Cosgrove Clayton: Anti-Money Laundering and Countering Financing of Terrorism Bill — In Committee 
Cosgrove Clayton: Anti-Money Laundering and Countering Financing of Terrorism Bill — In Committee 
[Volume:658;Page:6935] 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I concur with my colleague the Hon Pete Hodgson but on a different aspect of the Anti-Money Laundering and Countering Financing of Terrorism Bill. When we look at the bill that has come from the Foreign Affairs Defence and Trade Committee we see it is indeed in better shape than when it went to the committee. I would be grateful if the Minister in the chair the Hon Simon Power would perhaps report back to us or let us know why that is and whether he took his eye off the ball. I note that the committee said that the bill as introduced did not give sufficient emphasis to a risk-based framework for countering money-laundering and the financing of terrorism and that it had amended it substantially. I am not quite sure whether the Minister may be busy and unlike some of his colleagues—Mr Brownlee and company—may have taken his eye off the ball. 
The Minister will recall that his predecessors who had some stewardship of and relationship to this bill embarked on a costing of the legislation. We wanted to give the private sector the assurance that we were taking a precise and risk-based approach to it that the department was not putting an extra zero on the invoice and trying to “Rolls-Royce” it and that we were attempting especially with the monitoring regime to meet our international obligations in an appropriate way to ensure that we countered money-laundering in any aspect but that we were not ramping it up like some other jurisdictions have perhaps done by creating new departments and by putting in a lot of cost which is ultimately passed on to the private sector and to customers. That seems to have been lost in the transition from the bill being authored by the Minister to it being referred to the select committee. 
Under one of the Minister’s predecessors the previous Labour Government got Deloitte to do an independent costing of the proposals that were being put forward. As I said that was to give the private sector a level of comfort that we were meeting our obligations but that we were doing so in the most efficient and cost-effective way possible bearing in mind that even in doing that there is a substantial cost related to this legislation which banks in particular and other institutions will have to deal with. I wonder whether the Minister could take another call and tell us what happened to the quality control process in the time between the bill being launched off his desk and it finding its way to the select committee. 
I think the select committee has done a very good job in requiring some more precision in respect of the bill’s aims and objectives. Likewise in terms of the purpose and overview clauses in the bill I turn to the point that the select committee made when it recommended inserting an overview clause new clause 3A to set out in plain English the contents of the bill. The obligations in the bill are complex but again I ask what happened to the quality control. This bill will affect a large number of stakeholders. I ask the Minister again whether his eye was off the ball because it is helpful and preferable to draft modern legislation—the Minister is a lawyer; I am not—in a way that is as clear and as user-friendly as possible even given the constraints of parliamentary counsel around the language that is used. That is necessary so that those who read the legislation and those who have to implement it can see precisely what the aims and objectives are and what their obligations are. So I ask the Minister what happened. What happened between the work that was done by the officials and the legislation that was put in front of us? 
A lot of work was done by the officials—I acknowledge them. Originally it was put to the officials that the framework around this legislation was good but where were the costings? They then had to go away and have a wee look at what was going on. The officials did agree with me at the time that we should engage Deloitte—that we go out into the market place to have the propositions that now form part of this legislation tested independently. This Government over a whole series of policy platforms shrinks absolutely from that precedent. Whether it be—not to digress from this bill—the issue of private prisons whether it be cuts to various Government services or whether it be propositions around accident compensation there is a reluctance unlike the previous Government to have those propositions tested by independent organisations like Deloitte. That is what we did in respect of this legislation under my stewardship. We did so because there has always been an accusation when these kinds of international obligations are being implemented by—to be fair—any Government of the day that certain departments try to say it is a great grab bag: a great opportunity to load up the budget for a series of different purposes that they may perhaps see value in but that business may not and at the end of the day Ministers may not. 
So we broke the mould somewhat. I invite the Minister to take a call and indicate whether he may do the same as we did in relation to other things that he is proposing in his portfolio. As I said we engaged independent consultants in the form of Deloitte to go out and challenge our own thinking and our own proposals. The request that I put to them was simply this: given that we have to meet our international obligations why can we not do that in a least-cost manner or with the least burden to the private sector? 
I recall—I may have brought this up with the Minister before—that I said to the banks that we did not want to create different levels of obligation. The banks put a very interesting proposition to me. They said that if we were to go to a lower level of obligation than perhaps our Australian counterparts we would actually increase the compliance costs. The banks are set up in Australia which is ahead of us in terms of its legislation for a number of reasons. The banks said that even if we tried to establish a cheaper proposition for the banks here that in itself may create an additional compliance cost because even a cheaper option would require some systems adjustments. But we wanted to give the private sector confidence that we were not simply putting up a proposition to meet international obligations holus-bolus and we were not going to write our own bill with whatever obligations we thought we should meet that the private sector and ultimately the customer or the client down the chain would have to pay for. We did engage Deloitte and it did come up with a substantial report and that informed our thinking. Also I believe it engendered a high degree of confidence within the private sector. 
I say again to the Minister that I think that is a good thing to do. I wonder why—without digressing from this bill—his colleagues do not test the propositions that they are putting forward regarding accident compensation. Some say the propositions are spurious some say they are wrong and some say they are downright deceitful. The way to alleviate that concern is to ask an independent third party like Deloitte or PricewaterhouseCoopers or whoever it may be to go and test the Government’s propositions and the Minister’s ideas. If they stack up then we would have an independent agency with no axe to grind providing some ammunition I suppose for the Government. But equally if the propositions are bunkum if they are simply smoke and mirrors and if they are simply designed to put fear and panic into folk then that would be exposed by an independent third party with no axe to grind. I am pleased that the Minister at least when he was the Opposition spokesperson I think supported Deloitte coming in and having a look at the propositions in this bill. Well he says he was benign to the whole issue. 
The National Government campaigned on the basis of providing the most efficient solutions for business. We put this issue to Deloitte but again I say to the Minister that I wonder whether his colleagues will do the same on other issues. I wonder whether his colleagues the Minister of Corrections the Hon Judith Collins or the Minister for ACC the Hon Dr Nick Smith will do the same as we did. If they believe in the robustness of their arguments I ask what the problem is. They should put the propositions out to an independent third party have them costed roll the dice and see how they go. But I sense there is a reluctance on the part of this Government to do that. It talked fast and tough before the election about providing least-cost options to business but I note that over a whole series of portfolios it is very reluctant to have its propositions and its theses tested by anybody other than its own officials whom of course it can control. It can tell them what to say and they are required to follow the Government line of the day; that is the professionalism of the public servant. But oh no this Government is very very reluctant to have third parties examine at the very least the cost-effective nature of the propositions it is putting forward. 
I ask the Minister again to take a short call. I hope he will tell us why the wheels went off the rails and why the bill went from his desk to a select committee when it was so imprecise and unclear that the select committee had to put a bit of plain English into it in order to explain to the folk who will have to use the legislation what it means.