Dalziel Lianne: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
Dalziel Lianne: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
[Volume:657;Page:6082] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I want to return to the issue of consultation which I raised in the second reading debate on the Crown Retail Deposit Guarantee Scheme Bill. I have in front of me the 25-page regulatory impact statement which I downloaded from Treasury’s website during the dinner break and which of course was not included in detail in the bill largely because it would dominate the bill as the bill is so small. The executive summary of the regulatory impact statement is all that appears in the bill itself. I think it is important that we have a discussion about what we were actually seeking which was something that Treasury itself recommended in the regulatory impact statement. We have just heard from the member Amy Adams that somehow we are asking for a full 6 months at a select committee which we are not. We are simply asking for what Treasury recommended as an appropriate process given that there has not been adequate consultation. 
Let me read paragraph 65 of the regulatory impact statement: “The proposals for policy changes to the retail DGS were developed by The Treasury and the Reserve Bank of New Zealand in consultation with the Ministry of Economic Development (including the Companies Office) and the Securities Commission. These views have been reflected in the policy development. Annex 3 provides further detail on the issues raised in consultation and how these were dealt with.” These agencies developed the legislation that we have before us today. I actually believe that parliamentarians have a right to hear from those officials to be fully briefed on all the detail and to have an opportunity to debate some of the decisions that have been made. I am not 100 percent sure about them and I think that when we go through the detail of this bill and get some feedback from the Minister of Finance we will find that some issues need to be talked through a little bit more than this bill and this process allow. 
The regulatory impact statement goes on to state: “The decision was made not to consult proactively on the proposals with the public. This is due to: officials already having a reasonable amount of information about stakeholder views from regular interactions (summarised in Annex 3).” I have now had an opportunity to read annex 3 which I had not had when I spoke in the second reading debate. Annex 3 creates further difficulty for me because it talks about some of the feedback that the Government has in fact had in respect of concerns raised by both the banks and the non-bank sector. I want to highlight a couple of these concerns and I think it is important that the Minister responds to them. 
The first is the questions around distortions that were being created by the deposit guarantee scheme. My colleague the Hon David Parker raised those concerns in his second reading contribution. The regulatory impact statement states that “many non-banks are finding it difficult to attract deposits after the end of the guarantee period (creating a ‘wall’ of maturity). A business grouping has expressed concerns about the distortions to financial markets created by the DGS.” When the Government responds to this Treasury says: “The extended DGS is designed to minimise economic distortions by having much more risk sensitive pricing. It is designed with a definite end date”—it has gone from 2010 to 2011 so not much has changed except for the actual date; the definite end date was already there—“to help reduce the risk of another wall of maturities forming before the end of the guarantee period.” This means that there will be no lending after 2011 from the mezzanine finance sector. That alarms me because essentially the Government is admitting that this bill will simply delay the problem. 
I am not opposed to the idea of extending the deposit guarantee on the basis that it matches with that of Australia. I was also interested to see that the banks do not actually regard themselves as at any risk now from flight to Australia which is very interesting because that certainly was not the view at the time that the original scheme was put into place. There was a real concern that if we did not put a scheme into place—with unfortunately the lack of sophistication in our investing market—people would be persuaded to put their deposits over the Tasman in order to ensure that they were covered by a deposit guarantee. This is certainly a particular concern.