Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Thank you Mr Assistant Speaker. It is a real pleasure to rise to speak on this bill—and in support of it—the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill. It probably could be called a modernisation bill as well. I do congratulate Stuart Smith for having this bill drawn and undertaking the considerable work that it's taken. I suspect that the original conception of having a bill to incorporate credit unions was thought to be a simple task. Well it's certainly expanded somewhat since then.May I also congratulate him on embarking upon a project to improve something which is such a fundamentally Labour institution a friendly society and credit union. If we look at where these entities came from they are in fact industrial societies in communities that grouped together for mutual support something which I think we need to still hold dear. In fact one of the great things I think we're doing here is that we are in fact ensuring that we have a flexible system so that people can enter into financial arrangements financial groupings in a way to support each other.It's worth just pausing for a moment and understanding what a credit union is. It is a society of individuals a not-for-profit society of individuals. Section 101 of the Act sets that out and it uses some perhaps quaint language language that harks back to the roots in the 1850s when these things first came about. Section 101(1)(a): the promotion of thrift among its members by the accumulation of their savings" and also "the training and education of the members in … wise use of money … in the management of their financial affairs". Also it's worth seeing section 101(1)(d) that the credit union can make payments for "the welfare of its members … the making of donations for charitable cultural benevolent or philanthropic purposes." Now those are things which perhaps we've tended to lose sight of and certainly in many modern financial institutions they don't come close. We have financial institutions which are fundamentally corporatist as David Carter was talking—that's the wrong turn that was taken in Australia.So look I commend the member on taking this bill looking initially perhaps at a couple of minor improvements in terms of the way these institutions work but then actually preserving and enhancing—and I congratulate him on that that he's in fact enhanced and strengthened the mutuality here. I won't deny that we had some conversations about that in committee and those conversations were robust but they were very very fruitful. The amendment that we've now got is actually a dictate to credit unions: "A credit union is to operate on the basis of this Act for the mutual benefit and assistance [for] its members." That is in "Objects of [the] credit union[s]" in section 101. That is a limitation on the powers of a credit union. So a credit union can't go off on a jaunt of its own and can't be undertaken for the profit of some third party or for anything indeed which falls outside of those constraints. That is a very good thing.Can I also say that I was most impressed in committee with all of the submitters and as member Carter noted they did not agree with each other. I would encourage them to keep talking. They didn't agree with each other but what they all had in common was a fantastic commitment to the promotion of the interests of their members. They entirely understood what a credit union was about that it wasn't a commercial entity although it existed in the commercial world; it was an entity of a social nature to promote the welfare of its members. That I think is why this bill is such a great modernising bill because it remembered what those values were. This is social enterprise that started in 1850 and it's still relevant here today. So I congratulate the member on embracing that and on certainly being open to including that in the bill.So we have got a bill there that allows incorporation and this was perhaps the bogeyman for submitters. There was this sense that if we have an incorporation isn't that the same as a company? Doesn't a company have a profit motive? Won't things go terribly wrong? I think the lawyers on the committee accepted that that was a leap in logic that that did not follow but nevertheless we wanted to reassure the credit unions and submitters that that needn't be the case and that's why we looked at that amendment and indeed new section 107B which is another amendment made it very clear that the credit union's powers will be limited in that way that it can only act in pursuance of its objects. Indeed it went further and noted that a restraining order can be obtained from the High Court to make sure that those credit unions stay within their objects. So what we have is a modernisation—incorporation. The original framework was madness. You had these really fantastic people working hard but what they probably didn't realise was when they signed the loan documentation and what have you as trustees that were taking on huge personal risk and that as was noted the administration of the credit unions really wasn't workable. We didn't have a simple ability of one director to sign documentation. The trustees had to agree unanimously and obviously if someone's overseas that caused all kinds of problems. So this is a much much more sensible framework.Then we had a further adjustment to make it quite clear that credit unions can loan to associated entities in a small business framework. Look this is fantastic. Credit unions do occupy a particular part of the finance market. They're not low-cost lenders; they're not high-volume lenders. So the interest rates are a little higher but they are directly connected in with their communities. So they take a personal interest in the financial success of their members at every level. That's I think why it works.So now if you've got a member who wants to start a small business or has a small business and wisely has incorporated it or has it in a partnership or a trust they don't have to run around in circles and do legal backflips to try and get a loan from the credit union. They can simply go and say "This is a company. I or my family have a controlling or a significant interest greater than 25 percent." and the credit union is then able to loan. Look that is what prosperity is about. This is a Government which is absolutely committed to small business and it's great to see that we're supporting this move which will make lending money to small businesses easier because that's what we want to see: growth growth in those small business areas.So this is a bill about modernisation. What I do like is that it looks forwards and it looks backwards. It's flexible and I think it's really important in the financial field to not be a fetter on innovation. So with this framework credit unions are free to work out new ways of doing what they do better work out new ways of encouraging thrift of educating people to use their savings wisely. Old-fashioned words but really modern and relevant concepts. So I think it's great that what we now have is a bill where you've got an incorporation framework you've got an ability to lend to other entities to broaden the net of support and that's really great. So we've got essentially a modern social enterprise framework where people aren't pursuing profit; they're mutually supporting each other in something which is supporting their communities.As I said before really the greatest praise goes to the people who often for very little reward support these credit unions because they have dedicated a life to their communities. They're not making lots of money. These are not-for-profit societies. There are no multimillionaire chief executives here. These are people who have dedicated their lives to their communities through these credit unions and friendly societies. I commend them for it.This bill makes their lives easier. There's going to be some compliance costs. We had a very clear and weather eye on those compliance costs but what a great step forward. I do commend again member Smith for getting this bill into this House. It's been a lot of work. I know that and I know that every so often it was a little disheartening in that not everyone agreed with you all of the time but I also commend you for working with some very difficult members not least myself and getting this through. Thank you."