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.