Cunliffe David: Westpac New Zealand Bill — First Reading 
Cunliffe David: Westpac New Zealand Bill — First Reading 
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Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I would like to— 
Hon Darren Hughes 
: A good choice. 
Hon DAVID CUNLIFFE 
: It is pretty much the only choice I say to the chief whip. Therefore it is a good one if I may join the whip in expressing those sentiments. 
I begin with a couple of commendations. The first is to commend the member who has just resumed his seat Craig Foss. Without being too pointed about it many of us on this side of the House think he is a very able member and he has been a very responsible chairman of the Finance and Expenditure Committee which is the senior select committee. We give him a hard time around the table occasionally but he carries it with very good grace and business gets done. It is sensible that the Westpac New Zealand Bill goes to that committee. 
It is ironic then that the member read the speech as Craig Foss and not as the Hon Craig Foss which many of us think he deserves to be and that this is a private bill not a Government bill. We could expect to have heard him give a speech like that as a new Minister. I think it reflects just how concerned the Government must be about the face of this Government to have made the decisions it has on other matters—but that is for another day. 
There is another commendation and that is a commendation to Westpac New Zealand and its colleagues in the major banks that support the New Zealand banking industry. Whatever other comments we might make today we recognise the importance to New Zealand of a strong and stable banking and finance sector. We certainly believe that Westpac plays a responsible part in our financial system. 
At this stage the Labour Party’s position in respect of this bill is to support the bill being referred to select committee and we have an open mind beyond that. We think that the fundamental purpose of the bill which is to vest the institutional banking business of Westpac Banking Corporation into Westpac New Zealand is appropriate. Westpac New Zealand of course is a local branch that has been set up pursuant to the trans-Tasman regulatory structure whereby the Reserve Bank of New Zealand plays a role as guarantor of the stability and financial integrity of the New Zealand banking system and thereby ensures that systemically important banks are anchored well enough and solidly enough in the New Zealand market to avoid two unintended situations. One would be a marginal market problem in the event of a worse cataclysm than the financial system has suffered in the last few years if that could be imagined. We would hate to see a situation where not enough assets were anchored in the New Zealand market to underpin its stability. So this is a move in that direction and we commend it. 
With that it is worth repeating that the idea of having a full service New Zealand - domiciled banking regulator in the Reserve Bank has bipartisan support around this Chamber and is a very important part of our financial infrastructure. 
Before I move through the provisions of the bill I say that it is also a little ironic to see that the bill is in Mr Foss’ name rather than in Nikki Kaye’s name. The convention of course is that these bills are brought forward in the name of the local MP. According to Westpac’s website its head office and address for service are in Auckland Central not Hawke’s Bay. One asks why the bill— 
Chris Tremain 
: We have big visions for the bay. 
Hon DAVID CUNLIFFE 
: National does have big visions for the bay. I have a very fond spot for the bay as I know the bay does for me; I am well acquainted with its big visions. None the less why is Nikki Kaye not taking this bill to the House? Could it be that her colleagues somehow do not trust her to take a bill of this substance forward to the House? What is it about Nikki Kaye that has meant the Government has broken with convention and not given a private bill to the member in whose electorate the head office of the entity concerned is domiciled? That is a break in convention. It is a sign unfortunately that Nikki Kaye is destined to be a one-term MP or a one-term electorate MP anyway; of course we look forward to Jacinda Ardern being the new MP for Auckland Central very shortly. I am sure the whips would agree that we would trust Jacinda Ardern to bring a bill such as this to the House—no problem at all. She has the smarts to do it—no question. 
I come back to the legislation. It is clearly important to ensure that Westpac New Zealand Ltd has a sound and stable New Zealand operation while being able to enjoy the benefits of a trans-Tasman footprint and of access to global capital through its Australian-based parent. We note that the success of the Reserve Bank’s local incorporation policy is one element in securing the stability of the New Zealand banking sector and it is critical as I said earlier that we retain sovereign oversight of banking regulation. The severity and speed of the 2008 financial crisis provides ample evidence of why it is important to do this. We can accept that the transfer of assets and liabilities is best suited given the complexity of the matter to a vehicle such as this legislation. 
It is also true that on both sides of the Tasman the banking sector is again under close scrutiny. On the other side of the Ditch the Australian Parliament has a far-reaching inquiry under way which brings to mind that some of the parties of the New Zealand Parliament—that is Labour the Greens and the Progressive party—held an inquiry into banking issues last year. It was a matter of regret that the Government’s bank Westpac New Zealand did not make a submission to that inquiry. It is true that some other banks made both formal and informal submissions and it is also true that when the inquiry published its finding—which was that the major banks were not passing through in full the downward changes to the official cash rate into retail and wholesale interest rates—strangely enough those margins corrected themselves within weeks of the report being released. Imagine the coincidence. Those margins corrected within weeks of the report being released saving New Zealanders tens of millions of dollars of interest. 
Of course Labour the Greens and the Progressive party were happy to play that service. We think it is a matter of regret however that the Government members of the Finance and Expenditure Committee after having said that they would consider it repeatedly blocked having a banking inquiry under the auspices of the Finance and Expenditure Committee. There is therefore just a tinge of irony in the member who has brought this bill to the House—Mr Foss who chairs the Finance and Expenditure Committee—now playing that role as well as the other reasons I have suggested. 
The inquiry in Australia is much broader based than being a simple matter of interest rate pass-through. It is talking around a whole range of issues that are to a lesser or greater extent also important here. The New Zealand Banking Ombudsman has said that there were a record number of complaints to her office over the last 12 months. There is growing public concern about the banking sector. None other than Westpac’s own chief executive now holds the record for being the highest paid chief executive in New Zealand eclipsing even the chief executive officer of Telecom. I used to work with George Frazis. He is a good bloke. He is a very able executive and there is no implied negative comment about his abilities. But it is also a matter of fact that the public regards any individual who earns many multiples of the average salary as the chief executive officer of a bank like Westpac does as a matter of some public concern. 
I guess our call to the banking industry would be that given the climate out there given the fact that the New Zealand public is doing it tough given the fact that many industries are struggling in the real economy and given that our manufacturing exporters have their backs against the wall with the high exchange rate restraint is called for. There are no plans to do an Australian-style banking inquiry in New Zealand at this time but politicians cannot ignore the growing calls from the public to surface issues if they continue to grow. There is a message here to the whole banking sector. It should please exhibit its traditional high ethical standards and responsibilities and play its rightful role as pillars of the New Zealand business sector pillars of the economy and pillars of society—here not only for today but for months and years to come—and there will not be a problem. 
I say as my final comment—I have said it publicly—that Westpac as the Government’s banker has enjoyed a privileged position. The onus on it for responsibility is higher therefore than on other institutions. I think we are coming close to the time when it would be appropriate for the Government’s contract to be put up through a transparent tender process.