Parata Hekia: Credit Reforms (Responsible Lending) Bill — First Reading 
Text is incorporated into the Bound Volume 
Parata Hekia: Credit Reforms (Responsible Lending) Bill — First Reading 
[Sitting date: 21 July 2010. Volume:665;Page:12589. Text is incorporated into the Bound Volume.] 
HEKIA PARATA (National) 
: 
 Tena koe Mr Speaker. Huri noa i to tatou e te Whare tena tatou katoa. I begin my remarks on the Credit Reforms (Responsible Lending) Bill by acknowledging Carol Beaumont for the work effort and purpose that sits behind the bill and her predecessor Charles Chauvel who equally has made significant contributions to this area of work. I also join with the House in acknowledging Her Worship the Mayor of Porirua Jenny Brash the Deputy Mayor of Porirua Litea Ah Hoi and Andrew Shann. I acknowledge all the work he has done and the many months and years he has devoted to that work. If it is not clear from the speeches tonight I will make it clear that I do not think there is any disagreement between any sides of the House as to the problem we face and the concern we have about the predatory nature of fringe lending and the vulnerability of fringe borrowers. But with respect the fact that we disagree on the solution to this problem does not attribute to one side or the other a greater moral authority. I think it is important— 
Carmel Sepuloni 
: It’s shameful that that side is not supporting this bill. 
HEKIA PARATA 
: I am not ashamed at all to say that I think this is absolutely a problem and that it is one we need to deal with. Obviously it disproportionately affects those who are on the fringes of our society—those who are the poorest. In many cases they are Maori and Pacific Islanders. To have the Opposition shouting abuse at me that I should be ashamed is offensive because I do share the concern of the House; I do not share those members’ view that the Opposition has the monopoly on understanding the solutions. This is a very complex area and the bill proposes measures that are not in my view viable solutions. The Government is looking at comprehensive measures to address these issues and we are reviewing— 
Carmel Sepuloni 
: Looking is not good enough. 
HEKIA PARATA 
: It is amazing how those members can sit on a moral high ground when Labour had the opportunity for 9 years to address this issue but it did not do so. I have 4 minutes and I would really like the opportunity to contribute my 4 minutes to this debate. We are reviewing the Credit Contracts and Consumer Finance Act we are implementing the Financial Service Providers (Registration and Dispute Resolution) Act we are undertaking a major review of consumer law and we are improving financial literacy. Lacking as they might the drama that the Opposition wishes to bring to this debate those measures have far greater potential to bring about the changes that we all agree are necessary. 
The interest rates cap proposed in the bill as a way to stop loan sharks has generated the most publicity. Although National does not support the charging of excessive interest rates we have reservations about interest rate caps being a viable regulatory intervention for over-indebtedness and poor lending practices because the issues are wider and more complex than the cost or affordability of credit. All consumers should have access to credit when they need it on an informed basis. If a cap is introduced at a level insufficient to generate a lender’s required margin the price of credit can be transferred from the interest rate to fees and other charges thereby negating the intention of price control. 
The bill seeks to limit a creditor’s right to the value of the goods at the time of enforcement. This measure too is problematic. There is concern that the finance market for lending on consumer items could potentially collapse overnight if such a law was introduced. 
The bill proposes the introduction of responsible lending obligations that seem to be based on initiatives in Britain and Australia. We have heard from previous speakers that the capping of interest rates has been halted in the Commonwealth of Australia while its effectiveness is studied. The notion that we should embrace what every other country in the world is doing—which they have been doing for only the last 12 months or so without knowing how effective it is—seems to me to be a foolhardy rush when we have the opportunity to test the confluence of changes that we are already bringing about. I do not resile from my position that I share the concern of this House for fringe borrowers; nor do I resile from the position that this Government is taking.