Shearer David: Westpac New Zealand Bill — Third Reading 
Shearer David: Westpac New Zealand Bill — Third Reading 
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DAVID SHEARER (Labour—Mt Albert) 
: 
 It is a pleasure to speak on the Westpac New Zealand Bill. I say that touting this bill as part of the Government’s economic plan is a bit rich really. I mean this is a largely technical bill that effectively helps to shore up and stabilise our banking system but I fail to see how it is a part of any great plan. Mind you I fail to see where the plan is anyway; I am not actually sure what the plan is. Maybe this bill is a central plank in the Government’s economic plan to grow New Zealand. But I see it and Labour sees it as something along a more technical line which helps to stabilise our banking system and to ensure that Westpac is fully incorporated in New Zealand. For that reason Labour supports this bill. 
Many of the people who are watching the proceedings of Parliament at the moment may actually reflect on the fact that a lot of the time Parliament agrees on much of the legislation before it. In fact from memory I think about 80 percent of the legislation that comes through the House is agreed upon by both sides and that is because it is largely uncontroversial legislation designed to help New Zealand to go forward in a common-sense way. It is only in relation to some of the critical issues which most people hear about that we disagree. This bill is one of those pieces of legislation that we do agree on. 
The purpose of this legislation is to provide for the vesting of the assets and liabilities of Westpac Banking Corporation’s New Zealand institutional business in Westpac New Zealand. Effectively the bill makes sure that Westpac is fully incorporated as a New Zealand bank. The third reading debate this evening has brought up the matter of the foreign ownership of New Zealand banks. Aaron Gilmore raised the point that yes we do have the Taranaki savings bank and the Southland bank that he talked about but overwhelmingly bank transactions in liabilities and assets in New Zealand are undertaken by banks that are owned outside New Zealand not within it. I think it is a very disappointing feature of our banking system that a lot of the dividends and profits made in New Zealand are made by those banks which in many ways purport to be local. Let us face it if we look at the advertising by Westpac in particular—and by the ASB and other banks—we see they purport to be local. But in fact their ownership is offshore. 
One of the few major banks actually owned in New Zealand is Kiwibank. It was brought in with a great deal of opposition from the National Party yet it has proved to be a resounding success. People have got behind it and they feel that it is their bank because it is owned and controlled here in New Zealand. I worry—and Stuart Nash mentioned this earlier—that Kiwibank one of the assets that we New Zealanders own will be next in the firing line for sale once the power companies Air New Zealand and a number of the other assets that are in the firing line at the moment have gone. 
I come back to this bill which as I said is uncontroversial. The background is that the Reserve Bank’s local incorporation policy assists the regulator by providing it with greater control over the assets of a bank in the event of a bank failure under New Zealand law. This control can help to prevent a bank failure from spilling over into the wider financial system and causing a wider more systematic meltdown. Because of that policy Westpac Banking Corporation and Westpac New Zealand Ltd have agreed with the Reserve Bank that the Westpac Banking Corporation will transfer some assets and liabilities to Westpac New Zealand. Those are principally the assets and liabilities of Westpac Banking Corporation’s New Zealand branch—its institutional banking business. What this really does is to ensure that the assets and liabilities of the Westpac Banking Corporation’s New Zealand business are transferred across to Westpac New Zealand. For that reason Labour will support this bill as we did right throughout the discussions that took place at the Finance and Expenditure Committee during the select committee process. 
I want to touch on a couple of other points with regard to Westpac. I admit that I have a Westpac account; I bank with Westpac. However as an account owner and a member of Parliament I have a lot of issues with regard to the salary that the Westpac chief executive officer has awarded himself of $5.5 million. 
Michael Woodhouse 
: He didn’t award it to himself. 
DAVID SHEARER 
: The bank awarded that salary to the chief executive officer or the shareholders did. I understand that it is still the highest chief executive officer’s salary in New Zealand although someone may be able to correct me on that. If we look at what the chief executive officer gained from the tax switch—or swindle—in the last few months we see he now earns $5000 a week extra as a result of the tax cuts. The tax switch was supposed to be about lowering income tax and with the increased GST rate collecting more from GST. But I challenge the Government to say somehow this man will have so much additional expenditure that we will collect that $5000 back through the GST increase. That shows the nonsense of that particular policy. 
The other issue that is worth noting with regard to the banking sector—and Russel Norman brought it up—is that the banking sector and Westpac in particular has assiduously tried to avoid taxes. The banks have been caught out in the last few months and have had to pay more than $2 billion back to the New Zealand Government for avoiding taxes. Westpac was not alone in that; $500 million was Westpac’s share of that tax avoidance. It brings home the point I was making earlier that one of the issues around our banks is that they expropriate their profits offshore back to their home banking corporations which are the owners of the banks. 
With regard to the chief executive officer’s salary I note that the employees of Westpac had a 3 percent salary increase in the last year or so. The difference between $5.59 million and a 3 percent increase for the average teller or for the person who is responsible for helping to run the bank is extraordinarily high. 
The point has been made and I think it is a good one that a lot of the woes that we face in the economy are related to the fact that we have invested too much in property. We are not alone in having done that as a country. We have like other places throughout the world suffered as a result of people in the United States in particular investing in property and being encouraged to do so by the banking sector. Part of the reason for the global financial crisis is the American banking system. We have been very lucky here that our banks have been robust and strong enough to resist that. On the one hand we are pleased that we have secure solid banks—and this legislation will help with that—but on the other hand I think we need to point out that the banking system itself could do with a lot more New Zealand ownership. Thank you.