Wilkinson Kate: Real Estate Agents Bill — First Reading 
Wilkinson Kate: Real Estate Agents Bill — First Reading 
[Volume:644;Page:13828] 
KATE WILKINSON (National) 
: 
 I am very pleased to follow on from what the Hon Peter Dunne has said. I have to say that there is not much in the content of his argument that I can disagree with—just the conclusion. At first glance it may certainly seem prudent to vote for this Real Estate Agents Bill at its first reading and subject it to the proper scrutiny of a select committee but it needs such an extreme makeover and such amendments in terms of property management and other integral issues that have been omitted that any proper amendments should well be outside the ability and scope of the select committee to make the meaningful changes that would be required. Basically we need to start again. We need to do it once and do it properly. 
On reading the explanatory note of the bill one could be led to the conclusion that a huge problem regarding real estate agents has just recently surfaced and that this “remedial sledgehammer to crack a nut” bill is the only solution. The explanatory note states that in March 2007 Cabinet noted a range of problems with the Real Estate Agents Act and agreed to a full review of it. What I want to know though is what happened in July 2003 when according to the Associate Minister of Justice who I understand was Minister Barker Cabinet made decisions on the Real Estate Agents Act review. Suddenly 4½ years later we need to consider this bill—and now under urgency. Associate Minister of Justice Clayton Cosgrove unfortunately has vilified the industry. He said he had to take the real estate agents—the so-called land sharks—“kicking and screaming”. The Minister was going to drag land sharks “kicking and screaming” into the spotlight and “drop the hammer on them” in order to impose a new regulatory regime. We have heard references by the Minister to land sharks rogue agents and carnage in the sector. 
I want to ask why if it was so bad nothing was done about this back in 2003. What happened back in 2003 which is over 4 years ago? At the time the Real Estate Institute welcomed the opportunity for public consultation on how the real estate agency industry should be regulated. It said that it had been well aware for over 10 years that a number of elements of that regulatory regime needed updating particularly in areas of licensing procedures and enforcement of obligations. That is hardly “kicking and screaming”. It was aware then of a significant number of detailed issues that needed be addressed. Those issues had been drawn to the attention of successive Ministers and discussed with officials and the work was set aside for over 4 years. 
That is what the institute said then and what it wanted then. What did Minister Barker do 4 years ago? It appears he did absolutely nothing. Unfortunately there is now a real risk that this review of the real estate industry has lost its objectivity and that it has been hijacked by hyperbole by emotive labels such as “land sharks” and “carnage in the industry” and by exaggerated claims that have not necessarily been sustained. For example we heard in the select committee from the Minister who said: “I was accused of taking a cheap shot when I referred to the premium case where a High Court judge ruled against a real estate professional. I think it was to the tune of $3.2 million.” I had a look at that case; the amount was $900000 not $3.2 million as the Minister alleged. Although I admit that it is a significant amount of money I think the important thing about this case is that on appeal it was won and the real estate agent was vindicated. The real estate agent was vindicated not vilified. 
Unfortunately this is the sort of example that does nothing to inspire confidence in the process of this review. We have heard of delays waiting for complaints to be heard. Yet in the most public example of this where the appropriate forum for that complaint was a regional disciplinary committee—and we have heard about regional disciplinary committees—that committee had to be established under the existing 1976 legislation. Its establishment had to be ratified by the Minister who had to approve both its establishment and the members. Was he asked to establish it? Yes he was. Did he do so? No he did not. It is dangerous to look at only one side of the story and to vilify an industry when the papers have been on the Minister’s desk for over 4 years. 
Having said that it is important to support absolutely the purpose of the bill which is to promote and protect the interests of consumers by regulating agents raising industry standards and providing accountability through a disciplinary process that is independent transparent and effective. Indeed the real estate industry itself totally supports this objective as do we. If one reads the Real Estate Institute’s views it is important to note that it supports and indeed welcomes the reforms that remedy real problems in the current regime but the institute is concerned that it goes too far changing the law where there is no problem and not far enough in other areas that require further and more regulation. 
This is not an industry being dragged kicking and screaming; this is an industry that has been asking for years for the laws to be updated. This is an industry that is welcoming the update of its regulatory framework. This is an industry that welcomes the independence of the complaints investigation and disciplinary process. This is an industry that welcomes the introduction of compulsory continuing education. This is an industry that wants to be respected wants accountability and wants transparency but it is an industry that deserves good law. It is vital that New Zealanders buying and selling probably their most substantial asset have confidence in the professionals they are using to assist with such a significant financial transaction. There needs to be strong consumer protection and there needs to be strong consumer confidence. 
Real estate involves not only buying and selling property. An important part also relates to property management and this has been totally ignored by this Government. An integral part of property management is the handling of funds. The Minister himself has highlighted the mishandling of funds as one of the rules that should be applied. So why on earth then is it not addressed in this bill? The Government believes that property managers pose less risk. The institute believes however that one in five complaints relate to property management groups. Way back in 2003 the institute advised the Minister it was concerned about property managers operating outside trust account control and an audit regime. Now in 2007 it is still concerned but what has the Minister done? The Minister has ignored the institute. 
Property management involves holding significant funds in an account. Hundreds of millions of dollars pass through the bank accounts of property managers. What happens to missing rent moneys? The institute under this bill has no jurisdiction to deal with complaints about missing rent moneys. There is no requirement to hold the moneys in a trust account. There is no fidelity fund. If residential property managers are not covered by the new regime then gaps in the current laws will leave consumers vulnerable. If anything goes wrong the only recourse for consumers may be via the courts. This is contrary to the purpose of the bill which of course is consumer protection. 
There are concerning parallels between the latest bureaucratic system proposed and the Department of Building and Housing. Consumers can still be protected without having to bear the costs of senseless bureaucracy—that is what will happen. The industry will not bear the cost; the cost will be handed down to the consumer and housing affordability will get harder. For these reasons and the uncertainty as mentioned by my colleague Simon Power of whether in 5 years’ time salespeople will be able to work as independent contractors or whether they will be regarded as employees National opposes the bill. We welcome and support the industry’s view that transparency and accountability are welcomed. But unfortunately this is a wasted opportunity. Proper reform is welcome but this is not proper reform.