Smith Nick: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Smith Nick: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 13 June 2012. Volume:680;Page:2892. Text is incorporated into the Bound Volume.] 
3. 
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Minister of Finance 
: What reports has he received on the stability of New Zealand’s financial system? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Last week the IMF noted that New Zealand has a sound banking sector. Non-performing loans have fallen to less than 2 percent of the total loans and capital adequacy has improved since 2007 as New Zealand households and businesses save more and borrow less. There has been strong growth in retail deposits over the last 18 months—that is deposits by New Zealanders—and that has reduced banks’ reliance on wholesale funding from overseas lenders. These factors put New Zealand in a comparatively good position to weather any further banking problems.  
Hon Dr Nick Smith 
: What steps has the Government taken since late 2008 to strengthen New Zealand’s financial system? 
Hon BILL ENGLISH 
: The New Zealand financial system suffered some damage from both the collapse of the finance companies and then the impact of the global financial crisis. Since then capital market regulations have been overhauled and the Financial Markets Authority has been established. We have brought non-bank deposit takers under Reserve Bank supervision and applied minimum capital adequacy and credit rating requirements to them. The Reserve Bank has introduced new core funding ratios for the banks that require them to have 70 percent of their funding from stable sources and we are progressing a new legislative framework for covered bonds. The Reserve Bank has also ensured that in another financial crisis it can supply temporary liquidity to sound institutions as it did in 2008. 
Hon David Parker 
: Given that the Secretary to the Treasury at the select committee this morning said that the Minister has not requested any report from Treasury quantifying the additional losses to taxpayers caused by the mismanagement of the Crown guarantee of finance companies will he direct Treasury to cooperate with an independent assessment of those additional losses to clarify whether they total $100 million or more or less? 
Hon BILL ENGLISH 
: No and I do not agree with the assertions by other political parties of those numbers. 
Hon Dr Nick Smith 
: How does the current state of New Zealand’s financial systems compare with what he inherited in 2008? 
Hon BILL ENGLISH 
: I think there have been a number of lessons learnt from both the collapse of the finance companies and the impact of the global financial crisis. We have made sure along with the Reserve Bank and Treasury that our banks and what is left of the finance companies have been stress tested and that a number of measures have been taken that improve the resilience of the financial system. In fact the banks have almost halved their reliance on short-term funding and are reducing their reliance on overseas debt markets which are prone to disruption. 
Hon David Parker 
: Given that the Minister does not accept my assertion that the losses are more or less than $100 million what report has he received as to what is the additional loss that has been caused to taxpayers by the mismanagement of the Crown guarantee; if he has not received any report how can he deny the need for there to be an assessment? 
Hon BILL ENGLISH 
: The member misunderstands the point of the guarantee. The guarantee was given by his Government I might say—at your campaign launch—to enable people to keep depositing in those institutions so that they would not crash and now he is complaining that people were allowed to keep depositing in them. 
Hon David Parker 
: I raise a point of order Mr Speaker. My question was that given that he denied my assessment of the loss what reports had he received quantifying the loss. He has not even addressed that question. 
Mr DEPUTY SPEAKER 
: As I recall the member actually asked two or three questions incorrectly. He has further supplementary questions if he wishes to pursue that one specifically but there was more than one question. 
Hon David Parker 
: I raise a point of order Mr Speaker. Could the Speaker please advise which of the many parts you assert I asked the Minister answered? 
Mr DEPUTY SPEAKER 
: No. I have made a ruling. If the member wishes to pursue the question about reports he may ask another supplementary question.