April 2008 Variation to the 2005 Funding Agreement

This variation to the Funding Agreement is to provide additional funding required by the Bank in order to provide advice in respect of matters relating to the intended regulatory regime for non-bank deposit takers and insurers and to develop the operational capability to assume new statutory responsibilities contained in the Reserve Bank of New Zealand Amendment Bill (No 3).

Variation to the Reserve Bank of New Zealand Funding Agreement

1. This is a variation to the Funding Agreement between the Minister of Finance and the Governor of the Reserve Bank of New Zealand (the Bank) entered into pursuant to section 159 of the Reserve Bank of New Zealand Act 1989 (the Act) on 20 April 2005 (the "Current Agreement"). This variation is made pursuant to section 159(3)(a) of the Act and takes effect from the date of ratification in Parliament, to apply for the period from ratification through to the year ended 30 June 2010. The Minister of Finance and the Governor of the Bank agree that paragraph 2 of this variation supersede and replace paragraph 3 of the Current Agreement and that paragraph 6 of the Current Agreement shall be revoked.
2. The amount of the Bank's income to be applied in meeting the expenditure incurred in carrying out the functions and exercising the powers specified in section 159(1) of the Act is the sum of:
   1. $43,300,000 for the year commencing 1 July 2008;
      $46,900,000 for the year commencing 1 July 2009; 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. hedging of operating expenses.

Hon. Dr Michael Cullen
Minister of Finance
28 April 2008

Dr Alan Bollard
Governor of the Reserve Bank
24 April 2008