Adams Amy: Crown Retail Deposit Guarantee Scheme Bill — In Committee Third Reading 
Adams Amy: Crown Retail Deposit Guarantee Scheme Bill — In Committee Third Reading 
[Volume:657;Page:6124] 
AMY ADAMS (National—Selwyn) 
: 
 It is a great pleasure to take a call in the third reading debate on the Crown Retail Deposit Guarantee Scheme Bill. I have sat in this House and listened to the entire debate on this bill. It has been very interesting and there have been some very worthwhile contributions from all sides of the House. It certainly is good to see support from across the House on this bill. 
Obviously in effect we are continuing the scheme that was put in place by the previous Labour Government in October last year while Parliament was dissolved for the election period. At that time the scheme put in place was to expire in October next year but it is now very apparent that a longer-term transition is needed so now we see primary legislation before the House to put in place a new scheme. But the reality is that it is very much akin to continuing the existing position whereby retail deposits and bank and non-bank lenders can be guaranteed by the Crown. 
In the debate there has been a very wide range of contributions and some very big-picture analysis of the economy risk the banking sector what went wrong who is to blame and where we should go from here. All these things have their place but I am taking a short call to go back to the fundamental operation of the bill. Really it is about investor confidence and the stability of our sector. I think it is worth reiterating the point that my friend Mr Foss made so well in his speech when he said the bill is not about guaranteeing the banks or ensuring that they do not lose money. It is about ensuring mum and dad investors those people who have put money into the banks can have confidence that their money will be there when they come to get it. 
That confidence is important. It is important not only to look after the hard-earned money they have worked hard to save but also to ensure that liquidity stays in our system because those same deposits are then turned around and lent out to businesses and homeowners. Dr Norman talked about the difficulty for businesses in borrowing money. I am sure that is right particularly at the moment. But if we do not have deposits the banks will not lend. It is a pretty simple equation. That is why this system is so important. 
In this bill we have a system that ensures that any or all debt securities as defined in the Securities Act in an eligible entity can be guaranteed by the Crown. But—and it is an important “but”—that is only if the Minister believes it is necessary or expedient in the public interest to do so. I make that point and I made it during an earlier contribution because even if the eligibility criteria are met it is still up to the Minister’s discretion to determine whether granting any particular guarantee is in the public interest. That is the overriding test here. It is not about what the institutions want and not about whether they want to be able to put it on their website; it is about whether it is in the public interest for that particular entity to be guaranteed and for those particular debt securities to be guaranteed. 
We have a system that has a number of safeguards in place. It really makes it clear that the principle consideration in this entire system is the public interest. As I said the public interest is about protecting the funds of the mum and dad investors but also about the stability of our system. That stability has been more important in the last 12 months than ever before. If ever we have had to wonder about the stability of our banking system now we know first that we have a fairly good system compared with the rest of the world and second that that is crucial. It is crucial to New Zealand’s ability to weather the worst of the storm and to come out of it I will not say “untouched” because certainly a lot of people have been hurt terribly in this recession but in a considerably better position than we might otherwise have been. The bill is a good bill. I commend it to the House.