Westpac New Zealand Bill — In Committee Third Reading 
Westpac New Zealand Bill — In Committee Third Reading 
[Volume:633;Page:5227] 
Westpac New Zealand Bill 
In Committee 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 I seek leave for the Committee of the whole House to take the bill as one question. 
The CHAIRPERSON (Hon Clem Simich) 
: Leave has been sought for that course to be followed. 
LINDSAY TISCH (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. Are we talking about one debate on all the parts and then we will move back into the House for the third reading? 
The CHAIRPERSON (Hon Clem Simich) 
: That is what leave has been sought for. Is there any objection? There appears to be none. 
Preamble and clauses 1 to 24 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak in the Committee stage of the Westpac New Zealand Bill. First of all I would like to note that the National Party is supporting this bill. It has supported the bill at its first reading through the Finance and Expenditure Committee and at its second reading. We are happy to help the progress of this bill through Parliament. The bill comes with a couple of small amendments that came from the select committee process and again we endorse those amendments. We are quite happy with the bill in its current form. I thank the honourable member Marian Hobbs for her work in steering this bill in its various stages through the Parliament and for the way in which she has been more than open to consideration and discussion around the bill. 
It is an interesting reflection to get up now and speak in the Committee stage of a bill like this given the behaviour we have seen in the Chamber over the last 3 or 4 hours. It is a nice change I think. I guess people listening out there can now turn down the volume on their radios. It is certainly a pleasure not to have to listen to some of the diatribes and the gutter politics that we have heard here today. Mud has been thrown around and believe me if people are worried about where politicians stand in various trust surveys I think they will find that today they just went down again. 
On 1 November 2006 the largest New Zealand transaction in history will take place. It is a transaction of about NZ$35 billion affecting 1.3 million – odd customers. Some are individuals and many are corporates. Interestingly and I will come to this point later Westpac in its current form is the Government’s banker and of course the incorporated Westpac New Zealand will also be the Government’s banker. That raises interesting questions over who wrote and signed various cheques and about the cash flows going through Government accounts particularly in relation to last September. 
This bill incorporates Westpac New Zealand Ltd. It is a coming of age for Westpac. This argument and discussion has been going on for a long time in financial circles in New Zealand and between the Reserve Bank and Westpac. Interestingly of what are known as the four pillars of Australian banks—the ANZ National Australia Bank the Commonwealth Bank of Australia and Westpac—Westpac is the last one to be incorporated here. I congratulate members officials and Reserve Bank members on working their way through the ramifications of this. If we look at the share price of the two different companies we see that they have converged somewhat as the incorporation has come closer. 
I am a member of the Finance and Expenditure Committee that considered this bill heard submissions on it and reported it back to Parliament. I must say that it is a very good committee to be on. There is a very strong standing of National Party members on that committee—myself Mr John Key Dr the Hon Lockwood Smith and Chris Tremain. We bring a lot of gravitas to that committee. Currently the Finance and Expenditure Committee is also considering the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill. That bill will affect Westpac and the new Westpac New Zealand. It will hammer those who have provided for their retirement savings by putting a capital gains tax on their unrealised earnings in countries outside New Zealand and Australia and in what is under that other bill almost effectively a country the Guinness Peat Group. Some of the submissions that have been heard so far on the taxation bill—and many of those submitters are customers of Westpac and will be customers of the new Westpac New Zealand—are almost unanimous in their opposition to the bill in its current form which will create huge anomalies. Quite frankly I do not know how Westpac New Zealand will be able to address and manage those problems in its back office. 
The new Westpac New Zealand will be affected by the taxation bill because the bill affects migrants who are thinking about coming to New Zealand. Of those migrants who have already arrived in New Zealand many are thinking about leaving. Goodness gracious! We have a capital deficit in New Zealand. We have a higher taxpayer deficit although inflation has dealt to that. Twenty percent of people are on the 39c tax rate now. Many people are feeling sold out let down and deceived by the Labour Government. The Government has said to those people over the last 6 or 7 years: “Come to New Zealand invest your money here.” and once they have landed here suddenly they have been whacked with a capital gains tax that was not even on the horizon when they first talked about coming here. 
Westpac New Zealand is the Government banker. It is responsible for managing the cash flows in and out of various accounts. It will be interesting once various reports come out from the Auditor-General etc. to see who signed what authorisations and what prudential requirements were adhered to when the cheque for $446000 was signed by someone in the Beehive for the pledge card—or perhaps it was signed by the Parliamentary Service but with the authorisation of someone in the Beehive. We are yet to find that out but we look forward to that. It will come out in time. 
 This Westpac New Zealand Bill is one amongst a few other bills going through Parliament at the moment. We have recently seen the KiwiSaver Bill go through. That legislation made fundamental changes to the savings industry of New Zealand particularly in terms of the last-minute changes that were rammed through 4 hours before the second reading the scope of which even Labour members were totally oblivious to at the time. The Reserve Bank of New Zealand Amendment Bill and the taxation bill are also currently before the Finance and Expenditure Committee. All these bills contain quite fundamental changes and taken as a whole they are a giant lurch backwards for New Zealand and for investment in New Zealand. 
Coming back to the Westpac New Zealand Bill I say again that National supports it given the integrity of the Reserve Bank the submitters who came before the Finance and Expenditure Committee the Australian officials who were also involved in this bill and the officials from the various New Zealand Government departments. I thank those people very much. National looks forward to this legislation and we look forward to everything going very well and very smoothly from 1 November. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Tena koe Mr Chairperson. Last night while we were discussing the Insolvency Law Reform Bill it seems that we forgot some really important statistics. So being ever-helpful as we are the Maori Party humbly brings the following information before the Committee to help us better understand the Westpac New Zealand Bill as well. 
In 2002 47 percent of bankrupts had more than one credit card 53 percent had two to four of them and only 17 percent of bankrupts were Maori—thank heaven! These are big issues that we face—issues that banks like Westpac and other important banks in Aotearoa must address in order to protect their clients’ finances. Yet as the cash registers were ringing last Christmas the Banking Ombudsman was condemning banks like Westpac for encouraging their customers to take on debt they could not afford for extending credit to clients that could not make the repayments and for giving credit cards to people who had not even asked for them. 
There is an old saying about a weka escaping a snare and not going back to it. In this case though it was precisely because of the way Westpac snared its customers and dragged them back into debt that along with BNZ it jointly won the 2005 Roger Award for the worst transnational corporation operating in Aotearoa—the first banks ever to win the Roger Award for being corporate criminals. The award described how both banks pressured their staff to sell credit cards to people rather than to provide things that the customers had actually asked for. It is the McDonald’s philosophy. Instead of fries with one’s meal the banks are serving up debt with one’s credit—and they are making their staff serve it up by forcing them to meet targets based on increasing customer debt or losing their jobs. 
Westpac staff are required to meet a specific target of 8575 points a year and although every new account opened attracts 10 points selling a credit card gets the staff member an extra 25 points. Union spokesperson Karen Skinner said that these targets are putting increasing stress on bank workers and customers alike and they also place stress on the New Zealand economy. Why are staff paid incentives to put customers into more debt and why is it that if the staff do not sell enough their jobs can be under threat? 
The Maori Party will support this bill because it will enable the Reserve Bank to ensure that Westpac and all big banks operating in Aotearoa are incorporated here. We support the view of New Zealand Trade and Enterprise that because banks are vital and strategic players in our economy they should come under the control of this country’s laws and local incorporation offers that greater level of domestic security. 
But protecting assets and savings must also recognise the huge levels of bankruptcy insolvency and credit card debt this country has. I tell members to think about this: New Zealanders are the worst savers in the OECD bar none. For every $1 we earn we are spending $1.13. This time last year we owed more than $4 billion on credit cards—up a full $217 million on the previous year. It is hard even to contemplate what this year’s credit card debt level might be. We cannot just ignore these facts and forget to mention them here or just say tut-tut and condemn people for not being thrifty enough and hope that it all goes away. We all have a responsibility to talk about this and to deal with it. 
Westpac when lending credit to customers must be bound by the code of banking practice to act fairly and reasonably towards the customer in a consistent and an ethical way. The explosion in numbers of credit cards and the greater use of credit cards instead of cash and the growth of e-commerce and the use of performance targets are forcing Westpac staff to sell more and more debt to Kiwi customers. Incorporating Westpac here is expected to protect Kiwi depositors if Westpac goes belly up because current Australian law gives Aussies first call on the funds and limits overseas claims. It means that when incorporation is complete it will be Kiwi customers at the front of the line and we welcome that. 
The bill is also supposed to make the New Zealand banking system more resilient in times of stress make Westpac subject to the same rules for capital and insolvency as all the other banks in Aotearoa make Westpac answerable to the Reserve Bank for regulation monitoring and discipline and enable the Reserve Bank to better manage any potential bank failure. Hopefully that will mean New Zealand does not have to deal with the wider costs of bank failure like a collapse in investor and consumer confidence higher borrowing costs and low economic growth. 
But the questions we keep coming back to are what about Westpac customers trapped in credit dependency? What about those customers who are overspending and plunging into bankruptcy? Last night I reminded the House of the dream of Martin Luther King—that hopefully we might never open an account in the bank of justice only to find it bankrupt. In Westpac will we find a bank that dispenses justice to its customers and treats its employees fairly justly and with accountability and integrity? When I think of its staff targets and its drive for profit at any cost I harbour deep concerns about Westpac’s moral bankruptcy ethical insolvency and lack of social responsibility. This bill also states that current staff who become employees of Westpac New Zealand should have their contract of employment protected so we will be watching carefully to see that this does indeed happen and to see that Westpac employees’ rights are upheld in this process. 
The Maori Party will support the third reading of this bill in order to support initiatives that protect our nation’s economy as well as the finances of its clients. But we will also hold Westpac to account for its investment in social responsibility and efforts to promote a genuine progress index. We will be watching carefully to see whether the growing of its assets is matched by the growth in well-being and security of its staff and clients. Kia ora Mr Chairperson. 
Preamble and clauses 1 to 24 agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 I move  
That the Westpac New Zealand Bill be now read a third time 
. I wish to give some reassurances in this third reading. I wish to reassure New Zealand depositors with Westpac that their deposits will be as safe with Westpac after the passing of this legislation as they were before. Under Australian law in the event of bank failure Australian depositors have preference over the assets of the bank including the New Zealand assets of the bank. The assets of Westpac New Zealand as a subsidiary will not be available to Australian depositors of the Australian bank in the event of failure. In addition as a registered bank Westpac New Zealand will be required to comply with the Reserve Bank of New Zealand’s capital adequacy and other regulatory requirements. That was the purpose behind the Reserve Bank of New Zealand asking Westpac—as it has previously asked banks—to comply in this way. 
The second point I will make is on the question of transparency. This bill is transparent. It is not just a decision that has been made by the Minister of Finance. Under this bill Westpac New Zealand has to disclose what assets and liabilities it will vest in the new entity and it has to have that vesting order published in the  
Gazette 
 and through the Statutory Regulations series. 
 Also during the debate on this particular bill there have been claims that the Minister of Finance makes these decisions. This is not so. The Governor-General may by Order in Council approve a proposal signed by Westpac to vest certain assets and liabilities of Westpac into Westpac New Zealand. The Order in Council can be made only on the advice of the Minister of Finance after he has received a recommendation from the Reserve Bank of New Zealand. So there are cross-checks the entire way through in order to ensure that our people in New Zealand who deposit with Westpac New Zealand are as safe as anybody else with their deposits. I just wanted to clarify that. 
I also want to give my thanks to members of the Finance and Expenditure Committee for meeting the deadlines to enable Westpac to meet its 1 November date. The legislation was an essential way of doing this clearly so that we could do it securely without having a whole lot of other work that would entail cost for Westpac. My thanks also go to the officials who appeared before the select committee to offer clear advice on the issue. 
The member for Wellington Central often gets these jobs from head office. This member was a school principal and a teacher not a financial person. On a number of occasions I have needed to have bank officials in my room giving me advice and taking me through this legislation. I am very grateful to them for doing that and I have learnt a lot as we have gone through the process. I am very pleased that the Westpac New Zealand Bill has been given the support and the detailed attention of good members of this House. 
CRAIG FOSS (National—Tukituki) 
: 
 I will just make one quick point to Marian Hobbs. I think New Zealand investors in the new Westpac bank will actually be in a better position than before. I do not think anyone in this House likes to line up behind Australians for anything whatsoever and people from my good area of Hawke’s Bay of course are lining up and trying to get their apples into Australia—I had to get that point in. I acknowledge again the work of Marian Hobbs; I thank her very much. She is in good company as a former schoolteacher who puts sophisticated legislation like this through the House—the Minister of Finance of course was a university lecturer. In the spirit of this Westpac New Zealand Bill and in the spirit of good financial management and prudential setting up for New Zealand—and of being on a level playing field with the Australians—the National Party is very pleased to support the third reading of the bill. 
Bill read a third time.