16 May 2022
Chuck Schooner
Via Email: [FYI request #18955 email]
Dear Chuck
Thank you for your requests dated 23 March 2022 and 16 April 2022 to the Reserve Bank of
New Zealand - Te Pūtea Matua under the Official Information Act 1982 (OIA) for the following
information:
[…] what information / advice has been provided by the Reserve Bank to mitigate the impact of
the breakdown of the fiat currency and in turn people losing their lives savings.
What papers / information and advice are provided to government by Reserve Bank of NZ
surrounding the collapse of the US Petrodollar.
If the US Petrodollar is to collapse then I'm assuming the NZ Dollar collapses so what assets does
New Zealand have to cover their sovereign debt?
- Are their assets that NZ uses as collateral to sovereign debt?
- What assets are these and are they strategic in nature?
- Who / what would lay claim to these assets - global interests, other countries?
- Who would be responsible for the collapse of the NZ economy - Ardern, Minister of Finance?
- What is backing New Zealand's debt?
- What austerity measures would need to be put into place? Maybe we need to cut the majority
of the Public Sector / glorified beneficiaries
Is it time that we ended the Reserve Bank and the government only spends what is gets in taxes?
NZ has the highest benefit rate to minimum wage, our productivity is in the toilet and the only
thing that keeps NZ going is the primary sector which the elites are looking to destroy.
What mitigation measures / advice is given to government that will ensure Kiwi's don't lose
everything?
Will the reserve bank be responsible in anyway and if so how will they be held accountable? Why
should I be bankrupted when I work to a budget and put money away and pay down my debt?
Who will ultimately be responsible for Kiwis losing everything and being unable to afford to put
food on the table.
Can you include any and all information the Reserve Bank of NZ has on a potential new global
currency / parallel market being developed by the EAEU & China backed by commodities - has the
Reserve Bank been briefed on this and how would it impact the NZ dollar?
[…] can you also explain who causes inflation? The government is the only agency that can cause
inflation because they are the only entity that can print money. Inflation isn’t supply chains etc etc
etc - when government prints money inflation occurs. Shouldn’t the government be warned about
printing anymore money?!
Ref #3299666 v1.1
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Response
We are refusing your request under section 18(g)(i) of the OIA, as the information requested is
not held by the RBNZ and we have no grounds for believing that the information is held by
another agency.
In order to assist you to understand the RBNZ’s role and to give you some background on the
broad topics you raise, I have included some information below.
Role of the RBNZ
Under section 8 of the Reserve Bank of New Zealand Act 1989, the RBNZ is required to
formulate monetary policy with the goals of maintaining a stable general level of prices over
the medium term, and supporting maximum sustainable employment. Also, the RBNZ must
assess the effect of its monetary policy decisions on the Government’s policy to support more
sustainable house prices. In regards to price stability, the RBNZ’s objective is to keep future
annual inflation between 1 and 3 percent over the medium term, with a focus on keeping future
inflation near the 2 percent mid-point.
Sovereign debt
Sovereign debt may also be referred to as Government debt or public debt. The Government
does not use assets or other forms of collateral to “back” its sovereign debt, which is a promise
to pay out of future tax revenue. New Zealand has relatively low sovereign debt levels by
international standards and has a strong international credit rating. The link below shows New
Zealand’s credit ratings, as assigned by international credit rating agencies. Credit ratings are
a measure of a country’s willingness and ability to service its financial obligations.
https://debtmanagement.treasury.govt.nz/investor-resources/credit-ratings
Causes of inflation
In New Zealand, a change in the general level of prices is measured by the Consumer Price
Index (CPI), which is calculated by Statistics New Zealand. The CPI measures the prices of goods
and services purchased by households. Movements in the CPI measure changes to the average
level of prices paid by the average New Zealand consumer. The CPI is created by choosing a
mix of goods and services purchased by a typical New Zealand household.
In a speech earlier this year, Adrian Orr, Governor of the RBNZ, discussed some of the drivers
of inflation in the context of the COVID-19 pandemic. To quote from that speech:
“To a significant extent, the recent increase in New Zealand’s consumer price inflation has been
driven by global disruptions that have caused sharp price increases for critical commodities and
a broad range of imported goods and services.
In the decade prior to the pandemic, imported consumer price inflation into New Zealand was
either negative or close to zero. These deflationary or disinflationary ‘tradables’ price pressures –
which makes up 40 percent of New Zealand’s CPI basket - acted as an anchor on total headline
inflation. … Monetary policy authorities globally can no longer rely on declining price pressures
for internationally tradable goods and services. Central Banks globally are now grappling with
high imported prices that have proved persistent.
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New Zealand’s monetary policy has no direct influence on these imported global prices, other
than indirectly – and even then unreliably – via the level of the New Zealand dollar exchange
rate.
…
The most notable driver of recent inflation pressures, from a tradables perspective, is rising oil
prices. New Zealand petrol prices increased 30 percent in 2021. Higher oil prices have resulted
from robust global demand, restrained oil supply during the early stages of the pandemic as
global economic uncertainty increased, and more recently geopolitical tensions in Eastern Europe.
Higher fuel prices are pervasive within the economy, as they are a significant input cost for many
firms.”
https://www.rbnz.govt.nz/research-and-publications/speeches/2022/speech2022-02-25
Significant government and monetary support globally has helped to avoid prolonged
negative impacts on demand from the COVID-19 pandemic. This robust demand has not,
however, been met with sufficient global supply due to continued COVID-19 outbreaks, related
restrictions and shipping disruptions. These factors have created an inflationary environment
globally. New Zealand, as a small open economy, is directly impacted by these developments.
While global factors account for much of the recent inflation in New Zealand, domestic factors
are also playing a large role. Continued acceleration in the prices of goods related to the
housing sector has accounted for much of the recent increase in domestic or non-tradables
inflation, which captures goods and services not exposed to international competition. Housing
construction costs have increased at their fastest pace since the late 1980s, reflecting strong
demand and labour and materials shortages.
While not directly captured in the CPI, annual wage inflation was 3 percent in the March 2022
quarter. Although this is below current CPI inflation, the increase reflects capacity constraints
in the economy. Labour is scarce, so businesses have to offer higher wages to attract and retain
staff. At the same time, employees may ask for higher wage increases to cover increased living
costs. Consequently, businesses that face higher labour costs may try to pass these on to
consumers by increasing their selling prices.
OIA charging
The OIA allows charges to be imposed for the preparation of information in response to
requests. The RBNZ is resourced to meet disclosure obligations for a reasonable level of
requests and the cost of providing free responses to official information requests is generally
borne by taxpayers. However, the RBNZ believes that requesters should bear some of the costs,
where allowable under the OIA, when requests are made for large amounts of information,
where a response is particularly complex, or where individuals or organisations make frequent
requests. In this instance, no charge is being made under the OIA.
You have the right to seek an investigation and review of this response by the Ombudsman, in
accordance with section 28(3) of the OIA. The relevant details can be found on the
Ombudsman’s website at
www.ombudsman.parliament.nz.
Please note that we intend to publish a copy of this response on the RBNZ website at
www.rbnz.govt.nz/research-and-publications/official-information-requests. Responses to
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requests are published in order to improve public transparency and provide an additional
resource for anyone seeking information.
Yours sincerely
Ross Francis
Ministerial and OIA Advisor, Government and Industry Relations
Reserve Bank of New Zealand - Te Pūtea Matua
