van de Molen TimTIM VAN DE MOLEN (National—Waikato): Thank you Madam Speaker. It's a pleasure to rise and take the final call for the National Party on this bill the Deposit Takers Bill. As we have heard from our previous speakers we are supporting the bill at its first reading cautiously—cautiously supporting it I would say. Because in the first instance obviously the stability of our financial sector is very important and on that basis we absolutely want to ensure that it is enhanced where it can be appropriately done and needs to be done—we absolutely support those aspects. There are a few elements which I just want to touch on through my contribution where I have some questions or some areas of concern that I hope will be addressed through the select committee process as this traverses that aspect as well.The initial one that I just want to touch on and what we're talking about here is to try and safeguard or protect the money that has been deposited in these institutions by everyday Kiwis presumably so that they can have confidence that the money will be available when they need it for whatever purpose life may bring for them. Having a cap of $100000—I'm interested in that figure; as to exactly how that came about noting that in Australia it's $250000 under their scheme and $100000 in this day and age doesn't go particularly far in terms of making up a house deposit. I note the carve-out for examples where someone has just sold a house and they have a significant amount of cash but there doesn't seem to be a corresponding allowance for someone who is building up a deposit to buy a house. Indeed a 20 percent deposit on a million-dollar house for example is $200000; so that's double the cap as it is proposed here. So I just wonder whether or not that could see some flexibility as well because I would suggest having more than $100000 on deposit doesn't necessarily make someone financially stable enough to weather through the loss of that money if it was not caught under this cap. So that is one question I would have.Having said that though for me a lot of this comes back to personal responsibility. Now anyone looking to deposit some money into a financial institution should rightly be considering the status of that financial institution: how safe is my money going to be if I give this money to a bank or to an institute? Am I likely to see it back? And obviously that's reflected through the interest rates that are offered by those banks as well. We heard I think it was Mr Woodhouse talking about that earlier in terms of the varying rates between a mainstream bank like the big four" as it were compared to another financial lender who may offer a higher rate to try and secure a deposit in a competitive market on the premise that actually they may be perceived—whether that is just a perception or otherwise—as being a slightly higher-risk investment for that depositor. Of course the attraction for the depositor then being that they might secure a premium of a percent of more over the other banks depending on the situation and so that has some appeal.So of course it is risk versus return and this is a pretty fundamental tenet of economics here that we need to be mindful of in this situation and then asking the question "Well is it appropriate for the Government to be stepping in to try and come up with a solution here? Is it really needed? What are the costs that then might flow through?" because I am very mindful of costs at a time when we are experiencing a cost of living crisis unlike I can remember. We are now talking of potentially—probably—putting additional costs on to depositors and I am really concerned about that because we are at the same time of course trying to encourage people to save more. Now we're looking at impacting on that by having a higher cost for them. Because ultimately if the Government is putting this system in place and there's a levy being imposed on these deposit-taking institutions well of course that cost for those businesses is going to be passed on either in terms of a reduced deposit rate that they offer to Kiwis looking to deposit money with them or on the other side an increased lending rate to people who are looking to borrow from that institution which presumably is borrowing money on the one hand to lend out on the other side.So at a time when you may be looking at somebody wanting to borrow money to progress a business idea that they've had a lightbulb moment an inspiration—and we have hundreds of thousands of everyday businesses in New Zealand doing amazing things. Typically I think we've had an environment that fosters that sort of innovation and have-a-go spirit and I would be concerned if they were then having to experience perhaps an increase from a 6 percent to an 8 or 10 percent interest rate on the loans that they're able to borrow money at from these deposit-taking institutions because of the increased levy cost in part. So there are those costs that I just don't see appropriate consideration being given to at this stage and that is for me probably one of the biggest concerns I have—as I say a cost of living crisis and here we are putting more costs on to depositors and lenders.But of course we also have a Government that can never miss an opportunity to take control of something that they may or may not necessarily need to. We just saw that in my contribution last week on the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill that they're putting forward looking to get their fingers more involved there have more say and more influence. And here they are again looking to do exactly the same on this one. So we have a Government now saying "Hey we will be undertaking all of the credit assessments for these financial institutions. We will tell you as New Zealanders which of these institutes are best for you to invest in which are the most risky and which are the least risky and therefore where you should place your money." Now ultimately I'm not confident that that is a role that Government should play. Surely that is a position of the market to work through who is or isn't a safe bet and that is indeed part of what I mentioned earlier around the risk-assessment element that depositors would be considering—risk versus return—when they are looking at making a decision around who they may or may not engage with in those financial arrangements.So here we have a Government instead that's looking to put that in place to then levy on that basis—presumably making the levy based on a credit-risk assessment basis; so therefore the riskier the deposit-taking institution the higher the levy would be for them compared to someone with a lower-risk profile. And ultimately it risks speaking to the arrogance of a Government that continues to think they know best for everyday New Zealanders. Regardless of the situation they have the solution! Kiwis shouldn't need to use their own minds because here we have a Government that will do all the thinking for us! Well ultimately I think the market should be able to do that. Kiwis are generally pretty smart. They can make some of these decisions off their own bat and don't need this sort of influence. And actually it's a little bit like the jobs tax we've seen proposed as well from this Government where they're putting an insurance scheme in place for anyone who may lose a job—and I'm not sure whether or not that includes any outgoing members of Parliament if there was an electoral change for example—but the impact there obviously is that it provides a solution that may or may not be needed in some instances but ultimately ends up adding cost. And here we are again adding more cost from a Government that thinks they know best.So these are some of the real concerns I have about this particular bill because as we've heard I think from Mr Uffindell as well in his contribution the capital adequacy requirements that were brought in post global financial crisis helped to address some of these concerns right? Because we came through that in pretty good shape comparatively in a global context; our banking system held up pretty well. It got pretty close as I understand it in some instances to there being real issues but we got through. That having been said there were obviously some changes brought in off the back of that—the capital adequacy requirements off the back of the Basel Accord. Basel II I think it was and then Basel III as well still coming into play saw a significant shift in the level of capital that had to be held by a bank. Now obviously that comes at a cost as well. So we saw an increasing margin being applied by the banks between what they are borrowing or buying money at—the BKBM rate—and what they're then lending out to everyday borrowers. That margin had to increase to allow for that cost of capital that they then had to hold over and above what they had previously held. So this is another example of that sort of thing where we're saying "Hey we're going to see more costs coming into these businesses." But actually we've already got some elements of protection in place. So do we really need this?So I'm really interested in seeing what comes through the select committee process in that regard. I do just want to pick up a quote from the regulatory impact statement: "There are significant risks associated with implementation of the Deposit Takers Act and the potential for unintended consequences. The Reserve Bank is planning is to increase resourcing"—well how about that? More bureaucrats. What a surprise! But ultimately the unintended consequences is an area that we really need to see thrashed out because I don't have confidence at this stage that we've fully understood where that may sit or what might fall out off the back of that—as we saw with the Credit Contracts and Consumer Finance Act issues as well.Lastly I just want to pick up on the director requirements. That's a small part of this but an important part I think where it looks to change the due diligence liability requirements for directors carrying out due diligence such that it excludes that from being eligible to be covered by directors and officers liability insurance. And that is a significant risk I think for any director who will then likely take a much more risk-averse position when determining a potential investment opportunity. So that has the risk or potential to slow down our economic contribution our productivity as well. So there is a number of areas that I think we really need to traverse here and I am looking forward to some robust select committee discussions on it. Thank you Madam Speaker."