Gilmore Aaron: Crown Retail Deposit Guarantee Scheme Bill — In Committee Third Reading 
Gilmore Aaron: Crown Retail Deposit Guarantee Scheme Bill — In Committee Third Reading 
[Volume:657;Page:6130] 
AARON GILMORE (National) 
: 
 That was Lianne Dalziel the previous Minister of Commerce in the Labour Government that oversaw a large number of finance companies lose I think about a billion dollars during the time of her reign. But I think I heard more validity and understanding of the finance sector regulations in that last speech than I did in her speeches in her entire time as Minister of Commerce. Some very good points were raised by the previous Minister of Commerce in that last speech. 
I will raise a couple of issues including why this legislation is going through under urgency. It is pretty simple: the financial sector is unbelievably sensitive to information about changing a regulation. The financial sector is one where people have a good understanding of what goes on and when we look at what has occurred we see that even Treasury—in its great regulatory impact statement that Lianne Dalziel the member over there was speaking about—talked about the need for urgency for this legislation. The finance sector needs certainty and surety in relation to this legislation being passed. Even the regulatory impact statement goes into some detail about the need for urgency. The previous scheme which this scheme is replacing was implemented urgently without any select committee process. Giving a number of days for a select committee process would only drag this legislative process out and remove the certainty the finance sector needs for such legislation. 
I will touch a little on credit ratings. There have been a number of statements about credit ratings and a bit of misunderstanding about what a credit rating is: what is in what is out and how people get one. I suffered here from statements from a member on the other side of the House who criticised my understanding of credit ratings. I will say two things. The first is that on 1 March 2010 all non-bank deposit lenders with assets of over $20 million will be required to have a credit rating—all of them. That is existing law. Secondly the reality is that yes for about $100000 anybody can get a credit rating. Apart from that people do not know what credit rating they might get until they go through a process. 
Amy Adams 
: Like a box of chocolates. 
AARON GILMORE 
: Like a box of chocolates. When one goes through the process one might get A AAA B BBB or C but one does not know until one goes through the process. There are very well defined guidelines and rules about what credit ratings are given to what entities given their financial strength. That is well-known public information: to get the grade one has to go through a process that will cost about $100000. 
We also heard an outcry from the other side of the House about why we need to guarantee the banks. We believe that this regulation is needed to lubricate the wheels of industry. Lubricating the wheels of industry is very important. We heard from the Greens earlier today. Those members do not want to lubricate the wheels. They want to put a grinding halt on them and throw some sand in the wheels of industry. They want to control everything under the sun. What that says is that we would have no lending at all. I would look forward to that situation under that member’s control. I do not think many members on this side of the House would want to be in New Zealand. 
We also heard about the lack of consultation on this bill. Again the grand regulatory impact statement stated that the Reserve Bank and Treasury have had large amounts of consultation with many players in the industry: finance companies banks and everyone else in between. I think it is remiss to ignore that consultation. 
I want to talk about one more aspect and that is the issue of the fees. That is linked to the issue of the credit rating. Obviously the fee scheme we have here is risk-based. If one is riskier to the taxpayer the users will pay more. 
The final aspect that I want to touch on is the aspect around whom this guarantee covers. It does not cover the banks and it does not cover the finance companies; it covers the people who give their money to the banks and to the finance sector. I think that is a good thing. 
As the final National member to speak on this bill I think I have outlined that there are a number of good aspects to it. Hopefully it will be passed and will give confidence to the finance sector. I think that is a good thing for New Zealand.