McClay Todd: Reserve Bank of New Zealand (Covered Bonds) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
McClay Todd: Reserve Bank of New Zealand (Covered Bonds) Amendment Bill — First Reading 
[Sitting date: 22 May 2012. Volume:680;Page:2262. Text is incorporated into the Bound Volume.] 
TODD McCLAY (National—Rotorua) 
: 
 It is a pleasure to rise and speak on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. I want to go just briefly into parts of the bill and the importance of it. But I want to say to the last speaker in this debate David Parker who recognised that the Government needs to focus and do more around savings exports shoring up the economy and having less wastefulness in spending that that was a glowing endorsement of the hard work of the National Government over the last 3½ years. That is all that our work has been about: bringing up savings rates focusing on exports shoring up the economy through an extremely difficult time and getting rid of unproductive spending within that economy. Certainly New Zealanders recognised that only a few months ago.  
This is an important piece of legislation—a technical bill and not an overly exciting one but important—because it will give greater surety to investors greater certainty to banks and strengthen the role of the Reserve Bank when it comes to the role of these banks. The Reserve Bank Amendment Bill establishes a legislative framework for the issuance of covered bonds by New Zealand - registered banks again to provide greater clarity for these investors. Legal certainty will increase economic efficiency and financial stability because banks will not have to pay an uncertain premium which they otherwise would with uncovered bonds. They can have significant benefits for registered banks as a long-term source of relatively stable finance. 
 In fact stable finance is very important to New Zealand to New Zealand investors and to New Zealand businesses. Just look all over the country at the moment. The thousands of people who have mortgages are talking to their banks and shoring up those mortgages at record low interest rates in part because of the good economic management of this Government. New Zealand banks depend upon offshore wholesale markets for their funding and this bill will give greater certainty to them in these markets.  
A couple of the challenges that the current arrangements provide to our banks that this legislation seeks to address are that our banks are currently able to issue covered bonds using contractual arrangements—structured covered bonds. I note that in Europe and many other countries covered bonds have been issued under country-specific legislation frameworks for many years. In recent years most countries that have their banks active in issuing covered bonds have also implemented a legislative framework including Australia recently. This legislation will help bring New Zealand into line with these other countries and international best practice in this area.  
I look forward to this bill coming to the Finance and Expenditure Committee so that as the last speaker said we can hear from others about some of the more technical issues of this bill. But this gives certainty to New Zealanders that the Government is focused on what is important—on helping our banks to continue to deliver for them in a cost-effective and certain manner—and I commend it to the House. Thank you.