Tisch Lindsay: Credit Contracts and Consumer Finance Bill — In Committee 
Tisch Lindsay: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8838] 
LINDSAY TISCH (NZ National—Piako) 
: 
 I want to look at clause 114 “Transitional provision” which states: “(1) This Act applies to every credit contract consumer lease and guarantee that is made after the commencement of this subsection.” The point I make is that the contracts formed prior to the bill coming into force continue to be governed by the law in force at the time the contracts were formed. However revolving credit contracts that were formed prior to the bill coming into force must comply with the bill after the transition period. 
Simon Power 
: What is a revolving credit contract? 
LINDSAY TISCH 
: That is one that goes round. That is why it is called revolving. I draw the attention of the Committee to quite a significant move a change that was made in the original drafting of the bill—that is the original clause 114 which was struck out. National believes that this is a very important point because we should not be treating revolving credit contracts differently from any other contract. So the new provision is the one that we think is significant. That was a change that we supported—a change that says that all contracts need to be treated the same and in this case revolving credits. 
When we are looking at the transition periods we need to go back to the commencement date of these. The timing of the changes the commencement dates is significant. Clause 2 states that the buy-back provisions “come into force on the day after the date on which this Act receives the Royal assent.” Clause 2 then goes on to state in subclause (2)(a): “for the purpose of applying those provisions to buy-back transactions on the day after the date on which this Act receives the Royal assent;”. That is saying that there will be quite a considerable time frame that will allow creditors sufficient time to be able to change the way they operate change their requirements and procedures and update the computer system software whatever it will be. That provision is a good one and we support it. The buy-back provisions though come into force on the date on which the bill receives the royal assent. So those provisions are certainly ones that we supported. We are quite happy with those. 
I draw the Committee’s attention to clause 111 “Regulations”. What we see so much in legislation that is being promoted by this Government is that there is always by way of Order in Council provision for regulations that will put up charges on business. The National Party is concerned about the high compliance costs and the regulatory creep that come in under so much legislation. Clause 111 states: “The Governor-General may by Order in Council make regulations for all or any of the following purposes:”. This is the compliance cost regime that we see creeping in and in this case here it is of major concern to the way that we see this bill. Although we are supporting the bill we flag quite clearly the fact that anything that increases the cost of doing business and the cost incurred by people involved in whatever lease or credit facilities they have is something we are really concerned about. It is interesting that today we had a question in the House about the lower tax regimes that will come in and the Government’s discussion document which was released yesterday about how we can simplify tax for small businesses. 
I make the point here that with the release yesterday of the simplification of taxes for small businesses we will see that if they are paying GST on a 2-monthly basis then any provisional tax will be linked to that. Of course businesses that are on a 1-monthly GST return period will be paying that monthly. If it will improve and simplify the tax regimes that is all very well. But I tell members—I am putting out a warning here—that in a situation like that which relates to this bill here the huge costs associated in terms of being able to fund revolving credit facilities may be necessary. Revolving credit is a facility that one has to be able to move up and down within the scale of one’s operations without having to come back to the lender each time and want variations and extensions overdrafts term loans or whatever it will be. 
I am just flagging here that although the Government yesterday moved to look at tax simplification for small businesses it has not taken care of all those other huge compliance costs that business have to deal with. Dr Don Brash asked a question today about the KPMG survey of 760 businesses in New Zealand which showed that 98 percent of them said that compliance costs had gone up. The Minister Mr Cunliffe did not have an answer for that but he is in the chair now so he may like to answer that in a moment. I am talking about clause 111 “Regulations” which relates to compliance costs and the way this will work. The answer he gave to Dr Brash in question time this afternoon was completely unsatisfactory. The Minister was relating to a survey—not the KPMG survey because the KPMG survey on compliance costs was very very clear in what it said. The Minister was referring to the Massey University survey—which did come up with something different because it was instituted by the Government. So what else will it get but the results it was looking for? The point I make is that anything that increases compliance costs is to be avoided. Clause 111 “Regulations” allows the executive by Order in Council to say: “Hey we will increase fees. We will do whatever we like without the scrutiny of the House.”—without it coming back for members of this House to adequately debate and to see whether the charges and the fees that will be put on are sustainable and are for the benefit of all users. Those were the two points in Part 6 that I wanted to concentrate on. 
As I said earlier National will be supporting this bill but I have flagged those concerns. With regard to the transitional provisions in clause 114 we are quite comfortable with what they mean. Certainly the treatment of revolving credit facilities in the same manner as others is to be applauded and that original clause has been struck out. However I do flag the concerns we have about clause 111 “Regulations” and the costs that can be applied. I know that other speakers will pick up on the concern about anything that adds costs to the way people operate. I know that the bill is not specifically about business; it is about individuals. But if people on fixed incomes have to change the way they operate because of these provisions and extra charges then that must be looked at closely and needs to be avoided. Those were the points that I wanted to raise on Part 6.