Adams Amy: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
Adams Amy: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
[Volume:657;Page:6081] 
AMY ADAMS (National—Selwyn) 
: 
 I rise to take a call on Part 1 of the Crown Retail Deposit Guarantee Scheme Bill and before I start I really have to comment on the speech made by the member who has just resumed his seat David Cunliffe. He purported to make quite some mileage out of the fact that this bill is being passed under urgency and he purports to be quite concerned about this. That concern does not extend obviously to his not voting for it. To me the fact that that member does not understand the urgency that relates to this measure notwithstanding that we are 12 months out from the expiry date really highlights his lack of grasp of this area. Retail deposits are not decided on the day they fall due. The retail market in deposits needs to know now what the situation will be 12 months out and preferably 18 and 24 months out. 
Anyone in the financial market understands that this matter is urgent so we need to process this legislation quickly. Already the sector is calling out for some guidance. Already we are seeing that decisions are not being made and that investor confidence is starting to flag because that guidance is not there. We have to process this bill as a matter of urgency and if that member had a better grasp of financial reality and the reality of financial retail deposits he would understand that. Clearly he does not; none the less his purported concern does not extend to not supporting the bill. Furthermore I would have thought that the fact that there is unanimous support for this bill across the Chamber would tend to suggest that it is quite appropriate for it to be processed in this way. I would have thought that those members would be supporting the process but if they want to score points that is fine. 
The bill is focused on ensuring depositor confidence. As I said in my first reading contribution it is this country’s stable financial system and stable banking system that has enabled us to avoid the worst part of the global recession which the rest of the world is experiencing. We are lucky in this country that we have a relatively stable financial sector— 
Hon David Cunliffe 
: So? 
AMY ADAMS 
: —and it is important that we work to maintain confidence in it. The member opposite says: “So?”. It is no big deal to him whether there is stability and confidence in the market. Those members opposite could not care less because they do not understand that side of it. We have to have a stable system and a viable banking and non-banking sector. That is what this bill does and that is why the scheme has been extended. That is why National set aside its political point-scoring when the scheme was put in place last year and that is why National now in Government is acting quickly to ensure that there will be ongoing confidence in the scheme as New Zealand develops its path out of this recession. 
As the New Zealand recovery continues to consolidate we want to ensure that that deposit guarantee remains in place so that we do not see a loss of confidence in New Zealand and so that we do not see investors looking to move their money into Australian equivalents which would continue to have a guarantee in place. It is important in our close trans-Tasman relationship that we work on similar terms in this market. We have always tried to benchmark ourselves to Australia to a certain extent and there is a real risk in my view that if we had left the expiry date at October of next year then we would have seen a preference for many of our investors to invest across the Tasman. As I have already mentioned if we lose deposits in New Zealand we lose liquidity for our businesses we lose jobs and we lose productivity. It means mums and dads not being able to feed the kids or pay the mortgage because they have lost their jobs because the business could not get funding. There is a real social cost to not getting this right so that is why I applaud our Government for taking urgent steps to put this legislation in place. 
I turn to one particular aspect of Part 1 and that is clause 3 “Interpretation” which gives us some important criteria around what the Act will do. The lawyers in the Chamber will know that the interpretation clause which is much overlooked by laypeople is in fact one of the most important clauses of any bill. I want to look in particular at the terms “eligible entity” and “debt security”. Under this bill the Minister of Finance is able to set criteria for the eligible entities and I think we need to be conscious of the fact that the Minister in doing so has to be clear that it is necessary or expedient in the public interest. I think the words “necessary or expedient in the public interest” are the key words. This whole legislation this whole retail guarantee scheme is about working in the public interest. As I have said a stable banking system the confidence of mum and dad investors and the continuation of liquidity in our financial markets are key for New Zealand. They are key for our economy and they are central to the public interest.