Parker David: Westpac New Zealand Bill — Third Reading 
Parker David: Westpac New Zealand Bill — Third Reading 
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Hon DAVID PARKER (Labour) 
: 
 At times like this listeners will get an appreciation that a lot of what we do in this Parliament we actually agree on. I do not quite agree with the way in which it was expressed by the prior speaker Amy Adams who said that the Westpac New Zealand Bill does not affect depositors. Actually it does have effects for depositors that are positive. 
The background to this bill is that under the last Government the Reserve Bank came to the Government and said it was concerned that the dependence of New Zealand on overseas-based banking institutions could be detrimental to the interests of New Zealand depositors if we came to a tight squeeze because there were fewer instruments the Reserve Bank would use to control the ranking of unsecured depositors if there was a big clean-out in the banking system. The Reserve Bank wanted to make sure that the interests of New Zealanders could be secured against the assets of New Zealand - domiciled branches of banks rather than those banks being run as a branch of an Australian entity. As a consequence the last Government and the Reserve Bank—and now the current Government and the Reserve Bank—have taken steps to ensure that large New Zealand - based banking operations have a New Zealand - based branch that has New Zealand - based assets that would be available to depositors in the event of a failure of the bank. Otherwise there would be a contest between New Zealand - based depositors and Australian-based depositors over what would effectively be Australian-based assets even if some of those assets were physically based in New Zealand. That is the underlying reason why we have this change. As a consequence of this change we will have improvement in the banking system for New Zealand. 
The other point I will develop was raised by my colleague the Hon David Cunliffe which is the position that the National Government is taking with regard to savings and the economy. Effectively it is saying—I think the phrase Mr Cunliffe used was “steady as she goes”. I do not think he was referring to the track by The Raconteurs; he was referring to the economic vision that the National Party has for the country which is really that we do not have to change much. In its view New Zealand’s lot will improve despite the settings of the New Zealand economy being largely unchanged. 
I challenge that view. I think this bill is an illustration of why that view ought to be challenged. Australia owns not just its own banks but ours. That situation points to a fundamental problem that we have in savings: we do not save enough and we spend too much. 
David Bennett 
: It’s nothing to do with savings. 
Hon DAVID PARKER 
: The National member for Hamilton East says it is nothing to do with savings. Of course it has everything to do with savings. If New Zealand does not save enough as a country then we get poorer year by year because we actually have a current account deficit and we import more and more money into the country via banks like Westpac. An expression of how poor we are as a country is the fact that we do not have enough money in New Zealand to own our own banks. They have become Australian owned. 
Hon Member 
: This is rubbish. 
Hon DAVID PARKER 
: The National Government still does not get it. It came into Parliament a little while ago about a year ago and said that the big difference between New Zealand and Australia is mining. That is how it was going to catch up with Australia—through mining. We on this side of the House have known that a fundamental problem with the New Zealand economy is that we spend too much and we do not save enough and that is why we do not own enough of our own country. 
David Bennett 
: That is rubbish. 
Hon DAVID PARKER 
: We hear that again from National. The member is just completely wrong. That lack of understanding from the member from Hamilton is underlined by the projections in this year’s Budget. The Government has not fixed New Zealand’s structural economic problems as evidenced by the fact that in the Budget projection the current account deficit grows in 4 years to 6.9 percent of GDP. So when we get back eventually to some economic growth after the prolonged recession that we are suffering in this country we go straight back into current account deficit and we get poorer again I say to Mr Bennett and not richer. That shows up in the net investment position projected in this Budget. This is the statistic that Mr English has said is indicative of New Zealand’s greatest problem and I think Sir Roger Douglas would agree. The net investment position in New Zealand is the net balance of New Zealand’s assets in the world—what we own in the world less what we owe to the world—and for New Zealand it is negative. At the moment it is negative 76 percent of GDP—negative 76 percent of GDP—and it goes to negative 86 percent of GDP or thereabouts. It is negative 80-something percent; I will check the number and then put it in my  
Hansard 
 accurately. 
New Zealand’s net international investment position goes backwards because despite the changes in this bill brought about by the need to have reliance on Australian banks because we do not save enough in our country to own our own financial institutions we have a problem. The point I am making to the National members who plainly do not get it for themselves is that those problems will get worse under this Budget because in the projections under this Budget New Zealand’s net investment position will get worse from every year after this current year. Year on year to the end of the projection period New Zealand will continue to get poorer every year as our net investment position gets worse as a percentage of GDP and in nominal terms. 
If those projections are right and they are the best projections of the Government and Treasury and if the Government is re-elected if it gets its way and sells off all State-owned enterprises or half of the State-owned enterprises it has on the block at the moment and if it is on the Treasury benches for a further 3 years then by the end of that 3-year period a total of 6 years after it was first elected—this is assuming it is re-elected for a second term which of course we are fighting against and do not accept will be the case—under the Government’s economic prescription New Zealand’s net international position will get worse year on year on year. 
Those Government members are quiet now—they are quiet now. That is the reality of the Budget. It shows that the underlying structural problems of the New Zealand economy are not fixed. That is why members on this side of the House have said that the issue is not mining in national parks; the issue is New Zealand’s spending compared with how much we save. It mainly concerns the private sector. There is a Government deficit that is significant at the moment and that is made worse by some of the Government’s policies. But the greater problem in New Zealand is our private indebtedness. We are still dissaving as a nation and the Government’s own projections in this Budget show that at the end of 6 years in Government—if the Government were to be re-elected for another 3-year term—New Zealand’s net international position will get worse year by year by year. 
New Zealand will still be reliant indeed more reliant on Westpac and on the other major Australian banks because New Zealanders will not be saving enough. Of course the Government’s own policy in that regard to destabilise and undermine KiwiSaver will be one of the reasons why that position will continue to get worse. The bigger problem of course is that the Government’s Minister for Economic Development at the select committee last week said that agriculture was the only game in town. He paid due regard to the importance of agriculture and I have no problem with that but he does not see the importance of exports in other sectors that we need to grow if we are to increase our earnings in the world turn round our current account deficit and start getting wealthier as a nation rather than poorer as is projected by the Government’s own Budget.