Gilmore Aaron: Westpac New Zealand Bill — First Reading 
Gilmore Aaron: Westpac New Zealand Bill — First Reading 
[Volume:669;Page:15949] 
AARON GILMORE (National) 
: 
 It is somewhat ironic to be able to stand and do a bill about Westpac— 
Hon Darren Hughes 
: It’s your bill? 
AARON GILMORE 
: —talk about a bill on Westpac—sorry Mr Hughes. This bill has been brought to the House by Craig Foss the wonderful member from Tukituki. 
Westpac was my first bank and I vividly remember as a 7-year-old going to New Brighton and opening up my first bank account with Westpac. It was not called Westpac at that stage; it was actually called Trust Bank Canterbury. I raise that because it relates to a really interesting aspect of the reason for this bill having to be brought before the House. Westpac bought out Trust Bank Canterbury as some other members may recall. Trust Bank Canterbury was the dominant bank in Christchurch and in the wider South Island. All of the assets that were purchased as part of the acquisition of Trust Bank Canterbury ended up going into what was called the Westpac Banking Corporation branch which actually was a branch of the Australian operation not a stand-alone entity. At the time people thought “Well so what?”. The big key aspect of that was that the depositors and investors in Trust Bank Canterbury went from being investors in a direct subsidiary of a New Zealand entity—that is it was regulated by the Reserve Bank of New Zealand—to being investors in a branch entity over which the Reserve Bank had less control. The bill we have before us actually fixes that and I think that is a good step. 
Westpac has been in New Zealand for a long time. As I say the personal history of my banking relationship with them has been an interesting one. But the bank has been a good customer and operator in New Zealand. Westpac has been very good in terms of the recent earthquake in Canterbury and has worked very well with the locals there. That is a good indication of how well Westpac operates within our wider financial community. But this bill actually makes some improvements. As we have seen there are some issues potentially with it operating as a branch of an Australian bank rather than as a subsidiary that is fully regulated by the Reserve Bank. This legislation provides a bit more surety to the customers of Westpac out there that their own assets or liabilities—depending on whether they have mortgages or deposits—will have greater regulatory cover by the Reserve Bank. There has been a little bit of uncertainty about that but now there are no fears or concerns. This bill is a good bit of tidying up to fix that potential anomaly that might have existed. New Zealand has a very strong banking system and Westpac is one of the stronger players in that banking system. I understand that Westpac is one of the top 100 banks in the world and it has come through the global financial crisis in a very very strong fashion as indeed all of the New Zealand banks have done. 
The bill has some slightly unusual aspects and I think it will be interesting to analyse them when the bill comes before the Finance and Expenditure Committee. I will quickly touch on some of those aspects. Being a member of the committee I am sure we will spend some time looking at some of these aspects. In particular we will look at what is known as the liabilities cap. Not only are these assets and liabilities transferring to this new subsidiary but a cap exists. Not everything is transferring; a $15 billion liability cap is being put in place as part of the transfer. Some people might ask whether that is enough. That will be one of the interesting things we look at very carefully as part of the select committee process. Is it enough? Is the cover adequate for those with deposits or mortgages with Westpac for those who have banked with Westpac in some way as my children and I do? Will the Reserve Bank be able to regulate and control the new subsidiary in the best way? Should that cap be lower or higher? At this stage we do not really have a view on that matter and it is one of the interesting things I am sure we will look at in depth as part of that process. 
You see the Reserve Bank has been working with Westpac over a number of years to work out what the options are in relation to local incorporation. I know there has been a lot of discussion in the media about some of the other issues that it has dealt with such as other parts of its operations being brought into New Zealand and in the very unusual case that we have a problem with the bank the Reserve Bank actually having some regulatory oversight. I know that Westpac has been very good at working closely with the Reserve Bank to meet its requirements and to satisfy the Reserve Bank that under our New Zealand regulatory requirements—it operates under Australian regulatory requirements—it operates well and within the law and that the Reserve Bank will be very happy with it. 
I think one other aspect that members have not touched on so far is the neat things that Westpac does in the wider community. Some of those things have carried on for years and years. One activity I was particularly touched by when doing some research on this bill is called the Care for our Coast clean-up.