Curran Clare: Credit Contracts and Financial Services Law Reform Bill — In CommitteeText is incorporated into the Bound VolumeCurran Clare: Credit Contracts and Financial Services Law Reform Bill — In Committee[Sitting date: 13 May 2014. Volume:698;Page:17794. Text is incorporated into the Bound Volume.]CLARE CURRAN (Labour—Dunedin South): There is no doubt that the majority of this debate has focused on what is missing in this bill the Credit Contracts and Financial Services Law Reform Bill. Mark my words and my prediction tonight to everyone in this House is that we will be back in this House within a short time in the next Parliament revising this bill to include caps on interest rates.There is well-documented evidence of the importance of an interest rate cap in legislation such as this. There is well-documented evidence of the extent of the issue in New Zealand. I would just like to quote some research tonight that revealed that between 2006 and 2011 there had been a 60 percent growth in the number of third-tier lending outlets up to 40 percent of them were flouting the law by not registering as financial service providers and 127 new lenders had entered the market. In July 2013 which was just last year a new law took effect in Australia that capped interest rates at a maximum of 48 percent. The lending sums in the US of between $100 and $4000 for short terms at high interest rates have been regulated in 37 American States.This is not us making it up. This is a real issue. My fear is that this otherwise pretty reasonable piece of law will be flawed—deeply flawed—without that extra important control and extra important lever. I think we are doing a disservice tonight to the people of New Zealand by not including it. I also feel I guess disheartened really given the extent of the work that has been done in the Commerce Committee on this and the work that has been done by the officials who should be acknowledged again tonight and all the members on that select committee which was chaired by Jonathan Young over there. But yet where is the debate? Where is the discussion? Where are the explanations? Where is the argument that is the counterargument which is to put the other point of view rather than to have speaker after speaker on this side of the Chamber getting up and saying what is wrong with the bill and what it is missing out? Instead we just have this deathly silence. I think we do a disservice to the people ofNew Zealand by not having that discussion and by not having that debate so that people can actually hear what the counterargument is. Instead it is just deathly silence.All too often in this House this is what happens. Through really important pieces of legislation where there has been a big point of contention instead of having an actual debate and a discussion of ideas—which is what I thought this Parliament was supposed to be about—we end up having a string of speakers putting a point of view and a deathly silence from the Government which can pass the legislation because it has got the numbers. Well that is not good governance. It is not good governance and it is not what I came to Parliament to be part of and I doubt that many other people on this side of the Chamber particularly came to be part of that either.There are some very good parts to this legislation. I do want to mention some of them because there has been so much work put in to try to get good law coming before this Committee tonight. The introduction of the Responsible Lending Code I know is going to take some months to be developed and that will be done through regulations. I have already mentioned tonight that we hope that it can be done as quickly as possible but in order for that to be done as quickly as possible the ministry needs to be well resourced to do it. In order for that to be enacted so that there can be a good communication of such a code out to the community—because it is all very well developing a Responsible Lending Code but if it is actually not being communicated and if there is not that interface for people who are looking for ways to get access to extra money and who also need the good advice about how they could be borrowing in a more responsible way and how they could ensure that they can pay the money back.That exchange of information before the lending takes place is incredibly important. We have heard in debates on other legislation that has come before the House around investment and around mum and dad investors about the importance of being fully informed about the investments that you are making so it is sort of looking at it from the other perspective. The key to it is good financial literacy and the ability that is being put in place for that financial literacy to take place. So the mark of good governance around the implementation of the bill that we are discussing tonight in its Committee stage will be how it is communicated to people; how the codes are developed how they are communicated and how they are enacted; whether the Commerce Commission is actually going to be able to do the monitoring and enforcement that is required and that is needed across the whole of New Zealand—not just in Auckland with one extra staff member but across the whole of New Zealand—and how that monitoring will be reported; whether there will be a review done within a shortish period of time or certainly within the next couple of years I would assume it would be needed to see whether it is actually making any difference; and whether or not the Ministry of Business Innovation and Employment is adequately resourced to develop what is needed to be done to make sure that this law comes into practice responsibly.Once again and I just reiterate I predict that we will be back in this House within 2 years introducing interest rate caps. Would that not have been a good thing to include in this bill tonight? Would there not have been the ability for all the budget advisory centres across New Zealand all the citizens advice bureaux and all those other small organisations staffed by those really dedicated people—many of whom are actually doing voluntary work—to actually see that there is a whole suite of levers that are going to be used to stop this irresponsible loan shark behaviour which is causing a cancer throughout our low-income communities? So we will support this bill but we reiterate how important it is for those interest rate caps to be introduced.