New Zealand economic and financial chronology 1993 – 2007

This chronology lists key economic and financial events for the period January 1993 to December 2007. 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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 RBNZ. - 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.
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.
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. 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.

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.

New Zealand economic and financial chronology 1993 – 2007

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007