Clark David: Reserve Bank of New Zealand (Covered Bonds) Amendment Bill — In Committee Third ReadingText is incorporated into the Bound VolumeClark David: Reserve Bank of New Zealand (Covered Bonds) Amendment Bill — In Committee Third Reading[Sitting date: 19 November 2013. Volume:695;Page:15020. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): Well after that brief contribution from the member—Moana Mackey: Less than 2 minutes.Dr DAVID CLARK: Less than 2 minutes Paul Goldsmith. We call him “less than 2 minutes Paul Goldsmith”; I hear others do too. He failed I am afraid to address the issue of why 10 percent should be the right number and why the international interest should be protected at that level when overseas jurisdictions protect at a lower level. I mean it is a little surprising. Mr Goldsmith is normally—at least technically—well versed in these things although his slightly jaundiced view of the world sees the kinds of Thatcherite policies he prefers often put forward—Hon Clayton Cosgrove: Be fair he wrote John Banks’ biography.Dr DAVID CLARK: Yes my colleague reminds me that he wrote John Banks’ biography. He is wondering whether there will be a sequel. But normally Mr Goldsmith is well versed in the actual technicalities of the issue and will put forward an argument at least in defence of a position. I guess it is a bit disappointing to the House that he is not prepared even to defend the legislation here. He is simply willing to see the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill go through.Paul Goldsmith: Well you’re supporting it aren’t you?Dr DAVID CLARK: He says that the Labour Party is supporting it which we are because we need some regulatory framework but we have already drawn attention to the inadequacy in that respect and it is a shame that the Government will not even articulate—and maybe it has lost faith in—its own view about where that line should be drawn. That is symptomatic perhaps of a Government that is out of touch—just get it done get it in place—but it is a long way down the track.We are passing the bill under urgency. We have had 2 years of unregulated bond issue. There has been no regulation covering financial bonds. In fact it may be longer now. There has been no oversight or regulation. There has been a very tardy response as you have heard and not well articulated as to why the line has been drawn where it has been drawn and why it should be higher here in protecting international interests and big-business interests over small-business interests—those who risk their shirt every day in terms of putting their own shoulder to the wheel mortgaging their own houses and so on. No argument has been put forward by Mr Goldsmith on that front.This is typical of this Government. It is 5 years since the global financial crisis and we have had 5 long years of this Government which has been very tardy to address issues in the financial sector and certainly where it protects small investors and small lenders. It seems not to be a priority for it at all. In fact on that side of the House it seems to have rather a negative view towards small-business people. National memberswould much rather protect the interests of capital the vested interests those who already have the money—the 1 percent—and the people who are their financial backers. It is a real shame that National members are not interested in the broader prosperity of New Zealanders and the opportunities that are presented for New Zealand’s future in having every New Zealander succeed having a country where all can live in dignity and make their best contribution. But that is National and New Zealanders are getting a little tired of it and I expect that will be reflected in the next election. When a Government gets out of touch when it has been here too long the voters start to turn off and they start to ask what the alternative is and we are certainly hearing that around the country.This lack of oversight of the covered bond market is indicative as I have said of a Government that has got its eye off the ball and is in no particular hurry to protect the small-business people of New Zealand. This approach is already in place in the UK Australia Canada and other jurisdictions and has been in place for a long time. Opposing this legislation if we were to do that on that detail would see only further delays and that is the point I would make to Mr Goldsmith who seems strangely silent now. He is not responding in any way. In fact he is almost invisible in this debate right now I would suggest.This lack of regulation is paralleled in other areas and it is unfortunate for New Zealand. The Crown Retail Deposit Guarantee Scheme was another scheme designed to protect a run on banks designed to make sure that those creditors did not pull out and designed so that we had secured lending for the country and it is estimated that $500 million of taxpayers’ money was lost as a result of the Crown Retail Deposit Guarantee Scheme. This Government has failed—absolutely failed—to investigate it. It failed to have an oversight of that lending scheme and the likes of South Canterbury Finance and others have collapsed because of dodgy lending. Likewise other finance companies increased their loan books with dodgy loans of up to 10 percent because it was Crown guaranteed. That is taxpayers’ money that has been handed over to those lending companies. It has been handed over willy-nilly by a Government that failed to observe what was going on when it signed a blank cheque gave it out to those companies and said: “We will guarantee all of your lending.” Of course many people invested but particularly those with interests that were not necessarily straightforward. Many ordinary New Zealanders invested their savings got caught up and got hurt and taxpayers as I say have footed the bill for all of it.This Government has steadfastly refused to investigate and that is typical of the lack of oversight that we see here in this legislation—the lack of willingness to regulate in favour of the mum and dad depositors and to look out for the interests of those who mortgaged their own houses to contribute to our economy. We saw that with the collapse of Mainzeal Property and Construction. The large firms got out OK but the subcontractors could not even get their tools off the building site. That is why I think that the proposals put forward by my colleague Clayton Cosgrove the excellent proposals he has consulted on around making sure that subcontractors get their dues when they are contributing to projects in New Zealand are well worth thinking about and well worth debating. I do not expect we will see much progress from this Government which seems very disinterested in small business and the little guy who works to get ahead or the woman or man who risks their own house in order to get ahead. There have been $6 billion worth of bonds issued over 2 years without any regulatory oversight.So it is good that this is finally being addressed by this Government albeit it is being done in a fairly tardy fashion. The point that Mr Goldsmith did not address was why these big lenders should be protected at a rate of 10 percent: why are 10 percent of a bank’s assets being run in this way as opposed to 4 percent in Canada or 8 percent inAustralia. The arguments were not strong at the Finance and Expenditure Committee in favour of having a bigger protection for the big end of town in New Zealand than in those other countries. The Finance and Expenditure Committee chair Paul Goldsmith was content to let that slide through. Mr Goldsmith—Moana Mackey: The chair?Dr DAVID CLARK: Well subsequently the chair. There was another chair at the time. Mr Goldsmith is now the chair of the committee and again is very silent on the issue. As I look across the House I see no response—not even a glimmer in his eye can I see across the House.Hon Clayton Cosgrove: No it was a glazed look.Dr DAVID CLARK: A glazed look? I cannot see it now. I cannot even make eye contact with the man. He is absorbed in other things—probably a little bit ashamed of the legislation in its current form. But there we are.The three elements of the legislation are a requirement that covered bonds issued by New Zealand banks be registered subject to meeting registration requirements. It is a sensible step. We can see what is going on. We can make sure they are not exceeding the limit even though it is rather high. The fact that there will be independent monitoring of covered pools by an asset monitor makes sense and the provisions to amend the Act to clarify the treatment of registered covered bonds in the event of issuer insolvency all make sense as measures in terms of the framework that has been set up. So we will be supporting the legislation. We have noted our concerns our reservations about the level of covered bonds in New Zealand as opposed to those overseas jurisdictions which seem more interested in growing new businesses and supporting entrepreneurs than in supporting vested capital interests but that is the National Government. It is there for the 1 percent to protect the capital interests of some of its mates. Even the big corporate interests are not safe; it is only the ones that have got the Prime Minister’s ear it seems. We saw that with the casino deal we have seen that with Bill English and Rio Tinto and no doubt we will see that with Chorus.It is only the ones that have the immediate ear of the leaders of the National Party that seem to be able to get the handouts as and when they wish for them. Not all big businesses seem to get the fair treatment; it is only some that are close to the National Party. That is something New Zealanders are growing increasingly tired of and something I hear over and over again in my electorate. New Zealanders are getting sick of a Government that does everything by deals and that is not prepared to regulate markets in good time to make sure that they are acting in the wider New Zealand interest. This is one of those examples here. We are glad that the Government has finally come round to regulating this sector albeit in a kind of slightly haphazard way that it is not prepared to defend. But it is good. This is a Government that has got a terrible record on unemployment which is much higher than when it took office. Real wages are worth less—