Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Kia ora e te Mana Whakawā. I can assure Mr Bayly that there are some members that are new to the committee on this side of the House but they are not struggling with this bill in the slightest they are some of the most talented people we will ever see in this Parliament and I am very excited to hear their contributions. Whilst it was an excellent select committee—well led as well—that looked at this bill we will no doubt see some further insightful contributions coming from this side of the House at least. We know that Mr Bayly dealt in the murky world of merchant banking in a former life as I understand it anyway and he actually did make some very good contributions in select committee here about this Financial Market Infrastructure Bill. But it is important to just recognise that this bill actually touches on everyday lives because every time we go down to buy something at the supermarket with our Visa card or our EFTPOS card we are using part of our financial infrastructure and that payments and clearance system which underpins this underpins those simple payments is absolutely integral to the financial stability of New Zealand.So that is what this bill is about. Whether it be a clearing system for payments of that nature or whether it be the stock exchange or over-the-counter derivatives or any of the numerous other financial transactions that go on here in New Zealand underpinning this are these systems—largely run it must be noted or the services are provided by private companies. This is not Government infrastructure this is private infrastructure so it's really really important that it's stable because if one of these pieces of infrastructure were to fail the knock-on effects could be quite catastrophic. I guess there's really just two points I want to make about this bill one is about the purpose clause because we can sometimes get lost in the details—and I love to get lost in the details of bills of this nature—but in fact the purpose is really important and the committee did examine that. It's important because it's on the basis of purpose that regulators can intervene. Every time a decision is made about whether to intervene in an entity the regulator should be looking at the purpose and saying Has the trigger been reached? Is the purpose of this legislation met by this intervention?" The select committee noted that the purpose clause talked about a sound and efficient financial system and of course those are both good things "sound and efficient". Hon Michael Woodhouse: Good they're vital.Dr DUNCAN WEBB: Well they're still there so that's why we left them there. We didn't take those ones out Mr Woodhouse but we added in stability a stable system and public confidence in a system. That's another important thing that if a system loses public confidence then again the infrastructure can fail—whether it be a run on the bank or people choosing not to use the stock exchange and we've seen the stock exchange come quite rightly under scrutiny recently about whether its systems are robust and stable enough to do the work that it's expected to do. So adding in the purpose of "stability and confidence" was an important point. The other thing I wanted to—Hon Gerry Brownlee: Repetition.Dr DUNCAN WEBB: Ha ha! The other thing I want to talk about is the approach to the regulation-making powers because we got advice from the Regulations Review Committee—another fantastic committee a very good committee in the last Parliament it will be hard for this Parliament to keep up with that the firepower on that former committee—we actually looked here at the question of whether it was appropriate for the instruments made under this Act to be disallowable particularly an instrument which gave things like exemptions to particular organisations. The question there really was about whether that was having widespread legislative effect or whether it was simply a one-off kind of carve-out that only affected one entity. Now the Regulations Review Committee you'd never take the advice lightly but the committee looked at that question and said "No in that situation it's really not a legislative instrument. It doesn't have legislative effect it needn't be disallowable because of its narrow application."In the same vein and throughout the report—which I know we'll have all read avidly—it notes a shift away from ministerial regulation-making to regulation making by officials and that's unusual it's very unusual in fact. For example the appointment of a statutory manager is a very very significant step. It really does take away a huge amount of autonomy and freezes the entity itself but a lot of the stuff that goes on there it's not a broad policy decision—it's operational. The other thing to note—and I think this is critical—is in these situations dealing with financial infrastructure: hours and minutes count because these settlements must be made on time absolutely. It's a kind of drop dead situation that if a payment—and these can be payments in billions and billions of dollars if they're not made on time then a series of defaults can occur which could be catastrophic. So we need the ability where those decisions are made for them to be made extremely rapidly. They're decisions which are highly technical and largely operational. So it was entirely appropriate for those really important decisions to be pushed down the chain to where the technical expertise lay rather than leave them in ministerial hands. But I just do want to reassure the House that that was very very carefully considered.Of course the other really important point there is the designation of financial infrastructure entities. Not every financial infrastructure entity is kind of essential to the integrity of the system of the whole there are some smaller operators who have less widespread systems; smaller stock exchanges would be a really good example where whilst there might be benefits for them to be subject to this Act for various reasons—they get various protections and indemnities for example—it's not essential to Government to the integrity of our overall system that they be included in this piece of legislation. So we looked at the opt-in opt-out provisions there so where an entity is absolutely essential to the integrity of the system they will be compelled to be part of this regulatory framework but when they're not they may opt in to the framework so that they get the benefits of it—but they needn't if they don't want to.I guess the other point in there is really some of the questions around the confidentiality of information here because we know how sensitive the information can be here and it's important that when notices are issued here it's absolutely confidential—and as well the securities is another really important aspect that if an administrator is appointed a statutory manager is appointed then the rights of secured creditors are not diluted. In fact that was not immediately apparent that wasn't abundantly clear on the first draft and we wanted to make it absolutely clear that if someone had a call on financial assets as a secured party if an administrator was appointed they would be preserved. Again essential to the financial system that we have—and that goes to confidence doesn't it because if secured parties can't have confidence that their interests are protected even when the Government steps in to administer a piece of financial infrastructure then that's undermining of the financial system as a whole.So look it is absolutely a technical bill and. as Mr Bayly said it's one which the National Party kicked off because incidentally I think it was the IMF who indicated that it was a gap in our regulatory framework—perhaps a distance risk but a risk nevertheless and one that this Government was very happy to pick up very happy to make sure that the work was done. Of course this is a piece of governing that people will never notice this is the kind of work that good Government does isn't it? Because we're making sure the systems are in place the systems are working they're robust they're strong and people will be sleeping in bed at night knowing that tomorrow when they wake up their EFTPOS card will still work. I commend this bill to the House."