Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Tēnā koe Madam Assistant Speaker. It is with great pleasure that I stand to speak to this Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill and I think it's important that we understand exactly the place that friendly societies sit. In a sense they're really a form of social enterprise. They are a community that's getting together to help each other and the purpose is set out in the Friendly Societies and Credit Unions Act which talks about not only mutuality but also thrift cooperation and essentially the relief of poverty. I must say after I last spoke on this bill one of the members of a credit society—Victor Martick of Westforce Credit Union—took the time to email me because I had the temerity to suggest that they occupied a space which wasn't of the kind of low-interest rate. They were paying slightly higher interest rates and he was very quick to correct me and I thank him for it. He in fact sent me a spreadsheet which showed the place in the market that credit unions occupy showing in fact that on some occasions they may even provide cheaper finance than a trading bank but certainly considerably cheaper finance than most other non-bank lenders. So I commend him for pointing that out to me and showing importantly that these credit unions serve a sector of the community—often low-income low-asset sectors of the community—that can't otherwise get reasonably priced finance. So it's great to see that this bill of Mr Stuart Smith is enabling these credit unions to move into the modern era and to in fact—despite what Mr Seymour would have us think—streamline their processes and lower their costs by this regulatory reform and also to kind of meet the demands of modern society where a lot of people do have small businesses. They may be low income and low asset but they need finance for small businesses. A courier driver would be a really good example: needs $40000 to buy his or her van doesn't have the asset backing for it doesn't want to pay horrendous interest rates. They can now go to the credit union and say I'm part of this community I belong to the credit union I've got a business plan"—which the credit union may well have helped devise—"can I have this $40000?" Rather than going through some tortuous process of not lending it to an incorporated entity they can lend it straight to that entity because the credit union member has a controlling interest in it. So those kinds of steps are fantastic and they are modernising as the title to the bill says.It's worth noting that the credit unions and friendly societies have been around for centuries and centuries and this is just another iteration of them. Of course the critical thing and the item which caused the most consternation was the incorporation of these credit unions and friendly societies. To my mind it really is as night follows day the right thing to do because the need to have an incorporated vehicle so that the credit union and its members can be protected from the legal risks and can act as a single entity is really really quite important. The trustee framework which currently exists but will be changed when this legislation comes into force is simply not workable even from the simple requirements of signing documentation. If the credit union has to enter into a legal arrangement you have to go around and find the trustees in order for each trustee to sign. That's not workable. An incorporated framework is much much more sensible. It is also important to recognise that tucked away in there are important enforcement mechanisms. So for example the High Court can make restraining orders if these credit unions step outside of what they ought properly to do and I think that is important and it can give some considerable comfort to those objectors who were concerned that the whole essence of what it meant to be a credit union would fly to the wind that this whole idea of mutuality would go out of the window. Well if there are concerns there the members of the credit union or any interested party can approach the court and can say "Stop these arrangements stop this activity." so that indeed the rules—the essence the mutuality—are adhered to. It is important to recognise that mutuality and the idea that this is not a for-profit organisation. Members are not shareholders; members are very much members of a single community who have something in common whether it be their ethnicity their neighbourhood or their workplace. They have some common bond by which they come together and agree to cooperate and support each other and I think it's really important to recognise credit unions having that function in society. If I can just note there are real concerns about non-bank lenders in the market place and the Minister of Commerce and Consumer Affairs has—today in fact—released a discussion paper on this to make sure that non-bank lenders are behaving properly. I would encourage anyone in this House or who is interested in this to make a submission on this matter because there is advantage-taking that goes on out there. It doesn't take much to start lending money out in the market place; all it takes is a bit of cash and a few forms and there is a lot of advantage-taking and misbehaviour because of the underlying motives of some non-bank lenders because they're simply there for profit. They comply with the letter of the law and have frankly rapacious interest rates rapacious fees and rapacious penalty clauses. Now that needs to be stamped on. It is my hope that with this modernisation framework the costs of credit unions will fall the accessibility of credit unions will rise and therefore credit unions will expand and fill this part of the market because there is a real place for people who know each other and who have something in common with each other to get on and help each other out in this way. It was disappointing to see Mr Seymour introduce Supplementary Order Paper 40 which would have undone all of the good work of Mr Stuart Smith. It was frankly just a silly piece of gaming. I don't know who he was pandering to but it certainly wasn't going to get anywhere in the House and it's interesting to see that when it came to the vote the House voted against it. Only one member voted for it and really it's hard to see what he was thinking. Hon Ruth Dyson: Name that member!Dr DUNCAN WEBB: Yeah I think that was David Seymour the current MP for Epsom. Of course the other thing to note is that this bill enables credit unions to essentially enter into the modern financial world in terms of entering into securitisation arrangements so that they can go out and get money on the market whereas previously it was deposits only. Now the deposit-only framework getting money only from members that is a very limited market. It is necessarily going to constrain any growth in credit unions and constrain their ability to lend increased amounts of money out there. The ability to amalgamate more readily is another great move so that when it's appropriate the credit unions can band together as is the ability to belong to organisations which aren't simply organisations of other credit unions so they could belong to a complaints scheme or a union of other deposit takers or whatever it might be.So really this is a fantastic piece of modernisation and it really is my genuine hope that credit unions expand because this kind of modern social enterprise that recognises community that's not-for-profit but at the same time recognises the place for interest-bearing credit is really important and it's something that we need to recognise more—not only to relieve poverty but to grow business as well. This is a fantastic way for people to see small businesses in communities—that they can grow across any gender ethnicity community income bracket. So look it was a great introduction if you like because I think it was one of the first things we did me being a new member on that select committee. It was good to work with Stuart Smith on this piece of work and to see how we can make the law better. But really my hope is that this is a piece of legislation which helps and strengthens our communities. Thank you Madam Assistant Speaker."