Curran ClareHon CLARE CURRAN (Minister of Broadcasting Communications and Digital Media): Tēnā koe Mr Assistant Speaker. First of all I'd just like to acknowledge and congratulate the member Stuart Smith for having a bill progress through the House. That's a big deal. And also to the Finance and Expenditure Committee for the work that it has done to make it a better piece of legislation and for the cooperative collaborative approach which has occurred which is a demonstration of how well Parliament can work.I'm very pleased to be able to stand in support of Stuart Smith's member's bill. Credit unions operate on mutuality principles. They're an essential part of New Zealand's market for banking services particularly for people on low incomes and beneficiaries who can find it difficult to obtain banking services through banks. Credit unions have changed hugely over the last 35 years. The value of the assets under credit unions' control has quadrupled in real terms to more than $1 billion. However the number of credit unions has fallen by 95 percent from 284 to 13. In 1982 credit unions controlled assets of less than $1 million on average in today's money. Now the average is about $80 million. There has been much regulatory change over that time. Prudential supervision and investor protection regulation have both been strengthened considerably. However the governance framework contained in the Friendly Societies and Credit Unions Act has not kept up with the way that credit unions have changed. Although the core concepts of mutuality and common bond continue to remain as relevant as they ever were it is clear that other parts of the Act as it applies to credit unions and associations of credit unions are out of date. This bill will make three important sets of changes to the Act. First credit unions will become bodies corporate with perpetual succession. Incorporation will reduce the cost of operating credit unions because they will no longer need to have internal trustees in whom the credit unions' property vests. Instead credit unions will have the capacity and powers to undertake activities and enter into transactions in much the same way as other entities that are legal persons.The Finance and Expenditure Committee has made important modifications to the capacity and power provisions in the bill. Those changes will remove any doubts that credit unions must act in accordance with their objects. Giving credit unions legal personality will also better protect the interests of third parties that deal with credit unions in good faith. In addition incorporation will have certainty and accountability benefits because it will be clear that the responsibility for all aspects of a credit union's strategy governance and oversight will rest with the board.The second important change will be to permit credit unions to make loans direct to businesses that are owned or substantially owned by their members. This change will reduce compliance costs because it will no longer be necessary for the credit union to make the loan to the member with the member then on-lending to the business. The enterprise lending provisions will also provide credit unions with the opportunity to grow. A number of credit unions made this point in their written and oral submissions on the bill.The final set of changes was to provisions in the Act that relate to the registration of an association of credit unions and that describe an association's objects. Like credit unions associations of credit unions will become bodies corporate. This will provide associations with the same governance benefits and third-party protections.The bill also provides welcome clarity about the range of services that associations can provide and who they can provide them to. Changes contained in the bill make it clear that other than providing services to members associations can also provide services to non-members where authorised to do so by its rules. There had been a dispute about this about whether associations were able to provide services to non-members at the time that that bill was introduced in April last year. The dispute was resolved by the High Court in November 2017 in Osborne v First Credit Union. The High Court stated that NZACU has the power to take any action or do anything directly in pursuance of [its] objects or incidental to them provided that action is authorised by … [NZACU's] Rules or the Act." The changes contained in the bill are consistent with the approach outlined by the High Court.I acknowledge that some credit unions oppose the bill in part or in whole. There were concerns in particular about whether incorporation would compromise or undermine mutuality which is a defining feature of credit unions. Several supporters of the bill stated there is no incompatibility. If there were any doubts about this as a matter of law then the select committee has removed them by adding a subsection to section 101 of the Act which states that a credit union must operate "for the mutual benefit and assistance of its members."To summarise the bill as reported back by the Finance and Expenditure Committee retains all of the main reforms proposed in the bill as introduced so well done Stuart Smith. The committee has made a number of important changes that have improved the quality clarity and accessibility of the bill. My overall view is that this is good legislation. The changes will benefit credit unions and their members and will provide new opportunities for credit unions to compete against other banking service providers. I'd like to thank the Finance and Expenditure Committee for its work on the bill."