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:6083] 
STUART NASH (Labour) 
: 
 I stand to support the Crown Retail Deposit Guarantee Scheme Bill. There were two reasons for the scheme being undertaken by the Labour Government in October 2008. The one that most people have talked about was the desire to maintain liquidity at a time of immense tightness in global cash flows. I am aware that the BNZ was very close to implementing its contingency strategy on how to operate without access to foreign funds. We saw what happened when there was a rush on the funds of finance companies—they collapsed. As my colleagues have spoken about the first charge of the Labour Government was to provide a Government guarantee to depositors to ensure that there would not be a run on the funds of banks. 
As the Hon David Parker said had there been a rush on the funds of banks similar to the rush on the funds of finance companies the New Zealand economy would have been in grave danger of experiencing the sort of collapse we had seen overseas in Europe and in the United States or perhaps of being in even worse shape than that. Of course the mess in the UK ended up costing the British Government significant amounts of money and it was forced for all intents and purposes to nationalise large chunks of the banking sector. The whole argument about banks being too big to fail was belied by the fact that the UK Government nationalised much of the banking sector at a huge cost. And let us not talk about the situation facing US investors. 
We on this side of the House understand the importance of a strong banking sector. It annoys me a little bit when I hear members of the National Government standing over there preach at us as if we do not know anything about finance we do not know anything about the economy and we do not know anything about the banking sector. After all the Labour Government is the only Government in two generations to lower the corporate tax rate. I would say that the small to medium business sector would say the Labour Government was the friend of small to medium businesses. 
Hon Darren Hughes 
: That party voted against it. 
STUART NASH 
: That is dead right. Mr Coleman actually voted against dropping the corporate tax rate. It was amazing. 
The reason that the Labour Government introduced the scheme and more specifically that Dr Michael Cullen worked all of a Sunday evening to get it up and running within 24 hours was to shore up deposits within the banks to match what was happening in the Australian sector and therefore to prevent a possible run on funds and a collapse of the New Zealand banking sector. We understand that. But there was also another reason that the Crown Retail Deposit Guarantee Scheme was put in place and it seems that the National members are totally ignoring it. They have not mentioned it once. I will quote Dr Cullen: “The government is offering this deposit guarantee to address the current situation of international financial market turbulence and it will be for a two-year term in the first instance. This will give time to see how well international financial markets stabilise in the months ahead.” That reinforces what I was talking about—shoring up the banking system. But he went on to say: “The deposit guarantee is designed to give assurance to New Zealand depositors. The New Zealand banking system remains sound. We want to ensure that ordinary New Zealanders feel that their deposits are safe in the current uncertain international financial market conditions.” I think we must not forget that the other reason why the retail deposit guarantee scheme was set up was to protect ordinary New Zealanders from losing their hard-earned funds. That is one of the reasons why I support this bill. I would hate to see ordinary New Zealanders having lost their funds in the finance companies lose their funds in the banks. This bill is about providing confidence not only to the international credit sector but also to ordinary mum and dad grandma and grandpa Kiwis. 
When it comes to the matter of urgency I hear what the National members have said but I just do not buy it. The National members and more specifically Ms Amy Adams and Mr Craig Foss say that our not enacting this bill now might have a distortionary effect on the financial markets or more specifically the banking sector. So what we have here is on one side the rule of law and democracy which Labour members support where the bill would be taken through the full select committee process versus the banking sector. What does one favour? The National Government has said it favours the banking sector. It comes before democracy before the right of the people—and it is a fundamental right of our democratic system—to stand before their elected parliamentarians to present submissions on what should happen to the scheme. It is 13 months away before the scheme expires. Ms Amy Adams said we are debating the bill under urgency because people demand certainty. If it is so important—