Burns Brendon: Westpac New Zealand Bill — Second Reading 
Burns Brendon: Westpac New Zealand Bill — Second Reading 
[Volume:672;Page:18376] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I wish to alert listeners that I am not Aaron Gilmore the member who was speaking prior to the dinner break and I have no wish to be Aaron Gilmore. I do not hold the range of professional qualifications experience or high diplomatic posts that my colleague from across the Chamber holds. 
But I would like to speak on the Westpac New Zealand Bill and to talk for a moment about the salary paid to the chief executive of Westpac. This bill relates to some technical changes that will allow the Westpac Banking Corporation branch in New Zealand to comply with its condition of registration which includes the limitation of the bank’s liability to below $15 billion as set by the Reserve Bank. Obviously the chief executive runs Westpac here in New Zealand and one would expect that gentleman to be a well-paid person. But I looked at a table of executive pay summaries in the weekend’s  
New Zealand Herald 
 and saw that the chief executive of Westpac here in New Zealand George Frazis is the highest paid chief executive in the country. It might be argued that that is appropriate for a bank the size of Westpac. It is a big and major financial institution and it is appropriate that the chief executive is well remunerated. But then I looked at the pay that George Frazis earned in 2009. At that point he was earning the modest salary of $3.5 million—plus another thousand or two. But by last year his salary had risen some 67 percent to $5848411. 
Westpac is a good bank and its call centre for the nation operates out of Christchurch—or it certainly did until the 22 February quake. But I have to say that if I was a member of the Westpac staff—and the average salary is of the order of $45000 for the people who take the calls from bank customers wanting to know about issues with their bank deposits and transactions—I would feel somewhat perplexed to know that the bank’s chief executive was earning 100-plus times what I was earning on the front line on the counters. I am sure that some people might think that this is about the politics of envy but if we look at the facts we see that the chief executive of the ANZ banking group Jenny Fagg in 2009 received a salary of $1.2 million for running a similarly sized operation. That was about a third of George Frazis’ salary but I do have to acknowledge that her salary increased quite considerably last year. In fact it more than doubled to $2.84 million. 
We are seeing the sort of game that goes on in some industries in this country the parallel game: “My competitor is earning an amount; therefore I deserve to earn that amount.” The amount does not have any relationship sometimes back to the share price. It certainly does not have any relationship back to a comparison with what the average company worker is earning. Some people might dismiss that as being an invalid comparison but I think there is a deserved agreement for some form of relativity. There was an early American banker—Rockefeller I think or it might have been Morgan—who said that no manager should earn more than 20 times what his staff were earning. 
Jo Goodhew 
: I raise a point of order Mr Speaker. I wonder whether given that this is a second reading you could draw the member back to the bill. I have just not heard him mention it. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you for that. The issue is that the debate is rather wide-ranging but I ask the member to bring it back and focus on the bill. 
BRENDON BURNS 
: Thank you Mr Assistant Speaker. We are of course debating tonight the issue of the Westpac Bank and the technical changes to it for incorporation in New Zealand. I think that the legislation is good it is appropriate and Labour is not opposing it. But the chief executive is the person who is in charge of Westpac New Zealand and it is important that we note that the chief executive takes responsibility. Once this legislation is passed through the House the chief executive is effectively in charge of it. He will be running the organisation and incurring the responsibilities of running it. He is responsible for managing the staff and outcomes of that organisation and he deserves to be well remunerated. But I think it is obscene to see that someone who earns an amount in the order of $5.8 million has awarded himself a 67 percent increase when the average rate of wage increase in this country during that same time frame has been 1.7 percent. 
Banks have some responsibility to this nation because they are sometimes amongst the cheerleaders who call for fiscal restraint and financial responsibility but this is a case of “Do as we say rather than as we do.” This is a situation where the Westpac staff some of whom I am sure will be watching the progress and passage of this bill tonight have every reason to be discouraged by the fact that their chief executive is earning such a disparate amount. He is the highest earning executive of any organisation in New Zealand and has had a 67 percent pay rise as this bill which presumably was originated by him and his head office has come through to Parliament and is now being considered tonight. 
This bill is about a change in the ownership structure if you like of the Westpac bank. We know that Westpac is a very sound and stable bank. It is acknowledged that the bank has operated well in this country for a long long time. Of course the Reserve Bank has a track record of having had a policy of local incorporation as one of its key planks in ensuring the stability of the New Zealand banking sector which one has to acknowledge did hold up well through the course of the tumult that emerged in late 2008 and into 2009. I acknowledge that the New Zealand banks remained stable and sovereign and were able to endure the storms and that has to be reflected in wage packages but I still come back to my point about the size and scale of the increase with which that chief executive has rewarded himself. 
We also have to say in respect of Westpac that in 2009 we as a party with the support of the Greens thought it important to look at the performance of the banks throughout the financial crisis and the recession and we were very disappointed that Westpac did not take the opportunity to support that inquiry which was blocked effectively by the Government. However we still held an inquiry as we felt it was important that New Zealanders were able to look through the role of banks in the financial collapse as it happened. The banks came through the 2008 tumult pretty darn well but we thought it was unfortunate that Westpac did not support that inquiry. 
I will now turn to some of the key elements of the bill. Obviously it is transferring assets and liabilities of the Westpac Banking Corporation’s New Zealand branch to Westpac New Zealand Ltd to comply with its conditions of registration in limiting the bank’s liabilities to below $15 billion as set out by the Reserve Bank of New Zealand Act 1989. Some of the history to this is that the Westpac Banking Corporation was registered in New Zealand as a bank under the Reserve Bank of New Zealand Act 1989 and then as an overseas company under the Companies Act 1993. But from 2003 onwards the Reserve Bank began instituting a policy that required significant systemically banks to be incorporated in New Zealand. Initially the Westpac Banking Corporation established Westpac New Zealand to assume and carry on the retail banking business in New Zealand and this bill is bringing that process to finality. Legislation is of course the only means by which the assets of the Westpac Banking Corporation’s New Zealand retail business can be vested in Westpac New Zealand and that is what this legislation is about. 
I will just finish with a comment about the issue of the chief executive. It is still in my view inappropriate in hard times when people are being told to tighten their belts when we are seeing the prospect of a savage Budget in just a couple of weeks’ time when New Zealanders are bracing themselves for further restraint and when they have had a wage increase in the past year of 1.7 percent on average for the chief executive of one of the leading banks of this country to be rewarded with a salary package rise of 67 percent to $5.8 million at a time when the rest of the nation is being told to do it tough. I think most particularly of the staff of Westpac in Christchurch who are doing it extraordinarily tough at the moment. There are big questions about the Westpac call centre building in the centre of my central business district in Christchurch. Those people earn on average $45000 a year. They have every reason to feel very disgruntled at the fact that their chief executive has awarded himself a 67 percent pay rise.