Bayly AndrewANDREW BAYLY (National—Hunua): It is a pleasure to be talking to the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill. First of all I just want to congratulate my colleague Stuart Smith on having the good fortune to have his bill drawn out of the lottery as we all know of members' bills. But contrary to some of the aspersions and particularly those made by the previous member Fletcher Tabuteau I think this is a good bill. It is absolutely a very good bill trying to help ordinary New Zealanders with their financial arrangements. I think Stuart Smith is a hard-working MP who seized the opportunity to do a good thing for many people. As we have heard before there are a lot of people who have money invested in credit unions. So this is a good bill because it modernises some very old legislation as we have heard—from 1982. So it is timely that it is dealt with.Why the change? Well credit unions operate now in a very competitive market. We all know that. There are many different institutions operating offering money and doing services for people. It is interesting that a number of the speakers have spoken about the credit union arrangements at the moment. There are three that have fewer than 2000 members but there is one that has 68000 members and combined they have nearly $800 million worth of assets or loans. So in terms of these businesses they are large financial institutions.What is a credit union? I heard Mr Stuart Nash try to explain it. Basically these credit unions have the power to take money for the purposes of lending. They also can use it to control and apply savings and look after savings. But the third thing—one of the primary interests or purposes of credit unions—is actually about training and educating their members on the wise use of money. It is very unusual. I do not hear of banks having those sorts of things in their purposes statements. The fourth one is obviously to be able to operate.I think that what this bill sets about doing—it has got some key elements. The first one is the difficulty around the structure of a credit union. What this bill does is it deals with the issue of allowing them to incorporate under the Friendly Societies and Credit Unions Act—not under the Companies Act as many people assume but under the Friendly Societies and Credit Unions Act. That Act gives it effectively the power of a natural person.The second thing is that at the moment credit unions have this perverse situation where they have all these members—thousands of members—whom they can lend money to but they cannot lend money to their related small-business interests for instance if they own a company. What this bill does away with is it removes that perversity and allows the credit unions to lend directly to small businesses. Many people who are members of these financial institutions do want to borrow money to support those businesses and also to place money that the company may have generated into a financial institution that is safe.The other part about this bill is it deals with the issue around structure. Some of the speakers have talked about it. It is a very unusual structure that credit unions have to adopt such as they will have effectively a board of directors which you might envisage with an ordinary company. But underneath it they have to have trustees to hold assets such as property and another trustee to actually be able to operate the credit union. This is a weird structure that is very old and outdated. What this bill does is deal with those structural issues and effectively remove that added level of bureaucracy to enable credit unions to work and to operate much more effectively thereby reducing costs but just as importantly reducing the complexity of the way they have to operate.Finally the bill deals with the impracticality of 13 unions having to have a requirement of seven of them to be a member of the Association of Credit Unions. Most people do not understand what a credit union is. The Association of Credit Unions—what that does is provide services like ATMs eftpos services debit cards and mobile banking services. That is an important function and this bill deals with it comprehensively. I fully support it.