Curran Clare: Credit Contracts and Financial Services Law Reform Bill — In CommitteeText is incorporated into the Bound VolumeCurran Clare: Credit Contracts and Financial Services Law Reform Bill — In Committee[Sitting date: 13 May 2014. Volume:698;Page:17787. Text is incorporated into the Bound Volume.]CLARE CURRAN (Labour—Dunedin South): It is good to be able to speak again in this debate on the Credit Contracts and Financial Services Law Reform Bill. I would like to start by acknowledging and thanking two very special people in Dunedin who work at the coalface of people who are low-paid vulnerable and dealing with huge budgetary issues in their lives. Their names are Shirley Woodrow who is the front-person for the budget advisory service in Dunedin and Ngaire Duke who fronts the team at the Dunedin Citizens Advice Bureau. There are other people who work with both those services but they are both really tiny little teams that make a huge difference in our community. It is one of the many communities throughout New Zealand that are grappling every day with the effects of bad practices on the part of organisations that are lending money and charging exorbitant interest rates and undertaking very dodgy practices that are having huge ramifications. Yes there is a responsibility on the people who are taking out these loans and who get themselves into these situations but to be frank I think that everybody across the Chamber tonight would acknowledge that there are very very strong reasons for the terrible situations in which people find themselves in this country.As the Minister in the chair the Minister of Consumer Affairs himself acknowledged before New Zealand does have a reputation for being a good place to do business a transparent place to do business and in general a corruption-free place todo business but if you scratch the surface of that reputation underneath you do find practices that are not good that have been endemic in this country and that need to be sorted. Labour is supporting this legislation though we believe there is a really key part missing and I am sure you will not have missed that message tonight. We support it because it has to get passed. I am acknowledging tonight the efforts and the daily grind of these small organisations which are underfunded and that struggle but carry on because they know that the work they do is really important. Alongside them in Dunedin is the community law centre and also the Dunedin Council of Social Service. I could go on and on about these small organisations which often are staffed partly by volunteers because they are people who care enough about their communities to do this sort of work.I would like to make the point to the Minister tonight about the words he used about the work that is being done to raise awareness of financial literacy. I would like to see the facts and figures around how that is being increased and where that is being increased because we are not seeing any increase in Dunedin. I would imagine that a number of my colleagues who have spoken tonight and who will be speaking on this bill would say that they do not see any increase in the resources that are being put into improving financial literacy and upskilling people in knowing how to manage the small amounts of money that they are then forced to live on and to be able to make the choices that are going to enable them to carry on without having to apply for these loans and find themselves in this downward spiral of despair which is one of the reasons we have got this bill in front of us tonight.If we want to talk about resources we have talked about the resourcing for the Commerce Commission. Well having one person in Māngere is not going to solve this issue and it is not going to help with the enforcement of this issue. I would like to ask the Minister respectfully when he says that he has been given guarantees by the Commerce Commission—which as I understand it is already fairly stretched—whether there are any further guarantees that it is going to be looking at how the enforcement and the monitoring of this law is going to be carried out in other parts of the country. Are we looking at extra resources for financial literacy in schools throughout tertiary education and throughout other parts of the community where we need this to be embedded in our culture in terms of how we manage our money? Especially if you are on a very low wage and especially if you find yourself in circumstances not of your own choosing where you have lost your job you have got a mortgage and you find yourself ending up needing to get access to money and then finding yourself again in this downward spiral of despair and debt with high interest rates.There is a financial literacy and financial awareness gap in this country. I have sat on the Commerce Committee for nearly 6 years and I have heard countless submissions from individuals from organisations and from Government-attached organisations saying that what lies beneath the reform in this area in terms of financial regulation whether it is for mum and dad investors or people taking out loans is financial literacy. That is one of the issues in our country that is at the heart of these problems. We can as a Parliament introduce laws like this bill which we are passing through the Committee stage tonight but we need to address the underlying issues.The financial issues do not just stop there either; the resourcing issues also go to the regulations how the regulations are developed and how quickly they are able to be developed to enact this bill. It is my understanding that this bill even though it may get passed in the next short while may not come into effect for 12 months. It may not come into effect for 12 months if the regulations have not been developed or have not been developed in a way that is robust. In order for that to happen there needs to be adequate resourcing within the ministry. Mr Chair through you I would also respectfully ask theMinister to address those issues and to give an indication of the expectation of how long it is going to take for those regulations to be developed so that the country can be reassured tonight that we are not going to have to wait another 12 months before this legislation can be enacted and actually be law. We have waited for years. Before this Government came into office at the end of 2008 this legislation was in development. The bill comes out of very good work that was being done by the previous Minister of Commerce—or one of the previous Ministers of Commerce; there have been a few in the last 6 years—the Hon Lianne Dalziel who should also get a mention tonight with regard to this bill.I said in the first part of this Committee stage debate that the Government has a number of levers it can use in this area. In this bill it has introduced a number of those levers which include the Responsible Lending Code the disclosure requirements the clearer tests for unreasonable credit fees and the licensing of repossession agents etc. But the missing link—the absolute missing link—is the cap on interest rates. We are seeing that being introduced in other jurisdictions throughout the world but is New Zealand doing it? No. Why is New Zealand not doing it? Well it appears either for ideological reasons because perhaps the Government could not have got the support if the ACT Party had not supported it—and we certainly know that one of the previous Ministers of Commerce Heather Roy was opposed to interest rate caps—or there could be other reasons that perhaps involve lobbying from organisations. The fact is though that interest rate caps have been introduced in many other jurisdictions. They have been named. They include Canada Mexico Japan Singapore most African countries most South American countries most European countries South Africa and Australia. They all have interest rate caps and they have all done a substantial amount of work in this area. Why can New Zealand not do that too?