Cunliffe David: Insurance (Prudential Supervision) Amendment Bill Reserve Bank of New Zealand Amendment Bill — Third ReadingsText is incorporated into the Bound VolumeCunliffe David: Insurance (Prudential Supervision) Amendment Bill Reserve Bank of New Zealand Amendment Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:12817. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): It is a pleasure to take a call in the third reading of the legislation arising from the Insurance (Prudential Supervision) Amendment Bill. It is well worthwhile legislation for the House to be debating. Labour is supporting the legislation. Labour believes however that it does not really grapple with the fundamental problems of the insurance market and the insurance industry. It does provide welcome oversight by the Reserve Bank in a way that we think is in keeping with international best practice.It was not many days ago that Wellingtonians experienced an earthquake of the sort of magnitude that causes people to really reflect upon their lives and the way they normally go about things. It was over 6 in magnitude. Fortunately there were no real injuries and no loss of life and there was only relatively minor property damage on this occasion. But we all understand that this House sits on New Zealand’s equivalent of the San Andreas fault the Wellington fault and the cascade of many thousands of small medium and large earthquakes northwards from the Canterbury fault lines that underpinned the devastating Christchurch quakes has raised in the minds of many New Zealanders the degree to which Wellington’s region like Marlborough is at risk of a catastrophic quake in the near future.According to GNS the Institute of Geological and Nuclear Sciences the probability of a quake within the Wellington region 2 weeks ago after the last magnitude 6-plus was put at 21 percent over the following week. That was a one-in-five chance of another earthquake of magnitude 6-plus. It might have been 6 it might have been 7 or it might have been—God help us—an 8. The key point is that with a 21 percent chance in 1 week and a 51 percent chance in 1 year one of two things is going to happen. Either we are going to get a devastating earthquake in central New Zealand and we are going to exceed the ability of the Earthquake Commission and reinsurance arrangements to cope or the mere probability of being rated at that level will strain the reinsurance market even if no quake occurs because insurance is priced based on risk.What are the consequences for New Zealand? Although this legislation deals with ensuring the transparency and probity of the operations of the insurance market—and we welcome that as far as it goes—it does not tackle the two key underlying problems: firstly that the Earthquake Commission’s reserves have been naturally enough significantly run down from coping with the Canterbury earthquakes and we need to rebuild those reserves as quickly as possible in case we get another quake; and secondly that the fundamental problems in the insurance market and the escalating seismic risk around New Zealand mean that we could be in the position where there is a fundamental breakdown of the insurance market itself because insurance becomes priced out of the reach of normal commerce.What will the Key Government do? The answer is that in the face of this historic challenge it is tinkering with this legislation.John Hayes: What a lot of nonsense.Hon DAVID CUNLIFFE: There is nothing in this legislation that addresses those fundamental problems nothing in this legislation that provides support for the reinsurance market nothing in this legislation—John Hayes is doing exercise. What a wonderful spectacle. I encourage it. You may end up with a body like Mr Goldsmith’s there very soon. And it is lovely to have Maggie Barry with us sitting behind the lovelyJudith Collins garbed as she was today fromPlantorama. It is just likeMaggie’s Garden Show is back with us again. But enough mirth—enough mirth.It is really important for New Zealand that if we get the big one we can pay to rebuild it and we will not get an insurance market that works off the basis of this legislation alone. [Interruption] You can always tell a Government that is in decline because the backbenchers are getting restless. They spend their mornings counting heads between Steven Joyce and Judith Collins knowing that the end is nigh for John Key. Either it is coming in 15 months’ time with a rejuvenated Labour Government or he is going to step down just after. Those rowdy underutilised frustrated venomous backbenchers over there know that they are going to miss out on ministerial office. That is why they are all gathered around Mr Bridges. He is their only touch with greatness and that is a pretty fading dream. Back to the callisthenics from Mr Hayes—Hon Member: Maybe you should go back to your seat.Hon DAVID CUNLIFFE: And there we are. The parliamentary pantomime trundles on. But in the meantime the problems in the insurance market unfortunately are very real. I am very concerned and our party is very concerned that if there is not a more fundamental set of examinations of the insurance market New Zealand will be caught unable to deal with the big one in Wellington or with the risks that that potential creates in the market.I would ask the Government at what point it will lift its gaze above the tinkering that is going on in this legislation to address those questions by for example setting up another State insurer which could act to provoke competition in the market and keep the international reinsurers honest. Where is the courage from this National Government? Where is the foresight? Where is the looking over the horizon from the Government that would allow it to stand up for what New Zealand really needs? The answer is that there is not any. There has not been any since we faced the great challenges of the Christchurch earthquake and the global financial crisis. The Government has just to use its own words muddled through. New Zealanders are despairing. You can see the hope fading in their eyes and many thousands heading to the departure gates because they expected recovery. What did they get? Stagnation. Unemployment is stubbornly high. There is nothing in this legislation to address unemployment. Unemployment is well above the projections of the Government’s own Budgets from the last 3 years—not surprisingly because it has done nothing active to get it down.Government members are sitting there on their cushy seats in their ministerial LTDs climbing the greasy pole of ambition like Mr Bridges waiting for the market to deliver nirvana for someone more than their own mates. That is not going to work. Meanwhile the insurance market is failing all around. The best that this Government can serve up is tinkering reform extending the micro-regulatory powers of the Reserve Bank and ignoring the elephant in the room which is the fundamental escalation of risk and the inability of the reinsurance market to deal with it within a price range that will work for New Zealanders. It is yet another example of a Government that has lost its way lost its touch and is on the way to the departure gate. Thank you.