Cosgrove Clayton: Reserve Bank of New Zealand (Covered Bonds) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Cosgrove Clayton: Reserve Bank of New Zealand (Covered Bonds) Amendment Bill — First Reading 
[Sitting date: 22 May 2012. Volume:680;Page:2270. Text is incorporated into the Bound Volume.] 
Hon CLAYTON COSGROVE (Labour) 
: 
 The debate was going quite well I think in a pretty non-partisan way but if you had listened to that previous speaker Dr Nick Smith you would think Labour was opposing the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. No we are actually supporting it. He probably has not caught up with that fact.  
I want to touch on a couple of things that Dr Nick Smith in his own unique way—in a sort of bout of political amnesia—neglected to say. Part of this bill is about oversight—in fact the core of this bill. One of the concerns we have is to ensure that there is appropriate oversight as these bonds are issued and as they go forward. We are in favour of independent Reserve Bank oversight. But I have to say that even when you regulate oversight can fail. I will not digress into the field of dreams that Dr Smith digressed into because this is a narrow bill but I will say this: a prime example where Government oversight failed completely was when this Government extended the retail bank deposit scheme which was— 
Hon Dr Nick Smith 
: It was your mess. 
Hon CLAYTON COSGROVE 
: Before the political version of Jack Nicholson gets on his high horse and blows a fuse yes my Government of which I was a part brought the scheme in. We brought it in on the day the Aussies told us they were bringing it in. If Dr Smith had half the sense that he purports to have he would know—because he just made a case for us to be in synch with Australia—that if we had not brought it in there would have been a flight of capital. But of course with Dr Smith one and one sort of makes one and a half. But the point I make is this. His Government came into power and extended the scheme. OK? I am not arguing the rights and wrongs of that. I simply say this: once the Government extended the scheme it did not monitor it it got gamed— 
Hon Dr Nick Smith 
: I raise a point of order Mr Speaker. 
Hon CLAYTON COSGROVE 
: Oh he does not like it— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! 
Hon Dr Nick Smith 
: The very member who is giving this speech took issue with my speech not being within the scope of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. There is nothing in this bill—and nor was there very little in my speech—about the Crown guarantee. The member is wanting to relitigate a debate about an inquiry in the Finance and Expenditure Committee not the bill. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: There has been quite a wide range and I have allowed that. I keep very close watch on the time that members are speaking and whether or not they are actually speaking on the bill. When the member was speaking I did indicate to him to come back before there was the point of order. I am listening very closely to what the current member is saying. I invite the Hon Clayton Cosgrove to continue. 
Hon CLAYTON COSGROVE 
: Thank you. He does not like it. He has gone a bit troppo I think. The point I was making was this— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I just ask the member to get on with the speech and how about cutting out the— 
Hon CLAYTON COSGROVE 
: The point I was making of course which Dr Smith sort of puts the old cheese in the ears on is about when National extended that scheme. This bill is about monitoring and the illustration I make is that sometimes monitoring fails even when regulated. Dr Smith who was in Cabinet when it extended the scheme went to sleep. It will be interesting actually in future to examine and ask questions around that scheme as to what the Treasurer knew what questions the Treasurer may or may not have asked—but that is for another day. But as a result of those Cabinet Ministers including Mr Smith not monitoring not engaging and asking the tough questions not monitoring that scheme they got gamed to the tune of $100 million of waste that they then had to clean up because people had extended their loans under National’s watch—sorry under its lack of watch. That is an example where monitoring does not—and he shakes his head—work. 
So we will support this bill going to the select committee—and I have only a couple of minutes before the dinner break—but we will be very interested in the regulations and the monitoring framework put in place. I agree with other members who have spoken colleagues from New Zealand First and others—as old “Rumpelstiltskin” toddles off—that of course we would not want to see a hierarchy where institutions as they will be under this bill have a higher situation than mum and dad investors in terms of a payout if something goes wrong. We would not want to then see a liability visited on the Crown which is the taxpayer. That is exactly what happened when these folks these galahs in Government extended the retail deposit scheme and then went to sleep. Financial institutions simply went in anted up borrowed more extended money out as fast as they could knowing there was a Crown guarantee. The thing about a Crown guarantee or any guarantee is that you have an obligation—