Smith DamienDAMIEN SMITH (ACT): Public trust in the banking sector is essential for the running and functioning of the New Zealand economy. Savings aren't safe under the bed but while potentially this is a nice backstop to a financial economy which sets New Zealand in line with the OECD there are some other principles we should discuss around the bill and I hope they will be taken into consideration in the select committee.We're giving the Reserve Bank of New Zealand a significant suite of regulations and powers an expansion of these powers as the lender of last resort. One can argue that protection is already in place by several instruments. One is high capital ratios set for the banks which places the risk to protect the deposit takers with the banks and not at the feet of Government or a specialised fund. Open Bank Resolution processes are the second element that now also help protect depositor insurance—and with this piece of legislation this looks like we're putting ambulances at the top middle and bottom of the cliff which does not make sense because the higher level of risk of a financial institution failing is when it doesn't meet its capital ratios requirement which the Financial Markets Authority and the Reserve Bank should understand pretty fast and pretty quickly.Finally a depositor as member Willis said can't actually chase around for higher interest rates with $99000 per institution. Also it encourages potential non-bank lenders to take on risky projects or leverage their balance sheet. No one knows how the levies will be set except banks who have preferred terms for what the taxpayer is up for. ACT feels that the Government should slow this bill down; listen further to institutions. We've seen with the Credit Contracts and Consumer Finance Act (CCCFA) what can happen if we don't get the devil right in the detail. ACT believes this is the last thing New Zealand needs now and that existing protections are in place and we should protect the citizen using those macro tools.Timely payments is not clear. In the UK as an example if you have a situation where your bank has had a run on it there's a guarantee to pay in seven days or more and it's adjusted for inflation. One of the things about bank runs like Northern Rock or several of the bank runs in the United States is people just run to take all their money out. It's a panic and there's no guarantee with this system in place that it's any better than adequate capital ratios and encouraging the major banks to participate fully with supporting that balance sheet even if they're Australian banks. And effectively why you have a bank run is somewhere along inside the business—and all our banks are vertically integrated—their mortgage book blows out and they reach into the depositors' money to actually take that and subsidise that. That is one of the reasons why these financial institutions fail.In ACT we also believe that for taxpayers it would clearly be a wish to see tight defined constraints around the ability of Government to commit public funds in a financial crisis which no doubt will lead us back to this place for appropriation from Parliament. Confidence in the financial system and its stability already exists. What's the big question to rush this? Why do we need to not go through the detail? It will actually take after Royal assent two years to make this workable in the marketplace. So there are a lot of things to be thought through and even though the bill has 250 pages of slammed-together concepts it doesn't actually deal with those three levels of bank protection that the Reserve Bank should have highlighted in its documentation.So to enact a single regulatory framework for deposit takers there will be disadvantages to credit unions. There will be disadvantages to big banks. But I think it's worth listening to big banks on this occasion to avoid the CCCFA scenario.Timeliness of payments is a vital thing once people lose confidence in the financial system. So the seven days that resulted from the mitigation of the Northern Rock situation in the United Kingdom was one where the people were standing in the streets for seven days. They wanted all their money out not just what the deposit was at the time. So we hopefully will never see that situation in New Zealand. We need to consider that making commercial banks stick to the adequacy ratios is a more powerful tool than what we've got on the table here today.So ACT would like to see this through the next stage of the select committee. We won't be supporting the bill at this stage but we will give it a tight consideration and we'd like those points to be considered by the Reserve Bank Treasury and the Minister of Finance. Thank you Mr Speaker.