Huo Raymond: Westpac New Zealand Bill — Second Reading 
Huo Raymond: Westpac New Zealand Bill — Second Reading 
[Volume:672;Page:18374] 
RAYMOND HUO (Labour) 
: 
 It is a pleasure to take a call in the second reading of the Westpac New Zealand Bill. I will take the opportunity to congratulate Mr Craig Foss the member who sponsors the bill. Mr Foss has been a very able and responsible chairman of the Finance and Expenditure Committee and I certainly had a great time in that busy committee. Labour will be supporting the bill to the Committee; it is important to ensure that New Zealand’s banks are strong and stable. 
This bill was introduced for the transfer of certain assets and liabilities from Westpac’s Australian parent to its New Zealand subsidiary to bring it in line with Reserve Bank requirements that significant banks be incorporated in New Zealand. To that end we note the success of the Reserve Bank’s local incorporation policy as one element in securing the stability of the New Zealand banking sector. It is critical we retain sovereign oversight of our banking regulations. The severity and speed of the 2008 financial crisis provides ample evidence to underline the importance of that. Legislation is the only means to provide for the vesting of certain assets and liabilities being transferred in such a manner as provided for in this bill. Legislation is the only means by which appropriate amendments to and repeals of existing legislation can be effected as Westpac Banking Corporation currently operates under legislation in New Zealand through the Westpac Banking Corporation Act 1982. Westpac Banking Corporation was registered in New Zealand as an overseas company under the Companies Act 1993 and as a bank under the Reserve Bank of New Zealand Act 1989. In 2003 the Reserve Bank instituted a policy requiring systemically significant banks to be incorporated in New Zealand. Accordingly Westpac Banking Corporation established Westpac New Zealand to assume and carry on the retail banking business in New Zealand. 
The key provision of this bill is clause 6 providing for the transfer of assets and liabilities. On the advice of the Minister as a result of a recommendation from the Reserve Bank the Governor-General may by Order in Council approve a proposal for the transfer of assets and liabilities. The transfer will enable Westpac New Zealand Ltd to comply with the condition of registration that limits the parent bank’s liabilities to below $15 billion as set by the Reserve Bank. Another key provision is clause 24. The assets and the liabilities to be transferred from Westpac’s parent company in Australia to Westpac New Zealand Ltd include assets and liabilities that are located in other countries. Typically this may include a guarantee from an offshore parent company or a security given by a New Zealand company over an overseas asset. The extent of the foreign assets and the liabilities is more material than under the Westpac New Zealand Act 2006 because the assets and the liabilities concern institutional banking customers that contact the business internationally. 
I note Westpac New Zealand Ltd’s intention to ensure that this legislation assists the transfer of foreign assets and liabilities by providing a clear direction to New Zealand courts that the legislation is the overriding legislation. The words “equivalent of an enactment in a country other than New Zealand” were originally included in clause 24(4)(b) to ensure that a New Zealand court applying foreign law treated this legislation as paramount. The additional words were intended to assist a New Zealand court faced with a choice between conflicting systems of law to reach a conclusion that New Zealand law should be applied. This was seeking to utilise the principle that a New Zealand statute may accompany a substantive provision with an explicit or implicit conflict of laws rule and therefore override what would otherwise be the applicable conflict rule. Taking into account the points raised by the Finance and Expenditure Committee at the hearing Westpac New Zealand Ltd has now reworded clause 24(4) and also clause 25. This amendment means that the wording of the relevant clauses reflect the wording in section 24(4) of the 2006 Act. 
There are two other issues I wish to raise at this stage. Firstly 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 having a trans-Tasman footprint and access to global capital through its Australian-based parent. Secondly it is also true that on both sides of the Tasman the banking sector is again under close scrutiny. The Australian Parliament has a far-reaching inquiry under way which brings to mind that Labour the Greens and the Progressive party held an inquiry into banking issues too. I was very glad to have been involved in that banking inquiry. I can recall clearly that a familiar mood cropped up when I was out talking to members of the ethnic community on the street at events and in shops. The mood was one of anger and outrage at the reluctance of the National-led Government to support an inquiry into banking profits and at its failure to stand up on behalf of all hard-working New Zealand families. Many people I have spoken to believe they were paying higher interest rates than they should be paying. It seems to me that the best way to work out whether hard-working New Zealanders and businesses are getting a fair deal from banks is to hold an inquiry into the relationship between for instance the official cash rate and short-term interest rates. That way all the facts would be put on the table and people could see whether they were being treated fairly by their banks. 
In 2009 the Reserve Bank cut the official cash rate by 575 basis points but business lending rates have fallen by only 243 points and the floating first mortgage rate has fallen by only 446 points. I am very glad Labour the Greens and the Progressive party successfully held the equivalent of a parliamentary select committee inquiry into banking profits. I should also emphasise that the inquiry in Australia is much more broadly based than being a simple matter of interest rate pass-through. It is also looking at a whole range of issues that are to a lesser or greater extent also important here. The New Zealand Banking Ombudsman has said there were a record number of complaints to her office over the last 12 months. There is growing public concern about the banking sector. Thank you.