral only two-name Corporate and Asset-Backed eligible securities. This Tuesday OMO is seen as temporary, to be kept in place while global markets remain unsettled. The Reserve Bank will review this operation after one year.

20 January 2009

Statistics New Zealand figures show the CPI fell 0.5 percent in the December 2008 quarter, bringing CPI inflation for the year to December 2008 to 3.4 percent.

29 January 2009

The Reserve Bank reduces the OCR from 5.0 percent to 3.5 percent. The global economy is now in recession and the outlook for international growth has been marked down considerably since the December Monetary Policy Statement.



30 January 2009

Reserve Bank Governor Alan Bollard, in a speech to the Canterbury Employers' Chamber of Commerce, says that New Zealand will be better prepared for economic recovery if households, firms and banks do not "pull down the shutters". Our banking system remains well capitalized and has avoided the problematic credit exposures that have brought some major overseas financial institutions to their knees. Large underlying structural adjustments are underway internationally.

5th March 2009

The Bank of England announces that it will purchase £75 billion of assets over three months funded by central bank money. This is referred to as Quantitative Easing (QE). The quantity is subsequently increased several times, reaching £200 billion by January 2010.  In October 2010, a further round of purchases is announced, taking the cumulative total to £275 billion.  The aim of the purchases is to boost nominal spending and support demand, consistent with meeting the 2 per cent inflation target.



12 March 2009

The OCR is reduced by 50 basis points to 3 percent. The Reserve Bank expects the adverse economic forces generated by the crisis to remain dominant throughout 2009.

27 March 2009

Statistics New Zealand figures show GDP decreased by 0.9 percent in the December 2008 quarter, the fourth consecutive decrease, with an increase in annual growth of GDP of 0.2 percent for the December 2008 year.

1 April 2009

Reserve Bank Governor Alan Bollard expresses concern over the recent strength of long-term wholesale interest rates. Dr Bollard says, "As indicated in our March Statement, we are projecting interest rates to remain at relatively low levels for an extended period."

The minimum wage is changed from $12 to $12.50 per hour after tax.

17 April 2009

Statistics New Zealand figures show the CPI rose 0.3 percent in the March 2009 quarter, bringing CPI inflation for the year to March 2009 to 3.0 percent.

20 April 2009

The Reserve Bank announces the release of a draft Insurance (Prudential Supervision) Bill for stakeholder consultation. The draft Bill reflects policy approvals provided by Cabinet in December 2007 and August 2008, and is being released for consultation with an expectation that respondents will focus on legal, drafting and operational issues.



24 April 2009

Finance Minister Bill English announces two new appointments to the Reserve Bank's board of directors. They are Christchurch consultant and professional director Sue Sheldon, and Wellington consultant and professional director Keith Taylor. The board normally consists of seven non-executive directors plus the governor. The new directors replace Marilyn Waring who completed a five-year term in February and Paul Baines, who leaves in June after two terms.



30 April 2009

The Reserve Bank reduces the OCR by 50 basis points to 2.5 percent. Developments since March point to lower medium-term inflation than previously projected. The main factors behind this are weaker global growth, and an unwarranted tightening in financial conditions via both higher long-term interest rates and a stronger exchange rate than expected.



13 May 2009

The Reserve Bank issues the May 2009 Financial Stability Report. The global financial crisis is still affecting New Zealand, despite the recent pick-up in world equity markets. The global pressures are encouraging a recovery in household savings which should contribute to an improvement in New Zealand's external balance over the next few years. Recent monetary and fiscal policy measures will help to ensure that the adjustment to more sustainable debt levels is an orderly one.



19 May 2009

The Reserve Bank offers to purchase NZ government bonds maturing 15 July 2009 for liquidity management purposes. These purchases will help manage the large cash inflow to the banking system on 15 July as a result of the bond maturity. Purchases will be made for the Bank's own account and are expected to hold the bonds to maturity or they may be on sold to NZDMO.



28 May 2009

Budget documents are released which signal increased government spending over the next two years, despite some downward revision from around 2011. This increased spending comes both through higher operating expenditure and significant infrastructure investment.

11 June 2009

The OCR remains unchanged at 2.50 percent. The economic outlook remains weak and recovery is likely to be slow and fragile. However, there are signs that international economic activity is stabilizing. Many key economic indicators such as unemployment are projected to keep deteriorating well into 2010.



26 June 2009

Statistics New Zealand figures show that economic activity decreased 1.0 percent in the March 2009 quarter, the fifth consecutive decrease with annual GDP was down 1.0 percent for the year ended March 2009.

30 June 2009

The Reserve Bank releases the Statement Of Intent which is an annual document outlining the Bank's plans for the three years ahead and its budget for the year ahead. The Reserve Bank's strategic priorities are to ensure outcomes that are taken for granted in normal times: that financial markets and institutions continue to operate effectively and continue to support the financing needs of the real economy.

The Reserve Bank announces the release of its prudential liquidity policy for banks. The purpose of the policy is to ensure that banks maintain strong liquidity positions, making them more resilient to both short term and long lasting funding shocks.



2 July 2009

The Reserve Bank closes its offer to purchase NZ government bonds maturing 15 July 2009, for liquidity management purposes. The offer was announced on 19 May and closed at 4:00pm 1 July. The Bank repurchased $329.865 million of the July 2009 bond. Bonds are held on its balance sheet till maturity.



6 July 2009

The Reserve Bank released an analysis of interest rate margins, responding to a number of questions received regarding the stance on what room there still is for interest rate cuts. The Reserve Bank continues to talk to the banks to clarify recent trends in their funding costs and margins. There is to be a further review of these matters in the Bank's November 2009 Financial Stability Report.



13 July 2009

The Reserve Bank releases its risk management programme guidelines for non-bank deposit takers, with the aim of improving future resilience of New Zealand's non-bank financial sector. Deposit-taking finance companies, building societies and credit unions are required to have a risk management programme. This is to show how they can identify and manage credit risk, liquidity risk, market risk and operational risks, appropriate to each institution's particular circumstances.



14 July 2009

The Reserve Bank releases a paper on the potential impact of influenza A (H1N1) (swine ‘flu) on the New Zealand economy. The Reserve Bank's baseline result suggests that the economic impact of influenza A (H1N1) is likely to be low with declines in output of less than 0.6 percent in the first year.



16 July 2009

Statistics New Zealand figures show the CPI rose 0.6 percent in the June 2009 quarter, bringing CPI inflation for the year to June 2009 to 1.9 percent, the smallest annual increase since the September 2007 quarter.

30 July 2009

The OCR remains unchanged at 2.50 percent. Despite signs of a levelling off in economic activity, the economy remains weak. The Reserve Bank continues to expect a patchy recovery toward the end of the year, but it will be some time before growth returns to healthy levels.



31 July 2009

To mark the Reserve Bank of New Zealand's 75th anniversary, Howard Davies, Director of the London School of Economics, and formerly Chairman of the UK Financial Services Authority and Deputy Governor of the Bank of England, delivers a public lecture on "The Financial Crisis – who's to blame? Problems and remedies". A temporary exhibition marking 75 years of Reserve Bank operations will be open to the public in the Reserve Bank Museum and Education Centre from 3 August 2009



1 August 2009

On 1 August 2009 the Reserve Bank of New Zealand marks its 75th year of operations, three quarters of a century that span some of New Zealand's most tumultuous decades. The Reserve Bank was founded in response to developments in the early twentieth century. Britain was eager for its Dominions to establish their own central banks, so they could set their monetary policies to suit specific local conditions. However, in New Zealand the wheels only began turning with vigour after a 1931 visit by British economic expert Otto Niemeyer, who recommended a central bank to the government of Prime Minister George Forbes. The Reserve Bank has taken on significant growth and complexity in the past 75 years.



6 August 2009

The Reserve Bank announces it is exempting certain deposit takers from having a mandatory credit rating, under Part 5D of the Reserve Bank of New Zealand Act 1989. This exemption is available if the consolidated liabilities of the deposit taker are less than $20 million (measured as an average over a 12-month period).



7 August 2009

The Reserve Bank releases a discussion paper on the development of stratified housing price measures using the Real Estate Institute of New Zealand's (REINZ) housing market data. By using this data the Bank has developed a housing price measure that provides a timely and regular reading of housing price movements.



29 August 2009

Once a year, Jackson Hole in Wyoming hosts the world's central bankers. Reserve Bank Governor Alan Bollard says the mood of the Jackson Hole symposium was the worst of the global financial crisis is now over. New Zealand has come through reasonably well, but the crisis has also exposed some vulnerabilities that may have had harsher consequences had financial markets not stabilized earlier this year.



1 September 2009

The Reserve Bank announces that Baroda (New Zealand) Limited has been registered as a bank in New Zealand. The bank, which is a subsidiary of Bank of Baroda (India), will be changing its name to Bank of Baroda (New Zealand) Limited before it commences operations. There are now 19 registered banks in New Zealand, which are listed on the Reserve Bank website.



10 September 2009

The Reserve Bank leaves the OCR unchanged at 2.5 percent. There is more evidence that the decline in economic activity is coming to an end, and that a patchy recovery is underway. This is partly due to recovery in the Bank's trading partner economies in the June quarter. Domestically, retail spending appears to have stopped falling, following a rise in net immigration and a pick-up in the housing market over recent months.



22 September 2009

The Reserve Bank Museum and Education Centre hosts an exhibition of the orders, decorations and medals of the late Sir Edmund Hillary, KG, ONZ, KBE. The exhibition reflects a lifetime of extraordinary achievements that included the first ascent of Mount Everest, the first overland drive to the South Pole, and many projects to benefit the people of the Himalayas.

23 September 2009

Statistics New Zealand figures show GDP increased by 0.1 percent in the June 2009 quarter, following five quarters of contraction, with a fall in annual growth of GDP by 1.8 percent.



9 October 2009

2008-2009 Annual Report is released saying New Zealand has escaped major damage in the worst global financial crisis in decades, but the experience has highlighted imbalances and vulnerabilities. In recognition of the seriousness of the financial crisis, the Governor, Deputy Governor and two Assistant Governors request they be given no remuneration increase in calendar year 2009.



14 October 2009

The Reserve Bank announces that it will remove and consolidate some of the temporary emergency liquidity facilities put in place during the financial crisis in 2008. The Bank will continue to monitor markets closely and is in a position to supply sufficient liquidity as required depending on market conditions via its regular Open Market Operations.



15 October 2009

A bill that boosts measures to counter money laundering by criminal gangs and organised crime, and which counters the financing of terrorism, passes into law. The Anti-Money Laundering and Countering Financing of Terrorism Act enhances the ability to investigate organised crime, by following the illegal money trail through financial systems, and goes hand- in-hand with the Criminal Proceeds (Recovery) Act, passed by the Government in April, which can be used to attack criminal profits.

Statistics New Zealand figures show the CPI rose 1.3 percent in the September 2009 quarter, bringing CPI inflation for the year to September 2009 to 1.7 percent, the smallest annual increase since the March 2004 quarter.



29 October 2009

The OCR remains unchanged at 2.5 percent. Activity in New Zealand's trading partners continued to rebound during the September quarter and financial market sentiment has improved further. However, there remain significant vulnerabilities and challenges to be worked through in many economies. In contrast to current market pricing, there is no urgency to begin withdrawing monetary policy stimulus.



5 November 2009

In a speech to the Trans-Tasman Business Circle, Reserve Bank Governor Alan Bollard says financial markets and businesses need to appreciate the different futures New Zealand and Australia are charting out of the global financial crisis. Both countries have survived the crisis well, due to a mix of strong institutions and stimulative policies. However, Australia has avoided negative growth and its prospects are for stronger growth coming out of the global crisis. New Zealand has experienced recession and its pick-up is slower and more vulnerable.



11 November 2009

The Reserve Bank issues the November 2009 Financial Stability Report. The outlook for the New Zealand economy and financial system has improved in the past six months as international conditions have stabilized, but some risks and challenges remain. While the improved global outlook was generally positive for New Zealand, the rise in the New Zealand dollar over recent months could hinder continued improvement in the external balance. New Zealand and Australia had withstood the crisis better than those in many other countries. However, the banks were overly dependent on offshore wholesale capital markets which broke down during the crisis. Also, the banks' asset quality has deteriorated during the recession, as reflected in recent provisioning and profit results. Further loan losses are likely as unemployment continues to rise through into 2010.



10 December 2009

The OCR remains unchanged at 2.5 percent. The New Zealand economy continues to recover but there remains considerable uncertainty about the durability of the expansion. Activity in Australia, China and emerging Asia continues to increase and solid growth is expected over the next few years. Financial sectors are still impaired in a number of economies and economic activity is still heavily dependent on policy support.

The government announces changes in ACC levies which are well below ACC's proposed rise in order to compensate for a 57% increase in ACC claims over the last four years. ACC levies are set to increase for workers and employers from 1 April 2010, and for drivers from 1 July 2010.

23 December 2009

Statistics New Zealand figures show that economic activity was up 0.2 percent in the September 2009 quarter with GDP contracting 2.2 percent in the year ended September 2009



2008




24 January 2008

The Reserve Bank leaves the OCR unchanged at 8.25 percent at its interim review. Despite a cooling housing market, the labour market remains tight, with strong domestic income growth.



25 January 2008

Governor Alan Bollard gives a speech, titled ‘Coping with shocks – a New Zealand perspective', to the Canterbury Employers' Chamber of Commerce.

22 February 2008

The British bank, Northern Rock, is taken into state ownership.



6 March 2008

The Reserve Bank leaves the OCR unchanged at 8.25 percent at the release of its Monetary Policy Statement. Although the outlook for economic activity has deteriorated, headline inflation remains high fuelled by higher food and energy prices.



7 March 2008

Governor Alan Bollard highlights challenges for small open economies like New Zealand, in remarks to be delivered at an international symposium in Paris.



16 March 2008

The global investment bank, Bear Stearns, is acquired by JP Morgan Chase with the US Federal Reserve's assistance.



28 March 2008

Economic activity increased 1.0 percent in the December 2007 quarter with annual GDP growth reaching 3.1 percent for the year ended December 2007.

1 April 2008

The minimum wage increases from $11.25 to $12 an hour before tax.



8 April 2008

A Free Trade Agreement is signed between China and New Zealand, making New Zealand the first developed country to sign such an agreement with China.



15 April 2008

Statistics New Zealand figures show the CPI rose 0.7 percent in the March 2008 quarter, bringing CPI inflation for the year to March 2008 to 3.4 percent.



24 April 2008

The Reserve Bank leaves the OCR unchanged at 8.25 percent. The Reserve Bank notes sharp falls in consumer and business sentiment, a downturn in our housing market and weaker prospects for world growth. However, key commodity prices remain high.



7 May 2008

The Reserve Bank releases its May Financial Stability Report. The report notes the sharp downturn in global financial markets, described as the "largest financial shock since the Great Depression". New Zealand's financial system has been able to withstand these disruptions due to relatively low exposure to offshore credit risk. However New Zealand banks have been affected by higher cost of funds.




The Reserve Bank announces new liquidity measures in the wake of the global financial market turmoil. Measures include a broadened set of eligible securities in the Overnight Reverse Repo Facility and a graduated ‘Haircut' regime.



15 May 2008

The first disclosures are made under the Basel II capital standard for New Zealand banks. Basel II includes more comprehensive disclosure of risk information.



22 May 2008

The Minister of Finance, Michael Cullen, releases the Government's 2008 Budget. Personal tax cuts is the prominent feature in the 2008 Budget, with lower tax rates for those in low income groups and higher income thresholds for those in medium to high income groups.



5 June 2008

The Reserve Bank leaves the OCR unchanged at 8.25 percent when releasing its Monetary Policy Statement. The Reserve Bank notes significant increases in oil and food prices, despite waning economic activity around the world.



27 June 2008

Statistics New Zealand figures show GDP decreased by 0.3 percent in the March 2008 quarter, lowering annual growth in GDP to 3.0 percent for the year to March 2008.



30 June 2008

The Reserve Bank releases its Statement of Intent (SOI) for 2008-2011. The Reserve Bank points out that the SOI has been written in a period of high volatility and uncertainty. The Reserve Bank will strengthen its prudential liquidity policy, implement new regulatory frameworks for non-bank deposit-takers and the insurance sector, and introduce a new model for forecasting.



11 July 2008

Crude oil futures hit an all-time high of US$147.27 a barrel.



15 July 2008

Statistics New Zealand figures show the CPI rose 1.6 percent in the June 2008 quarter, bringing CPI inflation for the year to June 2008 to 4.0 percent.



23 July 2008

Hanover Finance suspends repayment of principal and interest to its investors.

24 July 2008

The Reserve Bank reduces the OCR from 8.25 percent to 8 percent, the first policy easing in five years. Inflationary pressures from the high price of oil and food persist, but the international ‘financial crisis' has significantly increased the cost of funds raised abroad. The Reserve Bank notes that monetary policy has been reasonably tight for some time, restraining activity and medium term inflation pressures.



30 July 2008

Governor Alan Bollard makes a speech titled ‘Flexibility and the limits to inflation targeting'. Dr Bollard notes that inflation targeting has served us well, and its flexibility has allowed us to manage the ongoing external shocks.



3 September 2008

The Reserve Bank Amendment Bill (No. 3) is passed, making the Reserve Bank the sole regulator of non-bank deposit takers, including finance companies, building societies and credit unions. The new legislation gives the Reserve Bank the right to develop and enforce minimum prudential and governance requirements and to administer credit rating requirements.



7 September 2008

The US mortgage finance entities Fannie Mae and Freddie Mac are placed into conservatorship run by the Federal Housing Finance Agency.



10 September 2008

The Emissions Trading Scheme (ETS) is passed into law.



11 September 2008

The Reserve Bank reduces the OCR by 50 basis points, to 7.5 percent. The outlook for the global economy and a marked domestic slowdown has continued to deteriorate.



15 September 2008

Lehman Brothers files for bankruptcy, in the largest bankruptcy filing in U.S. history.

Merrill Lynch is sold to Bank of America.



16 September 2008

AIG receives US$85 billion emergency bailout funds from the U.S. Government and the Federal Reserve.



19 September 2008

The US Treasury announces a temporary guarantee program for US money market funds.



26 September 2008

Statistics New Zealand figures show GDP decreased by 0.2 percent in the June 2008 quarter, lowering annual growth in GDP down to 2.6 percent for the year to March 2008. New Zealand is now in technical recession following two consecutive quarters of contraction.



7 October 2008

The Reserve Bank announces that Southland Building Society has been registered as a bank in New Zealand, taking the total count of registered banks in New Zealand to 18.



9 October 2008

The Reserve Bank announces further liquidity enhancements in a broadening of the securities eligible for its liquidity facilities.



12 October 2008

Minister of Finance Michael Cullen announces the introduction of an opt-in retail deposit guarantee scheme and gives assurance to New Zealanders that their deposits are safe and the New Zealand banking system sound.



21 October 2008

Statistics New Zealand figures show the CPI rose 1.5 percent in the September 2008 quarter, bringing CPI inflation for the year to September 2008 to 5.1 percent, the largest annual increase since 1990.


As from this date the CPI has been reweighted using the 2006/2007 Household Economic Survey and other information. The reweighted CPI results in housing and household utilities, food and petrol growing in relative importance. Groups that have shown a decline in relative importance include transport costs. The CPI was last reweighted in 2006.

23 October 2008

The Reserve Bank reduces the OCR by 100 basis points, from 7.5 percent to 6.5 percent. The Reserve Bank notes the rapidly deteriorating outlook for global growth and heightened turbulence in the financial market. Key commodity prices are falling, reducing inflationary pressures.



24 October 2008

Iceland receives a US$2.1 billion loan from the IMF after the country's financial system collapses amid the global credit crisis. The loan is the first to a Western nation by IMF since 1976.



29 October 2008

The United States Federal Reserve and the Reserve Bank of New Zealand announce the establishment of a temporary reciprocal currency arrangement (swap line). This is a move already taken by many central banks and the US Federal Reserve. The swap line arrangement has been authorised through to 30th April 2009.



1 November 2008

The Minister of Finance announces that the Crown will offer a wholesale funding guarantee facility, citing that "the primary goal of the facility is to support the re-entry of New Zealand banks to regular foreign markets, on a scale commensurate with our economy's overall financing needs".



7 November 2008

The Reserve Bank announces two new facilities intended to support banking system liquidity, the Term Auction Facility (TAF) and Reserve Bank bill tenders.



8 November 2008

The National Party wins the party vote in the 2008 New Zealand general elections. Leader John Key is to be sworn in as Prime Minister on the 19th of November.



12 November 2008

The Reserve Bank releases its November Financial Stability Report. The Reserve Bank reiterates the soundness of New Zealand's financial system, but acknowledges the higher cost and lower accessibility of offshore funding that the country is heavily reliant on.



21 November 2008

Crude oil closes below US$50 per barrel, the first time in two years and a steep fall from the all time peak in July.



24 November 2008

The US Government allocates a record US$300 billion for the Citibank rescue package.

25th November 2008

The US Federal Reserve announces the first round of what becomes commonly known as "Quantitative Easing", purchasing certain types of securities with the aims of reducing the cost and increasing the availability of credit and improving financial market conditions more broadly.  The programme is subsequently expanded, and purchases ultimately finish in the first quarter of 2010 after purchases of $1.25 trillion of "agency" mortgage-backed securities and about $175 billion of "agency" debt.



4 December 2008

The Reserve Bank reduces the OCR by 150 basis points, from 6.5 percent to 5 percent, the largest cut in the OCR since it was implemented. The Reserve Bank notes the ongoing turbulence in financial markets and marked deterioration in outlook for global growth. Monetary policy is now in an expansionary position.



9 December 2008

Hanover investors are asked to approve a moratorium.

10 December 2008

Governor Alan Bollard delivers a speech to the Wellington Chamber of Commerce titled: ‘Everyone needs to play their part: Inflation and recession in the New Zealand economy.'



12 December 2008

The Reserve Bank announces further liquidity measures to support New Zealand's financial system, extending the range of securities eligible for acceptance in the Reserve Bank's domestic liquidity operations.

16 December 2008

The US Federal Open market Committee (FOMC) decides to establish a target range for the federal funds rate of 0 to 1/4 percent and states that it anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

17 December 2008

Crude oil prices fall below the 40 dollar mark, at US$39.88.



22 December 2008

The current account deficit rises to 8.6 percent of GDP.



23 December 2008

Statistics New Zealand figures show GDP fell by 0.4 percent in the September 2008 quarter, lowering annual growth in GDP to 1.7 percent for the year to September 2008.



2007




17 January 2007

Statistics New Zealand figures show that the Consumer's Price Index (CPI) fell by 0.2% in the December 2006 quarter. This brings inflation for the year to December 2006 to 2.6%.



25 January 2007

The Reserve Bank leaves the Official Cash Rate OCR unchanged at 7.25% at its interim review. The Bank notes that in the near-term the inflation outlook is relatively benign as a result of lower oil prices and a strengthening exchange rate. In the medium-term upside risks to inflation remain due to uncertainty relating to domestic demand, the housing market and fiscal policy. In the absence of clear indications of slowing demand, further policy tightening is possible.



8 March 2007

The Reserve Bank raises the OCR by 25 basis points to 7.5% when releasing its Monetary Policy Statement. The Bank notes clear evidence of a pick-up in economic activity at the end of 2006 and in early 2007 with a resurgence in the housing market, an expansionary fiscal policy, net immigration, recovery in business confidence, continued expansion of mortgage credit, growth in household incomes and increasing dairy prices. While the OCR is the primary instrument of monetary policy, the Bank will work with relevant Government agencies to assess alternative measures that may support the OCR.



29 March 2007

Statistics New Zealand figures indicate a current account deficit for the year ended December 2006 of 9.0% of GDP.



30 March 2007

Statistics New Zealand figures indicate an increase in GDP of 0.8% for the December 2006 quarter. This brings annual growth to 1.5% for the year to December 2006.



1 April 2007

Statutory minimum annual leave increases from three to four weeks. Minimum wage increases from $10.25 to $11.25 an hour.



18 April 2007

Statistics New Zealand figures show the CPI rose 0.5% in the March 2007 quarter, bringing CPI inflation to 2.5% for the year to March 2007.



26 April 2007

The Reserve Bank raises the OCR by 25 basis points to 7.75% at its interim review. The Bank notes continued expansion in domestic demand, which is fuelled by a buoyant housing market, increases in government expenditure, a rising terms of trade, ongoing net immigration, and a robust labour market. The Bank states that the exchange rate is at a level which is exceptional by historical standards and unjustified based on medium-term fundamentals.



9 May 2007

The Reserve Bank releases its first Financial Stability Report for 2007. The report notes that while the financial system has continued to be stable, the economic imbalances that have risen from the ongoing housing boom, and the large savings deficit in the household sector funded by international borrowing, pose risks to the system. Further, the systemic risks associated with the rapid growth in the aggregate lending by banks are also highlighted.



17 May 2007

The Minister of Finance, Dr. Michael Cullen, releases the 2007 Budget. Key features include:

Further investment, especially in education, health, research and development, justice, and police.

Enhancement of the KiwiSaver scheme including tax credits for member contributions to a maximum of $20 per week, and compulsory employer subsidy payments.

Business tax reform including a reduction in the company tax rate from 33% to 30% with effect from 2008-09.

The OBERAC (Operating Balance Excluding Revaluations and Accounting Changes) excluding returns on the New Zealand Superannuation Fund is forecast to be at a surplus of around 3.1% of GDP over 2007, 2008 and 2009. The OBERAC in 2005/06 turned out at 5.5% of GDP.



29 May 2007

Alan Bollard is reappointed as Reserve Bank Governor for a five-year term expiring in 2012. The Finance Minister Michael Cullen and Dr. Bollard sign an unchanged Policy Target Agreement (PTA).



7 June 2007

The Reserve Bank raises the OCR by 25 basis points to 8% when it releases its Monetary Policy Statement. The Reserve Bank notes continued strength in domestic demand. Though there are indications that growth may be beginning to soften, the risks to inflation are on the upside. The marked increase in dairy prices is noted as a significant development in the past six months and the exchange rate is highlighted to be at a level that is unjustified based on fundamentals.



11 June 2007

The Reserve Bank confirms that it intervened in the foreign exchange market to sell New Zealand dollars due to the unjustifiable strength of the exchange rate based on medium-term economic fundamentals.



19 June 2007

The Ministers of Finance and Commerce announce that the Reserve Bank of New Zealand will be the single prudential regulator for banks, non-bank deposit takers (NBDTs) and insurers. Legislation to this effect is expected to be passed in 2008.

The Reserve Bank publishes its submission to the Commerce Select Committee on the inquiry into housing affordability in New Zealand.



28 June 2007

Statistics New Zealand figures indicate a current account deficit of 8.5% of GDP for the year ended March 2007.



29 June 2007

Statistics New Zealand figures show an increase in GDP of 1.0% in the March 2007 quarter, bringing annual growth to 1.7% for the year to March 2007.



1 July 2007

KiwiSaver comes into effect.



2 July 2007

Bridgecorp Limited and its subsidiaries are put into receivership.



3 July 2007

The Reserve Bank releases its Statement of Intent (SOI) for 2007-2010. The Bank notes that the outcomes of the economic environment have surprised forecasters and markets. The Bank intends continued investment in upgrading forecasting and policy tools, improving the understanding of household balance sheets, and improving the quality of statistics. The Bank is also strengthening its analysis of risk in the financial sector.



13 July 2007

The Reserve Bank announces changes to its financing and management of New Zealand's foreign currency reserves. In a move away from foreign currency assets being fully backed by foreign currency liabilities, in the future a portion of foreign reserves will be held on an unhedged or ‘open' position.



16 July 2007

Statistics New Zealand figures show the CPI rose 1.0% in the June 2007 quarter. Annual CPI inflation for the year to June 2007 was 2.0%.



24 July 2007

The New Zealand dollar reaches a post-float high of 0.8110 USD.



26 July 2007

The Reserve Bank raises the OCR by 25 basis points to 8.25% at its interim review. The Bank states that the economy is running strongly and has sustained inflationary pressures. The Bank warns investors that the high dollar is not sustainable in the medium term.



27 July 2007

The Reserve Bank releases its submission to the Finance and Expenditure Select Committee's Inquiry into the Future Monetary Policy Framework.



30 July 2007

The Reserve Bank releases a separate submission made by the Bank's Board of Directors to the Finance and Expenditure Committee's Inquiry into the Future Monetary Policy Framework.



16 August 2007

The Reserve Bank announces that it is closely following developments in the financial markets domestically and offshore, given disruptions in global credit markets. It notes that the level of cash in the domestic system is adequate and that markets continue to function satisfactorily. The Bank states that it will provide additional liquidity to the market if required.



21 August 2007

Nathan's Finance NZ Ltd. is put into receivership.



23 August 2007

The Reserve Bank announces that it will accept NZ bank bills in its overnight reverse repurchase facility, to ease liquidity conditions.

The Reserve Bank also announces the introduction of the Exchange Settlement Account tiering regime which was previously due to be introduced from 3 September 2007.



29 August 2007

Property Finance Securities Ltd. is put into receivership.



30 August 2007

Five Star Consumer Finance Ltd. is put into receivership.



4 September 2007

LDC Finance Ltd. is placed in receivership.



5 September 2007

Finance and Investments, a partnership which has links to LDC Finance, is placed in receivership.



12 September 2007

Finance Minister Michael Cullen announces the minimum prudential requirements framework for the registration of all non-bank deposit takers (NBDTs) including finance companies, building societies and credit unions.



13 September 2007

The Reserve Bank leaves the OCR unchanged at 8.25% at the release of its Monetary Policy Statement. The Bank notes increased uncertainty in the outlook for economic activity and inflation due to turbulence in the global financial markets.



20 September 2007

Statistics New Zealand releases Balance of Payments data for the June 2007 quarter. Reserve Bank calculations indicate a current account deficit of 8.2% of GDP for the year ended June 2007.

The Government announces that an emissions trading scheme is to be phased in from 2008, beginning with the forestry industry, and including all sectors over time.



28 September 2007

Statistics New Zealand figures show an increase in GDP of 0.7% for the June 2007 quarter. Annual growth in GDP was 2.2% for the year to June 2007.



1 October 2007

The Reserve Bank announces that JPMorgan Chase Bank NA has been registered as a bank in New Zealand, taking the count of registered banks in New Zealand up to 17.



4 October 2007

Clegg and Co Finance Ltd. is put into receivership.



15 October 2007

Statistics New Zealand figures show the CPI rose 0.5% in the September 2007 quarter, bringing CPI inflation for the year to September 2007 to 1.8%.



25 October 2007

The Reserve Bank leaves the OCR unchanged at 8.25% at its interim review. The Bank states that while inflationary pressures persist, there are signs of a moderating housing market. Upside risks to inflation identified include the direct effects of the emissions trading scheme and rising food prices. Downside risks to key trading partner's economies from the continued turbulence in global financial markets are noted.



7 November 2007

The Reserve Bank releases its second Financial Stability Report for the year. The Bank states that while the New Zealand financial system is resilient against global market volatility, New Zealand, given its large external debt, is heavily reliant on foreign capital markets which may not be as secure or liquid as previously believed.



21 November 2007

Crude oil prices trade at US $99.29, the highest level in real terms since 1980.



29 November 2007

Capital and Merchant Investment Ltd. is placed in receivership.



4 December 2007

The Climate Change (Emissions Trading and Renewable Preference) Bill is introduced to parliament.



6 December 2007

The Reserve Bank leaves the OCR unchanged at 8.25% at the release of its Monetary Policy Statement. The Bank notes that inflationary pressures have increased due to higher than anticipated oil prices, rapidly rising food prices and the likelihood of tax cuts. It also notes that global financial markets pose significant downside risk to trading partner economies.



17 December 2007

Finance Minister Michael Cullen announces a new prudential regulatory framework for all insurance providers to be licensed by the Reserve Bank.



10 December 2007

The Reserve Bank of New Zealand announces that four banks have been accredited to adopt the internal models approach under the Basel II banking capital adequacy regime.

Numeria Finance Ltd. is put into receivership.



20 December 2007

Statistics New Zealand figures show a current account deficit of 8.3% of GDP in the year to September 2007.



21 December 2007

Statistics New Zealand figures show that GDP increased 0.5% for the September 2007 quarter, bringing annual growth in GDP to 2.7% for the year to September 2007.

2006


18 January 2006

The Reserve Bank issues its finalised policy on the requirements which will apply to large New Zealand banks that have entered into outsourcing arrangements. The final policy follows consideration of comments on a draft policy issued in October 2005. The policy focuses on ensuring that the boards of large New Zealand banks maintain the legal and practical ability to control outsourced functions so that they can continue to provide critical services in a crisis situation. The policy also requires the boards to exercise meaningful control and oversight over the bank's chief executive and staff.

Statistics New Zealand figures show that the CPI rose 0.7 percent in the December 2005 quarter. This brings inflation for the year to

December 2005 to 3.2 percent.


26 January 2006

The Reserve Bank leaves the OCR unchanged at 7.25 per cent at its interim review. The Bank notes that there is no firm evidence of a slowing in domestic demand as employment, wage growth and house prices have remained strong. Though resource constraints are easing, inflation expectations remain high and the Bank states that an early decline in interest rates would reignite inflationary pressures.



31 January 2006

The Reserve Bank temporarily raises the Settlement Cash Level from $20 million to $500 million for value date 2 February. This move reflects concern over increasing liquidity pressures, which are expected to be exacerbated by the upcoming New Zealand Government bond maturity on 15 February.



9 February 2006

The New Zealand Companies Office signs a Memorandum of Understanding with the Australian Securities and Investment Commission reflecting an intention to work toward the alignment of processes and practices that will simplify the obligations of trans-Tasman companies.



10 February 2006

The Reserve Bank temporarily raises the Settlement Cash Level from $500 million to $2,000 million, for value date 13 February.



20 February 2006

The Reserve Bank announces that 31 July 2006 will be the date for the introduction of New Zealand's new, smaller and lighter 50, 20 and 10 cent coins. There will be a three month transition period from 31 July to 31 October during which all coins may be used. From 1 November the old coins will no longer be legal tender.



22 February 2006

Commerce Minister, Leanne Dalziel signs a revised memorandum of understanding with the Australian Treasurer affirming a commitment to the coordination of trans-Tasman business law and to reduce impediments to trans-Tasman commerce.



28 February 2006

The Government introduces the KiwiSaver Bill to parliament.



9 March 2006

The Reserve Bank leaves the OCR unchanged at 7.25 per cent when releasing its Monetary Policy Statement. The Bank notes that while economic growth is slowing and there is some cooling in household spending, productive capacity is stretched and the labour market remains tight. The Bank notes that it does not expect to be able to reduce the OCR during the current year.



17 March 2006

The Reserve Bank issues a consultation document and calls for submissions on proposed changes to the Bank's liquidity management system (Exchange Settlement Account System.) The review addresses issues of insufficient liquidity and inefficient injection of liquidity into the banking system. Closing date for submissions on the options presented is 20 April 2006.



22 March 2006

Parliament passes the Taxation (Depreciation, Payment dates alignment, FBT, and Miscellaneous Provisions) Bill, issuing in a set of comprehensive business tax cuts at a fiscal cost of $1.1 billion over 4 years



24 March 2006

Statistics New Zealand figures indicate a decline in GDP of 0.1 percent for the December 2005 quarter. This brings annual growth to 2.2 percent for the year to December 2005.



6 April 2006

The Reserve Bank and the Treasury release a joint report on possible additional instruments to supplement the role of interest rates in managing demand pressures and inflation. Prompted by the persistence of domestic demand and house price pressures, the report considers structural and cyclical policies and instruments in addition to the interest rate that could be used to manage specific demand or inflationary pressures. The report notes that there are no readily implemented options without significant complications or costs and further work is warranted in some areas.



19 April 2006

Statistics New Zealand figures show the CPI rose 0.6 per cent in the March 2006 quarter, bringing CPI inflation for the year to March 2006 to 3.3 per cent.



27 April 2006

The Reserve Bank leaves the OCR unchanged at 7.25 per cent at its interim review. The Bank notes that while the economy has weakened faster than expected, short-term inflation pressures have intensified, due to a fall in the New Zealand dollar exchange rate and the ongoing effects of the world oil price shock. The Bank reiterates that it sees no scope for a cut in the OCR during the current year.



9 May 2006

The Reserve Bank releases its first Financial Stability Report for 2006. The report notes that household indebtedness has reached an all time high creating some additional vulnerability in the face of a slowing economy. A sharp but orderly depreciation of the New Zealand Dollar has significantly reduced risks to the financial system. Overall banks are profitable and well capitalised and the financial system overall remains well placed to weather the slowdown of the economy



11 May 2006

Statistics New Zealand Household Labour Force Survey figures reveal an unemployment level of 3.9 per cent for the March 2006 quarter.



18 May 2006

The Minister of Finance, Dr. Michael Cullen, releases the 2006 budget. Key Features include:

Additional spending especially in health, education, research, science and technology, defence and transport infrastructure.

Further tax relief for families through the expansion of the Working for Families package.

The implementation of interest free student loans from 1 April 2006.

The OBERAC (Operating Balance Excluding Revaluations and Accounting Changes) is projected to be a surplus of $7.0 billion for 2006/2007, following an actual surplus of $8.9 billion for the 2005/2006 year.



26 May 2006

The Reserve Bank hosts the EMEAP (Executives' Meeting of East Asia and Pacific Central Banks) Governors, furthering moves to strengthen financial market regulation and operation, and regional cooperation in central banking.



8 June 2006

The Reserve Bank leaves the OCR unchanged at 7.25 per cent when it releases its Monetary Policy Statement. The Bank notes that weaker economic activity has reduced medium term inflationary pressures. However headline CPI inflation is expected to remain above 3 per cent into 2007 due to the effects of further petrol price increases and higher import prices. The Bank continues to see no scope for an easing of the OCR.



23 June 2006

Statistics New Zealand figures show an increase in GDP of 0.7 per cent in the March 2006 quarter, bringing annual growth in GDP to 2.2 per cent for the year to March 2006.



29 June 2006

The New Zealand Dollar exchange rate hits a 25 month low of US59.51 cents, while the TWI slips to a three year low of 60.5.



30 June 2006

The Reserve Bank releases the details of the liquidity management regime adopted following proposals publicised in March 2006. The new regime involves the removal of the Bank's autorepo facility and the use of bank paper, government bonds and corporate securities as security in liquidity operations, in return for cash injections into the system as is consistent with revealed demand. The Settlement Cash Level will be gradually increased until a target can be established at a steady state level.



17 July 2006

Statistics New Zealand figures indicate the CPI rose 1.5 per cent in the June 2006 quarter. Annual CPI inflation for the year to June 2006 was 4 per cent.



25 July 2006

The Government releases a Business Tax Review discussion document containing proposals for reductions of the corporate tax rate and compliance costs, changes to the tax base, and the introduction of targeted tax credits. Submissions close on 8 September 2006. The review seeks to deliver the new business tax package by April 2008.



27 July 2006

The Reserve Bank leaves the OCR unchanged at 7.25 per cent at its interim review. The Bank notes short term inflationary pressures arising from stronger than anticipated business activity and consumer demand and the continued upward trend in oil prices. While a rebalancing of economic activity from domestic demand toward exports and import substitution is expected to continue, second round wage and price effects remain a risk. The Bank states that it will be some time before an easing in the OCR can be considered.



31 July 2006

The Reserve Bank releases the new metal plated 50, 20 and 10 cent coins into circulation and begins the phasing out of the 5 cent piece. A three month transitional period will continue until 31 October 2006 during which the existing coins can be used.

Petrol prices at the pump hit a record high of 176.9 cents per litre (91 unleaded). A high in real petrol prices (inflation adjusted) was reached in the June 2006 quarter.



2 August 2006

Dubai oil prices reach a record high of US$72.49 per barrel.



10 August 2006

Statistics New Zealand figures indicate an unemployment rate of 3.6 per cent for the June 2006 quarter.



30 August 2006

The KiwiSaver Bill passes into law. Key changes to the draft bill have included the extension of opt out terms, amendment of employer exemption criteria and the allowance of employer contributions to count toward the minimum contribution of 4 per cent. The implementation date for the scheme is 1 July 2007.



6 September 2006

The Reserve Bank officially opens the Reserve Bank Museum and Education Centre. The museum focuses on the New Zealand Economy, the role of central banking and the production of currency.



14 September 2006

The Reserve Bank leaves the OCR unchanged at 7.25 per cent at the release of its Monetary Policy Statement. Resource pressures and economic activity have been easing more slowly than expected despite clear evidence of rebalancing in the economy. The Bank notes that significant inflationary pressures are being generated from higher oil prices and the depreciation of the exchange rate.



28 September 2006

Statistics New Zealand figures indicate an increase in total foreign investment in New Zealand of $19.5 billion (9 per cent) in the year ended March 2006, while New Zealand investment abroad increased by $10.7 billion (11.4 per cent). Australia remains the most important investment partner accounting for 23.9 per cent of all New Zealand investment abroad and 29.3 percent of foreign investment in New Zealand.



29 September 2006

Statistics New Zealand figures indicate an increase in GDP of 0.5 per cent for the June 2006 quarter. Annual growth in GDP was 1.9 per cent for the year to June 2006



13 October 2006

The Securities Legislation Bill is passed into law amending the Securities Act 1978, the Securities Markets Act 1988, the Takeovers Act 1993 and the Takeovers Code. Changes include prohibitions against market manipulation, amendment of broker and advisor disclosure law, and a new insider trading regime.



25 October 2006

Statistics New Zealand figures show the CPI rose 0.7 per cent in the September 2006 quarter, bringing CPI inflation for the year to September 2006 to 3.5 per cent. As from this release, the CPI has been reweighted using the 2003/04 Household Economic Survey and other information. The reweighted CPI results in a higher weight on petrol prices and rents and a lower weight on the purchase and construction cost of new dwellings than under the previous regimen. The CPI was last reweighted in 2002.



26 October 2006

The Reserve Bank holds the OCR unchanged at 7.25 per cent. The Bank notes an improvement in the short term inflation outlook due to a fall in the price of oil. However, medium term pressures remain significant with a resilient housing market and an expected increase in consumer demand resulting from declining petrol prices and a strong labour market.



30 October 2006

The Reserve Bank of New Zealand Amendment Act 2006 is passed into law. The Act amends part of the existing act passed in 1989 and is being matched by equivalent legislation in Australia. The legislation provides greater assurance of cooperation between New Zealand and Australian prudential regulators by imposing obligations to consult each other on proposed policy action and to avoid actions that may have a detrimental effect on financial stability without unduly constraining the actions of the regulators.



1 November 2006

The Reserve Bank registers Westpac New Zealand Limited as a New Zealand Subsidiary of Westpac Banking Corporation. This completes the local incorporation of all systemically important banks operating in New Zealand in line with the Reserve Bank's local incorporation policy.

The Government business tax review releases three issues papers exploring the tax credit options of the proposed tax reform. Proposals focus on the encouragement of research and development, export market development, and skills training. Submissions close on 1 December 2006.



9 November 2006

Statistics New Zealand figures show an unemployment rate of 3.8 per cent for the September 2006 quarter, a slight increase.



15 November 2006

The Reserve Bank releases its second Financial Stability Report for the year. The report notes that banks are competing aggressively with decreased margins and higher risk lending and thus remain vulnerable to any increased strain on households' ability to service debts.

Standard and Poor's affirms New Zealand sovereign ratings of AA+/A-1+ for foreign currency and AAA/A-1+ for local currency.



16 November 2006

Statistics New Zealand releases its national accounts statistics for the year ended March 2006. Figures show a significant fall in the level of national savings to $2.3 billion, its lowest level since the March 2000 year. Net borrowing from the rest of the world increased to 9.8 per cent of GDP, the trade balance deteriorated to a $4.2 billion deficit and the current account deficit increased to $14.9 billion or 9.6 per cent of GDP. GDP increased by 5 percent.



7 December 2006

The Reserve Bank holds the OCR unchanged at 7.25 per cent at the release of its Monetary Policy Statement. The Bank notes an improvement in the near term inflation outlook. However, household spending has remained resilient, the labour market has remained firm and there is new momentum in the housing market. The Bank states further tightening cannot be ruled out and this is particularly dependent upon trends in housing and domestic demand indicators.



15 December 2006

The trans-Tasman provisions in the Reserve Bank of New Zealand Amendment Act come into force



20 December 2006

Statistics New Zealand figures indicate a current account deficit of 9.1 percent of Gross Domestic Product in the year to September 2006.



21 December 2006

Statistics New Zealand figures show that GDP increased 0.3 percent in the September 2006 quarter. Annual growth in GDP for the year to September 2006 is 1.4 percent.

2005




19 January 2005

Statistics New Zealand figures show that the CPI rose 0.9 per cent in the December 2004 quarter, bringing CPI inflation for the year to December 2004 to 2.7 per cent.



27 January 2005

The Reserve Bank decides to keep the OCR unchanged at 6.5 per cent. The Bank notes inflation is expected to remain in the upper part of the 1–3 per cent band, with strong domestic demand and rising wage and salary pressures being partly offset by weakness in the export sector.



4 February 2005

Public submissions close on the Reserve Bank's proposal to modernise New Zealand's ‘silver' coins. Consultancy firm AC Nielsen begins analysis of public feedback.



10 March 2005

The Reserve Bank increases the OCR 25 basis points to 6.75 per cent when releasing its Monetary Policy Statement. The inflationary pressures associated with continued employment growth and high consumer and business confidence are cited as reasons for the tightening of policy. The Bank notes that the economy is close to a turning point and slower growth is expected later in 2005.



18 March 2005

A letter is sent to all New Zealand banks regarding proposed consultation about the implementation of the new Basel II capital framework. The new rules aim to increase the banks' solvency.



20 March 2005

The New Zealand dollar buys US$.7465, a 23 year high.



24 March 2005

Statistics New Zealand's GDP figures show an increase in economic activity of 0.4 per cent for the December 2004 quarter. Annual growth in GDP was 4.8 per cent for the year to December 2004.



31 March 2005

The Reserve Bank confirms changes to the currency. Fifty, twenty and ten cent coins will be smaller in the future and made of lower cost steel-plate. The five cent coin will be removed from circulation.



11 April 2005

Statistics New Zealand figures show the CPI rose 0.4 per cent in the March 2005 quarter, bringing CPI inflation for the year to March 2005 to 2.8 per cent.



28 April 2005

The Reserve Bank keeps the OCR unchanged at 6.75 per cent. The Bank notes that overall household demand is very strong, especially in the housing sector. The labour market shows little sign of softening. There are some signs the economy is slowing in some sectors but further tightening of policy cannot be ruled out in the near future, given strong inflation pressures



4 May 2005

Minister for the Environment Pete Hodgson announces details of the proposed Kyoto Protocol based carbon tax. It will commence in April 2007, and be set at $15 per tonne of carbon dioxide. This will apply to 2012.



13 May 2005

Commerce Minister Pete Hodgson announces proposed changes to legislation governing friendly societies and credit unions, included in a general review of non-bank financial products.



17 May 2005

The Reserve Bank releases its first Financial Stability Report for the year. It notes that, despite an increase in risks faced by households and some businesses, the financial system is in a good position to weather a possible downturn in the economy.



19 May 2005

The Minister of Finance, Dr. Michael Cullen, releases the 2005 Budget. Key features include:

Additional spending especially in health, education, defence, police and social welfare (via an increase in the Working for Families package).

the creation of KiwiSaver, a new work based savings scheme.

changes to tax, including cuts to encourage savings and investment and to assist small business;

a carbon charge in line with Kyoto Protocol obligations; and

the OBERAC (Operating Balance Excluding Revaluations and Accounting Changes) is projected to be a surplus of $7.4 billion for 2005/2006.



9 June 2005

The Reserve Bank decides to keep the OCR unchanged at 6.75 per cent when it releases its Monetary Policy Statement. It notes that the balance of inflation risks is on the upside with continued strength in the household spending and housing markets. However, the effect of past monetary policy tightening has not yet been fully realised and a number of indicators point to a slowing economy.



16 June 2005

The Finance Minister, Dr. Michael Cullen, announces changes to tax laws. Changes include:

foreign owned banks having to pay sufficient tax on income earned in New Zealand;

making it easier for businesses to claim tax deductions on environmental expenditure; and

the income of banks cannot be sheltered by interest deductions arising from excessive debt.



24 June 2005

Statistics New Zealand figures show GDP increased 0.6 per cent over the March 2005 quarter. Annual growth in GDP was 4.2 per cent for the year to March 2005.



14 July 2005

Statistics New Zealand figures show the CPI rose 0.9 per cent in the June 2005 quarter, bringing CPI inflation for the year to June 2005 to 2.8 per cent.



28 July 2005

The Reserve Bank keeps the OCR unchanged at 6.75 per cent at its interim review. It notes a weaker exporting sector influenced by the high New Zealand dollar, and the subsequent softening of GDP growth, as partly offsetting the inflationary effects of the strong housing market. The Bank does not rule out increasing the OCR in the future if short-term pressures from rising oil prices start to affect medium-term inflation expectations.



30 August 2005

The price of Brent crude oil hits a record high of US$70.58 a barrel following Hurricane Katrina. The storm hits the southern coast of the United States causing loss of life, widespread destruction to oil drilling and refining facilities, and flooding to the city of New Orleans and surrounding areas.



31 August 2005

Following a tender process, the Royal Canadian Mint is chosen to manufacture the new range of New Zealand coins.



15 September 2005

The Reserve Bank leaves the OCR unchanged at 6.75 per cent when it releases its Monetary Policy Statement. With the housing market still strong, consumer spending continues to rise despite high oil prices. Inflationary pressures remain strong, although there is now growing evidence of a slowdown in sectors such as tourism and manufacturing.



18 September 2005

The Reserve Bank leaves the OCR unchanged at 6.75 per cent when it releases its Monetary Policy Statement. With the housing market still strong, consumer spending continues to rise despite high oil prices. Inflationary pressures remain strong, although there is now growing evidence of a slowdown in sectors such as tourism and manufacturing.



18 September 2005

The General Election results in Labour winning 50 seats, National 48, New Zealand First seven, the Greens six, the Maori Party four, United Future three, Act two, and the Progressives one.



28 September 2005

Statistics New Zealand figures show total foreign investment in New Zealand at 31 March 2005 was $224.1 billion, up $21.9 billion (10.8 per cent), from a year earlier. Of this increase, increased investment by Australian investors accounted for $6.7 billion. The value of New Zealand's investment abroad was $98.0 billion.



29 September 2005

Statistics New Zealand figures show GDP increased 1.1 per cent over the June 2005 quarter. Annual growth in GDP was 3.1 per cent for the year to June 2005.



4 October 2005

The NZSX-50 Sharemarket index reaches a record high of 3470.74.



14 October 2005

Reserve Bank Governor, Dr. Alan Bollard, voices concerns about perceived "imbalances" in New Zealand's economy including the current account deficit (now at 8 per cent of GDP), and steady growth in the household debt to income ratio.



17 October 2005

Statistics New Zealand figures show the CPI rose 1.1 per cent in the September 2005 quarter, bringing CPI inflation for the year to September 2005 to 3.4 per cent.



18 October 2005

Prime Minister Helen Clark announces details of the new Labour-led Government. It consists of a Labour-Progressives coalition with confidence and supply agreements with New Zealand First and United Future. Progressives leader Jim Anderton will have a post in cabinet, with New Zealand First's Winston Peters and United Future's Peter Dunne both being Ministers outside Cabinet.



27 October 2005

The Reserve Bank increases the OCR 25 basis points to 7.00 per cent at its interim review. The Bank notes its concerns about high oil prices, a housing market that shows little sign of weakening, and the expansionary fiscal policy of the new government.



10 November 2005

Statistics New Zealand figures show that the employment rate, as measured by the Household Labour Force Survey, reached the lowest level in the survey's 19 year history at a figure of 3.4 per cent in the September quarter. This represents the lowest rate among the OECD group of countries.



11 November 2005

The Reserve Bank announces a joint project with The Treasury and Inland Revenue Department that will explore whether ancillary instruments could be deployed to complement monetary policy in the task of managing inflation pressures. The Bank notes that the project has been prompted by the strength and persistence of domestic demand, the scale of the accompanying external imbalances, and the key role being played by the current house price cycle. The Bank notes that such tools, if they exist, may enable less reliance to be placed on the Official Cash Rate, thereby reducing some of the pressure on the exchange rate.



17 November 2005

The APEC ministerial meeting concludes in Busan, South Korea. Member nations agree to continue to support the Doha Round of global trade talks despite the current deadlock at the World Trade Organisation.



18 November 2005

The Reserve Bank releases its second Financial Stability Report for the year. Overall the financial sector is still well placed to weather a slowdown in the economy. The risks to the market continue to grow, however, as the combination of rising household debt and a large current account deficit increases the chance of a hard-landing from a fall in the New Zealand dollar.



8 December 2005

The Reserve Bank increases the OCR 25 basis points to 7.25 per cent when releasing its Monetary Policy Statement. It highlights that consumer demand and household spending remains strong, despite previous interest rate rises. These inflationary pressures are being driven by a housing market that still shows limited signs of cooling.



19 December 2005

The World Trade Organisation, meeting in Hong Kong, agrees to end farm export subsidies by 2013.



21 December 2005

It is announced that Cabinet has agreed in principle that the Reserve Bank should be the sole prudential regulator of the financial sector. This announcement follows a review of financial products and providers undertaken by the Ministry for Economic Development.

Labour Minister Ruth Dyson announces the adult minimum wage is to increase from $9.50 to $10.25 an hour from 27 March 2006.

The Government announces it has scrapped plans to introduce a carbon tax in April 2006 and will instead look at alternative methods of meeting commitments to cut greenhouse gas emissions.



22 December 2005

Statistics New Zealand figures show that GDP increased 0.2 per cent for the September 2005 quarter. Annual growth in GDP was 2.3 per cent for the year to September 2005.

The current account deficit reaches 8.5 per cent of Gross Domestic Product, the highest since 1986.

2004




20 January 2004

The CPI increases by 0.7 in the December quarter, bringing CPI inflation for the year to December 2003 to 1.6 per cent.



29 January 2004

The Reserve Bank increases the OCR by 25 basis points to 5.25 per cent at its intra-quarter review.



11 March 2004

The Reserve Bank releases its March Monetary Policy Statement and leaves the OCR unchanged at 5.25 percent. The Statement notes that the latest activity indicators remain quite robust and that bottlenecks in the economy could persist for some time, raising policy risks. The Bank says it is appropriate to wait and watch the data, to see whether a further small increase in interest rates will be required during 2004.

The Reserve Bank announces it has provided advice to the Minister of Finance recommending that, as one of its monetary policy implementation tools, it should have the capacity to intervene in the foreign exchange market to influence the level of the exchange rate. The Reserve Bank's stance to date has been to use its foreign exchange reserves to intervene only if the foreign exchange market became "disorderly".



26 March 2004

Production GDP figures show that the New Zealand economy grew by 0.6 per cent in the December quarter 2003, bringing growth for the year to December 2003 to 3.5 per cent.



29 March 2004

Meridian Energy cancels Project Aqua, its proposed hydro scheme on the Lower Waitaki River in North Otago. The decision was driven by a series of commercial uncertainties which made the risks of continued spending on the project unacceptable.



6 April 2004

The Government ratifies an amendment to the Reserve Bank's Funding Agreement to broaden its foreign exchange intervention capacity.



19 April 2004

Figures show the CPI increased by 0.4 in the March quarter, bringing CPI inflation for the year to March 2004 to 1.5 per cent.



29 April 2004

The Reserve Bank increases the OCR by 25 basis points to 5.50 per cent, noting that "moving interest rates to less stimulatory levels appears prudent to ensure inflation remains within the target range over the medium term".



1 May 2004

The European Union undergoes its biggest enlargement with 10 new countries, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia joining with a combined population of over 100 million people.



5 May 2004

The IMF publishes its Financial System Stability Assessment for New Zealand following an examination undertaken in October/November 2003. The main findings were that in New Zealand:

- There is a profitable and well functioning financial system.

- Banking regulation is based on disclosure and market discipline.

- Foreign ownership of major banks poses unique challenges to the Reserve Bank.

- Recent reforms have strengthened the securities regulatory framework, but further reform is needed to fully implement the International organization for governmental securities commissions (IOSCO) principles.



27 May 2004

The Budget 2004 is released by Finance Minister, Michael Cullen. Key features include:

- $2.4 billion of new spending for 2004/05 is announced, including a $1.1 billion Working for Families program.

- An appropriation for a capital injection to the Reserve Bank to provide capacity to weather short term financial losses that could arise under the Banks new foreign exchange intervention policy.

- The Operating Balance excluding revaluations and accounting changes (OBERAC) is estimated to be a surplus of $5,986 million for the 2003/04 fiscal year, higher than forecast in the December 2003 Economic and Fiscal Update.



10 June 2004

The Reserve Bank releases its June Monetary Policy Statement. The OCR was increased by 25 basis points to 5.75 percent. The Bank notes that the New Zealand economy has enjoyed strong growth over an extended period and that activity has continued to prove stronger than expected, with stretched productive resources causing inflation pressures to increase across a range of industries. The Bank states that further increases in interest rates look likely to be needed over the year ahead, but to a modest degree by historical standards.



25 June 2004

The Reserve Bank agrees to a merger between ANZ and the National Bank, to form a single bank known as ANZ National Bank Ltd.

Production GDP figures show that the New Zealand economy grew by 2.3 per cent in the March quarter of 2004, bringing growth for the year to March 2004 to 3.6 per cent.



15 July 2004

Statistics New Zealand figures show that the CPI increased by 0.8 in the June quarter, bringing CPI inflation for the year to June 2004 to 2.4 per cent.



29 July 2004

The Reserve Bank increases the OCR by 25 basis points to 5.75 per cent at the interim review in line with forecasts in the June Monetary Policy Statement.



11 August 2004

In a speech to the Trans-Tasman Business Circle in Sydney, Reserve Bank Governor, Alan Bollard, says that the Reserve Bank still needs to be vigilant in its banking supervision role even though most of the main banks in New Zealand are foreign owned.



17 August 2004

The Reserve Bank issues a ‘Statement of Intent', outlining the Banks plans for the 2004-07 periods. The document is a pilot for an accountability obligation that will be required of the Bank prior to each financial year from 2005 onwards.



9 September 2004

The Reserve Bank releases its September Monetary Policy Statement and increases the OCR by 25 basis points to 6.25 per cent noting that further tightening in monetary policy may be required given a strong economy and limited inflation headroom.



24 September 2004

Production GDP figures show that the New Zealand economy grew by 0.9 per cent in the June quarter of 2004, bringing growth for the year to March 2004 to 3.6 per cent.



12 October 2004

Oil prices reach record highs, with the West Texas Intermediate price rising to over US$54 a barrel.



15 October 2004

The CPI increased by 0.6 in the September quarter, bringing CPI inflation for the year to September 2004 to 2.5 per cent.



20 October 2004

The Reserve Bank issues its first Financial Stability Report, a document assessing and reporting on the soundness and efficiency of the New Zealand financial system. The Bank notes that it sees the New Zealand financial system as being stable and functioning effectively, and the banking system as being financially robust and resilient. However, in discussing the risks to this outlook it notes that financial instability often has its origins in periods of long economic expansion, such as New Zealand has enjoyed in recent years.



28 October 2004

The Reserve Bank increased the OCR from 6.25 to 6.50 per cent at its interim review noting that it believes monetary policy is now doing enough to ensure price stability as defined in the Reserve Bank's Policy Targets Agreement (PTA).



11 November 2004

The Reserve Bank announces proposals to modernise New Zealand's `silver' coloured coins and seeks feedback from the public with a final decision to be made in early 2005. The proposals are that the current 50, 20 and 10 cent coins be made smaller, and of lighter and lower-cost plated steel and that the 5 cent coin be taken out of circulation.

Statistics New Zealand's Household Labour Force survey shows that the unemployment rate in the September 2004 quarter fell to 3.8 per cent, the lowest level since 1985 and the second lowest in the OCED.



2 November 2004

The Reserve Bank publishes a proposed policy on outsourcing by large New Zealand banks. Under the proposal boards of directors would need to ensure their banks have the legal and operational ability to operate their bank as a stand-alone entity if necessary.

George W Bush is re-elected as president of the United States of America.



2 December 2004

New Zealand and Thailand conclude a Closer Economic Partnership (CER). The CER involves preferential liberalisation of trade in goods investment and the scope for cooperation in areas such as standards and conformance, competition policy, labour and environment issues and technology transfer.  



6 December 2004

The New Zealand Dollar reaches a 16 year high of 72.68 cents against the USD.

The Reserve Bank announces that as from 6 December, the New Zealand dollar has been included in an international system designed to eliminate risks associated with settling foreign exchange transactions across national boundaries. The system is known as `continuous linked settlement' (CLS) and addresses the risks that can arise after one party has transferred funds as its part of a deal and is waiting for the other side of the transaction to be completed. Under CLS, both legs of foreign exchange transactions can be settled simultaneously. This is done through a New York-based multi-currency bank called CLS Bank International (CLS Bank) which holds accounts for each settlement member and an account at each eligible currency's central bank, through which funds are received and paid.



9 December 2004

The Reserve Bank releases the December Monetary Policy Statement. The Bank leaves the OCR unchanged at 6.50 per cent, anticipating this will achieve inflation between 1 and 3 per cent on average over the medium term, with significant pipeline effects from past interest and exchange rate increases to work through and constrain the economy over the period ahead. The Bank notes that economic indicators have continued to surprise on the upside however a slowdown is still expected in 2005. Inflation is projected to rise close to 3 per cent before easing back later in 2006, with little headroom if stronger than expected pressures emerge a further policy tightening cannot be ruled out.



14 December 2004

The Government releases its December Economic and Fiscal Update. Forecasted GDP growth for the 2004/05 fiscal year is considerably revised upwards from the Budget 2004, it is now expected to be 4.0 per cent (up from 2.4 per cent).



15 December 2004

The Reserve Bank confirms that Westpac has decided to incorporate in New Zealand, meaning that all systemically important banks operating in New Zealand will be locally incorporated on the conclusion of this process. The Reserve Bank's local incorporation policy provides, among other things, a well-understood legal framework for the conduct of business in New Zealand and a local board to act in the best interests of the New Zealand bank. These features promote the maintenance of a sound and efficient financial system, and assist in the avoidance of significant damage to the financial system that could result from the failure of a registered bank.



16 December 2004

The Reserve Bank announces that it intends to invest USD 50 million in the newly created Executive Meeting of East Asian and Pacific central banks (EMEAP) Asian Bond Fund 2 (ABF2) as part of its foreign reserves. ABF2 will be a fund devoted to investing in bonds denominated in the home currencies of EMEAP countries and follows on from ABF1 launched in June 2003 which invested in USD denominated bonds of EMEAP nations.

2003




17 January 2003

Figures show that the CPI increased by 0.6 per cent in the December quarter, bringing CPI inflation for the year to December 2002 to 2.7 per cent.



23 January 2003

The Reserve Bank leave the OCR unchanged at 5.75 per cent at its intra-quarter review. The Bank notes that "strong domestic demand is expected to be offset by offshore developments, keeping inflation pressures in check."



3 February 2003

Leviathan Limited registers as a bank in New Zealand. The bank intends to change its name to St George Bank New Zealand Limited, and will operate using the trading name "Superbank".



3 March 2003

The NZSE40, the New Zealand Stock Exchange's main index, is replaced by the NZSE50.



6 March 2003

The Reserve Bank releases its March Monetary Policy Statement. The OCR is unchanged at 5.75 per cent. The Bank notes that the "stronger currency and the stronger domestic economy continue to pull inflationary pressures in opposite directions." CPI inflation is projected to fall over the next few quarters due to the impact of the strong New Zealand Dollar. However, the Bank notes that there is not yet enough certainty to cut the OCR.



20 March 2003

The United States leads the Coalition of the Willing, unsanctioned by the UN, in a pre-emptive invasion of Iraq to remove the regime of Saddam Hussein.



28 March 2003

Production GDP figures show that the New Zealand economy grew by 0.8 per cent in the December quarter of 2002, meaning growth of 3.5 per cent for the year to December 2002.



15 April 2003

Figures show that the CPI increased by 0.4 per cent in the March quarter, bringing CPI inflation for the year to March 2003 to 2.5 per cent.



24 April 2003

The Reserve Bank cuts the OCR by 25 basis points to 5.5 per cent Bank, noting that that the conditions set out in January for an interest rate cut have now been met. The New Zealand economy is slowing, as projected, due to a weak international economy and a strong dollar, meaning that inflationary pressure will ease.



Late April 2003

The SARS epidemic (Severe Acute Respiratory Syndrome) first recognised in March, reaches its peak, after spreading from Asia to the United States and Europe. Governments across the world attempt to confront a lethal virus with no confirmed cause and no known cure, which has a 15 per cent death rate.



15 May 2003

The Government releases its 2003 Budget. The key features include:

The relative strength of the Government's fiscal position allows a move to full funding of the New Zealand superannuation fund a year earlier than originally planned.

There is funding for the integration of Trade New Zealand and Industry New Zealand into New Zealand Trade and Enterprise.

The details of the fee maxima policy for tertiary education are released.

The operating surplus for the 2002/03 fiscal year is estimated to be $1,361 million.



5 June 2003

The Reserve Bank releases its June Monetary Policy Statement. The OCR is decreased by 25 basis points to 5.25 per cent. The Bank notes that it has become clear that growth is beginning to slow following a period of strength. The slowdown is mainly reflecting the rapid appreciation of the exchange rate over the past 18 months which has left the export sector exposed to the weak world economy. The cut is intended to help prevent an unnecessarily sharp downturn in the economy.



27 June 2003

Production GDP figures show the New Zealand economy grew by 0.6 per cent in the March quarter of 2003, bringing growth for the year to March 2003 to 4.3 per cent.



7 July 2003

The New Zealand Dollar rises to above 0.60 against the USD for the first time in over five years.



15 July 2003

Statistics New Zealand figures show that the CPI was unchanged in the June quarter, bringing CPI inflation for the year to June 2003 to 1.5 per cent.



24 July 2003

At the intra-quarter review the OCR is decreased by 25 basis points to 5.0 per cent by the Reserve Bank. The Bank notes that evidence suggests the continued slowing of growth in the export sector, with the exchange rate remaining volatile and likely to appreciate further. The risks to the economy from SARS, the climate and electricity shortages appear to have abated and the domestic economy is relatively robust. However inflationary pressure is easing in the tradables sector.



14 August 2003

The Reserve Bank of New Zealand Amendment Act passes changing the Reserve Bank's governance and financial system oversight arrangements. Following a recommendation from the Svensson review, the Governor will no longer chair the Bank's Board of Directors.



19 August 2003

The Reserve Bank of New Zealand announces that it has taken up an offer to become a shareholder in the Bank for International Settlements (BIS), an international financial institution based in Switzerland. It is owned by around 50 central banks and provides a range of financial services to central banks, international financial institutions and governments.



4 September 2003

The Reserve Bank releases its September Monetary Policy Statement. The OCR is unchanged at 5.0 per cent. The Bank notes that the "economy is continuing to cool, although not as sharply as previously thought". Domestic activity has been stronger than expected and continues to balance the slowing effects on the economy of the weakening external sector.



26 September 2003

Production GDP figures show that the New Zealand economy grew by 0.2 per cent in the June quarter of 2003.



30 September 2003

The government's announces its tariff policy for post-2005. The highest tariff rates of between 17 to 19 per cent will be reduced to 10 per cent by 1st July 2009. Tariff rates on all other goods will be reduced to 5 per cent by July 2008. Alternative specific tariffs will revert to the apparel ad valorem tariffs on 1 July 2005.



15 October 2003

Figures show the CPI increased by 0.5 per cent in the September quarter, bringing CPI inflation for the year to September 2003 to 1.5 per cent.



23 October 2003

The Reserve Bank leaves the OCR unchanged at its interim review.

The Commerce Commission rejects a proposed alliance between Air New Zealand and Qantas on the basis that it would damage competition and hurt consumers.



29 October 2003

The Crown surplus for the year ended June 2003 is revised upwards by 63.9 per cent to $4,359 million.



31 October 2003

The Reserve Bank announces that officials and consultants from the International Monetary Fund (IMF) are now in New Zealand undertaking a Financial Sector Assessment Programme (FSAP). The outcomes will be announced during 2004.



11 November 2003

Statistics New Zealand's Household Labour Force survey shows that the unemployment rate in the September 2003 quarter fell to 4.4 per cent, giving New Zealand the second lowest unemployment rate in the Western world.



4 December 2003

The Reserve Bank releases its December Monetary Policy Statement and leaves the OCR unchanged at 5.0 per cent. Despite a strong domestic economy CPI inflation has fallen over the past year due to the weak export sector. The Bank does not expect this level of offsetting to continue and CPI inflation is therefore expected to lift over the next year. This makes small increases in the OCR likely in the year ahead to ensure that inflation remains comfortably within the target range over the medium term.



18 December 2003

The Government releases its December Economic and Fiscal Update. The forecasted operating surpluses for the 2003/04 and 2004/05 fiscal years are substantially revised upwards to $6,092 million and $6,338 million from $3,761 million and $4,474 million respectively.



19 December 2003

Production GDP figures show that the New Zealand economy grew by 1.5 per cent in the September quarter of 2003, bringing growth for the year to September 2003 to 3.9 per cent.

2002




17 January 2002

Figures show that the CPI increased by 0.6 per cent in the December quarter, bringing CPI inflation for the year to December 2001 to 1.8 per cent.



23 January 2002

The Reserve Bank leaves the OCR unchanged at 4.75 per cent at the interim review, reflecting the continuing balancing of risks between a domestic economy that is more buoyant than expected and a weak world economy.



12 February 2002

The Government releases its policy framework for economic transformation, Growing an Innovative New Zealand. The framework has three key elements:

Strengthening the economic foundations.

Investment in innovation, talent and global connectedness.

Sectoral policies focussing on the bio-technology, ICT and creative sectors.



28 February 2002

Europe's new single currency, the Euro, becomes the sole currency in twelve countries of the European Union (Denmark, Sweden and the United Kingdom are not included). Euro banknotes and coins have been in circulation since 1st January 2002.



20 March 2002

The Reserve Bank releases its March Monetary Policy Statement, increasing the OCR by 25 basis points to 5.0 percent. The Bank says that the performance of the New Zealand economy has been stronger than expected following the events of 11th September and is operating at close to full capacity. Following OCR reductions in late 2001 due to the potential deflationary risks from world events, indications are that inflationary pressures are increasing and will continue to do so in the absence of some increase in interest rates. The Bank notes that further increases are likely to be necessary during the year.



28 March 2002

Production GDP figures show the New Zealand economy grew by 0.6 per cent in the December 2001 quarter.



16 April 2002

Figures show the CPI increased by 0.6 per cent in the March quarter, bringing CPI inflation for the year to March 2002 to 2.6 per cent.



17 April 2002

The Reserve Bank increases the OCR by 25 basis points to 5.25 per cent at the intra-quarter review. This is in line with the March Monetary Policy Statement and reflects a strong domestic economy.



26 April 2002

Reserve Bank Governor, Don Brash, resigns after being invited to seek nomination for the National Party. Reserve Bank Deputy Governor and Deputy Chief Executive Rod Carr becomes Acting Governor.



9 May 2002

The Government announces a $187 million increase to its housing programme for low income families.



15 May 2002

The Reserve Bank releases its May Monetary Policy Statement. The Official Cash Rate is increased from 5.25 to 5.5 per cent. Data shows that core inflation remains at the upper end of the 0 to 3 per cent target band, leaving little headroom for further price pressures. The strong domestic demand conditions mean the degree of interest rate stimulus that seemed necessary late last year is no longer warranted. Further interest rate increases are foreshadowed over the year ahead.



23 May 2002

The Minister of Finance, Michael Cullen, releases the 2002 Budget. Key initiatives include:

- Vote Health receives the largest increase in expenditure, with $400 million being added cumulatively to health spending for the next three years.

- A planned merger of the Investment New Zealand arm of Trade New Zealand and Industry New Zealand's Major Investment Services into a single investment promotion agency.

- The operating surplus for the 2001/02 fiscal year is estimated to be $2,386 million, more than doubling the December Update forecast.

25 June 2002

The Government releases its Pre-election Economic and Fiscal Update. Projections are largely unchanged from the Budget.



28 June 2002

Production GDP figures show that the New Zealand economy grew by 1.1 per cent in the March quarter 2002.



1 July 2002

The taxpayer-funded paid parental leave scheme is introduced, meaning those who have been in paid employment with a single employer for 10 or more hours a week for a full year will receive $325 gross per week (or 100 per cent of their previous weekly earnings, whichever was lower) for twelve weeks following the birth of their child.



3 July 2002

The Reserve Bank increases the OCR by 25 basis points to 5.75 per cent at its interim review noting however that further increases were less likely than indicated in May, largely due a much sharper rise in the exchange rate than anticipated



15 July 2002

Figures show that the CPI increased by 1.1 per cent in the June quarter, bringing CPI inflation for the year to June 2002 to 2.8 per cent.



22 July 2002

WorldCom files for Chapter 11 bankruptcy in the United States, becoming the largest United States bankruptcy case ever.



27 July 2002

The general election results in Labour winning 52 seats, National 27, New Zealand First 13, ACT and the Greens both 9 and United Future 8. The Labour Party forms a minority government in coalition with the Progressive Coalition Party to govern with the support of United Future on confidence and supply votes. The Green Party is also to support the Government on particular issues.



14 August 2002

The Reserve Bank releases its August Monetary Policy Statement. The OCR is unchanged at 5.75 per cent. The Bank notes that the risk of a significant international slowdown has increased at a time when the outlook for inflation is a concern. However, the Bank judges that current global developments, the fall in export prices, a higher exchange rate and the lagged effects of earlier rate increases will be sufficient to dampen the inflationary pressures.



22 August 2002

Finance Minister Michael Cullen announces that Dr Alan Bollard is to be appointed as the new Governor of the Reserve Bank. Dr Bollard is currently the Secretary to the Treasury.



16 September 2002

New Zealand and Australia sign a Closer Economic Partnership agreement with South East Asian countries, which plans to cut trade barriers between the two regions with the aim of doubling trade and investment by the year 2010.



17 September 2002

A new Policy Target Agreement is signed between the Finance Minister Michael Cullen and incoming Reserve Bank Governor Alan Bollard. The most significant change is the requirement that the Bank keep inflation within a 1 to 3 per cent range "on average over the medium term", thereby giving the Bank more flexibility to respond to shocks in the economy.



26 September 2002

The release of current account figures for the year to June 2002 shows a $3.0 billion deficit, 2.5 per cent of GDP.



27 September 2002

Production GDP figures show that the New Zealand economy grew by 1.7 per cent in the June quarter 2002.



2 October 2002

The Reserve Bank leave the OCR unchanged at 5.75 percent at the inter-quarter review, with the situation largely unchanged from the August Monetary Policy Statement.



15 October 2002

Figures show the CPI increased by 0.5 in the September quarter, bringing CPI inflation for the year to September 2002 to 2.6 per cent.



21 October 2002

The international credit rating agency Moody's upgrades the credit rating of New Zealand's long-term sovereign debt to AAA.



20 November 2002

The Reserve Bank releases its November Monetary Policy Statement leaving the OCR unchanged at 5.75 per cent and projecting no changes over the period ahead. The Bank notes that there continues to be a balance of risks for the future direction of the OCR between strong domestic demand and weak offshore developments.



26 November 2002

The Securities Market and Institutions Bill is passed, resulting in three separate pieces of legislation: the Securities Markets Amendment Act 2002; the Securities Markets Amendment Act 2002; and the Takeovers Amendment Act 2002. They are to come into force on the 1st December 2002. The main changes will:

- Strengthen disclosure obligations.

- Extend the regulatory requirements that apply to registered securities exchanges.

- Strengthen enforcement of existing insider trading laws and increase penalties applying under the Securities Act 1978.



19 December 2002

The Government releases its December Economic and Fiscal Outlook. The forecasted operating surpluses for the next three years are substantially revised upwards from the Pre-election Economic and Fiscal Update. The forecasted operating surplus for the 2002/03 fiscal year is $2,505 million.



20 December 2002

Production GDP figures show that the New Zealand economy grew by 1.0 per cent in the September quarter, bringing growth to 3.9 per cent for the year to September 2002.



31 December 2002

The New Zealand Stock Exchange is demutualised. The reasons given for the move include becoming more flexible, improved ability to raise funds and facilitating greater transparency and public accountability.

2001




1 January 2001

The Closer Economic Partnership (CEP) between New Zealand and Singapore comes into force. The agreement removes restrictions on trade in goods and services, and on investment, between New Zealand and Singapore.



17 January 2001

Figures show the CPI increased by 1.2 per cent in the December quarter, bringing CPI inflation for the year to December 2000 to 4.0 per cent.



24 January 2001

The Reserve Bank leaves the OCR unchanged at 6.5 per cent at the intra-quarter review. The Bank notes that the recent exchange rate strengthening and slowing expectations for world growth mean that the peak in CPI may be shorter than earlier expected and therefore the OCR increase suggested in the December forecasts is not warranted.



8 February 2001

Statistics New Zealand's Household Labour Force survey shows that the unemployment rate in the December 2000 quarter fell from 5.8 per cent to 5.6 per cent, a 12-year low.



28 February 2001

The Government releases the Independent Review of the Operation of Monetary Policy in New Zealand by Professor Svenssen. The report is critical of the use of a Monetary Conditions Index as a policy signalling device between mid-1997 and March 1999 and also recommends an internal five person decision making committee for deciding changes in interest rates. The Bank welcomes the report.



14 March 2001

The Reserve Bank releases its March Monetary Policy Statement. The OCR is reduced to 6.25 per cent, a reduction of 25 basis points. Governor Don Brash says "While most inflation measures have been accelerating, recent events suggest that by the time today's monetary policy settings have an effect, inflation pressures will actually be easing.". The international economy is slowing faster than anticipated however further reductions are not inevitable as many sectors of the economy are still operating at close to full capacity.

New Zealand quarantine officials place a ban on all animal product imports from the European Union as the UK is hit by foot and mouth disease.



30 March 2001

Production figures show that the New Zealand economy grew 0.5 per cent in the December quarter and 3.4 per cent in the year to December 2000.



18 April 2001

Statistics New Zealand figures show that the CPI increased by 0.9 per cent in the March quarter, bringing CPI inflation for the year to March 2001 to 3.2 per cent.



19 April 2001

The Reserve Bank reduces the OCR by 25 basis points to 6.0 per cent, citing the slowing growth in New Zealand's main trading partners. However, it indicates the need for caution about further cuts.



16 May 2001

The Reserve Bank releases its May Monetary Policy Statement. The OCR is again reduced by 25 basis points to 5.75 per cent. The Bank highlights the downward effects of slow world growth, falling business and consumer confidence and the effects of the summer drought. However the Bank emphasises some upward pressures remain which necessitates caution.



24 May 2001

The Government releases its 2001 Budget. The key features are:

- A focus on education with increased funding for participation and quality of early childhood education and the introduction of the National Certificate of Educational Achievement (NCEA).

- The establishment of a New Zealand Venture Investment Fund.

- The forecasted operating surpluses are revised downwards from the December update for the 2000/01, 2001/02 and 2002/03 fiscal years.



29 June 2001

Production GDP figures show that the New Zealand economy experienced no growth in the March 2001 quarter.



30 June 2001

The Government imposes anti-dumping duties on imports of fridges and washing machines from Korea.



1 July 2001

The ‘Community Wage' reverts back to a work-tested Unemployment Benefit and a non-work tested Sickness Benefit.



4 July 2001

The Reserve Bank leaves the Official Cash Rate unchanged at 5.75 per cent noting that inflationary pressures have not changed since the May Monetary Policy Statement.



16 July 2001

Figures show the CPI increased by 0.9 per cent in the June quarter, bringing CPI inflation for the year to June 2001 to 3.2 per cent.



15 August 2001

The Reserve Bank releases its August Monetary Policy Statement leaving the OCR unchanged at 5.75 per cent. The trend in prices remains within the target range and the CPI is anticipated to track back to the middle of the target zone by mid 2002. However the Bank notes that inflation could turn out to be more persistent as a number of indicators suggest the economy may be operating slightly above full capacity. This presents the risk that inflation expectations may increase, although this risk is balanced by a weak international economy.



18 August 2001

The Pacific Agreement on Closer Economic Relations is concluded laying the groundwork for future trade and economic co-operation among all members of the Pacific Islands Forum and establishing the more long term goal of a ‘single regional market'.



6 September 2001

The Reserve Bank announces the appointment of two part-time external monetary policy advisers, Dr Brent Layton and Ms Kerrin Vautier. They will participate in the process of analysis and advice undertaken before the Reserve Bank's quarterly Monetary Policy Statements.



12 September 2001

The events to become widely known as ‘September 11' occur in the United States. Four planes are hijacked in the United States, two are flown into the World Trade Centre buildings in New York, one into the Pentagon in Washington D.C. and a further plane crashes in Pennsylvania.



19 September 2001

The Reserve Bank reduces the OCR by 50 basis points to 5.25 per cent. This is the first unscheduled change of the OCR and comes as a response to the forecasted slow down in world growth following the events of ‘September 11'.



20 September 2001

Parliament passes the Dairy Industry Restructuring Act allowing the New Zealand Dairy Board, the last major producer board, to be abolished and replaced by the Fonterra Co-op.



28 September 2001

Production GDP figures show that the New Zealand economy grew by 2.0 per cent in the June 2001 quarter.



3 October 2001

The Reserve Bank leaves the OCR unchanged at 5.25 percent at the interim review. The Bank notes that the global economic outlook has worsened since the events of 11th September. However the impact on the New Zealand economy remains highly uncertain.

Following financial difficulties stemming from the collapse of Ansett Australia, Air New Zealand becomes nationally owned again, after being sold in 1988 through the Privatisation of State Owned Enterprises program.



10 October 2001

Parliament passes legislation for the Government's Superannuation Fund, allowing for up to $50 billion to be set aside in a fund by 2025 for future payments of the Superannuation benefit.



15 October 2001

Figures show the CPI increased by 0.6 per cent in the September quarter, bringing CPI inflation for the year to September 2001 to 2.4 per cent.



6 November 2001

The Securities Markets and Institutions Bill is introduced into parliament. The Bill seeks to increase the effectiveness and efficiency of the laws governing securities markets and regulatory institutions and bring them in line with Australian practices. It includes amendments to the Securities Act 1978, the Securities Markets Act 1988 and the Takeovers Act 1993.



9 November 2001

A new round of multilateral trade negotiations begins to be known as the Doha Round. Focus continues from the last round to be on agriculture and services, with additional attention paid to development concerns, the Singapore issues and Trade-Related Aspects of Intellectual Property Rights (TRIPs).



14 November 2001

The Reserve Bank releases its November Monetary Policy Statement. The OCR is reduced from 5.25 to 4.75 per cent. The Bank notes that the events of 11th September have exacerbated the slowdown in the international economy and this is already affecting the New Zealand economy. New Zealand enters this period in a relatively strong position but the anticipated slowdown is forecast to bring inflation back to around the middle of the target band.



29 November 2001

Kiwi Bank Limited is registered in New Zealand, to be run by NZ post.



2 December 2001

ENRON files for bankruptcy, the largest such case in United States history. Arthur Andersen, Enron's auditing firm, is subsequently put on trial on charges of obstruction of justice.



18 December 2001

The Government releases its December Economic and Fiscal Outlook revising downwards the operating surpluses for the next three fiscal years.



20 December 2001

Figures show the current account deficit was 3.4 per cent of GDP in the year to September 2001, the lowest ratio since 1992.



21 December 2001

Production GDP figures show that the New Zealand economy grew by 0.2 per cent in the September 2001 quarter.

2000




19 January 2000

The Reserve Bank raises the Official Cash Rate by 25 basis points to 5.25 per cent following growth figures that confirm that both the domestic and world economies are growing strongly. The increase comes to ensure continued price stability in the context of stronger economic growth.

Figures show that the CPI increased by 0.2 in the December quarter, bringing CPI inflation for the year to December 1999 to 1.3 per cent.



29 February 2000

The Ministry of Commerce becomes the Ministry of Economic Development (MED). The MED, an Alliance Party initiative with Jim Anderton as its Minister, will cover the areas of economic development, industry and regional development, energy, consumer affairs, communications and commerce.



15 March 2000

The Reserve Bank releases its March Monetary Policy Statement. The OCR is raised by 50 basis points to 5.75 per cent. The Bank notes that any spare capacity in the economy has largely been used up, and while inflation presents no immediate threat it may do so in the future if monetary conditions remains as stimulatory as in recent months.



20 March 2000

The New Capital Market (NCM) is launched for new small to medium sized enterprises providing a vehicle to issue shares to the public whilst they wait to list on the New Zealand Stock Exchange (NZSE).



27 March 2000

GDP production figures show that the economy grew 2.2 per cent in the December quarter and 3.5 per cent in the year to December 1999.



1 April 2000

The personal income tax rate is increased for those earning over $60,000 from 33 cents to 39 cents in the dollar.



10 April 2000

The New Zealand Cabinet agrees on a five year freeze on unilateral tariff reduction. This is a reversal of the pledge made in 1998 by the National Government to remove all tariffs by 2006.



17 April 2000

Statistics New Zealand figures show that the CPI increased by 0.7 per cent in the March quarter, bringing CPI inflation for the year to March 2000 to 1.7 per cent.



19 April 2000

The Reserve Bank raises the OCR by 25 basis points to 6.0 per cent to reduce future inflation pressures; Governor Don Brash states that the "risks of rising inflation are gradually increasing" as domestic and world growth prospects remain strong.



9 May 2000

The Hon Dr Michael Cullen announces the terms of an independent Monetary Policy review, to be conducted by Professor Lars Svensson. The review will cover a range of issues including the way the Reserve Bank interprets and applies its inflation target, its range of instruments, its accountability and the effectiveness of its communications.



17 May 2000

The Reserve Bank releases its May Monetary Policy Statement increasing the OCR to 6.5 from 6.0 per cent. The Bank says the decision reflects the building inflationary pressures from exceptionally strong recent economic growth and indications that inflation is picking up.



15 June 2000

Minister of Finance, Michael Cullen, announces the 2000 Budget. The key features are:

- A plan to save the forecast fiscal surplus's (estimated to be $763 million for the past year).

- The writing off of interest on student loans during the period of study.

- The reintroduction of a limit on rent of 25 per cent of net income for low income state tenants as of 1st December 2000.

Figures show that the current account deficit was $8,542 million for the year to March 2000, 8.2 per cent of GDP.



23 June 2000

The Commonwealth Bank of Australia registers in New Zealand as a branch of its Australian parent.



26 June 2000

Production figures show that the New Zealand economy grew by 0.8 per cent in the March quarter, bringing growth to 4.4 per cent for the year to March 2000, which is the fastest rate since September 1995.



1 July 2000

The Government repeals the right of private companies to offer workplace accident insurance, returning this function solely to the Government owned Accident Compensation Corporation (ACC).



4 July 2000

The Government announces the launch of three ‘Partnership for Growth' programmes which aim to foster economic and regional development. They will be administrated by the Ministry of Economic Development.



5 July 2000

The Reserve Bank leaves the OCR unchanged at 6.50 per cent.



17 July 2000

Statistics New Zealand figures show that the CPI increased by 0.7 in the June quarter, bringing CPI inflation for the year to June 2000 to 2.0 per cent.



16 August 2000

The Reserve Bank releases its August Monetary Policy Statement. The OCR is unchanged at 6.50 per cent. The Bank notes that both consumer and business confidence have fallen and the exchange rate has depreciated to record lows. CPI inflation is expected to spike at the top of the Bank's inflation target mainly due to oil prices rises and indirect taxes on cigarettes, which the Reserve Bank need not respond to as long as they do not effect general inflation. The Bank notes less pressure on the economy's productive capacity than previously expected.



14 September 2000

The release of the 2000 Crown Financial Statements shows a $1.45 billion operating surplus, $686 million higher than forecasted in the budget.



22 September 2000

The Reserve Bank announces that from 25th September it will use repurchase agreements (repos); offering bonds from its own investment portfolio in exchange for cash in open market operations (OMOs). This is designed to enhance the flexibility of the Reserve Bank's OMOs.



29 September 2000

The release of production GDP figures shows the New Zealand economy contracted by 0.7 per cent in the June 2000 quarter.



1 October 2000

The Employment Relations Act comes into force. The aim of the act is to provide balance in the conduct of employment relationships and enable good faith bargaining. It makes provisions both for employees who join a union and those that do not.



4 October 2000

The Reserve Bank leaves the OCR unchanged at 6.50 per cent at the interim review.



16 October 2000

Figures show the CPI increased by 1.4 per cent in the September quarter, bringing CPI inflation for the year to September 2000 to 3.0 per cent.



18 October 2000

The New Zealand Dollar hits an all time low against the US dollar of 0.3895c.



7 November 2000

George W. Bush is elected president of the United States of America.



29 November 2000

The Reserve Bank announces that there will be some minor changes in future Monetary Policy Statements. The Monetary Conditions Index will no longer appear. In addition, interim Official Cash Rate announcements will now contain a brief commentary even if the OCR is unchanged.


6 December 2000

The Reserve Bank releases its December Monetary Policy Statement and leaves the OCR unchanged at 6.50 per cent. The Bank notes that economic activity has picked up in the second half of the year but believes that inflationary pressures can be kept in check by a small increase in interest rates next year .The Bank now projects CPI inflation will peak even higher than expected in August, exceeding the top of the target band for several quarters. However absent a number of one off elements, CPI inflation will remain within the target range.



19 December 2000

The Government releases its December Economic and Fiscal Outlook revising the forecasted operating surplus for the 2000/01 fiscal year downwards to $765 million from the projection in the Budget of $1,012 million.



21 December 2000

Production GDP figures show that the New Zealand economy expanded 0.7 per cent in the September quarter and 4.5 per cent in the year to September.

1999




1 January 1999

The new Trade Weighted Index (TWI) announced in late December 1998 comes into effect.



18 January 1999

Figures show the CPIX increased by 0.1 per cent in the December quarter, bringing CPIX inflation for the year to December 1998 to 1.1 per cent.



20 January 1999

The prolonged drought in much of the country is brought to the attention of the public with a TV news feature. For some there has been no significant rain for 18 months, and the drought is rated the worst since 1964.



1 February 1999

The APEC forum in Wellington holds its first meeting, with 650 delegates from 21 countries attending.

Changes to human rights legislation mean employers can no longer enforce a compulsory retirement age.



4 February 1999

The 90-day bank bill rate goes below 4 per cent reaching an all time low.



8 February 1999

The Reserve Bank announces changes to the way it implements monetary policy in order to simplify the process. From the 17th of March the Bank will use an Official Cash Rate OCR as its main lever to maintain price stability. In its dealings with financial markets the Bank will pay an interest rate 0.25 percentage points below the OCR for money deposited in Reserve Bank settlement accounts and will provide overnight cash at 0.25 percentage points above the OCR. The aim of monetary policy will not change, only the methodology, which will shift from relying on public statements to an instrument, based technique. The OCR will be reviewed every six weeks.



10 February 1999

The Reserve Bank closes the Wednesday window, previously used to comment on current monetary conditions. The Bank has decided that "the risks of misinterpretation of either using the window to make a comment, or being silent with the window open, are too great."



9 March 1999

Steady rain marks the end of the persistent summer drought in the South Island which has heavily affected farmers for the second consecutive year.



17 March 1999

The Reserve Bank releases its March Monetary Policy Statement. The first Official Cash Rate is set at 4.5 per cent; a level intended to be broadly consistent with current monetary conditions. The Bank notes that while the domestic economy is recovering relatively strongly there remains considerable surplus productive capacity. Consequently, downward pressure on inflation is expected to continue in the short-term.



20 April 1999

Figures show the CPIX increased by 0.2 per cent in the March quarter, bringing CPIX inflation for the year to March 1999 to 1.0 per cent.



21 April 1999

The Reserve Bank leaves the Official Cash Rate unchanged at 4.5 per cent.



26 April 1999

The Reserve Bank announces special contingency measures so the banking system will not be threatened in the unlikely event of an extreme demand for cash as the year 2000 (Y2K) approaches. The measures show a pre-commitment to the provision of any necessary additional liquidity. In particular the Reserve Bank will ensure there are enough bank notes and will lend, unsecured if necessary, the banks the money to buy those additional bank notes.



May 1999

The IMF and World Bank jointly introduce a Financial System Assessment Program (FSAP) which aims to increase the effectiveness of efforts to promote the soundness of financial systems in member countries.



3 May 1999

New Zealand's first polymer bank notes, $20 notes, come into circulation. Other denominations will be issued in polymer during the remainder of 1999 and into the beginning of 2000. The new polymer bank notes are considerably stronger and more durable than the existing paper notes.



14 May 1999

The Government sells Contact Energy Limited. Forty per cent is sold to a cornerstone shareholder (Edison Mission Energy Taupo Limited) and 60 per cent by way of a public share float, providing total proceeds of $2,331 million.



19 May 1999

The Reserve Bank releases its May Monetary Policy Statement. The Official Cash Rate is unchanged at 4.5 per cent with inflation forecasts largely unchanged from the March Monetary Policy Statement. The Bank notes that the international environment seems less fragile than previously thought. However while a steady domestic economic recovery is under way inflationary pressures still appear to be well contained.



21 May 1999

The 1999 Budget is released by the Treasurer, Bill Birch. The main features are:

- A focus on families, including the introduction of a new Parental Tax Credit.

- The removal of stamp duties as of Budget Night.

- The operating surplus for the 1998/99 year is estimated to be $2,164 million after a forecasted deficit in December, but includes a number of one-off factors particularly the sale of Contact Energy.



3 June 1999

The New Zealand Stock Exchange announces plans for an alternative market to help start-up companies when raising capital.



9 June 1999

Accident Compensation Corporation (ACC) is split into three new businesses. Employers now have the option of finding private accident insurance or obtaining it through the new state-owned company ‘At Work Insurance' from the 1st July when ACC is opened to competition.



10 June 1999

Figures show that New Zealand experienced a trade deficit of $2.4 billion in the year to April 1999, the biggest for 14 years.



25 June 1999

Production GDP figures show that the New Zealand economy grew by 0.7 per cent in the March quarter, but that activity fell by 0.2 per cent for the year to March 1999.



30 June 1999

The Reserve Bank leaves the OCR unchanged at 4.5 per cent.



15 July 1999

Figures show the CPIX (CPI less credit services) to have increased by 0.5 per cent in the June quarter, bringing CPIX inflation for the year to June 1999 to 1.2 per cent. The CPI regime has been updated and includes internet and cell phone charges for the first time.



22 July 1999

Former New Zealand Prime Minister Mike Moore is confirmed as the next Director General of the World Trade Organisation.



18 August 1999

The Reserve Bank releases its August Monetary Policy Statement. The OCR remains at 4.50 per cent, but an increase before the end of the year is seen as increasingly likely as indicators suggest stronger inflationary pressures than previously anticipated. Both the world and New Zealand economies are looking stronger but New Zealand business and consumer confidence still appears fragile.



12 September 1999

New Zealand signs a free-trade accord with Chile, an important trade partner in the Latin American region.



15 September 1999

The Government's E-Commerce web-site is launched with the aim of providing business people and the wider public easy access to all government information via electronic access.

Rabobank New Zealand Limited is registered in New Zealand from Rabo Wrightson Finance Limited which had been registered on the 7th July 1999.

The Reserve Bank unveils the design of a special $10 bank note to commemorate the millennium. The note depicts New Zealand's development in the digital age and some of the recreational pursuits New Zealand is renowned for.



24 September 1999

Production GDP figures show the New Zealand economy contracted by 0.3 per cent in the June 1999 quarter, and grew by 0.6 per cent for the year to June 1999.



29 September 1999

The Reserve Bank leaves the OCR unchanged at its interim review.



11 October 1999

The Personal Properties Securities Act is passed in Parliament. The Act clarifies the laws and reduces transaction costs associated with giving and taking security interests in personal property.



21 October 1999

The Treasury releases a Pre-election Economic and Fiscal Update. The operating balance is forecast to remain in surplus until 2003.



28 October 1999

The Reserve Bank announces a minor technical change to the way the Bank's inflation target is measured. In future the 0 to 3 per cent inflation target is to be calculated in terms of the Consumers Price Index (CPI) instead of the CPIX. The change occurs because Statistics New Zealand is no longer including interest rates in the measurement of the CPI.



29 October 1999

Figures show the CPI increased by 0.6 per cent in the September quarter, bringing CPI inflation for the year to September 1999 to 1.3 per cent.



17 November 1999

The Reserve Bank releases its November Monetary Policy Statement and increases the OCR by 50 basis points to 5.0 per cent, with further increases expected over the coming year. This represents the first increase in the OCR. The Bank projects that current growth will continue, supported by an increasingly robust world economy and the move is aimed at keeping inflationary pressures in check.



27 November 1999

The general election results in Labour winning 49 seats, National 39 and Alliance 10, with four other parties represented.



30 November 1999

The World Trade Organisation starts its Millennium round in Seattle, marked by mass protests against globalisation.



3 December 1999

Statistics New Zealand announces it has revised down the September quarter CPI result from 0.6 to 0.4 per cent following an error. The Reserve Bank releases a press statement stating that this change has no policy implications.



6 December 1999

Labour forms a minority coalition government with the Alliance party, to be supported by the Green party on some issues.



16 December 1999

A new Policy Targets Agreement is signed between the Governor of the Reserve Bank, Dr Don Brash and the Treasurer, Hon Dr Michael Cullen. The major change is the addition of an objective to avoid unnecessary instability in output, interest rates and the exchange rate when implementing monetary policy.



20 December 1999

The Reserve Bank announces that in future BT Portfolio Services (NZ) Ltd will administer the Reserve Bank's registry services although the Bank will continue legal ownership of the enterprise.



23 December 1999

Figures released by Statistics New Zealand show that economic activity increased by 2.3 per cent in the September quarter, following a 0.3 per cent fall recorded in the June quarter. For the year to September 1999 the economy grew by 1.9 per cent, close to the annual rate before the Asian crisis and the first of the two consecutive droughts.

1998




20 January 1998

Figures show that inflation in the CPI excluding credit services (CPIX, the target measure set by the December 1997 Policy Targets Agreement) increased by 0.5 per cent in the December quarter. This brings CPIX inflation for the year to December 1997 to 1.6 per cent.



20 February 1998

The Auckland power crisis begins when the remaining supply cable to the central business district breaks, causing significant disruption to retailers, hotels, banks and other businesses in the area. Full power is not restored until five weeks later when an emergency cable is installed.



23 February 1998

The Reserve Bank issues a statement saying that actual monetary conditions have eased too far over recent days and that the Bank would prefer to see them closer to the previously announced desired levels.



2 March 1998

ABN AMRO Bank NV is registered in New Zealand.



18 March 1998

The Reserve Bank releases its March Economic Projections. The Bank indicates that circumstances have changed quite significantly since the December Statement despite the domestic economy evolving generally in line with expectations. The main changes are the rapid depreciation of the New Zealand Dollar, lower expected world growth and weakened consumer and business confidence. Consequently desired monetary conditions have eased. The Bank notes that 500 on the Monetary Conditions Index is now appropriate, (down from 650), with further easing projected through 1998. This is the last Economic Projections released by the Bank with Monetary Policy Statements produced quarterly from here on.



27 March 1998

Reserve Bank Governor, Don Brash, states that financial markets have over reacted to the policy easing announcement in the March Economic Forecasts. He states that monetary conditions have now eased too far despite interest rate rises. This reflects the rapid depreciation in the exchange rate.



1 April 1998

The superannuation surcharge is abolished. Government superannuation payments are no longer taxed according to other income the recipient receives.



17 April 1998

Figures show that inflation in the CPI excluding credit services (CPIX, the target measure set by the December 1997 Policy Targets Agreement) increased by 0.3 per cent in the March quarter. This brings CPIX inflation for the year to March 1998 to 1.7 per cent.



10 May 1998

The Government releases the 1998 Budget. The key features are:

- The proposed replacement of the Unemployment Benefit with the Community Wage as of 1st October.

- The removal of both the prohibition on parallel importing and of remaining motor vehicle tariffs.

- The planned introduction of competition in the delivery of the Employers' Account of the ACC scheme.



26 May 1998

The Reserve Bank releases its May Monetary Policy Statement. The sixth consecutive quarter of monetary policy easing is announced, reducing the desired Monetary Conditions Index by 150 basis points to 350. This is an additional easing from that projected in March. In the near term growth is expected to continue to be subdued, with weak world prices for exports and restrained domestic spending. Growth is projected to pick up in the second half of 1998.



1 June 1998

The European Central Bank (ECB) is established in Germany. The ECB will provide the framework for the coming Euro currency and operate monetary policy for the Euro zone.



8 June 1998

The Government releases an Economic and Fiscal Update which updates Treasury's forecasts contained in the Budget Economic and Fiscal Update 1998 in light of the Asian crisis. The operating surplus for the 1998/99 fiscal year is forecast to be significantly lower than in the budget.



10 June 1998

The Reserve Bank cautions the financial markets on the extent of the recent market-led easing in monetary conditions and states that, over the coming weeks, it will be looking for conditions to track closer to the desired levels, as indicated in the May Monetary Policy Statement.



26 June 1998

GDP production figures for the New Zealand economy show a contraction in activity of 0.9 per cent in the March quarter and growth of 2.2 per cent in the year to March 1998.



1 July 1998

The second round of tax cuts announced in 1996 is implemented. The middle tax bracket is widened to include incomes up to $38,000 (from $34,200) and the tax rate for this bracket is lowered from 21.5c to 19.5c. The cuts had been postponed from 1997 following the 1996 coalition agreement which allowed for $5 billion extra spending.



15 July 1998

Figures show the CPIX (the CPI less credit services) to have increased by 0.3 per cent in the June quarter, bringing CPIX inflation for the year to June 1998 to 1.7 per cent.



28 July 1998

Following the announcement on 14th May 1998 that the Government intended to sell its shareholding in Auckland International Airport Limited, the company is publicly floated with the Crown receiving a price of $1.80 per share on the 216,762,152 shares on offer.



20 August 1998

The Reserve Bank releases its August Monetary Policy Statement. The Statement continues to sanction the easing of monetary policy, underway since December 1996, by indicating that a level of around zero on the Monetary Conditions Index is now seen as appropriate, largely in line with current market conditions. This follows a considerably weaker domestic economy in the first half of the year than expected, resulting in lower than anticipated inflationary pressures.



26 August 1998

Reserve Bank Governor, Don Brash, releases a statement saying that monetary conditions have eased too far and too fast and that a Monetary Conditions Index of zero is still appropriate.



28 August 1998

The Russian rouble falls 40 per cent against other currencies and international commodity prices fall to a twelve year low.



31 August 1998

The Reserve Bank announces the completion of a review of the disclosure arrangements for registered banks. The results are to take effect on the 1st October 1998 and include several small changes in particular covering the introduction of internet banking.



8 September 1998

A National-led minority government formed on the 31st August gains a vote of confidence. This follows the collapse of the National-New Zealand First coalition in August.



17 September 1998

Figures released show a Government budget surplus of $2,658 million for the 1997/98 fiscal year, its fifth consecutive yearly surplus.



24 September 1998

International credit rating agency Moody's downgrades the credit rating of New Zealand's long-term sovereign debt from Aa1 to Aa2.



25 September 1998

GDP production figures show that the New Zealand economy contracted 0.8 per cent in the June quarter, and grew by 1.2 per cent for the year to June 1998. With two quarters of successive declines in activity, the economy appears to have been in recession over the first half of 1998 (note that these statistics have since been substantially revised).



29 September 1998

The Government announces plans to remove most tariffs by July 2001 and all tariffs by 2006, saying that "Exports offer New Zealand the best route to growth and job creation."



1 October 1998

The Government introduces the Community Wage to replace the unemployment benefit as indicated in the 1998 budget; it is to be received in return for participating in training, part-time community work or job-seeking.



7 October 1998

The Reserve Bank makes a statement saying "The extent and pace of monetary policy easing over recent months has been very substantial suggesting increasing need for caution."



12 October 1998

AMP Bank Ltd registers in New Zealand, operating as a branch.



13 October 1998

New Zealand banks drop floating mortgage rates to their lowest levels in 28 years with rates on offer averaging around 6½ per cent.



15 October 1998

Figures show the CPIX (CPI less credit services) increased by 0.6 per cent in the September quarter, bringing CPIX inflation for the year to September 1998 to 1.7 per cent.



18 November 1998

The Reserve Bank releases its November Monetary Policy Statement. The Bank now considers a Monetary Conditions Index of -400 to be appropriate for the March 1999 quarter, a cut of 400 points, and expects the desired MCI to remain roughly at this level in the near future. Economic activity both globally and in New Zealand has been weak and subsequently inflationary pressures are anticipated to be subdued over the medium term. However the economy is responding to the considerable monetary stimulus and GDP growth is expected to pick up in the second half of 1998.



8 December 1998

Jenny Shipley is sworn in as the new Prime Minister, replacing Jim Bolger.



9 December 1998

The Government releases its December Economic and Fiscal Outlook. The operating balance is forecast to be in deficit by $52 million for the 1998/99 fiscal year, down from the Budget forecast of $1,305 million.

Treasury forecasts the economy to shrink by 0.9 per cent in the year to March 1999, a softer outlook than the 0.5 per cent growth rate forecast in September.



21 December 1998

The Reserve Bank announces changes to the calculation of the TWI to accompany the introduction of the Euro, which will take place in January 1999. The new TWI will include the currencies of the US, Japan, Australia, the UK and the Euro zone. The weighting scheme will be a 50:50 ratio according to each currency-area's share of New Zealand's merchandise trade (exports and imports), normalised to total 100 per cent, and each currency-area's share of their combined nominal GDP. The TWI will now be re-weighted annually.

1997




17 January 1997

Figures show the CPI increased by 0.6 per cent in the December quarter, bringing CPI inflation for the year to December 1996 to 2.6 per cent. The Reserve Bank estimates underlying inflation to have been 0.6 per cent for the quarter and 2.4 per cent for the year.



7 March 1997

The Reserve Bank releases a document called Monetary Policy Implementation and Signalling, which shows the preliminary results of a review of issues associated with monetary policy implementation and signalling. A change from targeting settlement cash balances to targeting the overnight interbank interest rate (the cash rate) is proposed, and submissions on the proposal are invited.



13 March 1997

The Reserve Bank releases its March Economic Projections. The Bank still expects inflation to decline, as in the December Monetary Policy Statement, but now expects that decline to be less sharp in the immediate future and unlikely to be sustained throughout the projection period. This shift is largely due to the unexpectedly muted impact of the recent rise in the exchange rate on prices and the continued buoyancy of inflation in the non-traded sector. Consequently the Bank sees no scope for an easing in desired monetary conditions.



15 April 1997

Figures show the CPI increased by 0.3 per cent in the March quarter, bringing CPI inflation for the year to March 1997 to 1.8 per cent. The Reserve Bank estimates underlying inflation to have been 0.2 per cent for the quarter and 2.0 per cent for the year to March.



12 May 1997

The Reserve Bank issues a statement noting that monetary conditions appear to be settling at levels below that assumed in the March Economic Projections and that the Bank would prefer to see conditions firm.



5 June 1997

Governor Don Brash announces that the Reserve Bank will not be making any substantive changes to the way it implements monetary policy following the consultative paper released in March.

The Reserve Bank advises that for the June Monetary Policy Statement a new model (called the Forecasting and Policy System, FPS) of the New Zealand economy will be used to produce the projections underlying the Statement. This will allow changes in inflationary pressures to be incorporated in the projected path for monetary conditions.


26 June 1997

The Government releases its 1997 Budget. The main spending focus is on health care, with increased health funding of $900 million over the next three years including providing equity capital to Crown health enterprises (CHEs) of $210 million in 1997/98. Also the Government sets an objective for the 1998 Tariff Review that all remaining tariffs will be removed within the 2010 deadline set by APEC. The estimated operating surplus for the 1996/97 fiscal year is $2,448 million.



27 June 1997

The Reserve Bank releases its June Monetary Policy Statement. In the Statement the Bank introduces, as proposed in December, the use of the Monetary Conditions Index (MCI) which combines the exchange rate and interest rates to produce an index of policy firmness. The current MCI is 825, with conditions having eased since the last Statement. Economic growth has been slower than expected, but is expected to accelerate during the following two years, reflecting the planned fiscal stimulus. Underlying inflation is expected to decline in the short-term before rising later in the projection period to slightly above the middle of the 0 to 3 per cent target range.



30 June 1997

GDP production figures show the New Zealand economy grew 2.3 per cent in the year to March 1997.



2 July 1997

Following a period of capital flight and speculative attacks on the Bhat, stemming largely from banking sector problems, the Thai government is forced to abandon its pledge of a 25 Baht per dollar exchange rate. The Baht's value collapses putting pressure on the currencies of Indonesia, Malaysia, South Korea and Taiwan. These events mark the beginning of a severe economic and financial crisis affecting most Asian economies which becomes widely known as the ‘Asian Crisis'.



11 July 1997

Governor Don Brash says that overall monetary policy conditions have settled too far from the Bank's desired monetary conditions, as stated in the June Monetary Policy Statement.



14 July 1997

Kookmin Bank is registered in New Zealand.



15 July 1997

Figures show the CPI increased by 0.1 per cent in the June quarter, bringing CPI inflation for the year to June 1997 to 1.1 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 per cent for the quarter and 1.5 per cent for the year.



18 August 1997

The Reserve Bank issues a statement noting that "Overall monetary conditions have become too loose given our current monetary policy stance".



18 September 1997

The Reserve Bank releases its September Economic Projections. The Bank endorses the recent market-let easing in monetary conditions, cutting the desired level of the Monetary Conditions Index by 100 basis points to 725, with further small reductions forecast for the first two quarters of 1998 before a tightening phase is entered. Emerging data suggests that the economy is a little weaker than expected, but is still forecast to recover in the second half of the year.



25 September 1997

The period for postal voting in the national referendum on a compulsory retirement savings scheme ends. The scheme is rejected with a 91.8 per cent ‘no vote', from a voter turnout of 80.3 per cent.



1 October 1997

A series of Amendments come into force, including the Securities Amendment Act. The major features of these Acts are:

- a new simplified document called the "Investment Statement" must be given to prospective investors;

- a requirement of those involved in investment business to disclose certain information; and

- many of the exemption notices previously issued by the Securities Commission will no longer be required.



15 October 1997

Figures show the CPI increased by 0.5 per cent in the September quarter, bringing CPI inflation for the year to September 1997 to 1.0 per cent. The Reserve Bank estimates underlying inflation to have been 0.6 per cent for the quarter and 1.8 per cent for the year.



5 December 1997

The Reserve Bank issues a statement saying that monetary conditions are becoming too loose.



15 December 1997

A new Policy Target Agreement is signed between the newly re-appointed Reserve Bank Governor Don Brash and the Treasurer Winston Peters. The major change is that the 0 to 3 per cent inflation target will now be measured using the CPIX measure of inflation –– CPI inflation excluding credit services (principally mortgage interest rates). Given that most of the difference between headline inflation and underlying inflation is due to interest rates the Bank discontinues the calculation of underlying inflation.



9 December 1997

The Government releases its December Economic and Fiscal Outlook. The operating balance forecasts are virtually unchanged from the 1997 Budget.



16 December 1997

The Reserve Bank releases its December Monetary Policy Statement. Monetary conditions continue to ease with a Monetary Conditions Index of 650 now viewed as appropriate, down from 725 basis points in the September Economic Projections. Recent inflationary pressures have proven persistent due to the weak New Zealand Dollar, stronger than expected economic activity and an expansionary fiscal stance. However the Bank expects downwards pressure from weaker growth prospects in East Asia to emerge in the short term.

1996




1 January 1996

A new public disclosure regime for registered banks comes into force, with the aim of promoting sound business practices. Banks must now publish quarterly disclosure statements. The disclosure statements will replace banks' existing prospectuses in respect of their debt securities. The principal objectives of the disclosure regime are to:

- Increase the incentives for banks to monitor and manage their banking risks. Banks will have incentives to manage their affairs prudently, so as to avoid the need to disclose adverse events to the market.

- Provide a more focused role for bank directors in overseeing, and taking ultimate responsibility for, the management of banking risks.

- Provide depositors, financial planners, investment advisers and others with higher quality and more timely information on banks, so as to improve investors' ability to decide where to place their funds.



17 January 1996

Figures show the CPI increased by 0.6 per cent in the December quarter, bringing CPI inflation for the year to December 1995 to 2.9 per cent. The Reserve Bank estimates underlying inflation to have been 0.6 per cent for the quarter and 2.0 per cent for the year.



1 February 1996

International credit rating agency Standard and Poor's upgrades the credit rating of New Zealand's long-term sovereign debt from AA to AA+.



19 February 1996

The Government announces a Tax Reduction and Social Policy program to be implemented on the 1st July in 1996 and 1997. The major feature is the lowering and restructuring of personal income tax rates.



28 February 1996

International credit rating agency Moody's upgrades the credit rating of New Zealand's long-term sovereign debt from Aa2 to Aa1.

National and the United Party sign a coalition agreement. The agreement sees different parties sharing the NZ cabinet table for the first time (in peacetime) in 60 years.



21 March 1996

The Reserve Bank releases its March Economic Forecasts. The continued stress on the productive economy and pressure in the real estate markets are seen as the most significant factors influencing the short-term inflation outlook. Underlying inflation for the years to September 1996 and 1997 is projected to be 1.9 per cent and 0.8 per cent respectively. Reserve Bank Governor, Dr Don Brash, reiterates that there will be no "room for any easing in monetary conditions, relative to assumptions in the projections, for some time to come."



1 April 1996

Rabobank Nederland Bank is registered in New Zealand.



17 April 1996

Figures show the CPI increased by 0.5 in the March quarter, bringing CPI inflation for the year to March 1996 to 2.2 per cent. The Reserve Bank estimates underlying inflation to have been 0.6 per cent for the quarter and 2.1 per cent for the year.



18 April 1996

With underlying inflation currently above the upper end of the 0 to 2 percent target range, the Minister of Finance writes to the non-executive directors of the Reserve Bank. He seeks their assessment of the performances of the Reserve Bank Governor under the Policy Targets Agreement signed in December 1992.



23 May 1996

The Government releases its 1996 Budget. A key focus is on the proposed tax reductions, announced in February and to be implemented later in the year. The Budget also highlights prospects for debt reduction financed by current operating surpluses. The estimated operating surplus for the 1995/96 fiscal year is $3,903 million, around a billion dollars more than forecast in December. The operating surplus is forecast to fall over the next two years as the tax reduction program takes effect.



4 June 1996

The Customs and Excise Act passes into law. The Act reforms laws relating to customs, excise and other duties and introduces excise duties onto alcoholic beverages, tobacco products and super and regular grade petroleum.



27 June 1996

The Reserve Bank releases its June Monetary Policy Statement. The short term inflation outlook is worse than earlier projected due to unexpected resilience in demand. Inflation is now projected to peak at around 2.6 per cent in September and only re-enter the target range in the first half of 1997, when it is projected to continue to decline. The Bank notes that despite the expectation that inflation pressures will moderate in the future it is too early to ease monetary policy.



1 July 1996

The first round of tax cuts from the program announced in February is implemented. The rate for those earning under $30,875 is lowered from 24c to 22c and a new middle band is introduced for those earning between $30,785 and $34,200, which will be taxed at 24c.



16 July 1996

Figures show the CPI increased by 0.8 per cent in the June quarter, bringing CPI inflation for the year to June 1996 to 2.0 per cent. The Reserve Bank estimates underlying inflation was 0.5 per cent for the quarter and 2.3 per cent for the year.



20 August 1996

The Government announces the sale of the Crown's shares in Forestry Corporation New Zealand Ltd to a Fletcher Challenge Ltd led consortium. The sale prise is $1.6 billion. This allows the Government to achieve its target of zero net foreign currency debt.



12 September 1996

The Government releases its Pre-Election Economic and Fiscal Update. Economic growth is projected to average 3 per cent over the following four years.



13 September 1996

The Reserve Bank releases its September Economic Forecasts. Underlying inflation in the years to December 1996 and 1997 is projected to be 2.5 and 0.8 percent respectively, broadly as envisaged in the June Monetary Policy Statement.



27 September 1996

GDP production figures show that the New Zealand economy grew by 2.1 per cent in the year to June 1996.



15 October 1996

Figures show that the CPI increased by 0.6 per cent in the September quarter, bringing CPI inflation for the year to September 1996 to 2.4 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 per cent for the quarter and 2.3 per cent for the year.



16 October 1996

David Archer, Chief Manager of the Reserve Bank's Financial Markets Department, issues a statement noting that at this stage any further easing in monetary conditions would be inappropriate. The inflation projections released the previous day had been lower than had generally been expected.



24 October 1996

David Archer, Chief Manager of the Reserve Bank's Financial Markets Department, indicates that the recent firming in the exchange rate has not been necessary and may put pressure on the export sector.



12 October 1996

The first New Zealand election under MMP is held, with National gaining 44 seats, Labour 37, New Zealand First 17, the Alliance 13, Act 8 and United Future 1. Coalition negotiations begin.



5 November 1996

Bill Clinton is re-elected as president of the United States of America.



8 November 1996

Deutsche Bank A G is registered in New Zealand.



11 November 1996

Reserve Bank Governor, Dr Don Brash, urges fiscal restraint during the process of forming a coalition to ease pressures on the export sector.



21 November 1996

The New Zealand Dollar rises to an 8 year high of 0.7176c against the US Dollar.



2 December 1996

The Government releases its December Economic and Fiscal Outlook. The forecast operating surpluses for the current and following two fiscal years are revised downwards by approximately $300 million, bringing the forecast for the current year to $2,493 million.



10 December 1996

A Coalition Agreement is signed between the National Party and New Zealand First. Jim Bolger and Bill Birch remain as Prime Minister and Minister of Finance respectively. The agreement includes the creation of a new position of Treasurer, to be taken by Winston Peters. It also postpones the second round of tax cuts from the 1996 programme from 1st July 1997 to the 1st July 1998 to allow $5 billion extra spending, including abolishing the tax surcharge on high income superannuation recipients from 1st April 1998.

A new Policy Target Agreement is signed by the Reserve Bank Governor, Dr Brash, and the Minister of Finance, Bill Birch on behalf of the Winston Peters (Treasurer-elect). The PTA introduces two main changes. First, the inflation target band is widened from 0 to 3 per cent (previously 0 to 2 per cent). Second, the new PTA makes clear that price stability is the best contribution that monetary policy can make to economic growth and employment, and not simply an end in itself.



17 December 1996

The Reserve Bank releases its December Monetary Policy Statement. The Bank notes that the New Zealand economy has managed a sustained period of economic expansion without a major acceleration of inflation, but that the burden of restraint has fallen largely on the export sector. The Bank states that strong inflation pressures are reducing and a moderate easing in monetary policy is now warranted given the predicted softening in aggregate demand, a widening output gap and a projected sharp fall in underlying inflation over the coming year.

The Reserve Bank announces it will introduce a Monetary Conditions Index (MCI) in the June 1997 Monetary Policy Statement to help reduce signalling problems. The MCI is an approximate measure of the state of overall monetary conditions. The intended index a 2:1 ratio such that a 100 basis point rise (fall) in the 90 day rate is assumed to have approximately the same impact on aggregate demand as a 2 per cent rise (fall) in the Trade weighted exchange rate index (TWI).

During the release of the Statement, Reserve Bank Governor, Dr Don Brash, notes that overall monetary conditions have eased substantially and urges a more moderate market easing in the future given the need for caution with respect to inflationary pressures.

1995




1 January 1995

The World Trade Organisation (WTO) is established, creating an umbrella over the GATT and the multilateral agreements from the Uruguay round of trade negotiations.



17 January 1995

Figures show the CPI increased by 1.2 in the December quarter, bringing CPI inflation for the year to December 1994 to 2.8 per cent. The Reserve Bank estimates underlying inflation to have been 0.6 per cent for the quarter and 1.5 per cent for the year.



23 February 1995

The Minister of Finance releases the Budget Policy Statement, which outlines the general pre-conditions that will be necessary before tax cuts can be implemented. These are:

- Net public debt must be within 20% to 30% of GDP

- There should be no risk of a return to deficits in the foreseeable future given reasonable expectations of economic performance and the level of Government spending.

- No significant risks of strong inflationary or balance of payments pressures emerging as a result.



16 March 1995

The Reserve Bank releases its March Economic Forecasts. The Bank forecasts that inflation may exceed the 2 per cent upper limit of the target range, noting that in hindsight recent monetary policy has not been tight enough, and that planned tax cuts could fuel demand.



18 April 1995

Figures show the CPI increased by 1.2 per cent in the March quarter, bringing CPI inflation for the year to March 1995 to 4.0 per cent. The Reserve Bank estimates underlying inflation to have been 0.5 per cent for the quarter and 1.9 per cent for the year.



1 June 1995

The Minister of Finance Bill Birch releases the 1995 Budget. The major increase in spending is on education. The 1994/95 fiscal year operating balance is estimated to be a $2,603 million surplus, higher than the December forecast. The surplus is projected to increase to $3,287 million in the 1995/96 fiscal year.



29 June 1995

The Reserve Bank releases its June Monetary Policy Statement. The Bank forecasts that inflation will exceed the upper limit of the 0-2 per cent range in the June and September quarters due to the rapid pace of expansion of the economy and insufficiently tight monetary policy in 1994. The Bank notes that the strain on the productive capacity of the economy has begun to ease but does not yet warrant an easing of monetary policy, as that path would extend the period that inflation was close to the top of the band and possibly raise inflation expectations.



30 June 1995

The Banking Act Repeal Act is passed in parliament, repealing the Banking Act (1982). Three principal changes include:

- Providing for non-transferable cheques.

- The ability for banks to pay cheques based on information received electronically.

- Freedom from a range of administrative requirements in the Banking Act 1982.



10 July 1995

The Reserve Bank Governor, Dr Don Brash, states that, given the rise in the exchange rate, the Bank is open to some small market driven fall in interest rates which would leave overall monetary conditions consistent with the forecasts of the June Monetary Policy Statement.



18 July 1995

Figures show the CPI increased by 1.0 per cent in the June quarter, bringing CPI inflation for the year to June 1995 to 4.6 per cent. The Reserve Bank estimates underlying inflation to have been 0.6 per cent for the quarter and 2.2 per cent for the year.

Reserve Bank Governor, Dr Don Brash, stresses that the June quarter CPI release does not provide any justification for an easing in overall monetary policy. The CPI figures are in line with the Bank's previous projections and accordingly monetary conditions will have to remain firm until there is clear evidence of weakening inflation as stated in the June Monetary Policy Statement. Further, the Bank will take any necessary actions to ensure that monetary conditions remain at least as firm as those prevailing at the time of the June 1995 Monetary Policy Statement.



11 August 1995

The Reserve Bank reduces its settlement cash target from $20 million to $15 millions to counter the easing of overall monetary conditions that has emerged over the preceding days.



25 August 1995

The Reserve Bank again reduces its settlement cash target, this time from $15 million to $10 million, in response to the easing of overall monetary conditions.



14 September 1995

The Reserve Bank releases its September Economic Forecasts. Inflationary pressures are expected to moderate until late 1996 before increasing again as projected tax cuts fuel demand.



2 October 1995

GDP figures show that the New Zealand economy grew by 5.5 per cent in the year to June 1995.



17 October 1995

Figures show that the CPI increased by 0.2 per cent in the September quarter, bringing CPI inflation for the year to September 1995 to 3.5 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 per cent for the quarter and 2.0 per cent for the year. This result brings underlying inflation back to the top of the 0 to 2 per cent target band.

Reserve Bank Governor, Dr Don Brash, notes that "if further evidence supports the picture of a more rapid easing of inflation, there may be room for conditions to ease a little sooner than we had previously expected."



30 October 1995

The Reserve Bank issues a statement saying that it is important that financial markets do not over-react to the statement by the Governor released on the 17th October. It notes that markets should not over estimate the scope for an easing in monetary policy that may exist over the coming months.



13 December 1995

The Government releases its December Economic and Fiscal Outlook. The operating surpluses for the 1995/96 and 1996/97 fiscal years are revised downwards to $2.9 billion and $3.2 billion. The net worth of the Government is projected to be positive for the first time as from the 1995/96 fiscal year.



14 December 1995

The Reserve Bank releases its December Monetary Policy Statement. Inflation is projected to remain close to the top of the target zone for longer than previously expected despite slowing economic activity. The Bank notes its resolve to maintain price stability, saying that monetary policy will be implemented to ensure that actual conditions are at least as firm as forecast.



1994




18 January 1994

Figures show the CPI increased by 0.2 per cent in the December quarter, bringing CPI inflation for the year to December 1993 to 1.4 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 per cent for the quarter and 1.3 per cent for the year. These estimates exclude the downward effects of oil price movements over the course of the year.



14 March 1994

The Minister of Finance, the Rt. Hon. Bill Birch, announces that the government expects a broadly balanced budget for the 1993/94 financial year.



17 March 1994

International credit rating agency Moody's upgrades the credit rating of New Zealand's long-term sovereign debt to Aa2.



23 March 1994

The Reserve Bank releases its March Economic Forecasts showing growth of around 3.5 per cent per annum for the two years ahead and projected underlying inflation of 0.6 per cent for the 1995 March year.



22 April 1994

Figures show the CPI was unchanged in the March quarter, bringing CPI inflation for the year to March 1994 to 1.3 per cent. Underlying inflation is estimated by the Bank to have been 0.1 for the quarter and 1.1 per cent for the year.



27 June 1994

The Reserve Bank releases its June Monetary Policy Statement. The outlook for inflation is higher that previously projected due to robust growth, strong wage growth and higher world market prices. Consequently the Statement notes that firmer monetary conditions are appropriate.

The Fiscal Responsibility Act (FRA) is passed. It aims to enshrine the last decade of fiscal reform by increasing the reporting requirements (including initiating the regular Budget Policy Statement) and enforcing responsible management by the Government.



30 June 1994

The Government releases its 1994 Budget. The key features are:

- A $77 million increase in expenditure on research, science and technology over the next three years.

- A range of new spending on education including extending the Parents As First Teachers programme and the Skill Start programme and increasing the operation grants for primary and secondary schools.

- The operating surplus is estimated to be $973 million in the 1993/94 fiscal year. This is the first surplus in 17 years and is to be dedicated to debt repayment.



15 July 1994

Figures show the CPI increased by 0.4 in the June quarter, bringing CPI inflation for the year to June 1994 to 1.1 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 for the quarter and 1.1 per cent for the year.



8 September 1994

The Reserve Bank releases its September Economic Forecasts. Gross Domestic Product (GDP) for the years to March 1995 and 1996 is projected to grow by 4.4 and 3.1 per cent respectively. The medium term outlook for inflation is unchanged from the June Monetary Policy Statement, with underlying inflation projected to rise slightly and headline inflation projected to move outside of the 0-2 per cent target range in the year to June 1995.



4 October 1994

Production GDP figures show that the New Zealand economy grew by 6.4 per cent in the year to June 1994, the highest level since the 1970s.



13 October 1994

The Audited Crown Financial accounts are released showing a surplus for the 1993/94 fiscal year of $755 million, after a forecasted deficit for the year in the 1993 Budget statement.



14 October 1994

Figures show the CPI increased by 1.2 in the September quarter, bringing CPI inflation for the year to September 1994 to 1.8 per cent. The Reserve Bank estimates underlying inflation to have been 0.5 per cent for the quarter and 1.2 per cent for the year.



7 December 1994

The Minister of Finance, the Rt Hon Bill Birch, comments that his focus remains on foreign currency debt repayment and that tax rate reductions are some time off.



12 December 1994

The Reserve Bank issues a paper outlining the Bank's policy conclusions with respect to banking supervision. They propose a shift from private monitoring to public disclosure. The key features are: a new public disclosure regime for banks; removal of some existing prudential regulation; and increased emphasis on the role of bank directors.



13 December 1994

The Reserve Bank releases its December Monetary Policy Statement. Increasing inflationary pressures have emerged and therefore the Bank regards the substantial firming of monetary conditions that has taken place as warranted. Rapid economic growth is putting stress on the economy as New Zealand recorded the most rapid growth in the OECD for the year to June 1994.



20 December 1994

The Minister of Finance, the Rt Hon Bill Birch, announces that the Government believes it is desirable to achieve zero net foreign currency debt, with the aim of removing exchange rate risk and enhancing the Crown's chances of obtaining a better credit rating.

The Government releases its December Economic and Fiscal Outlook. Growth forecasts for the year are revised upwards from the Budget to 5.8 per cent (from 4.0). The forecasted operating balance for the 1994/95 fiscal year was revised upwards by $1,030 million to $3,594.

International credit rating agency Standard and Poor's upgrades the credit rating of New Zealand's long-term sovereign debt from AA- to AA.





1993



1 January 1993

The Single European Market comes into force eliminating technical and administrative obstacles to free trade and movement within the European Union.



4 January 1993

The New Zealand Dollar falls to a 6 year low of 0.5015 against the US Dollar.



6 January 1993

The Reserve Bank tightens monetary policy in response to the sharp fall in the exchange rate. Three channels are used: increasing the penalty discount margin from 90 basis points to 150 basis points; not offering to sell back to the market preciously discounted Reserve Bank bills; and reducing the cash target from $20 million to zero.



8 January 1993

The Reserve Bank announces that the settlement cash target will be increased from zero to $5 million, effective on the 11th January, in response to a firming in monetary conditions.



14 January 1993

Figures show the CPI increased by 0.3 per cent in the December quarter, bringing CPI inflation for the year to December 1992 to 1.3 per cent. The Reserve Bank estimates underlying inflation to have been 0.4 per cent for the quarter and 1.8 per cent for the year.



18 January 1993

The Reserve Bank further eases monetary policy by increasing the settlement cash target from $5 million to $10 million.



27 January 1993

The Reserve Bank decreases the penalty discount margin from 150 basis points to 120 basis points and increases the settlement cash target from $10 million to $15 million.



3 February 1993

The Reserve Bank restores monetary policy settings to the levels that existed prior to 6th January 1993.



12 March 1993

The Reserve Bank releases its March Economic Forecasts which show a growing economy and projections of underlying inflation remaining comfortably within the 0-2 per cent target over the next two years.



14 April 1993

Figures show the CPI increased by 0.1 in the March quarter, bringing CPI inflation for the year to March 1993 to 1.0 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 per cent for the quarter and 1.8 per cent for the year.



16 April 1993

The Reserve Bank demonetises one and two dollar notes (removing their legal tender status) having introduced $1 and $2 coins in February 1991.



22 April 1993

International credit rating agency Standard and Poor's reaffirms the AA- credit rating for New Zealand's long-term sovereign debt.



8 June 1993

The Reserve Bank releases its June Monetary Policy Statement, advising that no policy adjustment is necessary as monetary conditions have become firmer. This has occurred through a rising exchange rate, leading to lower than expected inflation outcomes.



1 July 1993

The Government releases its 1993 Budget. The key features are

- A focus on global markets with increased spending on both the Trade Development Board and the Tourism Board.

- Details of the funding of the new Crown Health Enterprises health system.

- The estimated financial deficit for the 1992/93 financial year is $2.3 billion.



14 July 1993

Figures show the CPI increased by 0.6 per cent in the June quarter, bringing CPI inflation for the year to June 1993 to 1.3 per cent. The Reserve Bank estimates underlying inflation to have been 0.3 per cent for the quarter and 1.6 per cent for the year.



25 August 1993

A multi-party Accord is agreed between the Labour, National and Alliance parties on a tax-funded scheme for superannuation, aimed at providing assurance in superannuation policy for the public.



14 September 1993

The Reserve Bank releases its September Economic Forecasts showing projections of continued growth and inflation outcomes within the 0-2 per cent target range.



22 September 1993

The Government announces that the actual financial deficit for the 1992/93 fiscal year was $1,823 million, $517 million less than estimated in the budget.



28 September 1993

The Financial Reporting Act is passed, which requires issuers of securities to the public to file complete financial statements complying with accounting practices.

The Takeovers Act is passed by Parliament. The Act sets up a Takeovers panel to provide for the administration and enforcement of the Takeovers Code.



30 September 1993

The Government sells NZ Rail Ltd to Wisconsin Central Transportation Corporation for $400 million.



14 October 1993

Figures show the CPI increased by 0.5 per cent in the September quarter, bringing CPI inflation for the year to September 1993 to 1.5 per cent. The Reserve Bank estimates underlying inflation to have been 0.4 for the quarter and 1.4 per cent for the year.

The Government releases its Pre-Election Economic and Fiscal Update. The financial deficits for the 1993/94 and 1994/95 fiscal years are forecast to be $1,442 million and $1,194 million respectively.



6 November 1993

Election night results show a hung parliament with National winning 49 seats, Labour 46, and the Alliance and New Zealand First parties both winning 2. The Election Day referendum supports a change in the general electoral system from First-Past-the-Post (FPP) to Mixed Member Proportional (MMP).



8 November 1993

Reserve Bank Governor, Dr Don Brash, issues a press statement indicating that the Bank will continue to focus on maintaining price stability.



17 November 1993

The National Party gains a clear majority of seats (50) in parliament after the counting of special votes reverses the election night results in the Waitaki electorate. Jim Bolger remains Prime Minister and Bill Birch replaces Ruth Richardson as the Minister of Finance.



8 December 1993

The Reserve Bank releases its December Monetary Policy Statement. Inflation projections are for a further decline in inflation until mid-1995 where after it is expected to increase slightly. There is no required change to current monetary conditions, with the TWI appreciating, reflecting a growing economy, price stability and confidence around the fiscal outlook.



15 December 1993

An agreement in the Uruguay round of the General Agreement on Tariffs and Trade (GATT) negotiations is endorsed by 117 countries, opening the way for the liberalisation of world trade. Under the deal, tariffs will be cut on most goods by an average of 50 per cent, with agricultural tariffs dropping by an average 36 per cent in industrial nations and 24 per cent in developing nations. Textile tariffs will be phased-out over 10 years. The Agreement also brings agriculture and services under the scope of the multilateral trading systems.

DISCLAIMER GOES HERE

1992



6 January

The Reserve Bank released a statement reiterating its focus on the inflation outlook for 1992 and 1993 and noting that it was continuing to watch monetary conditions closely. The Bank noted that it would be concerned if there were further weakening in the exchange rate, because at then current levels inflation outcomes for 1992 and 1993 were now expected to be towards the top end of the target ranges.



15 January

The CPI fell by 0.1 percent in the December quarter, bringing CPI inflation for the year to December 1991 to 1 percent. The Reserve Bank released a statement welcoming the inflation out­ tum for the year.



3 March

International credit rating agency Standard and Poors reaffirmed the AA-rating of New Zealand's long-term debt.



28 April

The Minister of Finance announced that the Government's forecast financial deficit for the 1991/92 year was now expected to be $3,425 million, $671 million more than had been estimated in December 1991, due mostly to lower than expected tax revenue.



13 May

The Department of Statistics announced a revision to total overseas debt at 30 September 1991 from $51 billion to $60 billion. Of the $9 billion upwards revision, $7.5 billion was due to borrowing from related companies that was previously either unrecorded or considered to be equity investment. The Department also published revised balance of payments statistics, showing a current account surplus of $116 million for 1991, compared to a deficit of almost $2.2 billion for 1990.



5 and 9 June

The Minister of Finance announced on 5 June that the projected fiscal deficits for the next two years were likely to be larger than previous!y expected. This was reiterated in a statement released on 9 June.



19 June

The Government's financial balance for the ten months to April 1992 was announced. The $1.27 billion deficit for the period was lower than previously expected.



2 July

The Government released its 1992 Budget. The estimated actual financial deficit (after adjusting for currency revaluations and sales of forest cutting rights) for the 1991/92 fiscal year was $3.2 billion, compared to an adjusted deficit of $2.6 billion in the 1990/91 fiscal year. For the 1992/93 and 1993/94 fiscal years, financial deficits of $3.3 billion and $2.84 billion are projected.



14 July

The June quarter CPI outcome was released. During this quarter, the CPI increased by 0.3 percent, bringing inflation for the year to June to 1 percent. Underlying inflation was estimated by the Bank to have been 0.5 percent for the quarter and 1.4 percent for the year.



2 September:

Movements in the exchange rate prompted the Bank to com­ ment that these movements reflected volatility in the foreign exchange markets and were not seen as a risk to the Bank's price stability targets.



9 September

A fall in the exchange rate led the Reserve Bank to indicate that, were this fall to be sustained, the Bank's price stability targets could be put at risk.



14 September

A realignment of the EMS currencies was announced. The Italian lira was devalued by 3.5 percent and other ERM curren cies were revalued by 3.5 percent.



17 September

The British pound and Italian lira were withdrawn from the ERM.

30 September

The Reserve Bank responded to further falls in the exchange rate by stating that it was watching monetary conditions closely and that such falls, were they to be sustained, could pose risks to the Bank's price stability targets



13 October

The Government announced that the audited fiscal deficit for the 1991/92 year was $634 million less than estimated on Budget night.



14 October

The September quarter CPI outcome was released. During this quarter the CPI increased by 0.3 percent, bringing inflation over the year to September to 1 percent. Underlying inflation was estimated by the Bank to have been 0.5 percent for the quarter and 1.5 percent for the year.



9 November

The Government released the fiscal outcome for the first three months of the 1992/93 fiscal year. The $826 million adjusted deficit for the period was lower than previously forecast.



1 December

In responding to a fall in the exchange rate the Reserve Bank reiterated its commitment to achieving price stability and ex­ pressed concern about the inflation implications of any further weakening in the exchange rate.



15 December

The Reserve Bank responded to a weakening in the exchange rate by purchasing outright $30 million of government bonds as part of an open market operation.



16 December

The Minister of Finance announced the reappointment of Dr Donald T Brash as Governor of the Reserve Bank when his current term as Governor expires on 31 August 1993. At the same time, a new Policy Targets Agreement (PTA) was signed by the Minister of Finance and the Governor. Under the new PTA, the Reserve Bank is required to keep 12-monthly in­ creases in the Consumers Price Index within 0-2 percent.



17 December

The Government released its December Economic and Fiscal Update. The financial deficit forecast for the 1992/93 financial year was revised down slightly to $3,219 million. However for the 1993/94 and 1994/95 years the deficit was revised up to $2,914 million and $2,723 million respectively.

The Debt Management Office announced that the 1992/93 bond programme would be reduced by $250 million from the next tender to eliminate the prospect of over funding.



24 December

The Reserve Bank responded to continued weakness in the exchange rate by not conducting an OMO. Consequently, $41 million of Reserve Bank bills that had been earlier discounted in the day were not offered back to the market.

1991

11 January

Monetary Conditions

In response to the emergence of an upward sloping interest rate yield curve, the Reserve Bank released a public statement, reiterating that short-term rates should generally exceed long-term rates while inflation is being reduced.



17 January

Gulf War Begins

The US-led forces in the Gulf began attacks on targets in Iraq and Kuwait.



17 January

Release of December Quarter 1990 Inflation Data

During the December quarter the Consumers Price Index (CPI) rose by 1.1 per cent. This brought year-on-year inflation to 4.9 per cent.



24 January

New Bank Registration

BNZ Finance Ltd was granted registered bank status.



21 February

Monetary Policy Statement

The Reserve Bank released its third Monetary Policy Statement.



22 February

Technical Changes to Monetary Policy Implementation

Technical changes to monetary policy implementation arrangements were intro­ duced by the Reserve Bank. These changes were agreed to by settlement banks, and were expected to have a neutral impact on monetary conditions.



28 February

End of War Against Iraq

The President of the United States, Mr George Bush, ordered the suspension of United States-led allied combat operations in the Gulf, signalling the end of the war against Iraq.



5 March

New Safeguards for Banking Industry

The Governor of the Reserve Bank Dr Don Brash, outlined the new safeguards that have been introduced to the banking industry following the DFC failure. These include requiring banks to keep a certain amount of capital available, a limit to the amount lent to one borrower or group, and guidelines for internal control of banks.



12 March

Increase in Deficit

The Government announced an increase in the projected year to June 1991 financial deficit from $691 million - as projected in the December "Economic and Social Initiative"- to $1.4 billion.



17 April

Release of March Quarter 1991 Inflation Data

During the March quarter the Consumers Price Index (CPI) rose by 0.6 per cent. This brought year-on-year inflation to 4.5 per cent.



23 April

Yield Curve

The Governor of the Reserve Bank gave a speech in which he outlined the conditions under which a flat or positive yield curve could emerge over the coming year. These conditions included expectations of low inflation in the June quarter being realised, a continuing favourable inflation outlook, and further progress toward reducing the fiscal deficit in the July Budget.



15 May

Employment Contract Act

The Employment Contract Act 1991 took effect.



21 May

Revision to Current Account Deficit

The Department of Statistics announced a revision from around $4.2 billion to $2.2 billion in the year March 1990 balance of payments current account deficit.



12 July

State Asset Sales Proceeds

The Minister of Finance, the Hon. Ruth Richardson, announced that state assets sales proceeds in 1991/92 would be devoted exclusively to the repayment of overseas debt.



15 July

Release of June Quarter 1991 Inflation Data

During the June quarter the Consumers Price Index (CPI) rose by 0.1 per cent. This brought year-on-year inflation to 2.8 per cent.



30 July

1991 Budget

The 1991 Budget was presented in Parliament by the Minister of Finance. Key features relevant to monetary policy included:

a forecast financial deficit for 1991/92 of $1,739 million, projected to fall to around $500 million by 1993/94;

restructuring of health funding and significant changes in the funding and charging for public housing;

higher levies on petrol and wages to fund ACC reforms, and higher alcohol and tobacco excise.



31 July

Reserve Bank Response to 1991 Budget

The Reserve Bank issued a response welcoming the deficit reductions announced in the Budget. The statement indicated that the forecast fiscal deficits appeared to be sustainable. The Bank noted various Budget decisions would boost the CPI, but that the Bank's focus would be on underlying inflation, excluding this type of one-off effect. The statement added that recent fiscal and inflation developments meant that the Bank had no reason to prevent the yield curve turning upward sloping, provided conditions remained consistent with price stability.



12 August

Monetary Policy Statement

The Reserve Bank released its fourth Monetary Policy Statement.



25 September

Increase in Cash Target

The Reserve Bank eased monetary policy, announcing a $5 million increase in the settlement cash target (to $20 million). The decision to ease was taken because it appeared that inflation would fall below the indicative inflation ranges for the years to December 1991 and December 1992.



4 October

Government Revises Superannuation Changes

The Government announced its intention to revise changes to the superannuation policy which had been set out in the July 1991 Budget.



8 October

Revised Estimate of Fiscal Deficit

It was announced that the Government's audited fiscal deficit for the 1990/91 year was $513 million less than estimated on Budget night.



15 October

Release of September Quarter 1991 Inflation Data

During the September quarter the Consumers Price Index (CPI) rose by 0.4 per cent. This brought year-on-year inflation to 2.2 per cent.



13 November

Current Assessment of Inflation

The Governor of the Reserve Bank gave a speech in which he noted that inflation was expected to end up in the upper half of the Bank's 1.5 - 3.5 per cent indicative inflation range for 1992, and that the Bank would not feel comfortable with an exchange rate level that would put that inflation target a risk.



9 December

Inflation Forecasts

The Reserve Bank released a statement noting that its latest economic forecasts would be released on 17 December and, based on then current monetary conditions, would show underlying inflation in 1992 to be a little below the mid-point of the Bank's 1.5

- 3.5 per cent indicative range for that year.



17 December

Revisions to Fiscal Outlook

The Minister of Finance announced formal revisions to the fiscal outlook for the current and following two fiscal years, presented in the July 1991 Budget. The Minister noted that a fiscal surplus was now unlikely to be achieved by the original target date of 1993/94. The expected financial deficit for the current fiscal year was revised upwards from its Budget night level of$1.75 billion to $2.75 billion. For the 1993 and 1994 fiscal years, financial deficits of $2.3 and $2.25 billion respectively were forecast, up from Budget night projections of $686 million and $528 million respectively.



18 December

Settlement Accounts

The Reserve Bank announced changes to the calculation of interest payable on balances in the settlement accounts held at the Reserve Bank. Henceforth, interest would only be paid on individual balances up to $5 million, and the rate would be calculated as the 7 day cash rate less 300 base points, rather than as 65 per cent of the 7 day cash rate. The Bank noted that the changes were intended to enhance the functioning of the cash market and did not reflect a shift in the stance of monetary policy



24 December

Settlement Accounts

The Reserve Bank modified the changes to the payment of interest in settlement balances announced on 18 December, stating that the significant falls in overnight interest rates in recent days had been an over-reaction to the 18 December measure. Effective immediately, the Bank would pay interest on individual balances up to $20 million.



.

1990



17 January

Release of December quarter 1989 Inflation Data

During the quarter the Consumers Price Index (CPI) rose by 1.2 per cent. This brought year-on­ year CPI inflation to 7.2 per cent. The Reserve Bank's Housing Adjusted Price Index (HAPI) rose by 1.2 per cent, taking year-on-year HAPI inflation to 7.2 per cent.



1 February

Reserve Bank Act

The Reserve Bank of New Zealand Act 1989 came into force.



7 February

DFC New Zealand Ltd - Statutory Management

A report to creditors was released by the DFC statutory managers, Mr Don Francis and Mr Tom Davies.



2 March

Signing of Policy Targets Agreement

The Reserve Bank of New Zealand's Policy Targets Agreement was signed by the Minister of Finance, the Hon. David Caygill and the Governor of the Reserve Bank, Dr Don Brash.



15 March

Bank Registration Policy

The Reserve Bank released a paper containing a statement of principles relating to the registration and prudential supervision of banks.



20 March

Economic Statement

The Minister of Finance, the Hon. David Caygill, released an economic statement detailing a programme for future economic reforms. The major points were:

A proposed revision of the Companies Act and the legislation governing the areas of takeovers and securities;

The removal of the restrictions on ownership of ports;

A proposed restructuring of New Zealand Railways with a view to corporatisation;

A programme of tariff reduction from 1991 to 1996;

A proposed Labour Relations Act enabling more flexible work practices; The intention to sell Telecom subject to certain conditions being imposed upon the purchaser.



20 March

DFC - Statutory Management

The appointment of Mr Sandy Maier as new statutory manager and chief executive for DFC was announced.



28 March

New Bank Registration

Westland Bank Limited, a wholly owned subsidiary of ASB Bank Limited, was granted registered bank status.



2 April

Monetary Policy Statement

The Reserve Bank issued its first Monetary Policy Statement in accordance with section 15 of the Reserve Bank of New Zealand Act 1989.



18 April

Release of March 1990 quarter CPI result

During the quarter the CPI rose by 0.9 per cent. This brought year-on-year CPI inflation to 7.0 per cent. The Reserve Bank's HAPI rose by 0.9 per cent, taking year-on-year HAPI inflation to 7.3 per cent.



30 April

One and two cent coins

One and two cent coins were demonetised and shops, banks and other parties were no longer required to accept them in payment for goods and services, or for deposits to accounts.



3 May

Sale of State Insurance

The Government announced the sale of the State Insurance Office to Norwich Insurance for $735 million.



28 May

Reserve Bank Float Tender

The Reserve Bank increased the minimum acceptable bid in its daily 'float' tender from 82.5 per cent to 87.5 per cent of the one-day discount rate. This increase was one of a series of operations over the last ten days of May, designed by the Reserve Bank to tighten monetary conditions and reaffirm the Bank•s commitment to the price stability objective. This move followed perceptions of an increase in inflationary pressures in the June quarter and an easing in liquidity conditions particularly over April and May.



14 June

New Zealand Financial Markets Committee

The New Zealand Financial Markets Overview Committee was officially established. The aim of this committee is to foster the sound development of the financial markets in New Zealand by facilitating communication between the various financial market sector groups.



14 June

Sale of Telecom

The sale of Telecom to a consortium comprising two American companies, American Information Technologies Corporation and Bell Atlantic Corporation, and two New Zealand companies, Fay Richwhite partners and Freightways Holdings for $4,250 million was announced.



15 June

Sale of Tourist Hotel Corporation

The sale of the Tourist Hotel Corporation of New Zealand to Southern Pacific Hotel Corporation Limited for the sum of $74 million was announced.



25 June

Austraclear enters New Zealand

The Registry Department of the Reserve Bank announced the commencement of the use of the Austraclear system in New Zealand. Austraclear is a real-time computer system for storing securities in safe custody, and for recording and settling financial market transactions.





29 June

New Bank Registration

United Banking Group Limited, a subsidiary of the State Bank of South Australia, was granted registered bank status. Bank registration coincided with the conversion of United Building Society to a New Zealand registered company. United Banking group later changed its name to United Bank Limited.



12 July

Commemorative Notes and Coins

The Reserve Bank of New Zealand announced the release of commemorative bank notes and collectors coins, in association with the New Zealand 1990 Commission, to mark New Zealand's sesquicentenary.



16 July

Release of June 1990 quarter CPI result

During the quarter the CPI rose 1.8 per cent. This brought year-on-year CPI inflation to 7.6 per cent. The Reserve Bank's HAPI rose 1.5 per cent taking year-on-year HAPI inflation to 7.5 per cent.



19 July

July 19 Asset Sales

The Minister of State Owned Enterprises, the Hon. Richard Prebble, announced the end of the State­ owned asset sales programme.



24 July

1990 Budget

The 1990 Budget was presented. The main policy statements were:

Projected financial surplus of $89 million for 1990/91;

Projected financial deficit of $2.2 billion and $1.6 billion for 1991/92 and 1992/93 respectively;

The planned redemption of $5 billion of public debt over the 1990/91 fiscal year;

The abolition of excise duties on diesel fuel from I January 1991; The abolition of excise duties on motor vehicles from 25 July 1990;

Various tax simplification measures designed to reduce tax compliance costs;

Increased expenditure on health and education with a decrease in defence spending.

1 August

Monetary Conditions

The Reserve Bank undertook action to firm monetary conditions. This action followed exchange rate weakness in the weeks prior to this move, disappointing inflation outcomes and continuing high expectations of inflation. The Bank's aim was to send a clear message to both the financial markets and to the public of the Bank's committment to deliver price stability.



2 August

Invasion of Kuwait

Iraqi troops seized control of Kuwait prompting significant increases in oil prices.



3 August

Monetary Conditions

The Reserve Bank undertook further action to firm monetary conditions.



14 August

New One and Two Dollar Coins

The Reserve Bank announced that gold-coloured one and two dollar coins would be introduced in November 1990.



14 August

New Bank Registration

The Rural Banking and Finance Corporation of New Zealand Limited was granted registered bank status.



4 September

Change in Prime Minister

The Hon. Mike Moore replaced the Rt Hon. Geoffrey Palmer as Prime Minister.



4 September

Monetary Policy Statement

The Reserve Bank released its second Monetary Policy Statement.



17 September

Union - Government Agreement

The Government and the New Zealand Council of Trade Unions (CTU) announced an arrangement which became known as the 'Growth Agreement'. Under the terms of this agreement:

The CTU agreed to exercise its influence to achieve wage settlements of 2 per cent, with any further increases to be based on productivity growth; and

The Government undertook to take substantial steps towards reversing the deterioration in its fiscal position.

The Reserve Bank indicated its intention to not prevent any easing in monetary conditions that flowed from greater wage restraint.



11 October

Indicative Inflation range for 1991

The Governor of the Reserve Bank, Dr Don Brash, in conjunction with the release of the Reserve Bank's Economic Forecasts, announced a change in the specification of the Bank's indicative inflation range for 1991. This change was prompted by increases in international crude oil prices that had occurred since the release of the Bank's September Monetary Policy Statement.

In his statement, Dr Brash indicated that the Bank would focus on achieving an underlying ex-oil inflation rate of 1.5 - 3.5 per cent by December 1991.



15 October

Release of September 1990 quarter CPI result

During the quarter the CPI rose 1 per cent. This brought year-on-year CPI inflation to 5 per cent. The Reserve Bank's HAPI rose 1.1 per cent, taking year-on-year HAPI inflation to 4.7 per cent.



17 October

Reserve Bank Responds to Exchange Rate Movement

Exchange rate falls had been leading some investors to question the Reserve Bank's commitment to price stability. The Bank responded with a public statement reiterating its intention to maintain monetary conditions consistent with the price stability objective. In the event, this statement was misinterpreted by some commentators as a signal that the Bank was largely indifferent to exchange rate developments. To prevent inappropriate exchange rate falls, the Bank undertook a firming action and issued another statement on 18 October that further emphasised its commitment to achieving price stability.



29 October

General Election

The National Party won the general election gaining 67 seats in Parliament, compared to the Labour Party's 29 and the New Labour Party's 1. Consequently, the Hon. Jim Bolger replaced the Hon. Mike Moore as Prime Minister.



5 November

Bank of New Zealand/Fiscal Revisions

The Government announced its intention to commit $620 million to supporting the Bank of New Zealand following problems arising from an increase in the bank's non-performing loans in Australia.

The Government announced revisions to the projected fiscal situation. It expected a financial deficit of $1019 million in 1990/91 instead of the previously projected surplus of $89 million. Deficit projections for the years 1991/92, 1992/93 and 1993/94 were $3.7 billion, $4.5 billion and $5.2 billion respectively, assuming no change to Government spending.



12 November

Banks meet to discuss cash plays

Reserve Bank officials met with representatives of five major settlement banks to discuss the operations of the cash market following problems arising from periodic manipulation of the market for short-term cash.



19 November

DFC - Statutory Management

DFC statutory manager, Sandy Maier, announced that DFC's $2.2 billion debt restructuring plan was to go ahead. This announcement followed agreement to the plan by creditors holding over 99 per cent of the DFC' s total debt. Under the plan the Government had been committed to contributing

$112 million, National Provident Fund $341 million (in exchange for tax losses) and Salomon Brothers United States will contribute $8 million. The remainder of the debt will be funded from liquidating the DFC's assets.



27 November

Interbank Settlement Market

The Reserve Bank released a discussion paper on the options available to improve the functioning of the interbank settlement market. This discussion paper followed on from the 12 November meeting between the Reserve Bank and five settlement banks.



6 December

Bank of New Zealand

The BNZ's two shareholders, the Government and Fay Richwhite, both reaffirmed their commit­ ment to see through, to successful completion, the recapitalisation of the BNZ. This reaffirmation followed media reports indicating that the two shareholders could withdraw from their 5 November commitment to the BNZ if the bank's share price fell below 50 cents for seven of the ten days prior to the deal being finalised.



19 December

Economic Package Announced

The Government announced its 'Economic and Social Initiative'. The major points were: Across-the-board benefit cuts from 1 April 1991;

Abolition of family benefit, compensated by a rise in family support for those on low incomes;

Cut in subsidy for visits to the doctor. Some prescription charges increased; Projected financial deficit for 1990/91 reduced from $1, 019 million to $691 million;

End of compulsory unionism - associated labour market restrictions with workers free to negotiate their own employment contracts.



19 December

New Policy Targets Agreement

The Minister of Finance and the Governor of the Reserve Bank signed a new Policy Targets Agreement. This agreement altered the target date for the achievement of price stability from the end of December 1992 to the end of December 1993.



1989



28 January 1989

Westpac Named as Government Banker

The Treasury announced that Westpac Banking Corporation had been awarded the contract to handle the Government's banking business from April 1989.



8 March 1989

New Bank Registration

The Governor of the Reserve Bank, Dr Donald Brash, announced the registration of Elderbank Limited as a registered bank.



21 March 1989

Economic Statement

The Government's economic statement was presented by the Minister of Finance, Hon. David Caygill. The main features included:

  • An increase in the GST rate from 10 per cent to 12.5 per cent from 1July 1989.
  • An increase in the company tax rate, from 28 cents in the dollar to 33 cents, from 1 April 1989.
  • From 1 July 1989, reduction in excise tax on petrol and methanol by 4 cents per litre, and a 7 cents per litre reduction on diesel excise. Excise tax on other fuels would be abolished on this date.
  • The excise tax on motor vehicles would be halved to 7.5 percent on 22 March.
  • Government spending to be curbed by $700 million, largely by capping defence spending, over the next three years.


31 March 1989

Removal of One and Two Cent Coins

The Reserve Bank announced that it would stop issuing one and two cent coins from 31 March 1989.

The coins were still to be accepted as legal tender but the Reserve Bank would slowly remove them from circulation.



18 April 1989

Manufacturing Trade Barriers Removed

Commerce Minister David Butcher and Trade Minister Mike Moore announced that the last manufacturing trade barriers between Australia and New Zealand would be removed from July 1989, a year earlier than planned.



28 April 1989

Inflation Falls to 20-Year Low

The March quarter 1989 consumers price index was released, indicating that infla­ tion fell to a 20-year low, excluding the 1982-84 wage/price freeze, with consumer prices rising only 4 percent in the year to March 1989.



4 May 1989

Reserve Bank of New Zealand Bill

The Minister of Finance, Hon. David Caygill, introduced the Reserve Bank of New Zealand Bill into Parliament.

The main purpose of the legislation was to clearly define the roles of the Govern­ ment and the Reserve Bank with respect to monetary policy and the control of inflation. The Bill was intended to place the Bank on a more independent but also a more accountable legislative basis than had been the case, while recognising that ultimately it was the Government's right to determine economic policy.

Other reform in the legislation was in the area of Prudential Supervision. The Bank would now supervise only registered banks, and would be given more powers to put that into effect.



9 May 1989

Fiscal Surplus

The Minister of Finance, Han. David Caygill, released details of the Government's revenue and expenditure for the year ended March 1989, showing a Budget Table 2 surplus of $1.678 billion.



11 May 1989

New Bank Registration

The Governor of the Reserve Bank, Dr Donald Brash, announced the registrations of ASB Bank and Primary Industry Bank of Australia Limited as registered banks.



2 June 1989

New Bank Registration

The Governor of the Reserve Bank, Dr Donald Brash, announced the registration of National Mutual Corporation New Zealand Limited as a registered bank.



6 June 1989

BNZ Lose $648.8 million

The Bank of New Zealand announced an after tax loss (after extraordinary items) of

$648.8 million for the year to 31 March 1989. The loss was mainly due to increased loan loss provisions which were identified as a result of a review, undertaken by independent consultants, of the BNZ's loan portfolio.



8 June 1989

New Bank Registration

The Governor of the Reserve Bank, Dr Donald Brash, announced the registration of TSB Bank, formerly Taranaki Savings Bank as a registered bank.



12 June 1989

Temporary Cash Target Change

The Deputy Governor of the Reserve Bank, Mr R.L. Knight, announced a temporary increase in the cash target of $20 million to $50 million on Monday, 12 June 1989.

Mr Knight emphasised that the increase was aimed at countering manipulation of the cash market, rather than representing a change in monetary policy settings.



1 July 1989

GST Increases

The goods and services tax rate was increased from 10 per cent to 12.5 per cent. July 27

1989 Budget

The 1989 Budget was presented. The main policy statements were:

  • A range of macro-economic targets to be achieved by 1992:

(a) public debt to 50 per cent of GDP;

(b) 0-2 per cent inflation;

(c) unemployment under 100,000; and

(d) first mortgage interest rates of 7-10 per cent.

  • Guaranteed retirement income.
  • The Budget surplus in 1989/90 would be used to repay domestic rather than foreign debt.


2 August 1989

Foreign Investment in New Zealand

In a move confirming New Zealand's receptive attitude towards foreign investment, the Government announced an amendment to the Overseas Investment Regulations 1985.

The amendment established a new threshold of $10 million below which Overseas Investment Commission approval was not required, although certain sensitive sectors would remain subject to tighter surveillance.



7 August 1989

Prime Minister Resigns

Prime Minister David Lange resigned as Prime Minister. He was replaced by Geoffrey Palmer.



11 August 1989

New Bank Registration

The Governor of the Reserve Bank, Dr Donald Brash, announced the registration of Post Office Bank Limited as New Zealand's 20th registered bank.



18 August 1989

Sale of Rural Banking and Finance Corporation

The Government announced that the Rural Banking and Finance Corporation has been sold to Fletcher Challenge for $1.08 billion.



3 October 1989

Statutory Managers Appointed to DFC

The Governor of the Reserve Bank, Dr Donald Brash, announced that statutory managers had been appointed to DFC New Zealand Limited.

The decision to appoint statutory managers had been taken under the Reserve Bank of New Zealand Act, after the directors of DFC advised the Reserve Bank that DFC faced serious financial difficulties after taking into account of loss provisions for the half year ended 1989.

The statutory managers were Mr Don Francis and Mr Tom Davies of Deloitte

Haskins and Sells.



1 December 1989

Temporary Cash Target Change

The Governor of the Reserve Bank, Dr Donald Brash, announced a temporary in­ crease in the Bank's daily cash target. The cash target was increased by $15 million to $45 million on 1 December, and was reduced back to $30 million on 5 December.

Dr Brash emphasised that the move was aimed to relieve unduly tight liquidity conditions which had developed recently.



8 December 1989

Tourist and Publicity Department Sells Communicate Unit

The Minister of State-Owned Enterprises, Hon. Stan Rodger, announced the sale of Communicate New Zealand Limited to DAC Productions.



12 December 1989

Government Sells Government Printing Office

The Associated State-Owned Enterprises spokesman, Peter Neilson, announced the sale of the Government Printing Office to investment firm Rank Group for $23 million.

The Government had previously sold the Government Printing Office head office in Mulgrave Street, Wellington for $16 million and other small properties in Auckland and Wellington for $4.4 million, bringing the total Government Printing Office pro­ ceeds to $43.4 million.



15 December 1989

Reserve Bank of New Zealand Act

The Reserve Bank of New Zealand Act was passed in Parliament, with the new legislation to become effective from 1 February 1990.



21 December 1989

New Bank Registration

The Deputy Governor of the Reserve Bank, Mr R.L. Knight, announced the registration of Trust Bank New Zealand Limited and its nine regional subsidiaries- Trust Bank Auckland Limited, Trust Bank Bay of Plenty Limited, Trust Bank Canterbury Limited, Trust Bank Central Limited, Trust Bank Otago Limited, Trust Bank South Canterbury Limited, Trust Bank Southland Limited, Trust Bank Waikato Limited, and Trust Bank Wellington Limited- as the Trust Bank Group.

1988



3 February 1988

Government Loan

The Minister of Finance, the Hon. R.O. Douglas, announced that the Government had borrowed US$160 million in a five-year eurodollar loan at an interest rate of 8.5 per cent.



10 February 1988

Economic Statement

The Minister of Finance, the Hon. R.O. Douglas, announced further details concerning the implementation of the 17 December economic statement. The main features were:

- A tax rate for resident companies for 198 8/89 of 28 per cent.

- A 'deferral' of the proposed flat rate of personal tax and from 1 October 1988 the introduction of a 24 per cent rate of tax up to $30,875 per annum, and 33 per cent above that level.

- A rebate of 9 per cent of taxable income up to a maximum of $855 in a full year, abating at 4 cents in the dollar between incomes of$9,500 and $30,875.



18 February 1989

Kiwi Bonds Sixteenth Issue

The closure of the fifteenth issue of Kiwi Bonds and its replacement by a sixteenth issue was announced. The new issue, available from 29 February, offered a rate of 12.5 per cent for two years and 13 per cent for four years.



24 February 1988

Privatisation of State-Owned Enterprises

The Minister of State-Owned Enter­ prises, the Hon. Richard Prebble, announced that the Government planned to sell state-owned enter­ prises in a bid to retire $14 billion of public debt by 1992.



26 February 1988

Increase in Daily Cash Target

The Governor of the Reserve Bank, Mr Spencer Russell, announced an increase in the daily cash target from $30 million to $40 million, effective from 29 February. The increase was intended to offset seasonal pressures in the short-term money market that had built up as a result of uncertainty over end-of-year tax flows and SOE payments.



3 March 1988

Sale of Petrocorp

The Government announced that 70 per cent of the shares in Petrocorp had been sold to Fletcher Challenge at a price of $1.75 a share. Of the remaining shares, 15 per cent were owned by Brierley Investments and 15 per cent by the public.



17 March 1988

Kiwi Bonds Seventeenth Issue

The closure of the sixteenth issue of Kiwi Bonds was announced. A new issue was to be opened after the next stock tender on 7 April, the Minister of Finance, the Hon. R.O. Douglas, said.

18 March 1988

Government Loan

The Government raised NZ$335 million through yen eurobond issues in the London market. An issue of 10 billion yen (NZ$117.6 million) was made, due 8 April1993, paying 7 per cent and priced at 102 7/8 per cent while another issue for the same amount, and also due for 1993, paid 5 per cent and was priced at 1013!4 per cent.



22 March 1988

Daily Cash Target Reduced

The Governor of the Reserve Bank, Mr Spencer Russell, announced that the daily cash target would be reduced from $40 million to $30 mil­ lion from 23 March. The cash target had been increased from $30 million to $40 million on 29 February to offset seasonal pressures 111 short­ term monetary conditions. However, the Bank stated that the seasonal pressures had now passed and it was therefore appropriate to return to the previous policy setting.



14 April 1988

Largest Financial Transaction

The largest financial transaction in New Zealand's history took place at a ceremony to mark the handing over of assets from the Crown to the Electricity Corporation.

Electricorp gave the Minister of State-Owned Enterprises, the Hon. Richard Prebble, and the Minister of Finance, the Hon. R.O. Douglas, a cheque for $6.3 billion, the agreed valuation for the assets.



15 April 1988

Kiwi Bonds Seventeenth Issue

The Minister of Finance, the Hon. R.O. Douglas, announced the introduction of a seventeenth issue of Kiwi Bonds. The new issue offered a rate of 12 per cent for two years and 11.75 per cent for four years.



15 April 1988

Removal of Two Day Hold on Government Revenue

The Reserve Bank announced that all government revenue deposited to the public account will no longer first be held with the Bank of New Zealand for two days before being transferred to the Reserve Bank. As from 2 May, the revenue will be withdrawn from the banking system on the same day.



4 May 1988

CER Motor Vehicle Agreement

The Government announced details of the Closer Economic Relations motor vehicle agreement. The main feature of the agreement is the removal of the 25 per cent tariff on Japanese car assembly packs, eighteen months earlier than planned in the December 1987 industry plan review, and a 5 per cent cut in built­ up vehicle tariffs, six months ahead of schedule.

Removal of the duty on Japanese car and light commercial assembly packs will take effect from 1 July 1988, when excise tax also falls from 20 to 15 per cent.



4 May 1988

Petrol Price Reduction

The Government announced a reduction in the petroleum tax of 6 cents per litre.



5 May 1988

Canadian Eurobond Issue

The Government issued a C$125 million (NZ$151.25 million) euro­ bond loan in the London market. The issue paid 10.5 per cent, and was priced at 101.65 per cent.



5 May 1988

Fiscal Surplus

The Government announced a fiscal surplus of $46 million for the 1987/ 88 March year (0.8 per cent of GDP). This surplus included state asset sales of around $1,700 million.

The GFS financial deficit, which measures the difference between what the Government earns and spends - leaving out items like asset sales- was $1,323 million in 1987/ 88 (-2.2 per cent of GDP compared with -7.0 per cent of GDP in 1983/ 84).



5 May 1988

Reserve Bank Director

The Minister of Finance, the Hon. R.O. Douglas, announced that former Labour Party President Margaret Wilson has been reappointed to a further three-year term as a Director of the Reserve Bank of New Zealand.



27 May 1988

Government Loan

The Acting Minister of Finance, the Hon. Michael Cullen, announced that the Government had launched a euroyen bond issue for 20 billion yen, equivalent to NZ$200 million, with the proceeds going towards re­ financing existing debt. The issue was set at an interest rate of 5.5 per cent for a term of seven years.



14 June1988

New Reserve Bank Governor

The Government announced that Sir Spencer Russell was retiring as Gov ernor of the Reserve Bank, and that he would be succeeded by Dr Donald Brash.



20 June 1988

Bond Issue

The Minister of Finance, the Hem. R.O. Douglas, announced that New Zealand had completed its first borrowing in the euro-Australian dollar markets.

The issue was for A$200 million (NZ$227 million) at an interest rate of 8 per cent. The issue price was 3.15 per cent, for a term of seven years.



29 June 1988

DFC New Zealand: Sale by Government

The Government announced that DFC New Zealand had been sold to National Provident and international investment bank Salomon Brothers for $111 million. National Provident took an 80 per cent share and Salomon Brothers 20 per cent.



6 July 1988

New Zealand Debt Management Office Established

The Treasury announced the establishment of the New Zealand Debt Management Office (NZDMO) as part of the reform of public sector financial accountability with respect to funding between the Treasury and government departments. The establishment of the NZDMO is expected to facilitate a clearer distinction between the debt management and monetary policy functions of New Zealand's monetary authorities. The primary functions of the NZDMO will be to seek out the most cost-effective methods of finance and manage the risks in the debt portfolio of government.



7 July 1988

Reserve Bank Bill

The Reserve Bank announced its intention to introduce a Reserve Bank Bill in November. The Bill will replace Government Stock and Treasury Bills as the major component of primary liquidity.



11 July 1988

Early Repayment of Loan

The Minister of Finance, the Hon. R.O. Douglas, announced the repayment of an eight year, 7.9 per cent 100 billion yen loan taken out by the previous National Government in July 1984. The loan, the largest borrowing undertaken by a New Zealand Government, was paid off four years early.



22 July 1988

Stores Board to Become SOE

The Government announced that the Government Stores Board would become a State-Owned Enterprise.



28 July 1988

1988 Budget

The 1988 Budget was presented to Parliament by the Minister of Fi­ nance, the Hem. R.O. Douglas. The highlights were:

- A forecast 1988/89 Budget Table 2 fiscal surplus of around $2,260 million (3.6 per cent of GDP), up from last year's surplus of $467 million.

- A projected 1988/89 GFS finan­ cial balance of around -$1,380 million (-2.2 per cent of GDP) compared with last year's out­ turn of -$1,147 million (-1.9 per cent of GDP).

- A programme of asset sales amounting to $2,000 million con­ tributing towards a targeted

$2,000 million reduction in for­ eign debt this year.

- Proposed legislative changes des­ igned to strengthen public sector financial management and en­

hance Reserve Bank autonomy.

- A three stage rise in tobacco taxes

from the current 90 per cent to

135 per cent by 1 April 1989.



18 August 1988

CER

Prime Ministers David Lange and Bob Hawke put the seal on a Trans­ Tasman free market by 1July 1990, signing protocols breaking down most trade barriers between New Zealand and Australia.



18 August 1988

Reserve Bank Director

The Minister of Finance, the Hon. R.O. Douglas, announced the reappointment of Sir Peter Elworthy as a Director of the Reserve Bank of New Zealand for a further term of three years.



29 August 1988

Reserve Bank Bill

The Governor of the Reserve Bank, Sir Spencer Russell, announced that the first tender of the Reserve Bank Bill would be held on 1 September. The new Bill replaces Government Stock and Treasury Bills as the major component of primary liquidity.



30 August 1988

Broadcasting Split

The Minister of Broadcasting, Hon. Richard Prebble, announced that the Broadcasting Corporation would be split into two state-owned enterprises - Television New Zealand and Radio New Zealand.



1 September 1988

New Reserve Bank Governor

Dr Donald Brash officially took up his appointment as Governor of the Reserve Bank of New Zealand.



2 September 1988

Kiwi Bonds Eighteenth Issue

The closure of the seventeenth issue of Kiwi Bonds and its replacement by an eighteenth issue was announced. The new issue, available from 5 September, offered a rate of

11.5 per cent for both two and four year terms.



13 September 1988

Euro Loan

The Minister of Finance, the Hon. R.O. Douglas, announced that the Government had raised the equiva­ lent of $181.2 million in European Currency Units to refinance existing debt.

The bonds had a coupon of 7.88 per cent, and a maturity date of 4 October 1995. The bonds were issued at a price of 101.5 per cent.



1 October 1988

New Tax Rates

New tax scales were introduced. Amongst the changes was a decrease in the top tax rate, from 48 cents in the dollar to 33 cents.



6 October 1988

Reserve Bank Director

The Minister of Finance, the Hon. R.O. Douglas, announced that Ms Suzanne Snively had been reappointed for a further three-year term as a Director of the Reserve Bank of New Zealand.



20 October 1988

Foreign Fishing Quotas

The Minister of Fisheries, Hon. Colin Moyle, announced that the Government had reduced the fishing quota allocations to foreign countries for the 1988/89 fishing year by 29 per cent. The reductions were attributed to the need to provide for the increased requirements of the New Zealand domestic fleet.



7 November 1988

New Minister of State-Owned Enterprises

The Minister of State-Owned Enter­ prises, the Hon. Richard Prebble, was relieved of his Cabinet position and was replaced by the Hon. Stan Rodger



21 November 1988

Coalcorp Sale Approved

The Cabinet approved the sale of Coalcorp, almost five months after the Government agreed in principle to dispose of the state-owned enterpnse.



1 December 1988

Ministries-Changes and Replacements

The Foreign Affairs Ministry and the Department of Trade and Industry were replaced by a superministry - the Ministry of External Relations and Trade, and the shorn-down Commerce Ministry.

The New Zealand Trade Development Board also formally came into existence.

The Hon. Mike Moore was subsequently appointed Minister of Ex­ ternal Relations and Trade.



1 December 1988

Reserve Bank Director Appointment

The Minister of Finance, the Hon. R.O. Douglas, announced that Mr Lindsay Fergusson had been appointed as a Director of the Reserve Bank of New Zealand.

His appointment follows the retirement of Mr Keith McCliskie, who served as Director of the Re­ serve Bank for 15 years.




Debt Management Kiwi Bonds

The Debt Management Office an­ nounced that closure of the eight­ eenth issue of Kiwi Bonds from 3 December and the introduction of two new short-term Kiwi Bond maturities.

From 5 December, a six month and a one-year term would be added to the two-year and four-year maturities.

For investments of $5,000 -$250,000 interest rates would be 12.5 per cent for six months and one year, 12.5 per cent for two years and 12 per cent for four years. Investments between $1,000 and$4,999 would earn 0.5 per cent less than those rates.



7 December 1988

Additional Bank Registrations

The Governor of the Reserve Bank, Dr Donald Brash, announced the registration as banks of the New Zealand branches of Barclays Bank PLC and State Bank of South Australia.



10 December 1988

Postbank Sale Approved

Legislation clearing the way for the sale of Postbank was passed in Parliament.



14 December 1988

New Minister of Finance

The Minister of Finance, the Hon. R.O. Douglas, resigned from his Cabinet position and was replaced by the Hon. David Caygill.



21 December 1988

Sale of Air New Zealand and Postbank

The Minister of Finance, the Hon. David Caygill, and State-Owned Enterprises Minister, the Hon. Stan Rodger, announced the sale of Air New Zealand and Postbank.

Air New Zealand was sold to a Brierley-Qantas consortium for $660 million and Postbank was sold to the ANZ for about $665 million.



1987



1 January 1987

Liquidity Management

The Governor of the Reserve Bank, Mr Spencer Russell, announced that the primary liquidity level for January would be around $375 million, compared with an average of around $370 million in December.



15 January 1987

Government Borrowing

The Government undertook further overseas borrowing as part of its plan to refinance major energy project debt. A total of 400 million Swiss francs (NZ$475 million) were raised on the Swiss market.



15 January 1987

New Banks Information Requirements

The Reserve Bank announced the information it would require from prospective new bank applicants. This information as announced by the Governor of the Reserve Bank, Mr Spencer Russell, places emphasis on the quality and background of institutions which wish to call them­ selves banks, in accordance with the intention of the legislation to take effect from 1 April. Accordingly, the Bank will be looking for detailed information on the mode of operations, proposed activities, management, internal prudential systems, projections of financial performance and previous experience in the banking industry, Mr Russell said.



15 January 1987

Foreign Exchange Market: Code of Behaviour and Practice

The Reserve Bank announced that members of the New Zealand foreign exchange dealing community have formally accepted and ratified a code of behaviour and practice for the New Zealand foreign exchange market.

The code's prime objective is to convey a sense of standards of behaviour and practice which are both prudent and conducive to efficient market operation, but it also aims to generate a greater awareness of sound dealing practice.



22 January 1987

BNZ Public Share Float

The Bank of New Zealand announced the public float of 13 per cent of its capital in March 1987- the largest public float in New Zealand's history.

The issue, which will be available to the public and staff at $1.75 per share, will raise $180.3 million. The New Zealand Government is to hold the remaining 87 per cent of the bank's capital.



2 February 1987

Liquidity Management

The Deputy Governor of the Reserve Bank, Mr Lindsay Knight, announced that the average primary liquidity level for February was expected to be around $1,050 million. This is substantially above the average level in January which was around $385 million. The build-up in primary liquidity during February is the counterpart of the large March tax drain period. Primary liquidity levels at the end of March and be­ ginning of April could be expected to return to around the average levels of December and January.



11 February 1987

Petrol Price Rise

The Government announced that it had increased the price of petrol by 8.4 cents a litre from 11 February and abolished the minimum price limit on petrol. This minimum price limit on petrol had been in existence since the 1930s.



23 February 1987

Government Loan

The Government raised a further US$150 million overseas. Announc­ ing this, the Minister of Finance, the Hon. R.0 Douglas, said the loan would be used to repay an equiva­ lent amount of floating rate US dollar debt.



2 March 1987

Liquidity Management

The Deputy Governor of the Reserve Bank, Mr Lindsay Knight, said that the average primary liquidity level for March is expected to be around $1,360 million. Although higher than the average level in February of around $1,050 million, the build-up was necessary to accommodate the forecast large withdrawals from the system during the tax drain period and at the end of the month, Mr Knight said.



6 March 1987

Meat Board Debt

It was announced that as part of its 1986 Budget night promise, the Government will write off the Meat Board's billion dollar farm price smoothing scheme debt in exchange for $100 million of the meat industry's reserves.



9 March 1987

Petrocorp Float

The Government confirmed it will press ahead with its second corporate privatisation by issuing 30 per cent of the shares in Petrocorp to the public later in the year.



13 March 1987

Kiwi Bonds Twelfth Issue

The closure of the eleventh issue of Kiwi Bonds and its replacement by a twelfth issue was announced. The rates on the new issue, available from 20 March 1987, will be 18.5 per cent on the two year and 17.5 per cent on the four year maturity.



17 March 1987

Government Borrowing

The Government borrowed £100 million in the Eurosterling market to refinance a loan maturing in June 1987.



19 March 1987

Government Cost Cutting

A new Government cost-cutting exercise will begin on 1 April 1987 and could save about $1 billion. Announcing this, the Minister of Finance, the Hon. R.O. Douglas, said the exercise was not just a question of increasing revenue by ex­ panding services and charges to customers. But it would also involve greater efficiency and getting better value for every dollar spent.



27 March 1987

Revised Fiscal Deficit

The Minister of Finance, the Hon.

R.O. Douglas, revised his post­ Budget night deficit forecast of $2.9

billion down to the Budget night est­ imate of $2.45 billion. Tax revenue

$600 million above forecast was

given as the reason for the new deficit forecast.



Aprill

State Corporations

The Governmellt's nine new state corporations - Government Prop­ erty Services, the Airways Corpor­ ation, Forestcorp, Landcorp, New Zealand Post, Post Office Bank, Electricorp, Telecom, and Coalcorp

-came into operation. Negotiations between the Government and the corporations' management boards on the appropriate value of assets which are to be transferred to these corporations had still to be finalised for all but one of the corporations. The Post Office Bank was the only state corporation to have reached a final agreement with the Govern­ ment on asset transfer.



Aprill

Liquidity Management

The Deputy Governor of the Reserve Bank, Mr Lindsay Knight, said the average level of primary liquidity during April is expected to be around $380 million. Although significantly lower than the average level for March which was around

$1,050 million, Mr Knight said this level is consistent with the average levels attained before the seasonal February and March primary liquid­ ity build-up which was associated with the March tax drain.



2 April 1987

Government Borrowing

The Minister of Finance, the Hon.

R.O. Douglas, announced the Gov­

ernment had begun raising US$250 million through medium-term notes in the US as part of a US$1.25 billion financing programme announced in 1986. The loans, according to Mr Douglas, are to be used to refinance debt on the major energy projects and other government debt.



2 April 1987

Crown Assets Transferred

Assets worth $2,765.1 million m gross value were transferred to the State-Owned Enterprises, an­ nounced the Minister of Finance, the Hon. R.O. Douglas.

For the Post Office Savings Bank, assets estimated at $2,685.5 million, including $135 million to bring assets and liabilities into equil­ ibrium, were transferred from the Crown. An additional amount of

$250 million was injected into the

Post Office Bank in return for shares. A sum of $79.6 million was trans­ ferred to the Government Property

Services, payment for which had been $18 million in cash. 1he balance was owed to the Crown.



7 April 1987

Kiwi Bonds Twelfth Issue: Partial Closure

The closure of the four year maturity of Kiwi Bonds was announced. The two year maturity will remain open until a decision on the new rates for both two and four year maturities are made



9 April 1987

New Export Incentive Scheme

The Minister of Overseas Trade and Marketing, the Hon. M.K. Moore, announced a new $20 million export incentive- scheme. The scheme, called the Individual Exporter Pro­ gramme, provides for grants of up to

$50,000 a year for small and

medium sized companies to explore and develop products and markets. During each of the next two years

$10 million has been allocated to the

Market Development Board to distribute.



April tO

State Pay Agreement

The Minister of State Services, tbe Hon. Stan Rodger, announced that state servants will receive a 7 per cent pay increase.



13 April 1987

1987/88 Public Debt

Programme

The Minister of Finance, the Hon.

R.O. Douglas, announced details of

the Government's intended borrow­ ing programme for the rest of the 1987/88 fiscal year. A further eight tenders, each of $250 million, are planned with the next tender sched­ uled for 11 June.



13 April 1987

1987/88 Budget Deficit

The Minister of Finance, the Hon.

R.O. Douglas, announced that a deficit of $2.2 billion was expected for the 1987/88 financial year.



23 April 1987

1986/87 Budget Deficit

The Minister of Finance, the Hon.

R.O. Douglas, announced that the

budget deficit outcome for the 1986/ 87 financial year was $1.95 billion. This figure represents 3.8 per cent of GOP, which makes it the lowest

deficit out-turn in ten years.



24 April 1987

Increase in Daily Cash Target

The Governor of the Reserve Bank, Mr Spencer Russell, announced an increase in the daily cash target from

$30 million to $40 million, effective from 27 April. Increased uncertain­ ties in the domestic money market were cited as the reason for the

mcrease.



30 April 1987

Kiwi Bonds Thirteenth Issue

The Minister of Finance, the Hon.

R.O. Douglas, announced the closure of the two year maturity of Kiwi Bonds Twelfth Issue and its re­ placement by a thirteenth issue. The

new bonds, available from 30 April, offered a rate of 17.5 per cent for two years and 16 per cent for four years.





4 May 1987

Liquidity Management

The Deputy Governor of the Reserve Bank, Mr Lindsay Knight, announced that the average primary liquidity level for May is expected to be around $390 million, compared with an average of around $380 million in April.



11 May 1987

Daily Cash Target Reduced

The Reserve Bank announced that the daily cash target would be restored to the previous level of $30 million from 12 May. The cash target had been increased from $30 million to $40 million on 27 April in response to the highly uncertain conditions in the domestic money market. However, the Bank stated that the uncertainty had now passed and it was therefore appropriate to return to the previous policy setting.



17 May 1987

New Housing Package

The Minister of Housing, the Hon. Phil Goff, announced a $102 million boost in the Government's Home­ start Scheme. Features of the package included:

- a 'top-up' loan of up to $14,000 at 3 per cent interest, with no repay­ ments for five years;

- an increase of $37.7 million for modest income home lending and the Housing Corporation's rental housing programme; and

- refinance and second-change

  1. would increase $4.4 million.

Mr Goff said the $378 million budget for lending to modest income earners would help around 10,000 families into their first home.



26 May 1987

Liquidity Management

The Deputy Governor of the Reserve Bank, Mr Lindsay Knight, announced that the average primary liquidity level for June is expected to be around $380 million, compared with an average of around $390 million in May.



4 June 1987

Kiwi Bonds Fourteenth Issue

The Minister of Finance, the Hon.

R.O. Douglas, announced the closure of the thirteenth issue of Kiwi Bonds and its replacement by a fourteenth issue. The new issue,

available from 22 June, offered a rate of 16.75 per cent for two years and 15.5 per cent for four years.



10 June 1987

Rural Bank Discounting

Scheme

The Minister in Charge of the Rural

Banking and Finance Corporation,

the Hon. C.J. Moyle, announced that the Farm Loan Discounting Scheme would close at the end of June. The discounting scheme is available to farmers with Rural Bank finance and allows the bank to write off part of a farmer's mortgage pro­ vided other lenders also agree to some concessions. The scheme first began in July 1986, and the bank estimates that 5,100 farmers will have been helped by the scheme

when it ends.



18 June 1987

1987 Budget

The 1987 Budget was presented to Parliament by the Minister of Fi­ nance, the Hon. R.O. Douglas. The highlights were:

- the first government surplus for 35 years was forecast and plans for the repayment of $600 million overseas debt were indicated. The surplus of $379 million compares with a previous year deficit of

$1,952 million;

the sale of government assets to

pay off public debt. The Govern­

ment will sell shares in a number of its businesses, including New

Zealand Steel, the Development

Finance Corporation, Petrocorp

and Air New Zealand;

- measures to reduce the incidence

of tax evasion and tax avoidance

on overseas earned income;

- an increase in Family Support and

the Guaranteed Minimum Family

Income;

- higher exemption levels for the National Superannuation sur­

charge; and

the abolition of the Farm Owner­

ship Savings Account, from 18

June 1987.



25 June 1987

The Revised 1987/88 Debt

Programme

The Governor of the Reserve Bank, Mr Spencer Russell, announced that after considering the pattern of in­ jections to primary liquidity over the remainder of the fiscal year and the need to maintain a stable supply of stock to the market, the public debt programme had been revised as follows:

Tender

Date

$million

(Nominal Value)

Settlement Dates

9 july

250

13 July-3 August

6 August

250

10 August-31 August

15 October

250

19 October-9 November

10 December

200

14 December-21 December



26 June 1987

New Zealand Post Transfer Value

The Minister of Finance, the Hon.

R.O. Douglas and the Postmaster­ General, the Hon. J. Hunt, an­ nounced that the Government and New Zealand Post had reached agreement on the value of assets to be transferred to New Zealand Post. The valuation, which values the assets at $250 million, will be satisfied by:

- the issue of $120 million in shares to the Government by New Zealand Post, representing a 100 per cent equity holding by the Crown;

- $60 million worth of long-term

Crown liabilities to be taken over and discharged by the company; and

- a cash sum of $70 million, largely from the sale of assets, to be paid

to the Crown over five years.



27 June 1987

June 27 CER

Australia's Minister for Trade and Industry, Senator John Button, and the Minister for Trade, Mr John Dawkins, announced that Australia and New Zealand had reached an agreement to have free trade be­ tween the two countries in clothing by 1995 and footwear by 1990. Free trade for footwear would start on 1 March 1990, with access for cloth­ ing increasing by A$10 million each year until free trade starts on 1 March 1995.



1 July 1987

Liquidity Management The Deputy Governor of the Reserve Bank, Mr Lindsay Knight,

announced that the average primary

liquidity level for July is expected to be around $355 million, compared with an average of around $380 million in June.



15 July 1987

Coalcorp

The Minister of Energy, the Right Hon. R.J. Tizard, announced that Coalcorp's assets had been valued at

$83.1 million, including an allow­

ance of $5.8 million to develop the Wairaki and Morley mines at Ohai.



22 July 1987

New Banks

The Governor of the Reserve Bank, Mr Spencer Russell, announced the initial group of eight institutions to which the Reserve Bank had granted banking registration.

The successful institutions (with country of origin of majority share­ holder in parenthesis) are:

- NZI Financial Corporation Limited (New Zealand)

- Citibank NA (USA)

- Hong Kong and Shanghai Bank- ing Corporation (Hong Kong)

- Barclays New Zealand Limited

(United Kingdom)

- Macquarie Bank Limited (Australia)

- Broadbank Corporation Limited (a subsidiary of National Aust­ ralia (Australia) Bank Limited)

Indosuez New Zealand Limited (France)

  1. New Zealand Limited (Canada)


27 July 1987

BNZ Allowed Full Branch in

Hong Kong

The Chief Executive of the Bank of New Zealand, Mr Bob McKay, an­ nounced that approval had been obtained from the Hong Kong Gov­ ernment to set up a full branch oper­ ation in Hong Kong.



3 August 1987

Liquidity Management

The Deputy Governor of the Reserve Bank, Mr Lindsay Knight, announced that the average primary liquidity level for August is expected to be around $475 million. This is above the average level in July

which was around $340 million.

Mr Knight announced that the

build-up of primary liquidity in August was the counterpart of the large withdrawals from the system forecast over the September tax drain period.



7 August 1987

Butter Deal with Iran

The Dairy Board announced one of its biggest butter sales outside the United Kingdom in striking a deal worth nearly $80 million to sell 35,000 tonnes of butter to Iran.



7 August 1987

New Monetary Aggregates

The Governor of the Reserve Bank, Mr Spencer Russell, announced the release of two new monetary aggre­ gate measures; a newly defined broad money supply measure ('M3') and a new aggregate lending measure ('private sector credit'). Mr Russell said that the new figures would give a better picture of overall monetary conditions because they covered a wider range of financial institutions and different forms of borrowing and lending.



15 August 1987

New Zealand Election

The Labour Government was re­ elected for a second term in office, the first second term success by a Labour Administration in 49 years. In the final analysis, the Government majority increased by four seats to nineteen.



31 August 1987

Liquidity Management

The Assistant Governor of tbe Reserve Bank, Mr Peter Nicholl, an­ nounced that the average primary liquidity level for September is expected to be around $625 million. This is substantially above the aver­ age level in August which was around $350 million. Tbe build-up in primary liquidity during Sep­ tember is the counterpart of meeting large withdrawals from the system over the tax drain period at the end of the month.



1 September 1987

Reduction in Daily Cash

Target

The Governor of the Reserve Bank, Mr Spencer Russell, announced that the daily cash target would be re­ duced from $30 million to $20 million effective from Wednesday, 2 September 1987. Mr Russell said that this reduction was in response to an improvement in the Bank's ability to forecast daily cash influences.

24 September 1987

Reserve Bank Share Price Indices

The Reserve Bank announced that it would cease to publish its daily share price index and its nine weekly sec­ toral indices from 9 October 1987. The continuation of the Bank's indices was no longer seen to be warranted because of the intro­ duction in July 1986 of the New Zealand Stock Exchange Capital and Gross Indices.



1 October 1987




7 October 1987

Monetary Policy Stance

Tightened

The Governor of the Reserve Bank, Mr Spencer Russell, announced a further firming of monetary policy by way of an increase in the Reserve Bank's discount margin, from 1per­ centage point to 1.5 percentage points.



20 October 1987

October 20 Sharemarket Plunge

The New Zealand sharemarket suf­ fered its biggest ever one-day fall, seemingly prompted by a series of sharp falls on main world markets. The Barclays Share Price Index fell 505 points to 2925, compared to the all-time high of 3968 on 18

September 1987.



21 October 1987

Sale of New Zealand Steel

The Minister of Finance, the l-Ion.

R.O. Douglas, announced that Auckland investment bank Equiti­

corp Holdings had bought the Gov­ ernment's stake in New Zealand Steel in a $327 million deal. Although much less than the $2 billion the Government has had to inject into New Zealand Steel as part of its financial restructuring, Mr Douglas said he was satisfied with the arrangement. The $327 million will be a valuable boost in achieving the projected budget surplus in the year to March 1988.



27 October 1987

The Dollar and Sharemarket

Fall

The New Zealand dollar suffered its biggest one-day fall since it was floated with the trade weighted exchange rate index falling 3.7 per cent, and the New Zealand share­ market fell a further 11 per cent as international nervousness hit finan­ cial markets. The dollar fell heavily against all currencies, before firming slightly as trading closed, while tbe Barclays Share Price Index hit a 16- month low of 2577 after a fall of 322 points. International bearishness and New Zealand reaction to over­ seas market activity were cited as the main causes of the falls.



2 November 1987

Liquidity Management

The Assistant Governor of the Re­ serve Bank, Mr Peter Nicholl, an­ nounced that the primary liquidity level for November is expected to be around $600 million.

Mr Nicholl explained that this higher level of primary liquidity is a seasonal increase to meet large liquidity withdrawals to the Government.



6 November 1987

Increase in Daily Cash Target

The Governor of the Reserve Bank, Mr Spencer Russell, announced an increase in the daily cash target from

$20 million to $30 million. Mr Russell said this adjustment was seen to be warranted in view of the current uncertainty in financial markets following the recent share­ market decline.



6 November 1987

Government Intervenes in

Electricorp/PSA Dispute

The Government intervened to re­ solve a dispute between the Public Service Association and Electricorp over staff reductions, which threatened to result in major cuts in electricity supplies throughout the country.



17 November 1987

Kiwi Bonds Fifteenth Issue

The closure of the fourteenth issue of Kiwi Bonds was announced. A new issue will be opened after the next stock tender on 10 December, the Minister of Finance, the Hon.

R.O. Douglas announced.



23 November 1987

New Nominal Exchange Rate Index

The Reserve Bank introduced a new Nominal Exchange Rate Index to measure the value of the New Zealand dollar against a basket of currencies compnsing New Zealand's five major trading part­ ners. The Chief Manager of tbe Reserve Bank's International De­ partment, Mr Allan Smitb, said the new index, which is based on a system used by other central banks, is a more accurate way of deter­ mining the average value of the New Zealand dollar against a basket of other currencies.



1 December 1987

Liquidity Management

"!be average level of primary liquid­ ity for December is forecast to be

$515 million. However, the Reserve

Bank plans to undertake operations to reduce this figure to around $400 million.

The $515 million level was con­ sidered to be appropriate given the volume of SOE payments due to be made to the Government during December. However, a significant volume of these payments have been rescheduled into the March quarter.



4 December 1987

Revised Fiscal Surplus

The Minister of Finance, the Han.

R.O. Douglas, revised his budget

night surplus forecast of $379 million down to $229 million.



4 December 1987

New Registered Bank

The Governor of the Reserve Bank, Mr Spencer Russell, announced that Countrywide Banking Corporation Limited had been granted banking registration under the provisions of the Reserve Bank of New Zealand Act 1964.



4 December 1987

Government Loan

The Minister of Finance, the Hon.

R.O. Douglas, announced that the

Government had borrowed US$25 0 million (NZ$390 million) in the New York market to refinance exist­ ing debt.



10 December 1987

State Services Bill

The Government introduced legis­ lation enabling it to appoint heads of government departments.

Under the State Sector Bill, intro­

duced by Labour Minister Stan Rodger, the Prime Minister can direct the appointment of depart­ mental heads in contracts of up to five years.

The Bill will replace the State Ser­ vices Conditions of Employment Act 1977 and the State Services Act 1962.



17 December 1987

Economic Reform

The Government announced further plans for economic reform. The main features of the economic package were:

an increase in the Goods and Ser­

vices Tax to 12.5 per cent not earlier than 1 October 1988;

- a programme of asset sales to

repay one-third ($14 billion) of the national debt of $42 billion by 1992;

- from 1 October 1988, a guar­ anteed minimum family income for wage and salary earners with children which will be 'signifi­ cantly' above present benefits rates;

a single personal income tax rate from 1 October 1988; the rate of

which to be announced m February;

- a reduction in company tax rates

from 1 October 1988 to a rate comparable but not less than the persona] tax rate;

a full dividend imputation scheme from 1 April 1988, to integrate personal and business tax systems;

a four year programme of tariff reductions on goods not subject to industry plans and a two step re­ duction in rates of duty on cars; superannuation funds, life offices and related organisations will be subject to tax from 1 April 1988; and

all measures to operate within

fiscal constraint, so that any net cost of package must be met by expenditure reduction in other areas.



18 December 1987

Kiwi Bonds Fifteenth Issue

The Minister of Finance, the Hon.

R.O. Douglas, announced the intro­ duction of a fifteenth issue of Kiwi

Bonds. The new issue offered a rate of 14.25 per cent for two years and 14 per cent for four years.



21 December 1987

Appointment of Reserve Bank Directors

The Minister of Finance, the Hon.

R.O. Douglas, announced the ap­ pointment and re-appointment of Directors to the Board of the Reserve Bank of New Zealand.

Mr Jeff Todd has been re-appointed as a director of the Reserve Bank, for a three year term, commencing 1 February 1988. Mr Douglas also an­ nounced the appointment of Mr Eion Edgar to the Board of the Reserve Bank for a three year period. He replaces Mr Callum Kirkpatrick, whose term expires on 31 January 1988.

Mr Edgar is a senior partner in the Dunedin-based sharebroking firm

Forsyth, Barr and Company, and is chairman of the Dunedin Regional Stock exchange.



1986



9 January 1986

Debt Refinancing

The Minister of Finance, the Hon. R.O. Douglas, announced the Government's intention to refinance

$US500 million ($NZ1000 million)

of its overseas debt. The first part of the debt was to be raised through a fixed-rate 25 year $US150 million issue in the US domestic market at an interest rate of 9.875 per cent.



14 January 1986

Overseas Borrowing

The Government announced the issue of $US350 million in the Euronote market, set at the Libor (London inter-bank offer rate) to complete the debt refinancing package announced on January 9.



23 January 1986

Meat Board Deficit

It was announced the financing of the Meat Board's 1984/85 season losses with the Reserve Bank would require the holding of an additional stock ten­ der m February to offset the associated liquidity injection and maintain the Government's monetary policy stance.



24 January 1986

Kiwi Bonds Third Issue

The closure of the second issue of Kiwi Bonds and its replacement by a third issue was announced. The new issue, available from 30 January, offered a rate of 19.5 per cent for two years and 18.5 per cent for four years.



24 January 1986

Import Licensing

The Minister of Trade and Industry, the Hon. David Caygill, announced the results of the latest general round of import licence tenders. Import

licensing was eased on 340 categories of products, increasing access for imports to about 15 per cent of domestic production.



27 January 1986

Stock Exchange

The Wellington Stock Exchange took its first step towards computerisation with a test run of an exchange-owned computer system for recording quotes and sales.



29 January 1986

Overseas Borrowing

Moves by New Zealand to refinance more of its overseas debt to minimise costs and currency risks were announ­ ced by the Minister of Finance, the Hon. R.O. Douglas. In particular, the Government was to repay a number of old loans in the following three months and new loans were being negotiated to minimise the cost of servicing this debt and reduce the risks associated with holding too much debt in particular currencies.



30 January 1986

Government Stock Tender

No. 27

The 27th tender of Government stock offered a total of $100 million in one maturity. This tender made up the shortfall in the Government's borrow­ ing programme due to the inability of Rakiura Holdings Ltd to settle their successful bid for stock worth almost

$100 million in the 12 December

1985 tender.



4 February 1986

Liquidity Management Policy

The Deputy Governor of the Reserve Bank, Dr R.S. Deane announced that the Reserve Bank would be prepared to discount, on demand, government

securities maturing up until 15 May 1986. Prior to 29 January, no securities maturing after 30 April were to be discountable under the new definition of Primary Liquidity (announced 3 December 1985). The change had been made to allow $350 million of government securities to be available for discounting, if required, over the March Period.



7 February 1986

Borrowing Programme

The Minister of Finance, the Hon.

R.O. Douglas, announced that the

Government borrowing programme for 1985/86 had been finalised at slightly under $3 billion. This figure included the 13 February tender of

$400 million. February 7 Borrowing

Facility The Minister of Finance, the Hon. R.O. Douglas, announced that the Government had renegotiated a US$1.5 billion facility arranged in November 1984. New Zealand's lower overseas borrowing requirements since the float of the dollar had made it prudent to reduce the facility to $1 billion. Favourable terms for New Zealand overseas borr­ owing continued to persist with a reduction in the fee structure and a drop in the interest rate.



13 February 1986

CER

New Zealand and Australia agreed in principle to seek to expand the closer economic relationship treaty between the two countries to include other groups of Pacific and Asian nations.



14 February 1986

Kiwi Bonds Fourth Issne

The closure of the third issue of Kiwi Bonds and its replacement by a fourth issue was announced. The new issue, available from 21 February, offered a rate of 20.5 per cent for two years and

1.9.5 per cent for four years.



18 February 1986

Revised Fiscal Deficit

The .Minister of Finance, the Hon.

R.O. Douglas, revised the November

1985 estimate of the 1985/86 fiscal deficit before borrowing upwards from $1.6 billion to $1 .7 billion. Four negative factors contributed sig­ nificantly to the variation from the

$1.3 billion budget night forecast less than expected fringe benefit taxation receipts, reduced customs duty reven­ ues, increased Post Office spending costs and increased debt servicing costs.



25 February 1986

Dollar Coin Replacement

The Minister of Finance, the Hon. R.O. Douglas, announced the Government had decided to issue a $1 coin in 1987 to replace the bank note. The new coin will be heptagonal in shape, about the same size as the 10 cent piece, and made from a golden colour aluminium-bronze alloy.



26 February 1986

Kiwi Bonds Fifth Issue

The closure of the fourth issue of Kiwi Bonds and its replacement by a fifth issue was announced. The new issue, available from 7 March, offered a rate of 18.5 per cent for two years and

17.5 per cent for four years.



5 March 1986

Overseas Loan

The Government negotiated a US$150 million (NZ$280 million) loan on the Euromarket as part of its programme to refinance maturing debt. Finance Minister, the Hon. R.O. Douglas, said the loan was for seven years af an interest rate of 8.25 per cent.



20 March 1986

Government Borrowing

Another US$200 million was raised in the New York capital market by the Government as part of the Govern­ ment's US dollar refinancing opera­ tion announced in January 1986.



24 March 1986

Liquidity Management Operations

As part of the modified liquidity man­ agement framework, the Reserve Bank began targetting levels of daily settlement cash balances. The target level was set at $50 million, although this figure was not publicly announ­ ced until April 28.



24 March 1986

PSIS Unfreezes Funds

The remaining $5.8 million frozen by the Public Investment Society Man­ agement Act, 1979, was released. The amount represented the last five per­ cent of members' frozen funds, togeth­ er with rebates suspended following the Act.



24 March 1986

Petrol Price Decrease

Petrol and diesel prices fell 2 cents a litre at midnight as the Government moved to pass on the advantages of falling world oil prices.



26 March 1986

Opposition Leadership Change The opposition caucus elected the Hon. J.B. Bolger to replace the Hon.

J. McLay, as the Leader and the Hon.

G.F. Gair as the Deputy Leader.



26 March 1986

Wholesale Sales Taxes

It was announced that most wholesale sales taxes would be reduced to 20 per cent on the I April 1986. The reduc­ tions were a step towards the introduction of GST in October 1986 when sales tax would he reduced to a uniform 10 per cent.



27 March 1986

Additional Stock Tender

The Minister of Finance, the Hon.

R.O. Douglas, announced an extra

stock tender of $350 million to be held on 3 April 1986. This tender was required because it was thought that the March tax take had been lower than anticipated.



1 April 1986

Deputy and Assistant Governor Appointments

The M.inister of Finance, the Hon.

R.O. Douglas, announced the appoin­ tment of Mr R.L. Knight as Deputy Governor of the Reserve Bank of New Zealand. He replaced Dr R.S. Deane who became chairman of the State Services Commission. Following the appointment of Mr R.L. Knight as

Deputy Governor, Mr R . .J. Lang,

Executive Adviser of the Reserve

Bank, took up the position of Assis­ tant Governor of the Bank.



2 April 1986

Government Borrowing Programme

The Minister of Finance, the Hon.

R.O. Douglas, provided details of the likely borrowing programme for the June quarter 1986. It was intended to raise $1500 million in three tenders during the quarter, to be held on 17 April, 15 May and 12 June. This was in addition to the 3 April tender of

$350 million announced on 27 March. The lack of finality of the extensive Government Expenditure Review in conjunction with prepara­ tion of the 1986/87 Budget prevented a full year programme from being released. The June quarter program­ me was therefore based on offsetting expected liquidity injections over the period. Mr Douglas emphasised that the Government remained committed to fully funding net public sector injec­ tions over the coming year.



3 April 1986

Definition of Primary Liquidity

The Governor of the Reserve Bank, Mr S.T. Russell, clarified the way in which the new one month definition

of primary liquidity would operate in practice. The definition of primary

liquidity indicated the basics on which the Reserve Bank would discount government securities at the market's initiative. He stated that a rolling 30 day definition of primary liquidity would be used. This new definition would effectively commence on 15 April 1986. Each day, government securities which had 30 days to maturity would come within the definition of primary liquidity and therefore be discountable on demand.



15 April 1986

Benefits Increased

Social security benefits, national superannuation and income-tested war pensions were increased in line with the latest three-monthly Con­ sumer Price Index figure.



17 April 1986

Kiwi Bonds Sixth Issue

The closure of the fifth issue of Kiwi Bonds and its replacement by a sixth issue was announced. The new issue, available from 24 April, offered a rate of 17.5 per cent for two years and 17 per cent for four years.

23 April 1986

The 1985/86 Budget Deficit

The Minister of Finance, the Hon.

R.O. Douglas announced that the bud­ get deficit outcome for the 1985/86 financial year was $1870.9 million, or

4.1 percent of GDP, up only $67.9

million on the Government's February forecast. He said this result, the best deficit out-turn in nine years, was also the only occasion in that period when a government had been able to cut the deficit in two years.



28 April 1986

Fourth Petrol Price Fall

The price of premium grade petrol dropped by 6 cents a litre to 82 cents, the fourth drop since the high of 99 cents in August 1985. The Minister of Energy, the Hon. R.J. Tizard, said the drop in world oil prices and the con­ tinuing strength of the New Zealand dollar were again reasons for the latest price drop.



5 May 1986

Kiwi Bonds Seventh Issue

The closure of the sixth issue of Kiwi Bonds and its replacement by a seven­ th issue was announced. The new issue, available from 22 May, offered a rate of 15 per cent for two years and

14.5 per cent for four years.



9 May 1986

Housing Package

A housing package, to assist the elder­ ly totalling $21 million this year, was announced by the Minister of Hous­ ing, the Hon. Phil Goff. He said that total assistance available for pension

rental flats would rise by 25 per cent to

$35,000 per unit. This would compr­

ise a $5000 grant and a $30,000 loan subsidised at 3.5 per cent interest over 25 years.



14 May 1986

Government Loan

The Government arranged a US$250 million (NZ$431 million) floating

-ate note issue on the Eurodollar market. Finance Minister, the Hon.

R.O. Douglas, said the issue would be used to maintain overseas reserves while enabling the Reserve Bank to repay similar floating rate debt which it had on its books.



19 May 1986

Government Expenditure Reform

The Government released a 'Statement on Government expen­ diture reform'. The trading activities of the Electricity Division, _State Coal Mines, Post Office and Civil Aviation would be changed from departmental organisations to corporate structures. The major changes facing these state organisations included the need to fin­ ance activity by borrowing in ordinary financial markets, the need to pay tax and usually a dividend, and the removal of many special privileges previously embedded in legislation and practice. The major benefits expected were an improved structure of incentives to perform designated

functions efficiently, and clearer iden­ tification of the underlying resource costs of such functions.



28 May 1986

Overseas Borrowing

New Zealand borrowed US$200 million by issuing bonds in the Eurodollar market. Announcing this, Associate Minister of Finance, the Hon. David Caygill, said the funds would be used to refinance existing debt and maintain the level of official reserves. The bond offer completed a series of borrowings to restructure the

U.S. dollar portion of the Govern­ ment's overseas debt.



31 May 1986

CER : Licensing Eased

The Government lifted import licens­ ing restrictions on bicycles, sporting equipment, toys and many other goods after a review prompted by the Australian Government under the CER agreement. The overall effect was to remove all quantitative access restrictions on a range of Australian goods. The exemptiuns were in line with the Government's policy of progressiVe elimination of import licensing.



10 June 1986

Trade Code Signed

The Government decided to be sig­ natory to the anti-dumping code under the General Agreements on Tariffs and Trade. Reliance on quan­ titative restrictions (i.e. import licens­ ing) as the main source of trade protection meant that anti-dumping procedures until recently, had been, relatively unused in New Zealand.



13 June 1986

Kiwi Bonds Eighth Issue

The closure of the seventh issue of Kiwi Bonds and its replacement by a eighth issue was announced. The new issue, available from 20 June, offered a rate of 14 per cent for two years and 14 per cent for four years.



26 June 1986

Dairy Board Funding

The Government announced it would guarantee Dairy Board borrowing of up to $650 million for four years to enable the Board to smooth farmers' prices and pay off a discounted Reserve Bank loan. The guarantee replaced the Board's access to Reserve Bank credit for farm product price stabilisation.



26 June 1986

Trustee Banks to Merge

All trustee savings banks except Taranaki agreed to amalgamate their operations under a new corporate identity. Coinciding with this move would be a removal of several legal restrictions on the operating flexibility of trustee banks together with further moves to eliminate the banks' Govern­ ment guarantee over a period of time. A parent holding company has been formed which will own 75 per cent of the banks' assets, with the other 25 per cent owned directly by a series of regional community trusts. These trusts will also hold shares in the hold­ mg company.



27 June 1986

Public Debt Programme

The Governor of the Reserve Bank, Mr .Spencer Russell, announced the Government's intended borrowing programme for the September quarter and gave an indication of the expected programme for the full1986/ 87 fiscal year. Three tenders of $500 million were scheduled for the September quarter and on current information a further three of $500 million were tim etabled for the December quarter.




Mortgage Package

A $28 million, low-interest loan pack­ age for low and middle-income first­ horne buyers building new houses was announced by the Minister of Hous­ ing, the Hon. P.B. Goff. The loans were stage one of a two-stage package to help offset the effect of the goods and services tax.



2 July 1986

Rural Finance Package

A package of measures aimed at finan­ cial restructuring for at risk but poten­ tially viable farmers was introduced. The major features of the package were a discount scheme for farm borr­ owings from the Rural Bank and for loans taken out through the Depart­ ment of Maori Affairs, a conditional seasonal finance guarantee scheme, and extended social welfare assistance for farm families in distress.



3 July 1986

BNZ Public Share Float

The Government announced changes in legislation that would permit the public issue of shares by the Bank of New Zealand. The share issue is intended to increase the BNZ's capital base by about $150 million.



7 July 1986

Housing Package

A $20 million urban renewal package, including new and existing policies, was announced by the Minister of Housing, the Hon. P.B. Goff. The package included $12 million in home improvement loans for low-income families, $6 million for urban renewal projects like infill housing and sweat equity schemes, and $2 million in grant and loan assistance to local authorities, trusts and housing co­ operatives.



16 July 1986

Economic Development

Commission

The Associate Minister of Finance, the Hon. D.F. Caygill, announced the establishment of the Economic Development Commission and the appointment of the Treasury secretary, Mr B. V. Galvin, as its first chairman. An independent body, the new commission will have the power to initiate its own enquiries as well as undertaking assignments at the request of the Government. The Com­ missiOn would exarnme Issues relevant to economic development

and adjustment and enhance under­ standing of economic policy.



17 July 1986

Amendment Bill

The Reserve Bank of New Zealand Amendment Bill was tabled m Parliament. The Bill provided for application for registration as banks by interested parties of sound financial condition and with expertise in bank­ ing. The bill also gave the Reserve Bank extended powers to monitor the financial condition and risk exposure of banks as part of its prudential supervision, and in some circumstan­ ces to manage the exit from financial markets of failing institutions.



22 July 1986

Petrocorp-New Zealand

Steel Debt Refinancing

The Minister of Finance, the Hon.

R.O. Douglas announced the Govern­

ment had refinanced $US500 million of the Petrocorp and New Zealand Steel Limited debt. The loan was raised at the floating Libid rate -Lon­ don Interbank bid rate -and offered substantial cost and debt serviCmg savings on existing debt.



25 July 1986

Government Expenditure Cuts

The Minister of Finance, the Hon. R.O. Douglas, listed spending reduc­ tions totalling $1.57 billion, including $840 million of measures announced in May. More than half the total included borrowing shifts and one-off revenue gains,. rather than direct cuts in departmental spending.



31 July 1986

1986 Budget

The 1986 budget was presented to Parliament by the Minister of Finance, the Hon. R.O. Douglas. The main policy statements were:

-confirmation that the introduction of the Goods and Services Tax and cuts in income tax planned for

October 1 1986 would proceed as announced; -the Government assumed direct responsibility for major project and producer board debt worth $7.2 billion as part of the process to deregulate protected industries and improve efficiency in the ecodomy;

-measures to reduce the incidence of

tax evasion and tax avoidance;

-changes in the timing of provisional

and terminal tax payments to improve the pattern of tax flows to rhe public account;

-the fiscal deficit for 1986/87 was forecast to be $2452 million,

around 5 per cent of forecast GDP.



1 August 1986

New Tendering Procedures

New rules covering bidders for Gover­ nment Stock tenders and Treasury Bill tenders were introduced. Features of the new rules include a higher deposit for non-exempt bidders (10 per cent, up from 5 per cent), tighter provisions on registration as a bidder and the introduction of bidding and set­ tlement limits.



5 August 1986

Government Borrowing

The Government undertook further borrowing in the Euromarket as part of its plan to refinance the debt on the major energy projects. The US$500 million borrowing would form part of

the $NZ7.2 billion provision for Think Big projects and producer board refinancing announced in the Budget.



13 August 1986

Kiwi Bonds Ninth Issue

The closure of the eighth issue of Kiwi Bonds and its replacement by a ninth issue was announced. The new issue, available from 14 August, offered a rate of 15.5 per cent for two years and

15.5 per cent for four years.



18 August 1986

New Credit Rating

The New York credit agency Moody's, announced a new AA3 credit rating for New Zealand. In a move to a new rating system, Moody's indicated it took account of New Zealand's continuing political stability, good economic growth pros­ pects and improving debt picture. But New Zealand's heavily agricultual­ based exports were vulnerable to long-term price weaknesses. In addi­ tion, import barriers in key markets subjected it to the threat of export volume limitations. Moody's con­ sidered New Zealand's total external debt and debt service costs to be relatively high, but were encouraged by their downward trend.



17 September 1986

Kiwi Bonds Tenth Issue

The closure of the ninth issue of Kiwi Bonds and its replacement by a tenth issue was announced. The new issue, available from 25 September, offered a rate of 14.5 per cent for two years and 14.5 per cent for four years.



18 September 1986

Government Loan

New Zealand completed a US$250 million (NZ$530 million) fund-rais­ ing effort in the United States money market, the Minister of Finance, the Hon. R.O. Douglas, announced. The loan was to be used to refinance public debt being assumed by the Govern­ ment.



20 September 1986

Agricultural Products in GATT

GATT member countries signed the Ministerial Declaration on the Uruguay Round, agreeing to launch a new round of multilateral trade negotiations. The new round will include consideration of the inter­ national trade in agricultural products and in services.



20 September 1986

Live Sheep Exports

A Cambridge company negotiated what was thought to be the biggest live export deal from New Zealand - a

$50 million plus contract to ship one and a half million lambs to Saudi Arabia over three years.









22 September 1986

The Reserve Bank announced that the daily settlement cash target used in liquidity management policy had been

reduced from $50 million to $40

million. The change was made in

order to keep short-term liquidity management operations consistent with the thrust of the Government's medium-term monetary policy stance.



1 October 1986

Liquidity Management

The Deputy Governor of tbe Reserve Bank, Mr Lindsay Knight, announced that the expected monthly average

level of Primary Liquidity would be around $400 million over the next few months. This would imply somewhat tighter liquidity conditions than in September when primary liquidity had been allowed to rise significantly to allow for the flow of taxes to gover­ nment. Mr Knight also said that the appropriateness of the level of cash settlement balances and primary liquidity would be regularly reviewed in the context of both seasonal factors and emerging economic and monetary conditions.



1 October 1986

Goods and Services Tax

The Goods

introduced.

included:

and Services Tax was

The mam changes

-a flat 10 per cent consumption tax

on goods and services;

-major exemptions from GST are: existing housing sold by unregis­

tered persons, financial services, sales of second hand goods and fund raising activities;

-reductions in income tax rates;

-increases m Social Welfare payments to low income families;

-the abolition of sales tax in most

areas.



6 October 1986

Wage Round

In-House Agreement

The first award was settled in the 1986 wage round. Sixty-five Taranaki factory workers, members of the United Food and Chemical Workers settled an in-house wage agreement at 6 per cent. This settlement was foll­ owed by another significant in-house 6 per cent agreement at the Fisher & Paykel Mosgiel plant. The latter in­ house agreement of two hundred Engineers Union members set the trend for a number of in-house deals at the beginning of the wage round brak­ ing with the traditional national award system.



7 October 1986

Wage Round

First Major Award Settlement

The first main award of the 1986 wage round was settled. The general driver's award, a traditional trendset­ ter was settled at 6 per cent, well below the level being sought by other key unions. This agreement set the tone for future agreements in the December quarter.



9 October 1986

Public Debt Programme

The Minister of Finance, the Hon.

R.O. Douglas, provided details of the likely borrowing programme for the remainder of the fiscal year. Mr Douglas confirmed that three $500 million tenders would be held during the December quarter and that on the basis of present information, no ten­ ders were scheduled for the March 1987 quarter. The tenders tentatively scheduled for the remainder of 1986/

87 together with the seven tenders

held to date were expected to fully fund net public sector injections of

$4665 million. (As indicated in the

September 1986 Bulletin, the additional stock tender for $350 million held on 3 April1986 proved to be unnecessary for the 1985186 public debt programme and was accordingly regarded as part of the 1986/87 public debt programme). The fiscal deficit appeared to be broadly on track with the budget night estimate of $2.45 billion; that position to be reviewed following the sup­ plementary estimates round held in November.



10 October 1986

Social Security Benefits

Social security benefits increased II per cent. The Minister of Social Wel­ fare, the Hon. Ann Hercus said the increases were based on a rise of 6.12 per cent in the consumer price index for the six months to September, plus

5 per cent to compensate for the Goods and Services Tax.





28 October 1986

LPG Loan Scheme

Liquigas Limited launched a $25 million subsidised loans scheme to attract up to 1,800 vehicle conver­ sions a month to liquified petroleum gas. The system replaces the Govern­ ment subsidy for conversions.



29 October 1986

Business Tax Loopholes

Proposals to close business tax loopholes were unveiled in a tax report -the Consultative Document on Accrual Tax and Treatment of Income and Expenditure. Finance Minister, the Hon. R.O. Douglas, said the proposals were aimed at making income taxable as it was earned and preventing expenditure becoming tax deductible before the period to which it properly applied.



31 October 1986

Alternative Fuels

The Government formally handed over control of the alternative fuels loan scheme to the eng and lpg indus­ tries. The two sectors of the alter­ native fuels industry are now responsi­ ble for their own installer registra­ tions, marketing, loans schemes, warranties and various other inter­ industry controls.



3 November 1986

Liquidity Management

The Reserve Bank announced a reduc­ tion in the daily settlement cash balan­ ce from $40 million to $30 million. The change reflected the markets' growing ability to operate at the $40 million level as well as the need to ensure that short-term liquidity man­ agement operations continued to be consistent with the thrust of the Government's medium-term mon­ etary policy stance.



4 November 1986

Liquidity Management

The Assistant Governor of the Reserve Bank, Mr Peter Nicholl, said that the average primary liquidity level for November was expected to be around $360 million. Mr Nicholl also said that because the market had mis­ interpreted seasonal build-ups of primary liquidity in previous March tax. flow periods as an easing in mon­ etary policy, the Reserve Bank proposed to limit the seasonal build­ up of primary liquidity in February I March 1987. Accordingly, some of the forecast net liquidity inflows in November _would be offset through the sale of treasury bills maturing in May 1987.



5 November 1986

New Zealand Debt

The Associate Minister of Finance, the Hon. David Caygill announced that New Zealand had issued US$270 million of debt through a sovereign note programme set up in New York. The programme, operating in the United States commercial paper market, allowed the Government to issue debt on a daily basis. The funds raised would be used to refinance the overseas currency debt of the Think Big projects.



28 November 1986

CER Agreement

Apparel, one of the last remaining products outside the Closer Economic Relations Agreement, had now been included, Trade and Industry Mini­ ster, the Hon. D.F. Caygill, announ­ ced. An agreed increasing scale of access to both markets was to be replaced in 1995 by no quantitative restrictions on apparel trade allowing free trade.



3 December 1986

Credit Rating

New Zealand's credit rating was drop­ ped by international credit rating agency Standard and Poors frofl) AA plus to AA. Standard and Poors poin­ ted to a mild recession in New Zealand as part of the reason for the rating drop.



5 December 1986

Overseas Borrowing

It was announced by the Minister of Finance, the Hon. R.O. Douglas, that

New Zealand had borrowed NZ$800

million on the New York market. The issue comprised bonds with maturities of seven and twenty years. The coupon on the seven year bonds was

7.70 per cent and on the twenty year

bonds 8.75 per cent.



10 December 1986

Petrol Rise

The price of petrol would rise by a cent a litre and road user charges would increase by 9.7 per cent on 1 April 1987 to help pay the National Roads Board's increased budget.



11 December 1986

Government Stock Tender

No. 38

The 38th tender of Government stock offered a total of $500 million in three maturities. The tender was filled with the use of the oversubscription facility.



16 December 1986

Farm Debt Discounts

The Minister of Agriculture, the Hon.

C.J. Moyle, announced the Govern­

ment would extend its farm debt dis­

counting scheme six months, because of an overwhelming response.



17 December 1986

Kiwi Bonds Eleventh Issue

The closure of the tenth issue of Kiwi Bonds and its replacement by a eleven­ th issue was announced. The new issue, available from 1.8 December, offered a rate of 17 per cent for two

years and 16.5 per cent for four years.



24 December 1986

Amendment Act

The Reserve Bank of New Zealand Amendment Ac-r 1986 was passed into law. The Act's provisions would take effect from 1 April 1987.



1985



17 January 1985

Government Stock Tender No. 16 The 16th tender of government stock offered a total of

$400 million in three maturities. The tender was filled as

detailed below:

Weighted Weighted

Amount Amount Average Maturity Offered Allotted Yield

($m.) ($m.) (%)

15/ 3/1987 150 150 17.908

15/ 3/1990 150 150 17.464

15/10/1994 100 100 17.087



25 January 1985

New Zealand Futures Exchange

The New Zealand Futures Exchange began operations with a United States dollar contract. The decision to open trading with the United States dollar contract was made in view of recent changes to exchange control regulations, which resulted in an upsurge in activity on the foreign exchange market.

29 January 1985

Meat Board Notes Deal The New Zealand Meat Producers Board signed a

US$200 million (NZ$426 million) notes and advances

facility in Hong Kong, priced at 0.10 per cent over

LIBOR (London Interbank Offered Rate).



29 January 1985

Butter Sale to Algeria New Zealand and Australia secured their first joint

butter marketing contract with a major sale of 28,000 tonnes to Algeria.



29 January 1985

Treasury Bill Tenders Commence The first tender of Treasury bills was held. The tender

system replaced tap issue Treasury bills, the final issue

of which closed on 25 February.



7 February 1985

Compulsory Ratios Abolished The Government announced the abolition of the set of

regulations and controls collectively known as the

'compulsory ratio system'. The ratio system required financial institutions to invest fixed proportions of their total funds in government and public securities. Eight sets of regulations and a directive under the Reserve Bank Act were revoked on 11 February.



14 February 1985

Government Stock Tender No. 17 The 17th tender of government stock offered a total of

$400 million in three maturities. The tender was filled as

detailed below:



22 February 1985

Kiwi Savings Stock Fourth Issue

The Minister of Finance, the Hon. R.O. Douglas, announced the closure of the third issue of Kiwi Savings Stock and its replacement by a fourth issue. The new issue, available from 28 February, offered a rate of 17 per cent for either a two or a four year term, with interest paid quarterly and the stock redeemable after 15 January 1986.



28 February 1985

Rent Freeze Expires The rent freeze imposed in April 1984 expired.



2 March 1985

New Zealand Dollar Floated The Minister of Finance, the Hon. R.O. Douglas,

announced that the New Zealand dollar would be

floated on 4 March 1985. Under the new regime the

Reserve Bank would no longer quote official buy and

sell rates for the New Zealand dollar. It would not withdraw completely from the market, but would continue to act to meet Government requirements for foreign exchange. It would also monitor market trends and developments through minor market dealings, and it retained the option of entering the market during periods of undue volatility to smooth exchange rate fluctuations.



6 March 1985

Foreign Ownership Limits Abolished The Government announced that limits on foreign ownership in New Zealand financial institutions, advertising agencies and fishing processors had been abolished. Previously foreign ownership had been limited to 70 per cent in financial institutions, 49 per cent in land-based fish processors and 40 per cent in advertising agencies.



8 March 1985

Open Market Operations The Governor of the Reserve Bank, Mr Spencer Russell,

confirmed that the Bank, in accordance with its ongoing

open market operations, was moving to restore liquidity

in the financial system to a more appropriate level. The

steps were taken in order to ease some of the excessive short-term interest rate pressures following the float of the dollar. These pressures were the result of the coincidence of large capital outflows immediately prior to the float with the annual tax drain.



12 March 1985

Open Market Operations

The Governor of the Reserve Bank announced further

measures designed to settle conditions in financial

markets. The measures included setting the interest rate on trading bank compensatory deposits at 19.5 per cent

(rather than at the higher prevailing rates) and the cancellation of the government stock tender due to have been held on 21 March. Call rates, which reached a peak of 500 per cent (buy) and 750 per cent (sell) on 8 March, fell to 10 to 15 per cent (buy) and 20 to 25 per cent (sell) by 13 March.



15 March 1985

$20 million Export Credit An export credit agreement for NZ$20 million was

signed by the Deputy General Manager of the New

Zealand Railways Corporation, Mr M.R.H. Henare. The seven year, fixed interest loan guaranteed by the

Export Credit Guarantee Department (ECGD) of the British Government, was arranged for the Railways to assist with the electrification of the North Island main trunk line.



19 March 1985

Government Borrowing Programme Finance Minister, the Hon. R.O. Douglas, announced

the Government's borrowing programme for the

1985/86 fiscal year. Mr Douglas said the Government intended to offset fully the monetary injections into the economy as a result of the fiscal deficit and other public

sector activity. However, some allowance would be made for growth in the liquidity base, consistent with the objective of a lasting reduction in inflation. About

$700 million would be raised in three tenders to be held on 18 April 1985, 16 May 1985 and 13 June 1985.

Announcements on subsequent tenders would be made later, but it was intended that the programme would be concentrated in the first three quarters of the fiscal year to allow for the absence of a Compensatory Deposits Scheme next March.



2 April 1985

Import Licence Levels The Minister of Trade and Industry, the Hon. David

Caygill, announced details of import licence allocations

for 1985/86. Licensed imports were to be kept at about 1984's levels. The general schedule allocation for the 1985/86 licensing year would be set at 100 per cent of 1984/85 where issued on a volume basis and I 05 per cent where based on value.



2 April 1985

Housing Package The Minister of Housing, the Hon. P.B. Goff,

announced the second part of the $830 million housing package. The programme allowed for an extra I,500 state rental units over the next year, most of them from

new construction.



10 April 1985

Housing Package

Details of the third and final part of the Government's housing policy package were released. The measures were generally designed to assist families who would otherwise not have been able to service a mortgage or who could do so, but had not been able to save a deposit.



15 April 1986

POSB Home Loans

The Post Office Savings Bank increased the amount of money its customers could borrow to buy or renovate houses by 33 per cent, to a maximum of $60,000. The Postmaster-General, the Hon. Jonathan Hunt, said the increase would allow customers to do away with the need for both a first and second mortgage and would thus reduce legal costs. Priority would be given to Post Office depositors, but funds would also be lent to non­ depositors at a higher rate of interest.



18 April 1985

Government Stock Tender No. 18 The 18th tender of government stock offered a total of

$250 million in two maturities. The tender was filled as

detailed below:

Weighted

Maturity

15/10/1990

15/ 4/1995

Amount Offered ($m.)

150

100

Amount Allotted ($m.)

150

100

Average Yield (o/o)

18.989

17.953



20 March 1985

Three Year Projections The Treasury released a set of detailed economic

projections for the three years to 1987/88. The report

indicated a generally positive medium-term outlook for

the New Zealand economy.



28 March 1985

New Housing Package The first stage of a three-part $830 million housing

package was announced by the Minister of Housing, the

Hon. P .B. Goff. The range of measures were mainly directed to assisting low and moderate income families to purchase their own homes.



25 April 1985

Petrol Price Increase

Price increases which took effect from midnight on 25 April took premium grade petrol to 99 cents a litre and regular grade to 96 cents a litre.



6 May 1985

Interest Rates Futures

The New Zealand Futures Exchange announced that trading in the prime commercial paper contract would begin on 20 May 1985. The new contract would be based on prime 90-day commercial bills as traded in the New Zealand money market.



8 May 1985

Budget Deficit

The budget deficit for the 1984/85 financial year was

$2,784 million - $22 million more than forecast. The Secretary to the Treasury, Mr B. Galvin, stated that net expenditure for the year was $15,323 million and revenue $12,539 million.



16 May 1985

Government Stock Tender No. 19

The 19th tender of government stock offered a total of

$250 million in three maturities. The tender was filled as

detailed below:

Weighted

Maturity

15/ 3/1987

15/10/1990

15/ 4/1995

Amount Offered ($m.)

75

100

75

Amount Allotted ($m.)

75

100

75

Average Yield

%)

21.849

20.391

19.175



17 May 1985

New Zealand Bank Notes

The Reserve Bank announced that a new signature would appear on New Zealand bank notes. The signature is that of S.T. Russell, Governor of the Reserve Bank. Its use marks a return to a practice established when the Bank first began issuing notes 50 years ago.



23 May 1985

Export Promotion Package The Prime Minister, the Right Hon. David Lange, said

that exporters would receive $60 million this year in an

export promotion package that included another year of

market development tax incentives. He stated that the Government had announced the export package before the next month's Budget to enable exporters to plan ahead.



13 June 1985

1985 Budget

The 1985 Budget was presented to Parliament by the Minister of Finance, the Hon. R.O. Douglas. The main policy statements were:

confirmation of the Government's commitment to phasing out assistance to land-based and manufacturing industry;

new procedures for controlling the growth in government expenditure;

measures to increase the efficiency of the operations of government departments and state-owned enterprises;

increases in education expenditure and on several other programmes, funded through savings achieved in other areas;

a significant reduction in the fiscal deficit for 1985/86 forecast at $1,286 million or about 2.8 per cent of GOP.



13 June 1985

Public Debt Programme The Minister of Finance, the Hon. R.O. Douglas,

announced a reduction in the public debt programme

for 1985/86, resulting from the downward revision in

the Budget deficit. The borrowing programme for the

year was reduced from the $2.7 billion announced in March to $2 billion.



15 June 1985

GSTDelayed

The Government announced its decision to delay by at least six months the Goods and Services Tax. In a joint statement (on 16 June) with the Minister of Finance, the Deputy Prime Minister, the Hon. G.W .R. Palmer, said it was important that misunderstandings and confusion over the implications of the tax were resolved, and that further time was also needed for administrative reasons.



17 June 1985

Income Tax Cuts

The Minister of Finance, the Hon. R.O. Douglas, announced that two rounds of cuts in personal income tax would be made as a result of the six-month deferral of the Goods and Services Tax - a 'relatively small' package from I April 1986, and a larger package from 1

October 1986.



20 June 1985

Government Stock Tender No. 20 The 20th tender of government stock offered a total of

$300 million in three maturities. The tender was filled as

detailed below:

Maturity

15/ 3/1987

15/ 3/1991

15/ 4/1995

Amount Offered ($m.)

50

150

100

Amount Allotted ($m.)

50

150

100

Weighted Average Yield

(%)

19.596

18.153

17.332



21 June 1985

GST Changes Recommended A three-person advisory panel issued a report

recommending detailed changes to the Goods and

Services Tax (GST). The Government announced it would be accepting many of the major changes

recommended.



26 June 1985

Producer Boards Guarantee A Government guarantee would be available to

producer boards, as a last resort, if they found

themselves in difficulty following the removal of the Reserve Bank stabilisation accounts, the Under­

Secretary of Finance, Mr T.A. de Cleene, said.



1 July 1985

Post Office Charges

Post Office charges were increased by an average 7 per cent. Postal rates rose between 10 and 15 per cent, with the exception of parcel rates, some of which rose by as much as 90 per cent.



3 July 1985

Kiwi Savings Stock

The Minister of Finance, the Hon. R.O. Douglas, announced that the Fourth Issue of Kiwi Savings Stock would be closed on 5 July, but would be succeeded ten days later by a Fifth Issue at the same interest rate (17 per cent) and for the same periods -either two or four years.



4 July 1985

Rural Bank Funding

The Rural Bank announced the introduction of a $150 million certificate of deposit credit facility which would allow the Bank to raise money on the open market as it needed.



9 July 1985




18 July 1985

Foreign Investment

The Minister of Finance, the Hon. R.O. Douglas, stated that the Government was now willing to consider requests from foreign investors for up to 100 per cent







23 July 1985

Housing Corporation Borrowing

The Housing Corporation announced that it had borrowed NZ$50 million overseas, with a three and a half year private placement of unsecured notes to selected institutional investors in Japan and Europe.



30 July 1985

Overseas Borrowing

New Zealand concluded a 100 million Eurosterling (NZ$277. 7 million) floating rate issue to help refinance maturing sterling debt. The Minister of Finance, the Hon. R.O. Douglas, stated that the refinancing arrangement would save New Zealand about $700,000 a year.



1 August 1985

Employment Scheme A new employment assistance programme, the Job

Opportunity Scheme, began operating. The scheme

replaced the Employment Incentive Scheme. It provides

a subsidy to public and private sector employers who

hire an eligible registered unemployed person and has two levels of assistance ($75 or $120 a week) depending on how long the prospective employee has been unemployed.



5 August 1985

Import Licensing Amended Amendments to the Import Control Regulations came

into effect. Basic import licences were made freely

transferable between companies, and restrictions on the use of a licence by other than the licence holder were reduced. The amendments reflected other moves in the operation of import controls, in particular the increasing volume of tendered licences being made available.



7 August 1985

Meat Exports

The Meat Producers Board announced that it was opening up opportunities to allow meat companies to buy back carcasses from the Board for further processing. In future, companies would be able to sell into any market in the world -- except the special developing countries, North America and Japan. The Board took control of the marketing of all New Zealand's sheepmeat in 1982.



19 July 1985

Maturity

15/ 3/1991

15/ 4/1995

Amount Offered ($m.)

150

150

Amount Allotted ($m.)

150

150

Weighted Average Yield

(%)

18.175

17.857





20 August 1985

Taxation and Benefit Reform A statement on tax and welfare benefits reform was

presented to Parliament by the Minister of Finance, the

Hon. R.O. Douglas. The main points were:

a marginal increase in the company tax and the fringe benefits tax rate;

measures to counter tax evasion and avoidance;

details of the Goods and Services Tax (GST), which is intended to replace most existing indirect taxes from October 1986;

a new simplified income tax scale, incorporating significantly lower marginal and average income tax rates, also to apply from October 1986;

substantial new benefit increases to follow the introduction of GST.



15 August 1985

Petrol Price Decrease Petrol and diesel prices were reduced 5 cents a litre from

midnight, 15 August - the largest reduction in fuel

prices in the past twenty-five years. The drop in price followed the rising international value of the New Zealand dollar.



2 September 1985

Minimum Wage The minimum adult wage was increased from $100 to

$170 a week. The new minimum was expected to have

little. effect on unionised workers' pay although some

basic rates would rise.



5 September 1985

Tax on Exports

The United States Commerce Department announced a substantial countervailing duty on New Zealand lamb imports. The Department determined that from the date the ruling was published, a NZ36 cents in the pound countervailing duty would be levied on lamb imports. An interim decision on 25 July set a duty of 26 cents.



9 September 1985

Import Tariff Phase-Out Protective tariffs sheltering New Zealand goods from

imports would be reduced more slowly than was

originally planned, the Minister of Trade and Industry,

the Hon. David Caygill said, but the phase-out of the

existing import licence scheme would be speeded up. There will be a further review of tariff policy early in 1988, by which time it is intended that import licensing for products outside of industry plans will have been abolished. The scheme for continued phasing down of tariffs may be brought forward following the 1988 review.



9 September 1985

Higher Salaries Commission The Higher Salaries Commission announced

recommendations of wage increases for senior public

servants and politicians of up to 38 per cent. The Commission later recommended pay increases of 14 to

26 per cent for hospital specialists and doctors (on 17 October) and of 33 to 38 per cent for members of the judiciary (on 8 November).



10 September 1985

1985 Wage Round Negotiations on the first award in the 1985 wage round

began.



12 September 1985

Revised Stock Sales Programme Finance Minister, the Hon. R.O. Douglas, announced a

probable increase in the programme of government

stock sales for the current fiscal year. He stated that the revised programme did not imply any change in

monetary policy and the Government maintained its objective of fully funding the 1985/86 net public sector injection through borrowing from the private sector.



19 September 1985

Government Stock Tender No. 22 The 22nd tender of government stock offered a total of

$300 million in three maturities. The tender was filled as

detailed below:

Weighted

Weighted

Amount Amount Average Maturity Offered Allotted J;'ield

($m.) ($m.) (%)

151 3/1987 50

151 3/1991 150 1

15/ 8/1993 100 1



20 September 1985

Foreign Exchange Dealing Licence The Governor of the Reserve Bank, Mr Spencer Russell,

confirmed that following discussions between

Broadbank Corporation and the Bank, the Corporation had relinquished its foreign exchange dealing licence. Mr Russell indicated that the Bank had been in close contact with Broadbank since its difficulties in the foreign exchange market had first become apparent.



20 September 1985

Live Sheep Exports The Government lifted a nine year old ban on live sheep

exports.



4 October 1985

Cashless Shopping System The New Zealand Bankers' Association announced that

trading banks would proceed with the commercial

development of a nationwide cashless shopping system.

The four trading banks- Westpac, ANZ, BNZ and the

National -had been testing electronic funds transfer at point of sale (EFT/POS) for the past eight months. It was found that the average cost per transaction for the pilot scheme (involving more than 100 EFT/POS terminals) was 13.6 cents, compared with around 70 cents for a cheque.



7 October 1985

Labour Force Survey The Department of Statistics began collecting

information for a major new quarterly survey of

employment and unemployment based on a sample of

12,000 households.



10 October 1985

Trading Bank TCD Tender Competition for large parcels of cash increased when a

trading bank offered the first known tender for

deposits. The TCD (transferable certificates of deposit) tender allowed the trading bank to bypass the common intermediary in TCD sales, merchant banks.



17 October 1985

Government Stock Tender No. 23 The 23rd tender of government stock offered a total of

$300 million in two maturities. The tender was filled as detailed below:

Maturity

Amount Offered ($m.)

Amount Allotted ($m.)

Average Yield



15 October 1985

Petrol Price Falls The price of petrol and diesel fuel dropped by 4 cents a

litre following further strengthening of the New Zealand

dollar.



16 October 1985

Synthetic Petrol Plant The world's first commercial scale gas-to-petrol plant at

Motunui, near New Plymouth, began producing petrol.

The first of the two 2,200-tonne a day methanol plants at the complex began production on 12 October 1985, and petrol was first produced on Wednesday night, 16 October 1985.



22 October 1985

Marketing Board Loan The Apple and Pear Marketing Board announced that it

had arranged an offshore financing package totalling

US$125 million. The decision to arrange an international financing package followed the

Government's encouragement to the producer boards to reduce their dependence on Reserve Bank funding and to follow a more market orientated approach to their financing.



2 November 1985

Machinery /Meat Deal with Poland Poland would buy $40 million worth of meat under an

agreement confirmed by the Minister of Overseas Trade

and Marketing, the Hon. M.K. Moore. The sale of lamb cuts and carcasses was contingent on the Meat Board and its agents arranging purchases of Polish equipment by New Zealand and other countries.



5 November 1985

Kiwi Bonds

The Kiwi Savings Stock 5th issue was closed and replaced with a new retail instrument, Kiwi Bonds. The new instrument has similar terms and conditions. The main difference is in the frequency of reviewing the interest rates - interest rates on Kiwi Bonds will be maintained at a level in line with, but slightly below, the market determined yields on wholesale government stock of comparable maturity.



8 November 1985

Prudential Supervision The Minister of Finance, the Hon. R.O. Douglas,

announced that legislation would be introduced in Parliament this year to strengthen Reserve Bank powers of prudential supervision of the banking industry. Mr

Douglas said the legislation would provide the supervisory powers needed by the Bank to assist the maintenance of public confidence in the banking system. The Reserve Bank Act will be amended to

ensure that the Bank regularly receives detailed reports and statistics to monitor the position and performance of the key financial institutions. The Bank will be given powers of last resort intervention but responsibility for the failure of any institution or the associated losses will not be shifted onto the Government or taxpayers.



11 November 1985

New Banking Licences The Minister of Finance, the Hon. R.O. Douglas,

announced that legislation would be introduced this

year which would allow (subject to certain qualitative

criter'ia being met) existing institutions to call themselves 'banks' and which would also allow new institutions to set up as banks. Under the legislation the Reserve Bank would be given the responsibility for granting bank authorisations.



14 November 1985

Government Stock Tender No. 24 The 24th tender of government stock offered a total of

$300 million in two maturities. The tender was filled as

detailed below:

Weighted

Maturity

15/10/1991

Amount

Offered

($m.)

200

Amount

Allotted

($m.)

200

Average

Yield

(%)

17.783

15/ 8/1993

100

100

17.195



3 December 1985

Liquidity Management

It was announced that the Government's liquidity management programme had been modified, although the Minister of Finance, the Hon. R.O. Douglas, stressed that there had been no change in monetary policy itself. The modifications included a change in the

definition of primary liquidity and an increase (together

with regular adjustments) in the interest rate on the cash

balances held at the Reserve Bank by trading banks and other settlement institutions.



5 December 1985

Borrowing Programme Details were released of the Government's borrowing

programme for the remainder of the current financial

year by the Minister of Finance, the Hon. R.O. Douglas. Mr Douglas said that the full year stock tender programme would be for $2.5 billion. About $1.9 billion had been raised to date, leaving $600 million to be raised from two remaining tenders scheduled for 12 December 1985 and 23 January 1986.



12 December 1985

First Issue of Kiwi Bonds Closed The Minister of Finance, the Hon. R.O. Douglas, announced the closure of the first issue of Kiwi Bonds.



12 December 1985

Economic Statement A set of economic policy measures were outlined in a statement to Parliament by the Minister of Finance, the Hon. R.O. Douglas. The measures primarily concerned taxation changes and import tariff reductions designed to assist the farming sector to adjust to recent changes in the economic environment. However, the Minister also foreshadowed changes to the operations of the trading arms of state-owned enterprises and a review of the legislation and other procedures relating to the present system of industrial relations.



12 December 1985

Government Stock Tender No. 23 The 23rd tender of government stock offered a total of

$300 million in three maturities. The tender was filled as

detailed below:

Weighted

Maturity

Amount Offered

Amount Allotted

Average Yield

15/ 9/1989

15/10/1991

15/ 8/1993

($m.)

100

100

100

($m.)

100

100

100

(%)

17.360

16.690

16.848



19 December 1985

Employment Policy

The Minister of Employment, the Hon. T.K. Burke, announced a set of job training and employment policy measures. The measures, estimated to cost about $300 million are intended to replace several existing (Government funded) schemes. The announcement followed the release of a discussion paper on industrial relations reform



20 December 1985

December20 New Zealand Steel Restructuring The Minister of Finance, the Hon. R.O. Douglas

announced that subject to shareholder approval, the

Government would assume responsibility for servicing approximately $1,000 million of debt related to the New Zealand Steel expansion project, in exchange for shares in the enterprise. The programme is intended to ensure the longer-term viability of the project without levels of import protection which would seriously penalise downstream steel users. In line with the tariff reductions announced on 12 December, products from the expansion project will not be accorded import licensing protection and competing imports will be subject to a normal tariff of 10 per cent.



1984



24 January 1984

24 Benefits Increased The Minister of Social Welfare, the Hon. V.S. Young,

announced a 1.77 per cent increase in the standard

social welfare benefit rate. This increase became effective from 23 February for sickness and unemployment benefits, and from 6 March for others.



27 January 1984

Monetary Policy Initiatives As part of an attempt to reduce the growth in lending,

the Minister of Finance, the Rt. Hon. Sir Robert

Muldoon, announced two monetary policy initiatives. The free reserves margin used in setting the reserve asset ratio applicable to trading banks was reduced from $50 million to zero, effective from February, while the government security ratio for finance companies was increased by 5 percentage points to 30 per cent, effective from March.



1 February 1984

I Wage Freeze Extended The Prime Minister, the Rt. Hon. Sir Robert Muldoon,

announced that the controls on wages, which had been

due to expire on February 29, would be extended until

agreement was reached on long-term wage-fixing

procedures.



2 February 1984

Government Stock Tender No.5 The fifth tender of government stock was held and

offered a total of $600 million in four maturities (two

conventional and two indexed). Bids accepted totalled

$308.2 million as detailed below:



9 February 1984

Kiwi Savings Stock II Closed

The closure of the second issue of Kiwi Savings Stock w.as announced by the Minister of Finance the Rt. Hon. S!f Robert Muldoon. The issue raised a total of $126.1 m1lhon in the five months it was open.



9 February 1984

Finance Controls Extended The Financial Services Regulations (No. 2) 1983 and

Economrc Stabilisation (Mortgage Loans) Regulations

1983 due to expire on February 29, were extended to

August 31.



23 February 1984

Overseas Loan

The Acting Minister of Finance, the Hon . .I. Falloon, announced that the Government had raised a NZ$130 million loan, denominated in Japanese yen at an interest rate of 7.5 per cent on a 10 year term.



27 February 1984

Ratio Tightened

A further tightening in the reserve asset ratio applied to trading banks was announced by the Associate Minister of Finance, the Hon. J.H. Falloon. The ratio for March was set at 32 per cent of deposits, and was based on a free reserves margin of -$50 mi!lion



28 February 1984

28 Inflation Bonds Altered Alterations to the terms applicable to Inflation

Adjusted Savings Bonds were announced by the Acting

Minister of Finance, the Hon. J. Falloon. Designed to make the series more attractive, the changes comprised the removal of the $20,000 per person limit, a change in the calculation of the inflation premium, and the introduction, as from the March I984 quarter, of a minimum inflation adjustment of 1.25 per cent per quarter.



29 February 1984

Post Office Loans Reduced The maximum amounts on second mortgages and

personal loans available from the Post Office Savings

Bank were reduced by the Government. Second

mortgage finance was reduced from a maximum of

$15,000 per person, to a maximum of $7,000, while

personal loans (secured over real estate) were reduced

from a maximum of $5,000 to $3,000 per person.



22 March 1984

Government Stock Tender No. 6 The sixth tender of government stock was held, and

offered a total of $400 million in three maturities (one

conventional and two indexed). Bids accepted totalled

Type

Conventional

Maturity

15/7I 1985

A moun/ Offered ($m)

200

/I mount Allotted ($(!1)

58.5

Allot men!

Yield

(%)

llJ)

$295.1 million as detailed below:

Amount A moum Allotment Offered Allotted Yield

Conventional

Indexed

Indexed

15/7/1987

l516/\989

15/6/1992

100

100

200

JR.7

:w.o

20!.0

! 1.0

6.0

6.0

Type

Conventional Indexed Indexed

Maturity

lS/5/\986

!5/6/!99!

15/6/1999

($111) ($m) (%)

I Oil \2.6 10.00

  1. 222.5 5.30
  2. 60J) 4.59

1 April 1984

EEC Butler Agreement Beferred Proposals put to the European Community's

Agriculture Council for a five year New Zealand butter access agreement were rejected by Ireland, forcing New

Zealand officials to accept a two month rollover agreement.



1 April 1984

New Takeover Law Amendments to the Commerce Act came into force.

These amendments changed the role of the Examiner of Commercial Practices with respect to takeover procedures. Under the amended legislation, all takeover proposals go directly to the Commerce Commission, rather than to the Examiner in the first instance. The amended legislation also reduces the relative size of holdings allowed in the target company without the need for notification. These have been reduced from 50 per cent for private companies and 25 per cent for public companies, to 20 per cent for both.



1 April 1984

General Wage Adjustment A General Wage Adjustment of $8 per week was

announced as part of a transitional move towards a

relaxation of wage controls. The wage adjustment became effective from I April.



4 April 1984

Import Schedule Changes Changes to the !984 general schedule of import licence

allocation were announced by the Minister of Trade and

Industry, the Hon. H.C. Templeton. The allocation was increased by 5 per cent for those items determined by value, but was left unchanged for those determined by volume.



5 April 1984

Overseas Loan

The Minister of l.:;inance the Rt. Hon. Sir Robert Muldoon, announced the raising of a new overseas loan equivalent to NZ$!40 million, by way of a West German public bond issue or 250 million deutschmarks. The loan is on a seven year term at an interest rate of

7.25 per cent.



10 April 1984

Phase-Out of Import Licensing Agreement was reached between the Government and

the Manufacturers' Federation on the progressive

phasing out of import licensing and its replacement with

tariff-based protection.



13 April 1984

Overseas I.oan

The (Jovcrnment raised £100 million in a Eurosterling public bond issue. Announcing these details, the Minister of f'inance, the Rt. Hon. Sir Robert Muldoon, said the loan was for five years at an interest rate or 10.625 per cent per annum.



26 April 1984

Monetary Policy Relaxed The Minister of Finance, the Rt. Hon. Sir Robert

Muldoon, announced an casing in reserve asset ratio

policy. The ratio for May was based on a free reserves margin of +$50 million, after two months of -$50 million. This relaxation reflected a reduction in the growth of trading bank lending to rates of increase nearer the 1 per cent per month credit growth guideline.



3 May 1984

Government Stock Tender No.7

The seventh tender of government stock was held, and offered a total of $600 million in four maturities (one conventional and tbree indexed). Bids accepted totalled

$598.4 million as detailed.

Type

Conventional Indexed Indexed Indexed

Marurity

15/4/1986

15/9/1987

15/91l992

15/9/2001

Amount Offered ($m)

100

100

300

100

Amount Allotted ($mj

55 .I

63.3 .

360.0

t20.0

Allotment Yield (%)

10.00

5.00

4.95

4.55



7 May 1984

Finance Company Regulations Amended

An amendment to the Finance Companies (Investment) Regulations 1983 was announced by the Minister of Finance, the Rt. Hon. Sir Robert Muldoon. It increased the ratio of government stock required to be held by finance companies whose lending exceeded the I per cent per month credit growth guideline. For lending in excess of the guideline, the ratio was set at 100 per cent of that excess.



8 May 1984

EEC Butter Deal

European Community agriculture ministers again failed to reach agreement on a long-term butter access deal for New Zealand. Instead, a further two month roll-over deal for butter access to Britain was agreed upon.



10 May 1984

Limited Exemption Granted

The Reserve Bank announced an amendment to the Finance Companies (Investment) Regulations !983. Under this amendment, newly formed finance companies and those in the process or being formed were permitted to lend up to twice their ordinary paid­ up capital by 3! December !984 without being in breach of the I per cent per month credit growth guideline. The standard 30 per cent government security ratio continued to apply.



15 May 1984

Housing Package Released

The Minister of Housing, the Hon. A.P.D. Friedlander, announced a new housing package. Included in the package were an extra $25 million of housing loans from the Housing Corporation in the 1984/85 financial year, and the commencement of a programme to buy and develop up to 2,500 sections for state house construction.



23 May 1984

Overseas Loan

It was announced by the Associate Minister of Finance, the Hon. 1. Falloon, that the Government had raised NZ$100 million by way of a Euroyen loan of !5 billion Japanesc yen. The loan carried an interest rate of 7.125 per cent per annum, had an issue price of 99.75 per cent and was on a term of six and a half years.



28 May 1984

Lending Rate Regulations In response to what was perceived to be excessive levels

of interest rates, the Minister of Finance, the Rt. Hon.

Sir Robert Muldoon, announced the promulgation of new regulations to control lending interest rates. The

regulations imposed a ceiling of 15 per cent for interest rates on (non-mortgage) securities offered by trading

banks, savings banks, building societies, life assurance offices and superannuation funds, and 17 per cent for all other lenders (including finance companies).



29 May 1984

Monetary Stance Tightened In a package designed to reduce the growth in trading

bank lending, the MmJSter of Fmance, the Rt. Hon. Srr

Robert Muldoon, announced a reduction from $50

million to zero in the free reserves margin used in setting trading bank reserve assets ratios for June. In addition,

the effective cost of trading bank borrowing from the Reserve Bank in the event of a shortfall in reserve assets was increased from 4 per cent to 7 per cent.



30 May 1984

Overseas Loan

It was announced by the Minister of Finance, the Rt. Han. Sir Robert Muldoon, that the Government had raised an overseas loan for the equivalent of approximately NZ$62 million. Although the statement indicated the loan was from a Middle East source, no further details were given.



31 May 1984

New llond Issue

A new retail debt issue was announced by the Minister of Finance, the Rt. Hon. Sir Robert Muldoon. Entitled 'Our New Zealand Bond', the new security was available from June 5, paying a 5 per cent rate of interest plus a cost of living adjustment (payable quarterly), and redeemable on seven working days' notice (after six months).



6 June 1984

Exchange Control Adjusted The Governor of the Reserve Bank, Mr Spencer Russell,

announced that the trading banks' and other authorised

dealers' authority to sell foreign exchange for overseas travel was to be increased to $3,000 per person per

month and up to $10,000 per person in a twelve month period. The respective amounts had formerly been

$1,000 and $4,000.



7 June 1984

Government Stock Tender No.8 The eighth tender of government stock was held, and

offered a total of $250 million in three maturities (one

conventional and two indexed). Bids accepted totalled

$83.6 million as detailed below:

Allotted



11 June 1984

Interest on Deposit Regulations Introduced As part of a continuing move to reduce interest rates,

the Minister of Finance, the Rt. Han. Sir Robert

uldoon, announced that new regulations would be mtroduced to control interest rates. The Interest on Deposit Regulations 1984, effective from June 12, set maximum rates that financial institutions could pay on deposits.



12 June 1984

New Lending Constraints Further constraints on lending by the Post Office

Savings Bank were announced by the Postmaster­ General, the Han. R.L.G. Talbot. Personal loans were limited to $500 for unsecured or partly secured advances, and to $1,000 for secured advances. Loans secured over real property for housing purposes were reduced from a maximum of $7,000 to $5,000. In addition, applications for Bankcard and Mastercard credit cards with the POSB were limited to those with established savings records with the Post Office.



14 June 1984

General Election Announced The Prime Minister, the Rt. Han. Sir Robert Muldoon,

announced that His Excellency, the Governor-General,

Sir David Beattie, had accepted his advice to dissolve Parliament in preparation for a general election to be held on July 14.



18 June 1984

Forward Exchange Market Re-entered In view of the unsettled conditions that prevailed in the

foreign exchange market, the Reserve Bank announced

that it would re-enter the forward exchange market as from June 18, with forward rates being adjusted regularly as market conditions required.

The Reserve Bank's intervention reflected the markefs concern that there was likely to be a devaluation of the currency following the general election. This concern had led to a series of large outflows of foreign exchange, as importers advanced their import payments and exporters deferred, where possible, the repatriation of foreign currency receipts.



19 June 1984

Butter Deal Sealed

A meeting of EEC agriculture ministers agreed to a five year butter access deal for New Zealand. The compromise package involves guaranteed access of 83 ,000 tonnes for 1984, 81 ,000 tonnes for l985 and

79,000 tonnes for 1986, with quotas for 1987 and 1988 being determined by August of each of the respective preceding years.



21 June 1984

Overseas Loan

The Government confirmed a statement released by the Amsterdam-Rotterdam Bank NV, which indicated that the Government had agreed to borrow I 00 million guilders in 8.25 per cent, five year Euroguilder notes, at par.



25 June 1984

Butter Deal Amended In order to ensure that the butter access deal, agreed

upon on June 19, did not preclude the negotiation of

access after 1988, the Prime Minister, the Rt. Hon. Sir Robert Muldoon, announced that the deal had been

amended to include post !988 access negotiations.



27 June 1984

Ratio Policy Tightened The Minister of Finance, the Rt. Han. Sir Robert

Muldoon, announced a further tightening in reserve

asset ratios for the month of July. The ratio was calculated on a free reserves margin of -$100 million,

compared with zero for the previous month.



27 June 1984

SMP Scheme Abolished It was announced by the Prime Minister, the Rt. Hon.

Sir Robert Muldoon, that the Supplementary Minimum

Prices schemes would be abolished after the 1983/84 season. As an interim measure, lump sum payments

equal to anticipated SMP payments would be paid to the Meat and Wool Boards for the 1984/85 season.



6 July 1984

Overseas Loan

The Government borrowed £100 million from the London market. In announcing this the Minister of Finance, the Rt. Hon. Sir Robert Muldoon, indicated that the loan was for a 30 year term, and would provide a yield of 12.432 per cent to the investors.



14 July 1984

General Election

The general election resulted in a change of Government, with the Labour Party winning 56 seats in the House of Representatives, to 37 for the National Party and 2 for the Social Credit Party. On election night results, Labour won 43 per cent of the votes cast, with National winning 36 per cent, the New Zealand Party 12 per cent and Social Credit 8 per cent.



15 July 1984

f'oreign Exchange Market Closed In response to the uncertainties which prevailed in the

foreign exchange market leading up to and coincident

with the elections, the Governor of the Reserve Bank, Mr Spencer Russell, announced the immediate closure of the foreign exchange market. Provision was made for banks and other foreign exchange dealers to meet the urgent needs of travellers.



18 July 1984

Devaluation and Interest Rate Deregulation Package Announced

The Prime Minister-elect, Mr David Lange, announced

a devaluation of the New Zealand dollar of 20 per cent. As part of this policy package, controls on lending and deposit interest rates were removed, and a price freeze was imposed for three months. In addition, the marginal ratio policy applicable to finance companies was removed.



19 July 1984

Foreign Exchange Market Reopened The foreign exchange market was reopened.



23 July 1984

Discount Margins Increased As part of a general move towards maintaining a firmer monetary stance, the Governor of the Reserve Bank, Mr

Spencer Russell, announced increases to the margins the Bank adds to selling yields used when it buys government securities. The margins were doubled over all maturity bands, and became effective from July 24.



24 July 1984

Credit Guideline Remains The Governor of the Reserve Bank, Mr Spencer Russell,

confirmed that the I per cent per month credit growth

guideline, imposed by the previous Administration, would remain in force as a transitional measure until the new Government's public debt programme was fully implemented.







26 July 1984

Overseas Loan

The Minister of Finance, the Hon. R.O. Douglas, announced that the Government was in the process of borrowing 250 million Swiss francs in a deal initiated by the previous Government. The loan carries a coupon of 5 7/8 per cent and is for a five year term.



26 July 1984

Tight Ratio Policy Continued In keeping with its objective of maintaining a firm

monetary policy, the Minister of Finance, the Hon.

R.O. Douglas, indicated that a free reserves margin of

- $100 million was used in setting the reserve asset ratio for August, giving a ratio of 29.5 per cent.



27 July 1984

Government Stock Tender No. 9 The ninth tender of government stock was held and offered a total of $500 million in four maturities (two conventional and two indexed). Bids accepted totalled

$446.1 million as detailed below:



7 August 1984

Fuel Prices Increased

Substantial increases in the costs of liquid fuels were announced by the Minister of Energy, the Han. R.J. Tizard. The cost of petrol rose by 16.5 cents a litre to

87.5 cents, while the cost of diesel rose by !0 cents a

litre. Most of the increase was attributable to the 20 per cent devaluation, with the balance being due to higher interest costs on the Marsden Point expansion project, cost recovery\ and higher profit margins for wholesalers and retailers.

15 August 1984

Social Security Benefits Increased

The Minister of Social Welfare, the Hon. Ann Hercus,

announced increases in social security benefits, the

increases being effective from 18 July. The adjustment took the married weekly standard benefit rate to

$156.46 (from $152.04) and the single rate to $93.88

(from $91.23).




Export Incentives to End

The Minister of Finance, the Han. R.O. Douglas, and the Minister of Trade and Industry, the Han. D.F. Caygill, announced a programme to phase out export incentives and to increase access for imported goods into the country. As part of this programme, the main form of export assistance, the Export Performance Taxation Incentive, would be phased out between 1985 and 1987. It will cut by 50 per cent from April 1985, by 25 per cent from April 1986 and completely phased out by April 1987. In addition, the Rural Bank's Rural Export Suspensory loan, Dairy Export loan and Export Suspensory loans would all be removed in March 1985.

The move to liberalise access for imports would principally take the form of increasing the number of import licences to reach an equivalent of a minimum of 10 per cent of the value of the domestic market for the respective goods or services. Where import licences are denominated by value, the value would be increased by

25 per cent in order to enable the same volume of imports as was available before the devaluation.




Monetary Policy Initiatives

In order to further improve the effectiveness of public

debt policy, a number of measures relating to the

selling, trading and discounting of government securities were announced by the Governor of the Reserve Bank, Mr Spencer Russell. As part of this package, the Reserve Bank would deal on a regular basis in the government securities secondary market. Initially, the Bank would be operating mainly on a selling basis in shorter term stocks, but it was indicated that the Bank's intention was to expand dealing activity to include both buying and selling transactions. A minimum parcel size of $1 million would apply.

Further to the decision to increase the Bank's discount margins, the Governor also announced an extension to all persons of access to the Bank's discount

window for government securities. Similarly, access to

the Reserve Bank's portfolio of government securities with six months or less to maturity was made available

to ail tcnderers. Previously, both these facilities were available only to the trading banks.



16 August 1984

New Lamb Deal

In a link-up with British company Bernard Matthews PLC, the Meat Board secured a lamb marketing deal which involves the Meat Board supplying Bernard Matthews PLC with 20,000 tonnes of boneless lamb per year until 1996, with provision for a 12 year extension.




Government Stock Tender No. 10 The lOth tender of government stock was held, and

offered a total of $400 million in four maturities (two

conventional and two indexed). Bids accepted totalled

$375.4 million as detailed below:

Amount Amount Altotmenr

Type

Maturity

Offered Allotted Yield

($m) ($111) (O/o)

Conventional 15/5/86 s 150.0 SJ23.9 15.50

Conventional IS/ll/92 $50.0 $57.8 !5.25 Indexed 15/6/89 SIOO.O $73.7 6.00

Indexed 15/6/92 SIOO.O $120.0 6.00



23 August 1984

Monetary Policy Changes

Changes to the method of government stock tender allotment were announced by the Minister of Finance, the Han. R.O. Douglas. The changes, effective from !he 12th tender, replaced the uniform yield system with the 'yield-bid' system that was used for the first three tenders. In the same statement, the Minister also announced a second series of Our New Zealand Bonds, which would replace the first series due to expire on August 3!. The second series would be open from September I to November 2, with the terms of the bonds unchanged.







30 August 1984

Interest Rates Decontrolled In a further move to deregulate the financial sector, the

Government removed two additional controls on

interest rates. The '30 day rule', which had prevented

the payment of interest on trading bank deposits of less than 30 days, was abolished as was the restriction which limited the rate of interest payable on ordinary savings accounts to a maximum of 3 per cent. Both measures

took effect as from August 30.




Reserve Ratio Relaxed

The reserve assets ratio applicable to the trading banks

for September was set at 26.5 per cent. The ratio was

based on a free reserves margin of zero compared with

-$100 million in the previous month.




Government Stock Tender No. II

The eleventh tender of government stock was held, and offered a total of $250 million in three maturities (two conventional and one indexed). The tender was filled as detailed below:

Type Conventional Conventional

Indexed

/l,faturiry

1515/1990

I S/511994

!5/6/IYSH

Amount

Offered

($m)

100

100

50

Amount

A 1/orted

($m)

100.0

100.0

50.0

A//orment

Yield

(%)

15.49

IS .25

6.00



31 August 1984

Credit Guideline Removed As part of the move w free up the financial sector and

w promote competitive efficiency, the Government

removed the I per cent per month credit growth guideline. In announcing this, the Minister of Finance, the Hon. R.O. Douglas, emphasised that the objeclive of a firm monetary policy could be adequately met with an active public debt policy.



7 September 1984

POSB Competition The Postmaster-General, the Hon. Jonathan Hunt,

indicated that the Government would allow the Post

Office Savings Bank the opportunity of competing with

other businesses in the provision of savings bank

facilities and computer software.



7 September 1984

Treasury llill Tap Issue Closed

As part of a transition to new arrangements for liquidity

management, the Reserve Bank announced the closure of the tap issue of 182-day Treasury bills. The tap issue of 91-day Treasury bills continued to remain open.



12 September 1984

Economic Summit

The Government's three-day economic summit commenced at Parliament Buildings. Comprising representatives from various sectors, the conference agenda included a series of opening statements by the Prime Minister and main sector representatives; a discussion of the economic situation and policy framework; and a strategy for reconstruction. The summit's objectives were defined as: to broaden the nation's understanding of the economic situation; to clarify economic options; to endorse the approach adopted by the Government; to assist the Government in the preparation of the Budget; and to assist in the provision of a guide to longer-term action.



13 September 1984

New Wage-Fixing Rules New wage-fixing rules were announced by the Minister

of Labour, the Hon. S.J. Rodger. The new system

provides for tripartite talks on the state of the economy prior to each wage round, with a specific focus on the nation's ability to sustain a wage increase. Other components of the new agreement include: immediate consideration given by the three parties (the Government and union and employer representatives) to methods of protecting low-income earners; a new set of criteria for the Arbitration Court in order to build in greater flexibility in wage relativities; and greater encouragement of composite wage bargaining at enterprise or industry level. The Minister also confirmed that a wage round would commence at some stage during the year.



14 September 1984

Export Assistance Removed

The Governor of the Reserve Bank, Mr Spencer Russell, announced the withdrawal of three export credit assistance facilities administered by the Bank. These schemes, the Short-Term Export Credit facility, the Back to Back Facility for Long-Term Export Finance, and the Rediscount Facility for Developing Markets, were perceived as no longer meeting their objectives and no longer necessary.



18 September 1984

Overseas Loan

A loan totalling I 50 million Swiss francs was announced by the Associate Minister of Finance, the Hon.

D.F. Caygill. The loan is by way of a public bond issue and is for a ten year term.



20 September 1984

Government S1ock Tender No. 12

The 12th tender of government stock was held, and

offered a total of $200 million in three maturities (all

conventional). Bids accepted totalled $199.961 million as detailed below:

Maturity

15/9/1986

15/5/1990

15/5/1994

Amount q[fered ($m)

80

60

60

Amount Allotted ($m)

74.961

60.000

65.000

Weighted Average Yield

(o/o)

!5.974

15.604

15.453

The method of allotment in this tender was based on the original 'yield-bid' system, as will future tenders of conventional stock. Another change effective from this tender, was the reintroduction of the non.-competitive facility with minimum bids of $1,000 and maximums of

$100,000. The minimum competitive bid size was

increased from $5,000 to $10,000.



24 September 1984

Summi1 Committee Established

The Acting Prime Minister, the Hon. Geoffrey Palmer,

announced that a committee of officials had been

established with the objective of monitoring progress made in implementing recommendations made by the Economic Summit Conference.

26 September 1984

Ratio Relaxed

As a result of increased reliance on a more active and effective public debt policy, the reserve asset ratio for October was reduced to 21.5 per cent, being based on a free reserves margin of plus $100 million.



28 September 1984

Reserve Bank Approval Withdrawn

Owing to the more sophisticated structure of the financial sector, the Reserve Bank's approval of the four dealing companies operating in the official short­ term money market \vas withdrawn. Coupled with this measure, the 'lender of last resort' facility available to the official market was also withdrawn. As a result, the deposit-taking activities of the dealing companies no longer qualify for 'authorised trustee status'.



9 October 1984

9 Freeze Extended

The Wage/Price Freeze regulations, which had been renewed on July 17 by the new Government, were extended to November 8 - the date set down for the Budget.




Overseas Loan

An overseas loan of 250 million deutschmarks was raised by the Ciovernment, through a seven year, 7.25 per cent Eurobond issue at par.



15 Ocober 1984

POSB Changes

The Postmaster-General, the Hon. Jonathan Hunt, announced a number of changes to Post Office Savings Bank lending policies. Interest rates for various types of lending were increased, while its first mortgage finance was made available to all POSB customers. Interest at the rate of 3 per cent per annum would be payable on cheque accounts as from October.



16 October 1984

GATT Approval for CER

The Closer Economic Relationship agreement with

Australia was formally approved by the General

Agreement on Tariffs and Trade (GATT).



17 October 1984

New Wage Arrangements

New wage arrangements were announced by the Prime Minister, the Right Hon. D.R. Lange. As part of these arrangements, negotiations of union awards would commence on 1 December and be completed by 1 March I985. Wage agreements would be for a nine month period, and a new wage round would commence in September I985. The agreement also provided for immediate tripartite discussions as to the most desirable level of overall wage increase.

Adjustments to award rates would also apply to the

$8 per week general wage order granted earlier in the

year. Adjustments would not take effect until the earlier of either 38 months after the last award negotiation or I March 1985. State Servant pay rates would be adjusted from 10 January 1985.




Credit Rating Reduced

A New York investor service, Moodys, announced a

reduction of New Zealand's credit rating from a triple A

status to double A status. Commenting on the reduction in the rating, Moodys indicated that it had downgraded New Zealand's credit standing in response to the country's fundamental economic problems, including depressed terms of trade, difficult export access and persistently large internal and external deficits.



18 October 1984

Import Licence Tendering A new round of import licence tenders in November was

announced by the Minister of Trade and Industry, the

Hon. D.F. Caygill. Numerous changes were made to the basis of tendering, among these being the removal of restrictions on who may bid for a licence, the removal of limits on the number of licences that can be held by any one firm, and the availability throughout the year of licences not won in tendering rounds.


Government Stock Tender No. 13 The 13th tender of government stock was held, and

offered a total of $200 million in two maturities (both

conventional). The tender was filled as detailed below:

Weighted

Maturity

t5/IO/t990 tS/tO/t994

Amount

Offeced

($m)

tOO

tOO

Amount Allotted ($m)

99.825

99.997

Average Yield

(%)

17.395

16.961



31 October 1984

China/New Zealand Wool Deal A ten year technical co-operation agreement between

New Zealand and China was signed by the Wool Board.

The deal involves the establishment of woollen processing facilities in China using New Zealand

scoured wools.




Overseas Borrowing Controls Relaxed The Governor of the Reserve Bank, Mr Spencer Russell,

announced the abolition of the rules which had

previously limited private overseas borrowings to a

fixed term of at least twelve months and to an interest rate not greater than 2 percentage points above the London or Singapore inter-bank rate



8 November 1984

Budget

The Minister of Finance, the Hon. R.O. Douglas, presented the Budget in the House of Representatives. Major features were:

-In the 1984/85 fiscal year total net government expenditure was forecast to rise by 9.2 per cent to

$15,556 million, while total revenue was forecast to be up by 14.8 per cent to $I2,795 million, resulting in a deficit of $2,761 million, equivalent to 7 per cent of GDP.

-Various subsidies and incentives were either removed completely or will be partially or totally phased out over a period of years. The subsidies affected fertiliser transport; fertilisers; product inspection by the Ministry of Agriculture and Fisheries; farming and agricultural investment and forestry encouragement.

-Interest rates on Government-funded rural lending would be progressively increased to market levels.

-Similarly, it was announced that the price of State­ supplied electricity and coal would be progressively increased to levels reflecting the full cost of supply. As a first step, as from 1 April 1985, the average bulk electricity tariff would be increased by 25 per cent while non-export coal would rise in price by 35 per cent.

-Road user charges were adjusted to cost-recovery levels, rising by an average of 46 per cent from \ February 1985.

-Most personal taxation reform was deferred until the I985 Budget. As an interim step, a tax surcharge of 25 cents per dollar would apply as from 1 April I985 to incomes of superannuitants whose non superannuation income exceeds $5,200 per year.

-A tax on fringe benefits was introduced effective from I April 1985. Taxable in the hands of the employer, the tax will be levied at the rate of 45 cents per dollar of fringe benefit paid to employees.

-A 'family care' package of $\0 per week per child (tax free) was introduced, being effective from 4 December 1984. This is targeted specifically at low and middle income families, and abates at the rate of 25 cents per dollar of household income above

$20,470 per annum.

-The first home owners' rebate was abolished from Budget night for those homes purchased after 8 November.

-It was announced that a goods and services tax would be implemented on 1 April 1986, together with other taxation reform.



19 October 1984

New Treasury Bill Yields

In a transitional move towards introducing a tender system for Treasury bills, the Reserve Bank announced new yields for Treasury bills. For I3 week bills, the yield was mcreased to 13.5 per cent per annum, while 26 week bills were reintroduced to yield 14 per cent per annum.




Inflation Bonds Withdrawn

The Minister of Finance, the Hon. R.O. Douglas,

  1. the withdrawal of Inflation Adjusted

Savings Bonds as from 8 November.




Overseas Loan

The Government announced that it was intending to borrow NZ$1,000 million from the United States of America by way of an issue of adjustable rate extendable notes (Series A). A spokesman for the Mimster of Finance indicated that the latest loan was to refmance existing borrowings.



15 November 1984

Government Stock Tender No. 14 The 14th tender of government stock was held, and

offered a total of $400 million in three maturities (all conventional). The tender was filled as detailed below:

Maturity

15/ II I 1987

15/5/1990

15/5!1992

Amount Offered l$m)

100

150

ISO

Amount Allotted ($m)

99.700

149.843

149.985

Weighted Average Yield

(o/oj

17.364

17.052

16.947



21 November 1984

Overseas Investment Changes

Major changes to policies which relate to overseas investment in New Zealand, and corporate borrowings overseas, were announced by the Chairman of the Overseas Investment Commission, Mr R.W. Stannard. As a result of these changes, overseas-owned companies operating in New Zealand would in general have unrestricted access to the New Zealand capital market. In addition, restrictions prohibiting New Zealand financial institutions from borrowing overseas were remoyed, although specific currency exposure limits will remam.



21 November 1984

Overseas Loan

The Minister of Finance, the Hon. R.O. Douglas, released details of an overseas loan raised by the Government. The loan, for approximately NZ$835 million, was denominated in Japanese yen, for a ten year term and at an interest rate of 7 .I per cent per annum.



26 November 1984

New Retail Public Debt Issue

A third issue of Kiwi Savings Stock opened, offering an

interest rate of 16 per cent per annum for two years or

15.5 per cent per annum for four years. The stock is redeemable after 15 September 1985 on seven working days' notice, although if redeemed prior to the maturity date, the rate of interest payable falls to J 0 per cent per annum. Unlike previous issues, the third issue is transferable with holders able to transfer all or part of their holdings before maturity.

29 November 1984

Opposition Leadership Change

The Opposition Caucus elected the Hon. J .K. McLay as

Leader and the Hon ..T. B. Bolger as the Deputy Leader.



6 December 1984

First Awards Negotiated

Negotiations of award rates for the Metal Trades Union and Drivers Union awards were completed, with wage increases ranging between 6.4 per cent and 7.02 per cent.




'Budget 85' Task Force Announced

The Government announced the establishment of the

'Budget 85' Task Force. Comprising six Department of

Social Welfare and Treasury officials, the Task Force will tour the country in 1985 in order to investigate options for reforms to the social welfare benefit and personal income tax systems. It was also indicated that the Government intended to establish later in 1985 a Royal Commission on Social Welfare to evaluate the broader aspects of the Social Welfare system.



12 December 1984

Motor Industry Plan

A new motor industry plan was released by the Minister

of Trade and Industry, the Hon. D.F. Caygill. The main

features of the plan are: the reduction in sales tax on motorcars and motorbikes, particularly in the large engine capacity models; increase in import licences for fully built-up motor vehicles such that within four years, up to 25 per cent of all new cars registered per year will be imported CBU units. As well as these provisions, the plan also provides for greater access for imported motor vehicle componentry, the phasing down of tariffs on CKD packs and an increase in tariffs on imported components.



13 December 1984

Government Stock Tender No. 15 The 15th tender of government stock was held, and

offered a total of $500 million in three maturities (all

conventional). The tender was filled as detailed below:

Weighted

lv!aturity

15/1 J/1987

15/5/1990

15/10/1994

Amount Offered ($m)

150

200

150

Amount Allotted ($m)

149.937

199.827

149.847

Average

Yield

(%)

17.314

17.036

16.848



17 December 1984

Foreign Exchange Licence Granted

The Minister of Finance, the Hon. R.O. Douglas, approved the application of Elders Goodman (Merchant Finance) Limited to become an authorised foreign exchange dealer. The addition of the new licence brings the total of authorised foreign exchange dealers to fifteen.



21 December 1984

Liquidity Management Changes New liquidity management policies were announced by

the Reserve Bank. Details of these measures are given

on page 14 of this issue of the Bulletin




Exchange Control Relaxed

An easing of exchange control regulations was

announced by the Governor of the Reserve Bank, Mr Spencer Russell. Details of this are given on pages 13 and 14 of this issue of the Bulletin



1983



19 January 1983

Meat Board Acceptance Facility

The Meat Board confirmed that it had arranged an

acceptance facility giving it access to £125 million

sterling. The funds would be used to finance the

purchase and export of meat by the Board.



31 January 1983

31 Foreign Exchange Dealing The Reserve Bank tightened restrictions on dealing in

foreign exchange, blocking loopholes which had allowed merchant banks to participate in foreign

exchange contracts.



1 March 1983

Employment Incentives

Increases in various categories of employment subSidies to employers took effect, costing $6 million in a full year. The increased incentives placed particular emphasis on training in skilled areas.




Planning Council Report

The Planning Council released an authored paper

entitled 'Issues•in Equity'. The report summarised the opinions of various sectors of the community on social justice in New Zealand. Although mainly directed

towards social issues, the report frequently made reference to the interaction between social and economic factors, both having an input into people's perceptions of social justice.




Investment Study Released

'Equity Investment in New Zealand', a report on the

investment performance of the sharemarket, was released by the Institute of Economic Research. The

report evaluated returns from sharemarket investment on a time series basis and compared the returns to inflation over the period considered.



8 March 1983

Devaluation

In response to a 10 per cent devaluation of the Australian dollar, the Government devalued the New Zealand dollar by 6 per cent against the basket of currencies resulting in a slight revaluation against the Australian dollar.



16 March 1983

Government Securities

The Minister of Finance, the Rt. Hon. R.D. Muldoon, announced monetary policy changes, including the introduction of Kiwi Savings Stock, effective from 21 March. Available to non-institutional investors, the stock paid 15 per cent per annum at quarterly rests, and was redeemable on seven days' notice after one month, with the interest rate being 13 per cent per annum if redeemed within one year.

New Treasury bill and government stock rates were also announced, while Premium Stock was withdrawn as from 18 March. Treasury bill yields were increased from 11.25 per cent and 11.5 per cent to 12 per cent and 12.5 per cent for 13 week and 26 week bills respectively. Government stock yield increases ranged from 0.75 percentage points (to 13 per cent) for one year, to 1.5 percentage points (to 14 per cent) for three years.




CER

The Australian Deputy Prime Minister and Minister for Overseas Trade confirmed the newly elected Labour Government's formal approval of the CER agreement.



24 March 1983

Security Ratios Increased The Minister of Finance, the Rt. Hon. R.D. Muldoon,

announced an increase in the government security ratios applicable to finance companies from 18 per cent to 20 per cent.



28 March 1983

Final Signing of CER

Following delays due to the Australian general election,

the final signing of the CER agreement between

Australia and New Zealand took place. The ultimate

aim of the agreement is to promote free trade between

the two countries by 1995.



30 March 1983

Import Licences

The Minister of Customs, the Hon. K.R. Allen, announced that import licences in 1983/84 would be maintained at 1982/83 values, while those determined by volume would be reduced to 90 per cent of the levels prevailing in 1982/83.



Aprill

Foreign Exchange Dealing

The Minister of Finance, the Rt. Hon. R.D. Muldoon,

revealed moves to widen the entry qualifications for

foreign exchange dealers.

8 April 1983

Local Authority Stock The Minister of Finance, the Rt. Hon. R.D. Muldoon,

announced that local authority stock would be issued at a discount, such that investors would obtain a yield 1

per cent above the current coupon rate.



12 April 1983

Lending Guideline Imposed The Reserve Bank issued credit guidelines to the trading banks, involving npper limits of I per cent per month growth in lending, after adjusting for seasonal factors.



16 April 1983

Meat Board Loan

The Meat Board revealed its intention to raise a $50 million promissory note issue on the domestic wholesale money market. The facility was designed to enable the Board to manage its funding requirements more flexibly.



9 April 1983

Credit Guidelines Extended

The credit guideline imposing a limit of I per cent

growth in lending per month (seasonally adjusted) was

extended to finance companies, building societies,

savings banks and other major financial institutions.



30 April 1983

International Credit Rating Reduced

Standard and Poor's Corporation, the USA-based

credit rating company, reduced New Zealand's international rating from AAA to AA +. The reasons given included the increasing Government deficit, deteriorating current account deficit, and reduced

domestic economic flexibility. Standard and Poor's stressed, however, that in the longer term the prospects were favourable, citing the country's abundant natural resources and the investment projects being constructed to utilise these resources.



3 May 1983

Liguite Report Released The Minister of Energy, the Hon. W.F. Birch, released

a report on the lignite coal resources in the Southland­ Central Otago region. Written by the Liquid Fuels Trust

Board, the report produced revised estimates of the lignite reserves, estimating the recoverable reserves to be

5.3 billion tonnes. Numerous development options were canvassed in the report.



13 May 1983

Medium Term Review The Institute of Economic Research released its

'Medium Term Review 1983', the first of a revised form

of medium term forecasting report. Forecasting to 1986,

the Institute foresees an improvement in economic growth, but at a rate insufficient to significantly reduce unemployment.



23 May 1983

Freeze Extended

The Prime Minister, the Rt. Hon. R.D. Muldoon, announced the extension of the Wage/Price Freeze to 29 February 1984. Involving the extension of existing regulations under the Economic Stabilisation Act 1948, applicable to prices, wages, interest rates, directors' fees, rents and dividends, the regulations were further widened in scope, to include reimbursing allowances paid to employees. The regulations applicable to such allowances were back -dated to 20 May 1983.



13 June 1983

Interest on Deposit Regulations 1983

These regulations replaced the Interest on Deposits Order (No.2) 1982, which was due to expire on 22 June 1983. The prescribed maximum interest rates which could be paid on deposits accepted by financial institutions, as outlined in the Interest on Deposits Order (No. 2) 1982, were left unchanged, while the definition of interest was amended to bring it into line with that contained in Section 2 of the Reserve Bank of New Zealand Act 1964.



15 June 1983

Withdrawal of Kiwi Stock The Minister of Finance, the Rt. Hon. R.D. Muldoon,

announced the withdrawal of Kiwi Savings Stock, effective from 16 June. In the three months the issue was open, it raised a total in excess of $1,400 million,

although subsequent withdrawals have reduced this

amount.



17 June 1983

Transport Option Study The Institute of Economic Research released a study of

transport regulation options, entitled 'By Rail or Road'.

Using a case study, the report evaluated some of the

effects of rail protection and provided a framework for

the analysis of the various policy options.



30 June 1983

OECD Report

The report on the New Zealand economy by the Organisation for Economic Co-operation and Development (OECD) was released. The main conclusions of the report were:

increased unemployment in the 1984 and 1985 fiscal years

improvement in the external deficit in the 1984 fiscal year

increased competitiveness in international trade, as New Zealand's inflation rate falls to those levels prevailing in the OECD

continuation of slow growth in the economy in the 1984 and 1985 fiscal years.



11 July 1983

July 11 Tendering of Government Stock The Reserve Bank outlined the structure of the

proposed Government Stock Tender Scheme. Based on

the Australian scheme, the Government would offer an amount of government stock, for which the institutions

place tenders by bidding for a desired yield in each maturity. Of the total stock 95 per cent would be allocated on the basis of the yield bids, the remaining 5 per cent being allocated in a non-competitive bid at the weighted average of the successful yield bids. The Bank indicated that approximately eight tenders would be held each year.



27 July 1983

Interest Rate Policy

The Minister of Finance, the Rt. Hon. R.D. Muldoon, announced major reductions in government security interest rates, Treasury bill rates falling to 7.8 per cent for 91 days and 7.9 per cent for 182 days. He indicated that government institution borrowing and lending rates would also be reduced, and that the Government expected the private sector to follow suit.



28 July 1983

1983 Budget

The Minister of Finance, the Rt. Hon. R.D. Muldoon, presented the Budget for the 1983/84 financial year. Major features were:

Expenditure forecast to rise by 13.1 per cent to

$14,336 million, while revenue forecast to rise by

2.4 per cent to $11,167 million, resulting in a Budget (table 2) deficit of $3,169 million (9.5 per

cent of forecast GOP).

Debt Servicing (up 36.9 per cent), and development

of Industry (up 28.1 per cent), were the two fastest growing categories of expenditure.

Increase in the family rebate, particularly for low income families, funded by an increase in the standard marginal tax rate from 31 to 31.5 cents per dollar. The temporary tax surcharge on high income earners was retained.

Exemptions from estate and gift duties were increased, as were tax deductible employment­ related expenses.

Accelerated depreciation allowances for new residential rental properties, effectively doubling the depreciation rate for the first five years. Indirect taxes on tobacco and alcohol increased by approximately 8 per cent.

Supplementary minimum prices held at the same levels for the 1983/84 season.

Announcement of temporary long distance fee

applicable to heavy trucks operating beyond 150

km.



4 August 1983

New Lending Rates by Government New lending rates by various government institutions

were announced, including reduced rates for selected borrowers via the Post Office Savings Bank, Rural

Bank and the Department of Maori Affairs. Mortgage rates with the Housing Corporation were lowered from 28 July.



5 August 1983

New Foreign Exchange Dealers

As part of a move to create a more competitive foreign

exchange market, the Minister of Finance, the Rt. Han.

R.D. Muldoon, announced the names of nine new

foreign exchange dealers (seven of whom would be

operating from 1 September). Also announced was the

cessation of the Reserve Bank's quotation of the US$ exchange rate on a fixed basis per day. This would be

permitted to vary during the day, in line with market forces. In addition, the Reserve Bank would no longer participate in the forward exchange market



11 August 1983

Local Authority Rates Cut

The Minister of Finance, the Rt. Han. R.D. Muldoon,

announced reductions in interest rates applicable to local authority stock.



1 September 1983

Securities Act

The amended Securities Act took effect, the main provisions relating to the content and issuing of prospectuses\ trust deeds and financial advertising.



5 September 1983

Kiwi Savings Stock II

The Minister of Finance, the Rt. Hon. R.D. Muldoon, announced the introduction of a new issue of Kiwi Savings Stock, the terms being similar to those of the original issue, but at lower interest rates. The stock carried an interest rate of 10 per cent per annum, payable quarterly, and was redeemable after four weeks, with the rate being reduced to 8 per cent per annum if redeemed within one year.



8 September 1983

Government Stock Tender No. 1

The first Government Stock tender offered $100 million

on two maturities (15 June 1985 and 15 August 1987) with $286.79 million being received in bids. The full

$100 million was allocated with weighted average yields of 8.706 per cent and 9.005 per cent respectively for the successful bids.




1983 Energy Plan Released

The Minister of Energy, the Han. W.F. Birch, released

the 1983 Energy Plan, which comprised a general resume of the energy development programme and

suggested an acceleration in the utilisation of the Maui gas field as an option in medium term energy development.




Hire Purchase Controls Abolished

The Government revoked regulations restricting hire

purchase financing of motor vehicle sales.





14 September 1983

POSB Housing Package A housing package for first home builders was released

with the main feature being a $5,000 suspensory loan,

the loan being made available to those whose house and

section together did not exceed $70,000 in cost.



22 September 1983

Interest Rates Reduced

Interest rates on the government funded Energy

Conversion Loan Scheme and the Alternative Fuels Vehicle Conversion Loan Scheme were reduced to 10 per cent.



27 September 1983

Energy Planning '83' Released

The Minister of Energy, the Han. W.F. Birch, released

the Ministry of Energy's summary of the Energy Plan, 'Energy Planning '83'. A condensed version of the

Energy Plan, it comprises five sections: energy and energy planning; energy forecasting; resources; future developments; and public participation in energy planning.



6 October 1983

Butter Quota Proposals The European Community Commission proposed to cut

New Zealand's butter quota to 83,000 tonnes in 1984, compared to 87,000 tonnes in 1983. It was suggested

that subsequent reductions in the quota be made at a rate of 2,000 tonnes a year to be at a level of 75,000 tonnes by 1988.



13 October 1983

Government Stock Tender No. 2

The second tender for 'Government Stock, comprising

$200 million offered in three maturities (15 October 1985, 15 October 1986, 15 October 1989) resulted in bids

worth $215.734 million being lodged, of which $194.822 million were successful. Weighted average yields of the successful bids for each of the three maturities were

9.524 per cent, 9.902 per cent and 10.646 per cent

respectively.



25 October 1983

Dairy Board Borrowing The New Zealand Dairy Board announced details of a

borrowing programme to raise a minimum of $100

million. This move towards shorter term borrowing

followed the Government's imposition of a $750 million

limit on the Board's overdraft facility with the Reserve

Bank.



1 November 1983

Transport Deregulation The Transport Amendment Act No. 2 became effective,

commencing the first stage of a progressive deregulation of land transport. Completion of the transitional phase

is scheduled for 31 October 1986.



4 November 1983

Meat Board Controls Sheepmeat The Meat Board announced that it had invoked Section

10 of the Meat Export Control Act, allowing it to take

control of all export sheepmeat for the 1983 season. It

also announced plans for marketing in the United Kingdom.



7 November 1983

Wool Board Finances Changed

The Government announced changes to the Wool

Industry Act 1977 allowing the Wool Board to vary its levies on fanners, and to extend the levy to meet the cost

of all its activities, instead of just promotion and research. The Wool Board indicated its desire to increase the levy from the then current level of 5 per cent, to 6 per cent in the 1983 season.

The Government also announced changes in the minimum wool prices funding account, including an increase in the fund's interest rate from I per cent to the equivalent of the 12 month government stock rate.



9 November 1983

Mortgage Interest Controls The Financial Institution (Mortgage Loans) Regulations

1983 took effect, placing maximum limits on mortgage interest rates of II per cent for first mortgages and 14

per cent for second and subsequent mortgages. When introducing the new regulations the Government also revoked the Interest on Deposit Regulations 1983.



10 November 1983

Modified Meat Task Force Report Accepted

The Minister of Agriculture, the Rt. Hon. D. Macintyre, announced that the Government had accepted the broad recommendations of the meat industry task force, but with a number of modifications. As part of the implementation of the modified recommendations, a Meat Industry Council will be established and charged with a number of responsibilities, including the overseeing of the strategies and marketing plans developed by the meat industry and the Meat Board.



11 November 1983

New Governor Named The Prime Minister, the Rt. Hon. R.D. Muldoon,

announced the decision to appoint Mr Spencer Russell

as the next Governor of the Reserve Bank, his

appointment taking effect from 17 May 1984, when the current Governor, Mr D.L. Wilks, retires.



17 November 1983

17 Government Stock Tender No. 3 The third tender for Government Stock, comprising

$400 million offered in three maturities (15 October

1985, 15 May 1987, 15 October 1991) raised $143

million from a total of $458 million received in bids.

Weighted average yields for the successful bids in each

of the maturities were 10.644 per cent, 10.586 per cent

and 10.901 per cent respectively.



18 November 1983

Tender Basis Altered The Minister of Finance, the Rt. Hon. R.D. Muldoon,

announced a change in the allotment method for future

government stock tenders. Future allotments would be made on the basis of a uniform yield (the highest

successful yield), while the non-competitive facility would be removed.




Air Services Licensing Liberalisation Royal assent was given to the Air Services Licensing

Bill. The legislation is designed to liberalise the air transport sector as part of a general policy of transport deregulation.


Bid for New Zealand Forest Products Ltd.

A partial takeover bid for ordinary shares in New

Zealand Forest Products Limited was launched. The bid

resulted in approximately 25 per cent of the company's

share capital being purchased jointly by Watties

Industries Limited and Goodman Group Limited.



21 November 1983

Bulk Tariff Increase Announced

The Minister of Energy, the Hon. W.F. Birch,

announced an increase in the bulk electricity tariff averaging 4 per cent, effective from I Aprill984. A two

stage price differential between the North and South Islands would result in a 6 per cent increase for the North Island and no change for the South Island.



23 November 1985

Iranian Lamb Deal The Meat Board concluded a lamb-for-cash deal with

Iran, involving an estimated 140,000 tonhes of lamb,

valued at approximately $400 million.



24 November 1985

Wage Legislation Passed The State Services Conditions of Employment Bill,

designed to restructure the relationship between public

and private sector wages and salaries, was passed.



25 November 1985

Public Accounts Released The Public Accounts for the first six months of the

!983/84 financial year revealed a deficit of $2,011

million.

28 November 1985

National Development Strategy The Government released the National Development

Strategy. A medium-term economic and social plan, the

strategy laid down in general terms the broad objectives of Government policy over the next few years.



29 November 1983

Japan-New Zealand Methanol Deal Japan-New Zealand methanol deal concluded,

involving the export of methanol to Japan.



1 December 1983

EMG Report

The Planning Council's revised Economic Monitoring Group released its first report, 'Foreign Exchange Constraints, Export Growth and Overseas Debt'. The report examined trends in New Zealand's exports and imports, terms of trade and external deficit constraint and indicated the Group's concern about the consequences of a continuation of current borrowing levels.



2 December 1983

Revised Government Stock Tenders The Minister of Finance, the Rt. Hon. R.D. Muldoon,

announced details of further changes in the Government Stock tender system. A new stock, to be inflation­

indexed, was outlined as were details of allotment procedures based on a uniform yield.




New Banknote

The Reserve Bank announced the commencement of a

new issue of $50 banknotes. This was the first change in the denominational structure of New Zealand currency since 1967.



6 December 1983

Finance Bill Passed

The Finance Bill was passed through all stages in the

House of Representatives. It amended the Economic Stabilisation Act 1948 to allow the introduction of the

Economic Stabilisation (Mortgage Loans) Regulations

1983. The regulations were retrospective to 10 November and replaced the Financial Institutions (Mortgage Loans) Regulations 1983 and those parts of the Financial Services Regulations 1983 relating to private mortgage loans. The new regulations limit mortgage interest rates to the levels contained in the replaced regulations and provide for the extension of interest rate controls to existing mortgages upon review.




Planning Council Report The Planning Council released the second version of its

National Sectoral Programme, entitled 'Towards 1990:

Patterns of National and Sectoral Development'. The

report was based on two economic models and on consultations with representatives of 26 sectors within

the economy, and projects growth rates in the economy consistent with sectoral constraints.



13 December 1983

Industrial Law Reform Bill

Major changes to industrial relations were initiated with the passing of the Industrial Law Reform Bill. The main effect of the legislation is to make unions voluntary organisations by removing the unqualified preference clause in union rules. Clauses in the Bill pertaining to youth rates were defeated in the. committee stages.




Temporary Butter Quota

European Community Agriculture Ministers agreed to a

temporary quota for New Zealand butter exports to the Community of 13,833 tonnes for January/February 1984.



15 December 1983

Government Stock Tender No. 4

The fourth tender for Government Stock comprised

$400 million in three maturities for normal stock (15

December 1984, 15 June 1986, 15 October 1991) and

two maturities for inflation-indexed stock (15 March

1989 and 15 March 1994). Total bids received amounted to $404.222 million, of which $313.644 million were successful. Allotment yields for ordinary stock were

9.89 per cent, 11 per cent and 11 per cent respectively with the indexed stock allotted at an interest rate of 6

per cent per annum.




Wage Negotiations Held Negotiations between the Government and

representatives of employers and employees were held to discuss the post-freeze incomes policy. The

discussions focused on the two main options available: a general wage adjustment or a limited wage round.



16 December 1983

Increased Ratios The Minister of Finance, the Rt. Hon. R.D. Muldoon

announced increases in government security ratio applicable to finance companies and building societies.

Finance company security ratios will rise from 20 to 25 per cent effective from 29 February 1984, while the building society ratios will rise by 3 per cent to 19 per cent from 9 February 1984. This followed lending growth by these institutions in excess of the guideline.



19 December 1983

Electrification Approved

Cabinet approved $85 million of tenders for the electrification of the trunk rail line between Palmerston North and Te Rapa.



20 December 1983

Price Surveillance Outlined

The Minister of Trade and Industry. the Hon. H.C.

Templeton, announced details of the price surveillance

system that would be in operation from 29 February

1984, the date designated as the last day of the freeze.

The main provisions are: a restriction to no more than

two price increases in the year following the end of the freeze, this applying to suppliers of goods and services;

while manufacturers and service industries with annual turnovers in excess of $10 million and $3 million respectively are required to give twenty days' notice to the Department of price increases, which has discretion in accepting these. Retailers, wholesalers and importers face no price increase restrictions, but must submit returns of sales and profit to the Department, which can investigate and alter price changes.



20 December 1983

Directors' F'ees and Company Distributions

Regulations

The Prime Minister, the Rt. Hon. R.D. Muldoon, announced that the Limitation of Directors Fees Regulation 1982 and the Companies (Limitation of Distributions) Regulation 1982 would be allowed to expire on 29 February 1984.



21 December 1983

Road User Charges Increased The Minister of Transport, the Hon. G.F. Gair, and the

Minister of Works and Development, the Hon. A.P.D.

Friedlander, announced increases of up to 20 per cent in

road user charges for heavy vehicle operators, the

increases to apply from I April 1984.




Labour Market Analysis Released The Institute of Economic Research released a report on

various aspects of the labour market in New Zealand. 'Studies in the Labour Market' covered topics such as

labour supply, employment and unemployment and labour productivity growth rates.



22 December 1983

Government Financial Institutions included in Regulations

The Governor of the Reserve Bank, Mr D.L. Wilks, announced that government-owned financial institutions would be subject to a requirement to hold public sector securities in terms of the Finance Companies (Investment) Regulations 1983. A phasing­ in period would be allowed where necessary, with the Development Finance Corporation Ltd. having up to five years to fully comply with the Regulations.



23 December 1983

New Zealand Forest Products Ltd. Bid

for Watties

New Zealand Forest Products Limited announced their intention of seeking a further 40 per cent of capital of Wattie Industries Limited. If successful, this would result in NZFP holding 65 per of Watties' share capital.



28 December 1983

Reserves Margin Narrowed Following a growth in bank lending in excess of the

guideline, the Reserve Bank announced that the free

reserves margin used when setting the trading bank

reserve asset ratio for January, had been reduced from

$100 million to $50 million.

.



1982



11 January 1982

Government Expenditure

It was announced that Government Departments would have to prune 3 per cent from their budgets for the 1982/83 financial year.



18 January 1982

Air Fare Rises

It was announced that air fares between New Zealand and Australia, the USA, South America and Canada would go up by 5 per cent from IFebruary.



26 January 1982

Mutton Sale

The first major mutton sale of the season - worth upwards of NZ$30 million - was negotiated with the USSR.



28 January 1982

Benefit Payments Rise

Social security benefits and war pensions were increased

by $9.36 a week for married couples and $5.62 a week

for single people.



29 January 1982

National Superannuation

It was announced that National Superannuation rates would rise by 5.9 per cent on 23 March.



29 January 1982

Freight Rates Traditional conference line meat shippers from New

Zealand and Australia reduced their rates by 10 per cent to bring them down to the level of new competitors in

the market.



3 February 1982

Forest Product Investment Incentives

It was announced that eligibility for 'high priority' status of certain forest products would be withdrawn.



5 February 1982

Inflation Bonds

The Right Hon. R.D. Muldoon announced that the more liberal repayment provisions which apply to inflation bonds issued since late last year would be extended to those issued in the first series from 1977.



9 February 1982

Reserve Bank Governors' Appointments Announced

Mr D.L. Wilks and Dr R.S. Deane were appointed Governor and Deputy Governor respectively of the Reserve Bank of New Zealand.



9 February 1982

Motonui Synthetic Fuel Plant Contract The American-based Mobil Company decided to sign

the contract for the Motonui synthetic petrol plant.



10 February 1982

OECD Report

The OECD annual report on New Zealand was published. Its major predictions were:

a 16 per cent rise in consumer prices during 1982;

an increase in household incomes of 20 per cent;

some growth in both domestic demand and GDP;

and a static level of unemployment.



15 February 1982

Small Business Loans The Government announced that it was broadening the

scope of its loan guarantee scheme for small businesses

so that all small businesses engaged in manufacturing, processing, tourism, and servicing industries which directly earned or saved overseas funds would be eligible for the Small Business Agency loan guarantee scheme.



17 February 1982

Petrol Price Rise The Minister of Energy, the Hon. W.E. Birch

announced that the price of petrol would rise by 3c a litre to 64c a litre for premium grade.



22 February 1982

Milk Exports

The Dairy Board won a fresh order worth NZ$30 million from Peru to supply milk for the recombining trade.



3 March 1982

Financial Services Regulations

Suppliers of finance proposing to institute new specified financial services became required to give the Reserve Bank notice in writing of the price they propose to charge.



12 March 1982

Meat Board Loan

The Government approved a NZ$15 million Reserve

Bank loan to the Meat Board to help fund mutton purchases.



22 March 1982

Forestry

CSR-Baigent announced a halt to letting of major contracts for the NZ$150 million Eves Valley pulp mill, citing a slump in the world price of wood pulp and dissatisfaction with the negotiated electricity price as the reasons for the delay.



23 March 1982

Overseas Loan

The Minister of Finance, the Right Han. R.D. Muldoon, announced that the current United States dollar floating note issue would be increased from US

$250 million to US $350 million.



29 March 1982

Transport Fees

Various increases in transport fees were announced. The major movement was the increase of $19 in the private motorists' registration fee.



30 March 1982

Air New Zealand

The Government announced that it would lend Air New Zealand NZ$50 million.




Local Authority Finance

The Right Han. R.D. Muldoon announced increases in

the local authority security ratios on life insurance companies, private superannuation funds and building

societies, to help meet the essential needs of local authorities for loan finance.



1 April 1982

Government Charges Increased charges for postage, telephone rentals, state coal, bulk electricity and road user charges were announced.



7 April 1982

Financial Services Regulations The Reserve Bank moved to close some of the loopholes

in the Financial Services Regulations in a letter to

institutions asking them to follow the regulations 'both

in law and intent'.



14 April 1982

Taxation Task l'orce

The New Zealand Task Force on Tax Reform published its report. Its major recommendations were that present income tax should be reduced, families should get greater tax support and wholesale sales tax should be extended and rationalised.




Post Office Interest Rates

The Post Office Savings Bank increased its interest rates on deposits.



19 April 1982

Aluminium

Comalco reached agreement on the long-term supply of substantial quantities of primary aluminium to the large Japanese concern Showa Denko.



21 April 1982

Meat Board

The New Zealand Meat Board obtained a US$125 million short-term credit as a hedge against fluctuations in meat prices.



23 April 1982

Money Market

The Governor of the Reserve Bank, Mr D.L. Wilks, announced that the Bank would step up its purchases of short-term private sector securities.



28 April 1982

Overseas Loan

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that the Government had signed an agreement to borrow 15 billion yen (NZ $82 million).



4 May 1982

Aluminium

The Government reapproached Comalco about the possibility of a fourth and fifth aluminium potline at Tiwai Point.



10 May 1982

Meat Producers Board

The New Zealand Meat Producers Board announced that it was borrowing US$125 million to finance its intervention in the export trade.



21 May 1982

Liquor Price Controls

The Government removed price controls on liquor.

Air New Zealand Air New Zealand sealed a contract to lease two of its six

DCIO's to a Chilean airline.



26 May 1982

Overseas Loan

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that a loan of 100 million Swiss francs (NZ $68 million) had been obtained by the Government.



3 June 1982

Air New Zealand

Air New Zealand announced that it would cut almost 1000 people from its payroll by early next year as the first stage of a redundancy programme aimed at increasing efficiency.



6 June 1982

Government Revenue and Expenditure

The Minister of Finance, the Right Hon. R.D. Muldoon, released the Public Accounts summary for the year to 31 March 1982. This showed that the deficit before borrowing was NZ$1,879 million, $271.7 million less than was budgeted for.



6 June 1982

CER

The final draft agreement on Closer Economic Relations was released. This contained a large number of trade liberalisation measures with the ultimate objective of no trade restrictions by 1995.



14 June 1982

Petrol Price Increase

The price of standard and premium grade petrol rose by 4 cents a litre to 65 and 68 cents a litre respectively.



17 June 1982

Aid for Hill Farmers

The Government made NZ$40 million available to the

Rural Bank for aid to help hill country sheep farmers and other sheepfarmers affected by drought and

outbreaks of facial eczema.



18 June 1982

Railway Charges

The Chairman of the Railways Corporation, Mr L. Papps, announced that Railways charges would increase by between 8 per cent and 20 per cent from 18 July.



22 June 1982

Wage, Price and Rent Freeze The Government imposed a twelve-month wage, price

and rent freeze in a move aimed at cutting New

Zealand's inflation rate. A freeze was also imposed on

interest rates, dividend rates, directors' fees and

professional charges.



23 June 1982

Aramoana Smelter

Plans for the Aramoana aluminium smelter collapsed after a meeting between the Pechiney-backed consortium and the Minister of Energy and National Development, the Hon. W.F. Birch failed to reach agreement on the level at which the basic power price should be set.



23 June 1982

Exchange Rate

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that the creeping devaluation of the New Zealand dollar would be suspended and that the exchange rate would be held at its present level.



24 June 1982

Overseas Loan

The Minister of Finance, the Right Hon. R.D. Muldoon, announced the arrangement of a sterling bond issue of £100 million- the first since 1971.



1 July 1982

Dairy Contract

The New Zealand Dairy Board signed a contract to provide a minimum NZ$90 million worth of dairy products to Kuwait over the next 5 years.



12 July 1982

Interest on Deposits Order

The Minister of Finance, the Right Hon. R.D.

Muldoon, issued a new Interest on Deposits Order so as to close loopholes left following the introduction in the

previous month of the freeze on interest rates.



20 July 1982

Proposed Nickel Smelter

An Auckland company revealed it had made major advances in plans to build a $100 million nickel smelter in Nelson.



26 July 1982

New Forestry Project

Shell Oil and New Zealand Forest Products announced

plans for a very large afforestation scheme in

Northland.




Taxation Agreement

New Zealand and the United States signed a new double

taxation agreement to avoid dividends, interest and

other incomes being taxed twice



29 July 1982

Synfuel Plant

A US $1,700 million credit advance to the New Zealand Synthetic Fuels Corporation from 40 lending banks was signed in London.



3 August 1982

Wool Board Loan

The New Zealand Wool Board negotiated a fresh US$100 million standby loan facility to back its market support activities.




Financial Services Regulations

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that new Financial Services Regulations had been implemented which had the effect of amending the previous Regulations and widening their application. The main change was a reduction in the exemption which applied to suppliers of financial services from $100,000 to $10,000.



4 August 1982

4 Benefit Increases

Further social security benefit increases, backdated to 21 July, were announced by the Minister of Social Welfare, the Hon. V. Young. These included a new rate of $62.97 per week for single people under 18 who receive an invalids or a sickness benefit. Other benefits to rise were unemployment benefits (for single people under 20 with no dependent children), orphans' benefits and child supplements.



5 August 1982

1982 Budget

The 1982 Budget was introduced. Highlights of the Budget included:

A rationalisation of the personal income tax scale.

A tightening of the requirements necessary for

approval of a private superannuation scheme.

Taxes on alcohol and tobacco products rose by an average of over 30 per cent.

Duty on premium grade petrol rose by 3. 1 cents per

litre.

The treatment of financial leases by financial

institutions in the same manner as short-term hire

  1. for income tax purposes became

prohibited.

Deregulation of major sectors of the transport industry became a matter for immediate consideration.



20 August 1982

Price Freeze Regulations

The Minister of Trade and Industry, the Hon. H.C. Templeton, announced moves which would allow traders to pass on certain wage costs into prices as well as moves to provide greater flexibility in other areas of the price freeze regulations.



1 September 192

CER Import Licences The Government announced that half of the licences for

exclusive imports of Australian goods under Closer Economic Relations would be put up for tender.



3 September 1982

Government Loan

A NZ$465 million Government loan raised in Britain was confirmed by the Acting Minister of Finance, the Hon. J .H. Fa!loon.



1 October 1982

Westpac

The new Westpac Banking Corporation, the result of the merger of the Bank of New South Wales and the Commercial Bank of Australia, was officially launched.



5 October 1982

Shellfish Exports

A new market for New Zealand shellfish was opened by the signing of a Government agreement with Canada.



16 October 1982

Refining Company Loan

A US$750 million syndicated loan for the New Zealand

Refining Company's Marsden Point expansion was

signed in London.



20 October 1982

EEC Butter Quota Agiculture ministers of the European Economic

Community agreed in principle to a quota of 87,000

tonnes of butter from New Zealand for 1983.

26 October 1982

New Power Station The Government approved the construction of a

geothermal power station at Ohaaki and the development of the Broadlands geothermal field near

Wairakei.



26 October 1982

Fletcher Challenge

Fletcher Challenge Ltd announced it had bought a

major Canadian forest products company, Crown

Zellerbach Canada Ltd for almost NZ$400 million.



1 November 1982

Overseas Loan Increase

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that a syndicated note facility arranged with Citicorp International Group and other banks would be increased from US$500 million to US$750 million.



3 November 1982

Petrol Plant Loans

Japanese loans totalling NZ$325 million for the Motonui synthetic petrol plant were finalised by the New Zealand Synthetic Fuels Corporation.



9 November 1982

CER

The Australian Government approved the Closer Economic Relations agreement with New Zealand, paving the way for trade liberalisation between the two countries.



15 November 1982

Overseas Loan

The Government signed an agreement for a Japanese yen syndicated bank loan worth 15 billion yen (about NZ $78 million).



30 November 1982

Overseas Loan

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that the Government would borrow a further NZ$65 million on the Swiss market.



6 December 1982

Timber Processing Plant

H. Baigent and Sons Ltd, Nelson, announced that Shell (NZ) and the Todd Group would join it in a NZ$30 million timber processing plant in Nelson.



7 December 1982

Overseas Loan

The Minister of Finance, the Right Hon. R.D. Muldoon, announced that the Government would borrow a further NZ$82 million from West Germany.




EEC Quota

New Zealand failed to gain final European Economic

Community approval for its 1983 butter quota at a

meeting of EEC Agricultural Ministers in Brussels.



12 December 1982

Lamb sale

The Meat Board confirmed that it had sold 100,000 tonnes of lamb to Iran.



14 December 1982

CER

The Closer Economic Relations agreement between New Zealand and Australia was formally signed.