Dalziel Lianne: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
Dalziel Lianne: Crown Retail Deposit Guarantee Scheme Bill — First Reading Second Reading In Committee 
[Volume:657;Page:6072] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I am happy to speak on the second reading of the Crown Retail Deposit Guarantee Scheme Bill. I am pleased that the Government has decided to introduce this bill and to deal with the issue in a legislative way. However I am deeply concerned about the bill being dealt with through all of its stages here in Parliament under urgency. The reason that I am concerned about that is that there is no opportunity for any of the institutions that will be affected by this bill to have any public input into it by way of submission to the Finance and Expenditure Committee. The select committee does not have the opportunity to give detailed consideration to all of the elements of the bill. 
I am also quite concerned to pick the bill up off the Table of the House as I come in here this evening and find that the regulatory impact statement is not set out in full in the bill. It is in fact to be found on the Treasury website if I want to go and read it. That is what I will have to do now over the tea break. Giving this speech at one end of the tea break obviously gives me an opportunity to comment on it when I return. But the problem I have is that that means the legislation will not get the degree of scrutiny that it deserves. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon LIANNE DALZIEL 
: Thank you for the opportunity to continue my contribution on the Crown Retail Deposit Guarantee Scheme Bill. When the House rose for the dinner adjournment I was making the point that the bill which I had just picked up off the Table of the House included a comment in the regulatory impact statement that it was not in fact the regulatory impact statement. It was only the executive summary of the regulatory impact statement. We are directed to the Treasury website in order to find the full regulatory impact statement—all 25 pages of it. There was a very interesting comment that I found right at the very beginning of the regulatory impact statement in the executive summary. It said: “Given the time imperative implementation is to be through urgent legislation for some or all of the stages with a limited select committee process.” Where is the limited select process? That is what I want to know. There is a reason why the executive summary of the regulatory impact statement says there was to be a limited selected committee process and that is that there has been no public consultation on this bill whatsoever. That is a serious issue when we are talking about something that will obviously have an impact on a significant number of individuals particularly those who invest currently in institutions that will no longer qualify for coverage under the Crown retail deposit guarantee scheme. 
When consultation is talked about in the regulatory impact statement which has been generally hidden from public view because it has been tucked away on the Treasury website instead of included in the bill itself the statement says: “The decision was made not to consult proactively on the proposals with the public. This is due to: officials already having a reasonable amount of information about stakeholder views from regular interactions (Summarised in Annex 3); desirability to make an announcement soon limiting the time available for any consultation; a period of consultation would make timing significantly worse and may not make us any better informed;”—that is a Treasury line if ever I heard one—“commercial sensitivity of the policy decision; concern that public consultation would create further uncertainty in the market. The proposed course of action is temporary.” Well so was the original course of action which was not subject to legislation at all. In the recommendation it says: “For these same reasons we recommend the some or all of the stages of legislation to enact these changes be passed under urgency with support from key support and opposition parties. There could also be a limited (one-two day) select committee process.” But no select committee process is being allowed for at all. I am a little bit nervous about that because I think it is important that we have the opportunity not simply to receive public submissions but actually to receive a full briefing from officials to our key spokespeople on legislation of such major significance. I think it is a very unfortunate approach that the Government has decided to take with this legislation. 
Do we in essence support the legislation? Yes of course we do. We were the Government that introduced the Crown retail deposit guarantee scheme in the first place. Are there issues around some of the detail of it? Yes there are and I think of the question I raised immediately preceding the resumption of debate about those individuals who currently have investments in institutions that will choose not to continue with the scheme and those that will be unable to continue with the scheme due to the new requirements of the scheme. They will have some concern about how the changes might impact on the decision they have made to reinvest knowing that the guarantee was there in the first place. 
It is important that we have a guarantee scheme in place but not so much because our banks need any protection from the circumstances that we saw occurring in the rest of the world. In fact I think our banks were better placed than many and the reason they were better placed was that we had much better regulatory oversight and prudential supervision from the Reserve Bank of New Zealand than many other jurisdictions. Much of the talk that we hear from overseas about regulators now beefing up the rules is about actions that New Zealand does not have to take because New Zealand has had beefed-up rules in those areas for a long time. Where there has been a disadvantage I guess to investors in the New Zealand marketplace is in the non-bank deposit-taking sector and we have seen the fall of many finance companies over several years. We have seen regulatory frameworks now put in place to address concerns around non-bank deposit-taking organisations and financial advisers as well and that is an important step for us to take. 
With three bills passed last year before the general election of course we are in a much better position to go forward. The problem though is that before that legislation is fully effective certain actions need to be taken. Considerable work is going on at the moment in the financial advisers sector and the Reserve Bank is working very closely with the non-bank deposit-taking sector in order to put in place the rules that will be needed. 
The reason New Zealand had to have a deposit guarantee scheme is simply the fact that we are in a situation where money can be transferred out of our country across what are now called e-borders. They are not physical borders. That could have been done in an instant. As a result if we did not match what was occurring in other jurisdictions with deposit guarantee schemes we would have risked essentially a run on perfectly healthy well-regulated institutions because a guarantee would have been seen by those perhaps less sophisticated in that regard to offer a better deal than the situation in New Zealand. That is obviously why we needed to have it. It was not so much to protect investors in New Zealand banks but to protect New Zealand banks from investors’ flight of capital as it were to a more protected market where a deposit guarantee scheme was operating. In Australia they have a different set of rules from us and theirs operate for a further year. That is why we support the Government moving to match Australia in respect of the timing of this initiative. 
When we get to the Committee stage I think we will have to do some pretty serious and detailed analysis to substitute for the kind of briefing that we would have got in the 1 to 2 day select committee hearing that Treasury recommended parliamentarians should receive. As a result I hope that the Minister when he takes the chair will be in a position to give us the kind of response that we will be looking for as we go through this recommended change in some considerable detail. With those caveats on the table I reiterate our support for the Crown Retail Deposit Guarantee Scheme Bill and regret that we have not had the opportunity to consider it in more detail.