Street Maryan: Insurance (Prudential Supervision) Bill — In Committee Third Reading 
Street Maryan: Insurance (Prudential Supervision) Bill — In Committee Third Reading 
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Hon MARYAN STREET (Labour) 
: 
 Yes I will bear that ruling in mind. However I think it is also appropriate in third reading speeches to be permitted a little bit of rebuttal. There was a good deal of misrepresentation in the previous speech by Craig Foss that should not go unanswered.  
There was misrepresentation of the Labour Party’s position on the inflation target under the Reserve Bank and that needs to be dismissed. Labour has never said that the inflation target should go wider. We know that inflation can have a devastating effect on people’s standard of living especially on Kiwi householders with fixed incomes and people who struggle to have anything left over at the end of the week.  
To return directly to the Insurance (Prudential Supervision) Bill it is fine as far as it goes. That is what we have said and that is what the previous Labour speaker said very eloquently. This measure is designed to improve prudential controls over the insurance sector and provide fairness transparency and security over the supervision scheme for the benefit of policyholders. But it cannot go unsaid that this bill represents a lost opportunity. 
We are in extraordinary economic times. We have seen the collapse of economic orthodoxy. We have seen the collapse of financial institutions. We have seen the punishment of innocent people who entrusted their savings to banks financial houses and economic structures on which they should have been able to rely. The financial crisis that we find ourselves in as part of the global community is not the construction of the Labour Party or the former Labour Government. It is not our construction. It is an international phenomenon. However the unfortunate thing is that the New Zealand currency bobs about on the ocean of international trading in a way that disadvantages our exporters. In order to assist the economy to recover we need to assist exporters. 
One way to assist would be to alter monetary policy and the kinds of prudential structures that exist in the economic system. Taking one measure this bill when others could have been employed is a lost opportunity. It represents timidity—in fact I said earlier that it was cringing timidity—on the part of this Government. It has not been bold enough to deal with some of the big issues in order to restore faith in economic and financial structures. 
All that this bill addresses is the insurance sector. It is a reasonably good bill that is improved by the addition of the 10-page Supplementary Order Paper which clearly indicates that the Minister of Finance realised that not everything was right in the first draft of the bill. We support the Supplementary Order Paper—we support that. But why take baby steps towards addressing and correcting financial supervision when giant steps are required? Quantum leaps are required not just step changes—in this case a baby step change—if we are going to provide our exporters who are far and away the money earners in this economy with some stability in order for them to trade profitably. It is good that we have security transparency and fairness in a supervision scheme for the insurance sector and for the policyholders within that sector. Of course anything that protects and buffers policyholders—ordinary New Zealanders and New Zealand businesses—from the vicissitudes of the fluctuating financial situation in the world at the moment is good and worth supporting. But it is essential to note that this baby step will not fix the things that need fixing. 
This bill will not—and it could have—address the core issues at the heart of the financial and economic malaise that encompasses the world at the moment. The heavy trade in the New Zealand dollar comes at the price of our exporters. It makes our dollar volatile. It makes it very difficult for exporters with very low margins—like most of our commodity producers—to anticipate and roll with the punches in their trading functions. That makes exporting a risky business. It will take more than this bill to fix that. 
This is one measure of many that is appropriately being put into the hands of the Reserve Bank as an independent arbiter to monitor and supervise. On this side of the House we believe that the Reserve Bank needs clearer legislative authority to allow it to use prudential powers to support wider-ranging monetary policy—a different mix within our monetary policy settings. We would address the Reserve Bank’s powers and we would welcome the inclusion of these supervisory functions in its powers but we would look at other powers that the Reserve Bank ought to have because it is hamstrung by the limitations of the tools it has at its disposal. Of course we want inflation controlled. Of course we want stability of prices. But we also need additional measures to fix the kinds of problems that New Zealand experiences to take pressure off interest rates to make our dollar a less attractive trading currency than it currently is and to allow our exporters to flourish. Labour would make those changes. We believe that we should make them. We believe that this bill is heading in the right direction but it is not the step change that the Prime Minister talks about. 
Not only is the step change in this bill insufficient but it represents a lost opportunity. We have lost an opportunity to do something bold something that would truly make a difference to the economic direction of this country something that would support our exporters enable our interest rates to arrive at levels that are manageable and increase capital flows to exporters. The provision of prudential supervision over the insurance sector is good and we will support it but— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the honourable member but her time has expired.