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2000 Funding Agreement

The Reserve Bank's Funding Agreement is a five yearly agreement between the Governor and the Treasurer that specifies how much of the Bank's revenues can be retained by the Bank to meet its operating costs, with the remainder going to the Government.

  1. This is an Agreement between the Treasurer and the Governor of the Reserve Bank pursuant to section 159 of the Reserve Bank of New Zealand Act 1989 ("the Act"). It supersedes and replaces the Agreement signed on 30 June 1995.
  2. It is hereby agreed that the amount of the Bank's income to be applied in meeting the expenditure needed to carry out the functions and to exercise the powers specified in section 159 of the Act shall be the following amounts, plus, in each of the years specified, the amount of income earned by the Bank in respect of the activities set out in paragraph 3 (ii), and the amount referred to in paragraph 3 (iii):
  • $34,000,000 for the year commencing 1 July 2000;
  • $31,000,000 for each of the years commencing 1 July 2001, 1 July 2002, and 1 July 2003; and
  • $33,000,000 for the year commencing 1 July 2004.
  1. The amount specified in accordance with section 159 (1) of the Act, in each of the financial years referred to, is the total of:
    1. the amount set out in paragraph 2 in respect of the relevant year; and
    2. the amount of income actually earned by the Bank in the relevant year in respect of the following activities:
      1. Provision of settlement account services (ESAS);
      2. Property management rental;
      3. Collectors' currency;
      4. Scrapping obsolete coins;
      5. Registry services;
      6. OIC secretariat; and
    3. the amount of any loss recorded in the accounts of the Bank for the relevant year on revaluation or disposal of the Bank's land and buildings.
  2. Pursuant to section 160 (d) of the Act, it is agreed that the activities specified in paragraph 3(ii) are included within the amounts specified in paragraph 2 on the basis of operating expenses less income.
  3. It is agreed, pursuant to section 159 (1)(f) of the Act, to include within the amounts specified above expenditure on foreign exchange dealings, settlement banking, government banking and securities registry services as defined in sections 16, 32, 34 and 35 of the Act.
  4. For the avoidance of doubt, net expenditure on the OIC secretariat is included in the Agreement pursuant to section 159 (1)(g) of the Act.
  5. It is further agreed that:
    1. if the policy target for inflation agreed by the Treasurer and the Governor pursuant to section 9 of the Act is reviewed and a new policy target substituted, the agreed net expenditure limits as specified in paragraph 2 above will be adjusted to reflect any difference between the mid-points of the Bank's new and old path for inflation;
    2. if there are any material changes in the nature or extent of the work undertaken by the Bank in respect of any of the functions or activities covered by this Agreement, the Treasurer and Governor will re-determine expenditure limits set out in paragraph 2 above to reflect such changes; and
    3. this Agreement may be suspended and renegotiated at any time by mutual agreement between the Treasurer and the Governor provided however that any such renegotiation will require ratification by Parliament.

Hon Dr Michael Cullen
Minister of Finance

Dr Donald Brash
Governor of the Reserve Bank

16 May 2000