Tremain Chris: Westpac New Zealand Bill — Second Reading 
Tremain Chris: Westpac New Zealand Bill — Second Reading 
[Volume:633;Page:4803] 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak on the Westpac New Zealand Bill. It seems somehow inappropriate to be debating the Westpac New Zealand Bill at the same time as many great State events have taken place in our nation in recent days—the tangi of a Queen; the coronation of a King; the swearing-in of a new Governor-General; and the Westpac New Zealand Bill. 
Firstly I congratulate Anand Satyanand and his wife Susan on taking up the role of the 19th Governor-General of this great nation. I believe that his speech today was reflective of where our nation currently sits and that his use of Witi Ihimaera’s quote was timely given the passing of our Maori Queen and the outpouring of grief surrounding her tangi. If that quote sets the framework for the new Governor-General’s term then indeed he will be a man for our time. I wish our new Governor-General and his wife the very best in their new role. 
I will be returning to the bill in a minute Mr Assistant Speaker. I just wish to acknowledge the passing of our Maori Queen before I do that. My sympathies are shared with all New Zealanders over the passing of the Maori Queen Te Arikinui Dame Te Atairangikaahu. Her funeral marked the occasion of a great humble leader under whose tutelage we saw remarkable steps forward for her people and at the same time for all New Zealanders. I take this opportunity to wish the new King Tuheitia Paki a reign marked by achievements for his people and for all New Zealanders. Finally I mihi him with a proverb I used in my own maiden speech: “Whaia te pae tawhiti kia tata Whaia te pae tata. Whakamaua kia u kia Ti-na!” Reach to the stars for New Zealand. For your people pull them close and hold them tight. 
So in this vein it is somewhat of a let-down that we are debating the passing of the Westpac New Zealand Bill as the first legislation before Parliament following such great events. As with the new Maori King and the new Governor-General there are very few dissenters—with the exception of the ACT party in this case—and this provides somewhat of a comparison with the Westpac bill which all sides of the House support with the exception of ACT. But I guess that is where the comparisons cease. 
This bill will enable Westpac New Zealand to sever the apron strings currently binding it to its Australian parent. The bank hopes to achieve that goal in November provided that this legislation is passed through the House in good time. In that regard the new Governor-General does have some authority and connection in the granting of Royal assent to this bill. However as Marian Hobbs who is no longer in the House pointed out in regard to this legislation there needs to be an expeditious nature to the bill to get it through by 1 November. 
If the legislation is timely Westpac will incorporate on 1 November passing all its retail assets and liabilities to a new company registered here in New Zealand. Westpac is currently the only one of the four major banks in this country not locally incorporated. Reserve Bank policy is that systemically important banks should be locally incorporated to wall off the country’s financial system from problems with overseas parent banks—although I take the point made by my colleague Craig Foss who pointed out very clearly that problems in the Australian market will have a significant impact on the New Zealand market in our banking institutions. 
Local incorporation requires the establishment of an entity with its own board. Under the Reserve Bank’s conditions the New Zealand board must operate solely in the best interests of the locally incorporated bank even if this is in conflict with the parent bank and to an extent this caters to Mr Hide’s concerns. It brings an added degree of protection otherwise not available to the bank in its current structure. This is especially the case given that the Reserve Bank can veto the appointment of directors and the chief executive to their locally incorporated bank once again giving a protection to local consumers and local suppliers that the bank will be in safe hands going forward. In addition the assets and liabilities of the bank must be transferred at the same time to the New Zealand company. It is important to understand that this includes only the retail arm of the Westpac New Zealand business and that the wholesale arm will remain in a separate company that will continue to be registered in Australia. 
There is no doubt that an Act of Parliament is the best way to implement local incorporation. To do it in any other way with a transaction of the size we are talking about would be simply crazy. An Act of Parliament will result in the least disruption to all parties concerned and there are many in this case. We should remember that this bank is one of New Zealand’s four largest banking organisations and it is a transaction in the vicinity of $35 billion to $40 billion and that we are talking about 1.3 million customers and over 6000 staff. We should also remember that the bank’s biggest customer is the Government of this nation. On top of that the bank deals on a daily basis with thousands of suppliers who will also be connected with this change. The potential for disruption in the New Zealand economy is significant and therefore it is important that this change happens quickly and efficiently. Only an Act of Parliament will allow Westpac’s retail banking operations to be vested within Westpac New Zealand without affecting the conduct and continuity of the bank’s operations. 
Firstly this Act will reduce the impact on customers with very little or no disruption. Mr Hide points out that customers should have been consulted and each and every one of them should have had a copy of the bank’s new balance sheet. Well this is not to belittle customers of the Westpac Banking Corporation but I suggest that by far the majority of them would not understand the balance sheet and do indeed put their trust in the Reserve Bank of this country and in the Government to ensure that the financial capacity of the new bank is strong and that the prudential ratios are ensured. 
The bill will ensure that customers’ accounts and loans the assets and liabilities will automatically vest immediately in Westpac New Zealand. It will ensure that customers have the same relationship with the bank. It will also ensure that customers are not required to sign new security documents on the transaction changeover date. In essence the transfer should be seamless. 
Secondly the bill will also reduce the impact on the employees of the bank of which there are over 6000. The relationship between employee and employer is unaffected. There are no new employment contracts that need to be signed to effect the change and there is no detriment on employees losing their jobs or on the employer being in the position of having to pay out redundancy in this situation and then having to rehire. In this regard the transaction should be seamless. Thirdly the bill will reduce the impact on suppliers and in this regard suppliers will not have to re-contract with the bank on the day of the transfer. 
Most important the bill will minimise disruption to the banking system. It allows for the assets and liabilities to be vested immediately into the new entity therefore allowing a seamless change. It also provides for any proceedings arbitrations actions or claims against the bank to continue. Importantly it provides that property registers do not need to be changed. One can imagine having to go out there and find every property that has a bank mortgage registered against it and changing it on the property registers around the country. It would be virtually impossible. 
The bill will ensure tax neutrality. It is a key thing with an organisation of this magnitude that on GST the tax payable neutrality is maximised. As a result of this compliance with the Reserve Bank’s New Zealand incorporation policy is achieved in the most efficient manner possible for customers for staff for the banking system and for suppliers. So with the support of both sides of the House this bill should pass within the necessary time frame to meet the bank’s goals of a transfer on 1 November; failing that the transfer will be delayed until April 2007. 
Finally this may be one of the first bills for which our new Governor-General Anand Satyanand will need to provide Royal assent in order for it to pass. I am sure it will not be his most controversial but it will be an important Act for this country.