Nash Stuart: Westpac New Zealand Bill — In Committee 
Nash Stuart: Westpac New Zealand Bill — In Committee 
[Volume:672;Page:18817] 
STUART NASH (Labour) 
: 
 I am sorry; was the member in the chair Craig Foss going to take a call? For a minute there I saw him writing away furiously and I thought he was going to stand up and address some questions that Lianne Dalziel had asked which were all very relevant. 
I will pick up on one of David Parker’s points if I may at the beginning of my speech. I sat on the Finance and Expenditure Committee as did the member in the chair. There was not much debate on the Westpac New Zealand Bill but there was very healthy discussion on the meaning of all parts of the bill Part 1 included. There was consensus and officials explained how it would work etc. The Maori Party often did not have someone at the committee but the Maori Party voted against the preamble. I would have thought that if at some point the Maori Party had concerns— 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot make comments about the absence of a member. I bring the member back to the bill. We are on Part 1. It is a very narrow part and has only three clauses—clauses 3 to 5. I ask the member to concentrate on them. 
STUART NASH 
: We are talking about Part 1 which really is quite an important part of the bill because it sets out the purposes of the bill and the interpretation. I was very surprised when the Maori Party voted against the preamble. I thought there was consensus. I assume the member in the chair— 
Hon David Cunliffe 
: They voted for it in the select committee. 
STUART NASH 
: Yes they did. The member in the chair would have assumed consensus and I am sure he reported back to Westpac— 
Rahui Katene 
: I seek leave to amend the record to show that the Maori Party supports this bill. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought for the Maori Party to amend its vote on the preamble. Leave is sought for that purpose. Is there any objection? Would you like to tell us what you want to achieve? 
Rahui Katene 
: Four votes in favour. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave has been sought; no one has objected. It is very clear: leave has been sought for the Maori Party to amend its vote on the preamble. Leave was sought; there was no objection. The Maori Party vote will be amended accordingly. That is the end of the matter. It means that the vote on the preamble was unanimous. We do not need to put the vote again. It was unanimous and a party vote will not appear on the record. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. This is now an interesting situation because before the leave was put I was about to clarify matters such as whether there would be an opportunity to debate the Maori Party’s seeking to amend its vote and— 
The CHAIRPERSON (Lindsay Tisch) 
: No there is not. The member will sit down please. There is no debate on the leave. The Committee can either accept it or reject it. I put the leave no one objected and that is the end of the matter and there is no further debate on it. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. That matter having been settled Mr Chairperson the next matter relates to how the record will read given that the leave motion has been part of the proceedings— 
The CHAIRPERSON (Lindsay Tisch) 
: I have just said how it will be. It will appear in  
Hansard 
 as a unanimous vote. We do not have to put the vote again because everybody has agreed. That is what the record will show. 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. Can I therefore seek clarification as to whether these points of order or other comments in relation to the Maori Party’s position on the bill will be expunged from the record or whether they will they remain in  
Hansard 
 notwithstanding the fact that the leave has been accepted and the vote itself will be shown as unanimous. 
The CHAIRPERSON (Lindsay Tisch) 
: The record will show that no party vote took place. I refer members to Speaker’s ruling 68/4. In regard to the points of order that have been raised in relation to the seeking of leave I am seeking advice on that matter and I will come back to members. 
Hon Steve Chadwick 
: I raise a point of order Mr Chairperson. Without being difficult on this subsequent to the initial vote by the Maori Party members on our side raised concern about that vote and we do not want that in  
Hansard 
 if now the Maori Party is changing its vote. I think that is the point my colleague is making. 
The CHAIRPERSON (Lindsay Tisch) 
: I hear what the member is saying. The comments that have been made will stand. The member is bringing to my attention points that her party made during debate. Those comments will stand. They are in the record as are the other comments. 
STUART NASH 
: I thank the Chair and Ms Katene. It is good to hear that the Maori Party is supporting this bill but I think no one is more thankful than the member in the chair Mr Foss because otherwise at some point he would have to go to Westpac and to the Maori Party and try to figure out what part they did not like. But that is now sorted and that is very good. As has been mentioned I thought that this bill had gone through unanimously. It received robust debate but not a lot of debate. 
I come back to Part 1. As I mentioned previously the gist of this bill is in clause 3 and clause 3(b) talks about “the efficient conduct of Westpac’s New Zealand business.” But of course this is not about just Westpac’s business. Even though legislation is the only way that this matter can go through it is also about protecting the requirements of Westpac’s customers’ business. 
One of the most interesting things about this is the interpretation of assets. Clause 4(1) states: “assets means property of any kind whether tangible or intangible real or personal” etc. Clause 4(1)(a) refers to “estates or interests in any land including rights of occupation of land or buildings;”. The question I would like to ask—and it is a difficult one to answer—is how Westpac will account for the Crafar farms for example. My understanding is that Westpac was the major lender for the Crafar farms. I wonder how the issue will be dealt with. Will it be dealt with as an interest in the land? Is it a liability in the land? How will it be accounted for? Will the Reserve Bank look at the asset register and count the Crafar farms as an asset or will it look at its liabilities and count them as a liability? I must admit that this goes to the heart of the whole debate on farming. 
As we know the Reserve Bank has put in place new liquidity provisions in relation to increased money held by banks against loans to the agricultural sector. So the Reserve Bank has major concerns about the level of debt which I think is sitting at about $42 billion at the moment across all banks. The Reserve Bank has major concerns about the level of debt against the agricultural sector and that is why I bring up the point of what is an asset and what is termed a liability. 
The Crafar farm issue is a big deal. We are told that the value of some dairy farms has dropped by up to 30 percent and that other dairy farms have actually increased in value over this global financial crisis. At some point because it says this in the legislation when the Governor-General signs off on this—and we will talk about this in Part 2—a line will be drawn in the sand and Westpac’s assets and liabilities will have to be assessed. That will probably be a major task and I am unsure who will undertake it. Will it be Westpac will it be the parent company or will it be the Reserve Bank? If we come down to liabilities clause 4 states: “liabilities means liabilities debts charges duties and obligations of every description (whether present or future actual contingent or prospective)”. That is how we understand liabilities but again David Parker brought up a very good point. How will these liabilities be accounted for on the Westpac balance sheet? I have no doubt that in this economic climate there are a lot of liabilities out there that the bank must be very concerned about. If we look at the equity held in some dairy farms especially the dairy farms that have dropped in value by up to 30 percent which is the figure given to me by one of the banks then we have to wonder what impact it has had on Westpac’s asset register and liability register. 
I would like to question some of the other asset terms as well. Clause 4(1)(f) specifies “goodwill and any business undertaking”. I am not too sure what “any business undertaking” means but we can guess about that. But as to the valuation of goodwill there was a classic case where Rolls-Royce put a value of $1 or £1 on its brand. It did that because it knew that the brand had value. The company knew that the Rolls-Royce brand was worth something but it had absolutely no idea how much it was worth. By putting a dollar on that brand on its balance sheet it signalled to the market that it knew the brand was worth something but it could not quantify the value. That was a while ago and I know that advanced accounting practices include models to value goodwill but it is an interesting point. I wonder whether the Reserve Bank values goodwill using a different methodology or the same methodology as the Westpac Banking Corporation. It would be interesting to know what value goodwill has on the asset register of Westpac. 
Another matter relates to clause 4(1)(e) “intellectual property and applications pending for intellectual property:”. Intellectual property does have a definition in this bill and it is one of the few assets that are defined. I suspect that is because we are moving in a fast-changing world. The 21st century was completely different from the 20th century with patents and all sorts of carry-on. We have had patent legislation go through this House and it is fraught with difficulties. Clause 4 states: “intellectual property means all patents designs copyright know-how trade secrets trade marks service marks and other intellectual or industrial property rights of any kind and any rights in relation to them”. A very interesting question relates to how we value a trade secret. In fact how do we even acknowledge a trade secret? Would a bank have on its balance sheet or asset register $5 million worth of trade secrets? If the Reserve Bank came along and saw that figure I wonder how it would account for it. Would the Reserve Bank say: “We need to audit your accounts. You have $5 million worth of trade secrets on your asset register. Can you please show us.” Of course Westpac would be absolutely reluctant to lay out what its trade secrets are because no organisation or institution would ever let an independent institution understand its trade secrets. So it is a little unusual that it is in here. But the fact is that trade secrets could be on the asset register and we must remember that this is specific to Westpac New Zealand. This legislation is not about all trading banks or wider than that. It is about Westpac New Zealand. The fact that this legislation includes trade secrets in the definition of intellectual property means that there is a high probability that trade secrets are on the asset register. I could be wrong. Maybe the member in the chair can clarify this. Maybe a definition of intellectual property must be in the interpretation clause of every finance bill and this is just the standard definition that has been taken from other bills that include an intellectual property clause. But the valuing of trade secrets is very very interesting. 
There are other complications—not complications but I suppose questions—in respect of the definition of assets as “chooses in action and money:”. I am a businessman and— 
Amy Adams 
: Choses in action. For once get it right. 
STUART NASH 
: I am not too sure what that exactly means and I suspect that Amy Adams will stand to speak. 
Amy Adams 
: I did a law degree Stuart; you clearly didn’t. 
STUART NASH 
: Amy Adams shouts across the Chamber. She said that people in the Labour Party have not run a business or contributed to any productive enterprise. Well if I am right Amy Adams is a lawyer. In fact I have no doubt that Amy Adams was one of the people who set up a whole lot of structures that allowed farmers to pay about $1500 in tax. In fact if I understand correctly from the Register of Pecuniary Interests of Members of Parliament Amy Adams has about three houses and a number of farms. I am very keen for Amy Adams to stand up and take a 10-minute call before the dinner break to explain all those things. Because she is a lawyer I have no doubt that she can answer every question that has been put by the Hon Lianne Dalziel. She can answer every question that has been posed by David Parker. In fact Aaron Gilmore is now shouting across the Chamber.