Robertson GrantDEPOSIT TAKERS BILLThird ReadingHon GRANT ROBERTSON (Minister of Finance): I present a legislative statement on the Deposit Takers Bill.DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon GRANT ROBERTSON: I move That the Deposit Takers Bill be now read a third time. This piece of legislation is the third in the trilogy that emerged out of the Reserve Bank Act review—the first of those widened the objectives of the bank and changed its decision-making processes to be a more modern form of monetary policy decision making; the second of those dealt with the institutional arrangements of the Reserve Bank. This the third bill deals with the modernisation of legislation for arrangements for deposit takers—in other words banks and non-bank deposit takers such as credit unions building societies and retail funded finance companies.Can I at the outset of this contribution thank everybody who has been involved in what has been a very very long piece of work. This is a piece of work that began as far back as the end of 2017 and beginning of 2018 when our Government came into office and we set about the Reserve Bank Act review. At that time it was clear that it was a very big undertaking and that it needed to be split apart—as is being done at the moment with the third of these three bills. At that time consultation began—and I want to thank everybody who has been involved in that consultation within the broader finance sector and indeed the wider community. I want to especially thank the officials from both the Reserve Bank and the Treasury who have been heavily involved in the drafting work and the redrafting work.And I do as I did in earlier reading want to especially thank the Finance and Expenditure Committee who I believe did excellent work to improve the quality of this bill and I know that members of that committee will get a chance to talk about that in the coming calls on this bill. In particular—and I do just want to briefly mention this again—the work that was done to alter clause 3 and clause 4 of the bill around the purposes and the principles in addition to the vitally important and core purpose of the legislation: to ensure we have a stable financial system that we also ensure that the system has diversity and that the management of it the supervision of it has proportionality. So those principles around stability diversity and proportionality now feed through in a coherent way in clauses 3 and 4 of the bill as a result of what the select committee did and I think that is a really good example of how a select committee can add value to the legislation and can reflect the views of submitters because we do want a diverse deposit-taking sector that provides to depositors a range of options that are in line with their lives and their circumstances. Equally we want those to be institutions that are stable and strong and that we can have confidence in and I think what the select committee did in those changes is indeed quite significant.We've dealt with in other readings some of the core provisions of this: particularly around the modernisation of licensing supervision and enforcement. These are serious powers—and this came up during the committee of the whole House stage a couple of times—these are serious powers that the Reserve Bank has but they're important ones because New Zealanders need to know if they've got money in a bank credit union or building society that that institution is strong stable well-governed and behaving in line with the law. Unfortunately in our history New Zealanders have had examples where that hasn't happened and in those examples that has caused significant financial distress to a wide range of New Zealanders.This bill makes a strong attempt to create a modernised and rigorous regime and as I've said in a couple of the other earlier readings of this earlier in the year when we saw Silicon Valley Bank—signature bank in the US—New Zealanders rightly raised their eyebrows and said Could that happen to us?" The thing I can say to New Zealanders is our banking system is more robust and rigorous in how a bank is established. It is more robust and rigorous in that jurisdiction as it is too in these supervision and in these licensing and enforcement regimes that are covered in this bill. So New Zealanders can have confidence in the system we have but its legislation that gives them that confidence and underpins it. In the remaining time I'm going to take today I want to talk about what is being created under this legislation and that is the new depositor compensation scheme. And this is a red-letter day; this is something that has been discussed for years in New Zealand about whether or not we should do as most other countries do and have some kind of standing scheme for the time when the very very worst happens and people's deposits are at risk. Now I know—and we all know—what happens when you don't have that scheme: you have an ad hoc response. Invariably it is the Government that people turn to and say "Well can you help us out in this situation?" I vividly recall my first election campaign; we had Mr Simpson talking about his. It was Mr Woodhouse's first election campaign as well in 2008 when in the middle of that we were faced with these issues. I can recall being at the Labour Party's launch of its campaign and Michael Cullen was off to the side of the stage on his phone working out what to do in the face of a potential collapse and run. So these are real issues. They don't happen very often because our banking system is stable and our financial system is stable but when they do happen we want New Zealanders to have confidence that they will be looked after.So today when we pass this legislation we will create that depositor compensation scheme. We've again—over the course of that consultation—made improvements in how that scheme is going to operate. We started out with a protection limit of $50000 for a deposit. We consulted and out of that consultation it emerged that that wasn't going to cover enough New Zealanders so we increased it to $100000. That means that 93 percent of depositors are covered and I think of actual deposits—obviously that number is a bit different because that missing 7 percent have quite large deposits. But that's $100000 in each bank or in each institution—so if people have spread their money out they would be covered in the event that it would happen in another institution. So that gives New Zealanders that basic assurance that their money is going to be looked after if the worst thing happens. What happens from here: when the legislation passes today the Reserve Bank and the Treasury will enter into a period of consultation around the funding strategy and the levy framework. So yes this will be levy funded: the levy will be on those deposit takers and the funding framework for that will need to make sure that the scheme is able to fund itself—and when it does have to pay out it's able to manage itself. When we look internationally this can be done with a fairly modest levy on those institutions and I hope those institutions will see that as part of their responsibility to be part of a banking system. Invariably some costs may be passed on to those who are putting their money into the bank but we hope that banks will be absorb as much of this as possible as part of their licence as it were—a social one in this case—to operate in New Zealand. So the piece of work that will take place over the next months will get us to the point that the scheme can be operational in 2024. That will be an important day for New Zealanders to know that that scheme and that backstop is there and I'm very proud of our Government for having addressed a longstanding issue; a longstanding absence in our framework of the way that we ensure that New Zealanders' money is looked after and I look forward to the deposit compensation scheme coming into force.With that I am proud of the fact that we have now completed three bits of legislation as a result of the Reserve Bank of New Zealand review. We have a modernised bank; we have a system that is designed for confidence in our financial system and confidence in the way monetary policy is created. This bill contributes strongly to that. I again thank everybody who has contributed to it and I commend this bill to the House.DEPUTY SPEAKER: The question is that the motion be agreed to."