Cunliffe David: Insurance (Prudential Supervision) Amendment Bill — First ReadingText is incorporated into the Bound VolumeCunliffe David: Insurance (Prudential Supervision) Amendment Bill — First Reading[Sitting date: 08 May 2013. Volume:689;Page:9834. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to confirm that the Labour Party will be with some reluctance supporting this bill the Insurance (Prudential Supervision) Amendment Bill. This bill extends the transitional period established under the Insurance (Prudential Supervision) Act 2010 that would otherwise expire in September of this year and the bill does need to be enacted before this date.I could not hope to match the comprehensive and exciting presentation by Minister Nikki Kaye. There will be a quiz at the end of this debate for people watching Parliament tonight to test their memory of the points that the Minister made in her opening address. My remarks will be limited to two broad sections. Firstly I am going to note some of the provisions of the bill that have no doubt been made with considerable input from the insurance industry. I think it is important that the House checks off that input. Secondly Mr Assistant Speaker if you will allow me I will note some contextual matters to do with Reserve Bank prudential supervision which provide some of the framework within which this bill has occurred.On to the first matter which is that this bill might have been named the “Insurance (Prudential Supervision—The Industry Made Me Do It) Amendment Bill”. The reason for that characterisation is that it contains a number of provisions that might be kindly described as business-friendly. In other words judging by the Minister’s enthusiasm for her speech she was probably handed a list by the insurance association and told: “Please enact these.” That seems to be what is happening and I draw the House’s attention to but a couple of examples.The first is in the genteel language of officials: “The Bill … contains amendments that extend the term of provisional licences of insurers that enter into an insolvency procedure before 7 September … Extending the term of … [these licences] ensures that the distress management tools made available … will reduce unnecessary costs and improve administrative efficiency …”. In other words it is a free extension. Here is another example: “Other amendments will reduce … costs and improve administrative efficiency”—the same language again—“(for example a formalised register administered by the Bank and an ability to exempt insurers in run-off from the requirement to maintain a current financial strength rating).” Why have a current financial strength rating if you are simply going to exempt the insurers? This is rather interesting—“The Industry Made Me Do It Bill”. I will not go on because of course there are valid reasons to have the bill. We do not want the current transitional period expiring and the industry simply being left in the lurch and for that reason Labour is supporting the bill.It is very important to note if I might some of the context within which this has occurred. This has been a very very big week for the Reserve Bank. It was only yesterday that we discovered despite the continual protestations of the Minister of Finance that New Zealand had hitherto had the very best monetary policy in the entire world which included no intervention in currency markets and no macro-prudentialtools that guess what? The Governor of the Reserve Bank confirmed to the Finance and Expenditure Committee yesterday that virtually as the Minister was speaking the bank was busy intervening in the New Zealand dollar. Goodness me! What the Minister refused to countenance the governor was already doing. How very very interesting. So there is the Reserve Bank selling New Zealand dollars like it is going out of fashion to drive the Kiwi dollar down—and in fact it did because as soon as that was announced the Kiwi dollar dropped like a stone by about a cent.But the interesting thing here is that Labour has been calling for exactly that kind of intervention—and so have our Green colleagues—for about the last 3 years and the Government of the day has said it was unnecessary. Here is the embarrassing thing for the National-ACT Government: the Governor of the Reserve Bank hardly a noted Marxist revolutionary has gone on and done it behind the Government’s back—leapfrogged the Government and agreed with the Opposition.What an interesting week for the Reserve Bank to be debating the now rather exciting Insurance (Prudential Supervision) Amendment Bill. Who knew that this bill would be a show-stopper? Who knew why the Government buried it at the very end of the long list of matters to be covered in urgency? Because it is embarrassed—deeply deeply embarrassed. It is so worried that Tim Groser has been brought back from Geneva or Ouagadougou where he was busy marshalling votes to be the Secretary-General of the South Pacific Forum just so he could save the Government for this bill. I commend his action I hope someone gave him a decent visa and I look forward to running against him in the good seat of New Lynn in a mere 18 months’ time.The second signal achievement of this week in regard to the Reserve Bank is the governor’s admission that in a few days he will be signing with the Minister of Finance a memorandum of understanding on the subject of macro-prudential supervision—a matter not unrelated to the content of this bill but rather more exciting. That is things like loan-to-value ratios and other tools that will compress the rapid rise of the housing market. Again the Labour and Green parties have been calling for the increased use of these tools and the consequential amendment of the Reserve Bank of New Zealand Act for the last 2 years. We are on record. What did Mr English say? “Oh no!” he said “There is no need. We already have the best monetary policy in the whole wide world and that would be unorthodox!” Well how very interesting that in a short few days’ time he will be signing off on the very same amendments that the Opposition has long mooted and that he has long denied. What a very interesting week for the Reserve Bank.The third leg of the treble for the Reserve Bank is the contribution of notedNew Zealand Herald economist Brian Fallow who today has declared that “Austerity’s for booms not slumps.” This is important because the Government is embarking on a veritable austerity programme soon to be confirmed by another miserly and unfair Budget in just a few days’ time. Does the Government believe that we are in a boom? If it does it must be living on a different planet. Should we call it “Planet Gilmore”? On “Planet Gilmore” everything is rosy! The waiters deliver on time and they do not answer back. On “Planet Gilmore” New Zealand is blooming. It is just that on the real planet Earth in the real Aotearoa it ain’t booming. There are 270000—here is the serious bit—children growing up in poverty and many many tens of thousands more unemployed than when this Government took office. This is something closer to a slump for real New Zealanders than a boom and this is no time for austerity. [Interruption] Todd there is time for the noted chairman of the Finance and Expenditure Committee to refresh the coiffure of his pate before he leaps to his feet and demands the attention of the viewer.May I sum up. There are three elements to this debate. The first is—as the Minister with such sparkling repartee has outlined to the House—that this is a boring bill.However it is boring particularly because she is merely reading the shopping list from the insurance industry association. She is so afraid; she is now slumping down behind her chair. She is so ashamed to have been the tool of the industry. The second main point is that there are some significant holes which Labour will do its best to reconsider in 18 months’ time when we take the Treasury benches. The third is that it has been a huge week for the Reserve Bank. It has finally come out. It is appropriate to use such terms in the House of course noting recent achievements. It has come out and said that it likes to intervene in currency markets—that it is good for it it puts hairs on its chest it makes money out of it and it drives down the Kiwi dollar so we can export more. That is all good stuff. The only person who disagrees is Bill English but Graeme Wheeler has seen to him. Finally he is seeing to him next week when he forces the Minister to sign off on the macro-prudential tool box which Labour and the Greens have long been calling for. I would say this is a week in regard to the Reserve Bank’s supervision role where you could say Opposition one Government nil. The people of New Zealand live in hope.