Nash Stuart: Westpac New Zealand Bill — In Committee 
Nash Stuart: Westpac New Zealand Bill — In Committee 
[Volume:672;Page:18805] 
STUART NASH (Labour) 
: 
 I suppose those watching will have seen two extremes this afternoon. The Westpac New Zealand Bill is a bill that I think every party in the Committee actually agrees on. We will all be speaking in favour of it. It was brought to the House by the chair of the Finance and Expenditure Committee Mr Craig Foss and he did a very good job in chairing it through the process. 
I suppose the nub of this bill is Part 1 clause 3(b) where it states that the purpose of the bill is to provide for “the efficient conduct of Westpac New Zealand’s business.” That is the nub of the bill. I have a slight problem though with the salary of Westpac New Zealand’s chief executive officer. I think he receives over $5 million a year which means he receives about $5000 a week in tax cuts. There are some people who would have a problem with that $5000 a week as some people do not get that in 6 months—but anyway. 
We know that one of the reasons why New Zealand came through the global financial crisis in the state it did was that Dr Cullen had left the books in very good shape. I shudder to think what might have happened if Don Brash had got in in 2005 and had given tax cuts. Dr Cullen left the books in very good shape. In fact the banking sector was one of the most robust in the world. Westpac is an important part of that banking sector but I believe that it breached its covenant albeit very briefly which was the impetus to bring in this bill. 
Mr Cunliffe talked about assets and liabilities. If we look at the interpretation we see there are some interesting words in relation to the interpretation of assets. No doubt they are the right ones but people may find them slightly interesting. Under clause 4(1) “assets means property of any kind whether tangible or intangible real or personal corporeal or incorporeal and whether or not subject to rights and includes—”. We would expect some of these things in terms of assets but there are some surprises here. Assets include “(a) estates or interests in any land including rights of occupation of land or buildings:”—which is the sort of thing that banks are involved in and we would expect that—“(b) buildings vehicles plant equipment machinery fixtures and fittings and rights in them:” and that is absolutely right. Assets also include “(c) choses in action and money: (d) rights of any kind and applications objections submissions and appeals in respect of those rights:”. 
Then it is interesting. We should remember that we are moving assets to Westpac New Zealand to allow Westpac to meet the requirements of the Reserve Bank. A further category of assets is “(f) goodwill and any business undertaking”. That is what it says in clause 4(1) of the bill and I ask the member in the chair Mr Foss to feel free to stand up and say if I am wrong. But it would be interesting to know how the bank values goodwill and whether in fact goodwill is valued by the Reserve Bank in the same measure that Westpac New Zealand values it. 
Clause 4(1) states that assets means “(e) intellectual property and applications pending for intellectual property:” and “intellectual property” is defined in the same subclause as “all patents designs copyright know-how trade secrets trade marks …” etc. Trade secrets are part of an asset because they are under the guise of intellectual property. Again it would be interesting to know how a bank values trade secrets. I suspect it would be quite hard to value a trade secret. It would be interesting to know at what point the Reserve Bank accepts a fair valuation on a trade secret. I am not too sure how the Reserve Bank could account for that but it is an asset. 
The actual purpose of this bill is that it enables Westpac New Zealand to comply with the Reserve Bank’s local incorporation policy for “systemically important banks” under recital (2) of the preamble. What does “systemically important” mean? According to the Reserve Bank it means those banks that have liabilities other than those to related parties—so we are not talking about liabilities to Westpac Australia—of $15 billion. Branches of Australian-registered banks such as obviously the Westpac Banking Corporation have a condition of registration that their external liabilities will not exceed that amount. Unfortunately—or fortunately—legislation is the only means by which the vesting of these assets and liabilities in Westpac New Zealand can be effected efficiently and economically and the only way that amendments to the Westpac New Zealand Act 2006 which was the Act that incorporated Westpac New Zealand can be made. There are no other ways to do that and the amendments cannot be obtained in any other way except through legislation which is why Mr Foss has brought the bill to the House. 
The Reserve Bank’s local incorporation policy assists the regulator by providing for greater control over the assets of a bank—in the event of bank failure I suppose. So a huge part of this is about providing certainty for those who have deposits mortgages assets and all sorts of other things with Westpac New Zealand. I have defined what assets are as determined by the bill. It is very important especially in this day and age—