Nash Stuart: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
Nash Stuart: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
[Volume:657;Page:6070] 
STUART NASH (Labour) 
: 
 I rise to speak in support of the Crown Retail Deposit Guarantee Scheme Bill as I did in the first reading for a number of reasons. I was interested to hear Melissa Lee emphasise this Government for the whole of her speech and how this Government is responsible for guaranteeing the deposits of ordinary New Zealanders. Ms Lee has a very short memory. In fact Dr Michael Cullen instigated this bill under urgency. Dr Michael Cullen was one of the great Labour politicians who believe in listening to the people. He understood that hundreds and thousands and millions of dollars had been lost by New Zealanders due to the collapse of financial institutions. He went around the country with people like Phil Goff Annette King and Maryan Street and they spoke to constituents around their electorates. They realised after hearing the stories about people losing their life-savings that something simply needed to be done. So I tell Melissa Lee that the National Government did not do this; it was a Labour Government measure. 
This bill is going through under urgency at the moment because the National Government did not get off its chuff and sort this thing out. The current retail guarantee expires in about 4 weeks. It was set up for 1 year. We are debating this bill under urgency so that the extension of the scheme will be in place and will give a high level of stability to the mum and dad savers who rely on their savings for their retirement. We all know that the Government will cut superannuation and raise GST. Bill English’s Tax Working Group has said that it thinks it would be a great idea to raise GST to 15 percent maybe 17 percent or even 20 percent. It wants to do that so it can drop the top tax rates from 38 percent and 33 percent down to 30 percent. How will that help the vast majority of the people of New Zealand? How will that help superannuitants? That is why Dr Cullen brought this deposit guarantee scheme in. 
There is a fundamental difference between the groups of people who were losing the money they had invested: there are savers and there are investors. Savers are the people who had put their hard-earned savings—which they had built up over 30 40 50 60 or many many years of working hard and paying their taxes—into these funds only to see their savings wiped out. Savers do not necessarily price risk like investors do. Investors are professionals who understand risk or are supposed to and therefore invest appropriately. They understand that risk equals return whereas savers—mum and dad investors who lost all their money in the financial sector—were not pricing risk; they were putting their money away ready for their retirement for their children’s education or for their grandchildren’s education. As I alluded to in some of the examples I gave earlier we are seeing the downside of the collapse of the financial sector in terms of the increase in ill health and decrease in the well-being of a huge cohort of New Zealanders. I spoke of at least two people who had committed suicide because they had lost their life-savings. I spoke of the tremendous hardship and mental anguish of those New Zealanders. Melissa Lee smiles but I do not think the issue is particularly funny or worth smiling about. Many many Kiwis have suffered and this deposit guarantee scheme will alleviate a lot of the anguish and harm caused to many people who have their money invested at this time. 
I support this bill for two reasons. First it is about ordinary New Zealanders whom members opposite tend not to understand. I cannot believe that when we are talking about New Zealanders who have committed suicide because they have lost their life-savings we see some members opposite smiling and clapping. Quite frankly that is one of the saddest things I can imagine. I read about it in the  
New Zealand Herald  
and I thought: “Goodness me! Imagine if that had been my parents.” Let us imagine that it had been our parents who had lost their life-savings after paying taxes for 50 years. Imagine them seeing their life-savings suddenly wiped out and being told to sell their family home to pay their debts to those blokes who are living the high life in Sydney. I do not think that is fair. 
Dr Cullen did what all good Labour politicians do: he remedied the problem. He came up with this retail deposit guarantee scheme which said that the Government of New Zealand would guarantee the deposits made by good hard-working ordinary New Zealanders. He put this scheme in place in the space of 24 hours. How do I know this? I was at a Taradale branch meeting. Michael Cullen was one of those MPs who go to every branch meeting in his or her electorate. My God they were great meetings! We heard Dr Cullen the then Minister of Finance and also Deputy Prime Minister talk about what was going on. Once for the first time since I had been in Hawke’s Bay Michael Cullen sent an apology to that meeting. We thought that something serious must be going down because Michael Cullen always attended those meetings just like every good Labour Cabinet Minister. We woke up the next day to find out that he had been working for the last 48 hours without sleep with his Australian counterpart the legislators and the Secretary to the Treasury to come up with a scheme that he could take to ordinary New Zealanders and tell them not to worry. They could sleep easy because he guaranteed that if any of these finance companies collapsed people would not lose their money. He went back and as Minister of Finance said that the Labour Government would guarantee that people would not lose their money. 
That scheme put in place the fundamental philosophies of social democracy. The fundamental philosophies of social democracy are to look after ordinary Kiwis who have saved hard who have paid their taxes and who have saved for a rainy day. That is what Dr Cullen did and I think it was fantastic. Now we are debating this bill which will extend that scheme. I really support the bill and I commend Mr English for understanding the value of it. But I think Mr English sees just the financial side of things as opposed to the hardship faced by ordinary New Zealanders. 
The second reason I support the bill is that it shores up the banking system. I was at the banking inquiry and it was very interesting. I take my hat off to the chief executive of Kiwibank. 
Paul Quinn 
: One of your mates. 
STUART NASH 
: I do not think the chief executive of Kiwibank is one of my mates but he came along to the banking inquiry. He stood up and said that he was there because he was accountable to the people of New Zealand. I was talking to one of the bigwigs at Westpac before this inquiry was held and I asked him to come along to the inquiry. I told him that if he had nothing to hide he should come along and tell us what he is doing and dispel the perception that the big banks are ripping Kiwis off. He said: “Cobber I probably should come along and tell them what we’re doing.” I said that that would be fantastic. I told him that if he could see his way there it would be the best piece of public relations his bank could possibly do. But he could not. Kiwibank fronted up because it is a bank that is owned by Kiwis and is for Kiwis. I applaud Kiwibank. I applaud the other people who had the guts to put in submissions stump up with the figures and actually say that for short-term floating mortgage rates the banks are rorting ordinary New Zealanders. That is what the inquiry heard from a number of people including Bernard Hickey. Someone said to me that Bernard Hickey was coming along and that he was a friend of the banks. I said that Bernard Hickey himself admitted this. 
The reason why short-term floating interest rates on mortgages were the terms of the inquiry was that Mr English had said that he would support an inquiry. Suddenly after a weekend of beers with his mates or some phone calls—we do not know what happened—he withdrew his support. He had already stated in the press that the banks needed to stump up and bear some of the pain that the banks needed to come on board and that the banks needed to face up to ordinary New Zealanders. But suddenly the rhetoric changed. He said he was not supporting a banking inquiry. To tell the truth I felt quite sorry for Mr Foss the chair of the Finance and Expenditure Committee. He does a good job; I take my hat off to him. He was put in a very difficult situation because the Minister of Finance had said that the Government would support this inquiry. Mr Foss went to the select committee and said that he thought they could get it through. Then suddenly Mr Foss had to go along and say that he did not support the inquiry at all. We asked Mr Foss what had happened and who had been talking to him. He said that no one had been and that he had just made that decision himself. We said that we thought his Minister of Finance had made that decision. So poor Mr Foss was put in the unenviable position of having to go against what he believed in. I know that Mr Foss wanted this banking inquiry. In fact it is a shame that Mr Foss himself did not put forward a submission because I know that the submission would have read like every other submission that we heard—that is that the banks are not treating New Zealanders the way they should be treating them. It is a shame that Mr Foss did not come along to the inquiry but we can have these conversations off the record. 
Getting back to the bill I say that one of the reasons why it is important which has been alluded to is that—let us face facts—we need a strong banking sector in this country. The Australian banks which basically have about 80 percent of our market are some of the most profitable banks in the world. I accept the fact that we need profitable banks but they are some of the most profitable in the world.