Hudson BrettBRETT HUDSON (National): I am thrilled to take a call on the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill in its first reading. I cannot imagine what could fire the passions more than taking care of a bit of regulatory streamlining or throwing away a few archaic regulations. It is difficult to contain oneself. How could anyone call this a dull and technical bill? This is the sort of thing that really inspires you to come to the House and let loose.Before moving on to the substance of the bill I would just note that Mr Nash in his call postulated that perhaps a friendly society could be seen in the Labour caucus. Well I have to say that the rumours and leaks coming out of that caucus about the blood on the floor as it was debating whether or not to support the Family Incomes Package in the Budget show it is anything but a friendly group of people. What are you doing with your hands Mr Faafoi—are we dancing?Kris Faafoi: Get back to the bill.BRETT HUDSON: The purpose of the actions and initiatives under this bill is to change some regulation around credit unions to make them more competitive and less expensive to run in the modern financial services industry. Over the last few years both before the global financial crisis and certainly following it a number of regulatory frameworks and rules have been put in place to provide some safeguards for people in their dealings with financial services companies. The credit unions will still be covered by all of those but this bill will get rid of some of the complicated and difficult wording around the statutory objects of association that credit unions have to follow but other financial services institutions do not. For instance it will reduce the number of union members required for an association of credit unions down from seven to two. That will make it easier for credit unions to maintain their operations and to continue serving their members. Under the current Act credit unions have a very complex supervisory and oversight regime. Among other things they have to have internal trustees—as one of my colleagues pointed out not only a set of trustees to manage their financial assets but actually a separate trustee to take care of the operations of the union. Another really odd piece—because you know credit unions are not-for-profit organisations but are there for the benefit of their members. The customers are effectively owners and members of the credit union. There is this odd situation where a credit union is not permitted to lend directly to a business such as a small to medium sized enterprise (SME) that has a relationship to one of the members of that credit union. They get around this or have got around this to date by instead making the loan to the member of the credit union who then has a second loan with that SME with which they have some relationship. Meanwhile the credit union does hold collateral against both its own member and the SME that ultimately is in effect the recipient of the loan. That just seems absolutely bizarre particularly when it is not a requirement that is imposed on other major trading banks.So the measures that Mr Smith's very good bill—and he is a very good member for Kaikōura by the way—will put in place will actually serve to help credit unions to maintain a competitive position in what is a regulated but still very competitive marketplace. They are a significant contributor to our financial services industry. About 194000 people are members of credit unions in New Zealand. They collectively hold assets of around $1.7 billion and are actually the sixth-largest financial transactor by volume. That is pretty substantial I think by anyone's measure. Given that they transact that volume of business and given that they exist for the benefit of their members and are a non-profit financial services option for people to choose I actually think it is a very very good idea that we make sure that the legislation that governs them is actually keeping step with modern times and modern markets. I commend this bill to the House.