Hodgson Pete: Anti-Money Laundering and Countering Financing of Terrorism Bill — Second Reading 
Hodgson Pete: Anti-Money Laundering and Countering Financing of Terrorism Bill — Second Reading 
[Volume:657;Page:6891] 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 It might surprise members but I am going to address my comments to the Anti-Money Laundering and Countering Financing of Terrorism Bill. I start off by saying that the bill as reported back from the Foreign Affairs Defence and Trade Committee is pretty much the same bill that a Labour Government would have introduced. 
Hon Simon Power 
: It’s not the one I saw. 
Hon PETE HODGSON 
: It is not the one the Minister saw; that is the point. I direct some initial comments to the Minister in charge of the bill the Hon Simon Power. I know a bit of a blame game is going on here but here is my insight in case it is of any use to the Minister. I think that Labour would not have gone with the bill that the Minister saw. In the months leading up to its introduction a certain amount of ministerial pressure came from my colleague Minister Cosgrove and I am sure Minister Dalziel had a hand in the matter as well who was pretty keen to get costs down. For that reason a delay was put on the legislation in our time in Government. With respect to the Minister I think frankly officials got away on him a little bit because the bill that we had introduced had too much prescription too little future-proofing too much unnecessary transaction cost on the economy too big a difference with Australia’s system and not enough of a risk-based approach. Officials were in too much of a hurry. I will come back to the business of being in a hurry in a minute.  
The committee across all parties roughly came to the view that its aims would be to deliver legislation that was compliant with the Financial Action Task Force or at least compliant with its essential aspects and with some but not all of its desirable aspects; to keep transaction costs low to be consistent with the first aim; and to have as much harmonisation with Australia as possible given our history in CER and now our single economic market. When we applied those criteria to the bill in front of us we saw it was not any good. Further the submitters informed the committee in quite a lot of detail of what they thought was wrong with the bill; indeed a number on the committee were lobbied in private especially by the banking sector. The message to the Minister is that when Ministers take their eyes off the ball—and I think this probably inevitably happens in the lead-up to an election and in the immediate aftermath thereof—they can end up in a situation where officials get away on them. Not that officials are bad people or do things behind someone else’s back; they have a view of what is best and it may not be shared by the people who are being regulated and in this case it was not shared by the select committee.  
On the business of being in too much of a hurry I have a sense—and I do not offer it up as a truth so much as an opinion—that the Government got somewhat panicked by the recent arrival in the country of officials from the Financial Action Task Force. The Government decided it wanted to make serious progress on this matter so that when the report finally came out it could hold its head up high present the legislation and say that it is now part of New Zealand law and that all problems had gone away. I can understand that. I can understand a Government being a little bit defensive about the fact that the New Zealand system at the moment is not compliant with the task force. In fact it is not very compliant with the task force at all. This bill is necessary. This is good law. It is important that we do this but it is not important that we do it at breakneck speed in order to lay to rest some of the concerns of visiting folk from overseas. Of course they will find this legislation an improvement. But the fact is until it has been implemented which will take years they will not give us a good vet. That is not their job. Their job is not to predict how good the country will be when the legislation has been fully implemented; their job is to take a look at the country now. If one is in any doubt about that then one needs only to look at the task force’s report as it applied to Canada.  
We had a situation where in my view officials found themselves delayed including delay caused by the previous Labour Government which wanted to get transaction costs lower than they were at the time and wanted to make sure that having suffered the delay its members were able to rush around and assure the task force officials that good legislation was on its way even though the task force officials were not interested in legislation; they were interested in how it worked when implemented. That meant a good deal of pressure was put on the committee. As it happened the committee responded. I am sure the chairman of the committee has made the remark—I may have not been in the House at that time so I will make the point again—that the committee worked very very well on this bill. All members on the committee from the chair across to all other members ought to be congratulated on the way we got down got the job done and got it done in time. I still hold the view that we were panicked. I still hold the view that it was a dumb timetable to operate to. I still hold the view that we should have gone to the Business Committee and it should have given ground. But the advice received was that if we did that the bill would come back unamended and would have to be amended in the Committee of the whole House which is not ideal.  
I think there are some lessons to be learnt. I say that because another issue is coming. The new United Nations Convention Against Corruption legislation is coming before the House in due course this year. In fact the national interest analysis is in front of the committee already. We will see as we have seen with this legislation the issue of domestic politically exposed persons come forward in that legislation and again we will have a bit of a scrap over it.  
The reason we had a scrap in respect of the legislation in front of us is simply that the officials decided that that would make them wonderfully compliant with the task force even though it made them completely different from Australia. Those officials did not have the right frame in which to look at the legislation; they were simply building something to a bunch of people called the Financial Action Task Force so that they could tick their boxes and go out to dinner and be told that they had done a fine job. It is not good enough. It is not good enough when those two economies Australia and New Zealand are moving as inexorably close to each other as they are.  
The other aspect of the select committee process that I think should be put on the record—I am sure it already has but let me give the House my variant on it—is that a group of the submitters became ancillary advisers. That worked well; it need not have. It might have turned to custard. It was a bit of a risk. The New Zealand Bankers’ Association agreed when the idea was proposed by the chairman that they would come up with four people to help us that those people would work in confidence and that they would work with officials. It needs to be said that the officials initially surprised by the action taken by the select committee very quickly got the idea and worked very well openly and honestly and that is how we ended up with the legislation that is before us now. In the course of that process one financial institution might have tried to pull rank on another but I am not aware of that happening. One financial institution that was not represented in the gang of four might have got its nose out of joint but I am unaware of that happening. That process which was risky—or could have been risky—turned out to work very well.  
I just say to the Minister that I hope we do not have too much trouble with the United Nations Convention Against Corruption legislation but if we do we look forward to his giving us the room to move that he gave us last time. I thank the Minister for that latitude; he need not have given it but we have better legislation in my view because he did. I think we might have a replay with that other legislation but I would not want to—touch wood—damn anyone before we see what the legislation looks like.  
I make one final point: when the legislation came into the House it had a regulatory impact statement that I think was out of order. It removed the compliance costs or the estimates thereof. It did so because it wanted to maintain confidentiality with the Minister. There is some ability to understand that and I do understand it. But it is not a sufficient reason. The Minister is a servant of the House. The Minister must allow the House to have a compliant regulatory impact statement. This one was not. We saw that before dinner. We had a compliant regulatory impact statement in respect of the legislation considered the Climate Change Response (Moderated Emissions Trading) Amendment Bill and we saw what good honest— 
Hon Member 
: Robust. 
Hon PETE HODGSON 
: —and robust advice looks like. In this case we were denied that advice at the introduction stage. That is a very bad look and in my view ought never to happen again.