Nash Stuart: Westpac New Zealand Bill — Third Reading 
Nash Stuart: Westpac New Zealand Bill — Third Reading 
[Volume:673;Page:19404] 
STUART NASH (Labour) 
: 
 I would like to clarify one point that the last speaker David Bennett made. He said that the Labour and Green members had used the Westpac New Zealand Bill for bank bashing. Well I can clarify that the Labour Party is supporting this bill. We have always supported this bill. In the Finance and Expenditure Committee we were very proactive in making sure that this bill went through without any interruption whatsoever. It might have been 3 weeks that the select committee spent deliberating on this bill. There were a couple of small changes but not once in the select committee process did we mention anything that was bank bashing. 
What the member may have been referring to—and I would not want to put words in his mouth—is that occasionally in our speeches we have highlighted some of the inequities in the banking system as it relates to ordinary good hard-working New Zealanders. But we certainly do not think this bill is bad banking legislation. This is good banking legislation. The Labour Party of all parties understands that a good solid sound banking system is absolutely important to the economic well-being of an economy. In fact once Parliament had risen for the 2008 election Michael Cullen came back here to do a considerable amount of work at the height of the economic crisis to ensure that our banking system was stable and to ensure that the deposits of all New Zealanders were secure. That is how much we believe that a secure sound robust banking system is vital to this economy. 
Before I talk about the bill there is one thing I would like to correct. I was deeply offended by something that “Mr Nasty”—Chris Finlayson—said. He said that if Peter Fraser were alive today he would be a member of the National Party. I think that comment shows Chris Finlayson’s complete lack of knowledge of history and culture. The vast majority of members on both sides of the House and from all parties will be aware I am sure that Peter Fraser fought his whole life for the working men and the working women of New Zealand. He fought his whole life to ensure social equity and he would be disgusted at the way that the Government is dumping on those hard-working New Zealanders who are really struggling at the moment. Peter Fraser was a man with a vision. He led this country and his Government through a war and he led them through the Depression. He was one of New Zealand’s most visionary Prime Ministers and that is acknowledged by the vast majority of historians. He is acknowledged as one of the greatest Prime Ministers this country has had. John Key and this Government—there was a full stop there—are not worthy of being mentioned in the same sentence as the great first Labour Government of Peter Fraser. I wanted to get that out. I was going to stand up at the time and say that I took personal offence at Peter Fraser’s name and legacy being demeaned but I decided I would wait till my speech and give it a little more effort. 
Let me talk about the bill. This bill will allow the vesting of certain assets and liabilities of the Westpac Banking Corporation which is incorporated in Australia in Westpac New Zealand. This is to enable Westpac New Zealand to comply with the Reserve Bank of New Zealand’s local incorporation policy for systemically important banks and to conduct its business efficiently. Legislation is in fact the only way that we can do this. There is the Westpac New Zealand Act 2006 and we did have a look at it I understand but it could not be done under it. The only way it can be done is through this Westpac New Zealand Bill. The bill was brought to the select committee by Craig Foss—the Hon Craig Foss now—when he was chair of that committee and it was supported by all members of the select committee. As was mentioned we understand the necessity for this sort of thing. 
Westpac is one of New Zealand’s oldest financial institutions. In fact I understand that next year Westpac will celebrate its 150th anniversary. If we look at the New Zealand banking sector at the moment we will find there is only one New Zealand - owned bank and that is Kiwibank. Who set up Kiwibank? 
Carmel Sepuloni 
: I think it was us. 
STUART NASH 
: Actually that is right. I think the Labour Government set up Kiwibank. I think it was the Labour-led Government that set up Kiwibank. In fact if I am right it was opposed by John Key and Bill English. They were opposed to the setting up of Kiwibank. We had the chief executive officer of Kiwibank stand up and say that Kiwibank has saved New Zealanders over a billion dollars in interest—over $1 billion in interest. 
David Bennett 
: Oh rubbish. 
STUART NASH 
: That member over there denies the fact that the chief executive officer of Kiwibank at the time Sam Knowles stood up and said that Kiwibank has saved New Zealanders a billion dollars in interest. Do members know what I am fearful of? Mighty River and the other power companies are gone. What is next on that list? Kiwibank. Once one starts the sale of State assets where does it stop? BNZ? Gone. I think something like $15 billion in dividends since that bank was sold for $1.5 billion has gone to Australia. Imagine if we had $15 billion more liquidity in our economy. Imagine how different it would be. I am incredibly concerned that with the sale of State assets next on the list is Kiwibank. Instead of going one way and investing money in Kiwibank the Government will go the other way and sell it. Once Kiwibank is sold it is gone for ever. We can never get these things back. 
Let me talk about Westpac New Zealand. It was incorporated and became a registered bank in 2006 in order to comply with the Reserve Bank’s local incorporation policy. Mr Russel Norman said that it was part of the New Zealand Government forcing banks to comply. I do not think they were being forced to comply. They did not have to be here. If they were not interested in complying they could have left this market but anyway that is how it works. 
David Shearer 
: Too profitable. 
STUART NASH 
: Yes exactly—too profitable. That incorporation policy provides that systemically important banks should be incorporated in New Zealand. What does “systemically important” mean? A bank is regarded as systemically important if it has liabilities to related parties in excess of $15 billion which is obviously what Westpac had. I understand that during the financial crisis Westpac very briefly breached that covenant—not in a bad way; it was not in danger of falling over. But that necessitated this bill. We need to make sure that liquidity requirements are at a level to meet the prudential requirements of the Reserve Bank. Branches of New Zealand - registered banks such as Westpac Banking Corporation have a condition of registration that their external liabilities cannot exceed that amount. 
When we talk about $15 billion worth of liabilities we cannot help but talk about how much money New Zealand owes. New Zealand is too indebted and most of that debt is in the form of mortgages on residential properties and farmland owned by overseas banks which ultimately borrow money from offshore. Let me give an example. About $42 billion is lent against the farming sector. This is at such a level that the Reserve Bank is concerned about it. The Reserve Bank has actually instigated some capital adequacy requirements to ensure that the banks that hold these rural mortgages have enough money to cover them just in case things turn to custard and the bottom drops out of the farming sector. I hope that does not happen at all but I am just pointing out that the Reserve Bank is concerned about that $42 billion worth of debt. 
We are borrowing too much. As a nation we are borrowing too much and for the wrong purposes. Businesses are starved of affordable credit while the mortgage markets are flooded with cheap money. For example according to the IMF New Zealand has one of the highest business lending rates in the OECD. I have heard members of the Government say it is wonderful that mortgage rates are at an all-time low. Well they may be at an all-time low for residents who want to invest in the unproductive economy but for businesses and companies that want to invest in the productive economy that want to grow their business and that want to employ Kiwis we have the highest lending rates in the OECD. What is the Government doing about that? Absolutely nothing. It is one of those things that those members conveniently forget. But anyway owning our future means getting that debt down by changing the economic incentives that have created the problem of property speculation and over-borrowing. 
Mr Bennett said these problems have been solved by his Government. I do not think so I tell Mr Bennett. I do not think so at all in fact. It has done a bit of tinkering around the edges. The problems have not been solved whatsoever. 
Carmel Sepuloni 
: Aaron Gilmore says we’re going to borrow billions more. 
STUART NASH 
: That is right. Aaron Gilmore says we should borrow more and invest in housing. No we on this side of the House think we should invest in the productive economy not in the unproductive economy I tell Mr Gilmore. 
As mentioned the transfer will mean that Westpac New Zealand will increase in size. But the one thing that I think has been reiterated by most speakers is that those who bank with Westpac will not notice any difference. If you have a mortgage with Westpac or if you have a bank account— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No I have not. 
STUART NASH 
: —well if you do Mr Assistant Speaker Robertson—if any New Zealander or any member of Parliament has a bank account with Westpac they will not see any difference whatsoever. This legislation will only protect their interests. I commend this bill to the House. Thank you very much.