Woolerton R Doug: Reserve Bank of New Zealand Amendment Bill (No 3) — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Woolerton R Doug: Reserve Bank of New Zealand Amendment Bill (No 3) — Second Reading In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18219. Text is incorporated into the Bound Volume.] 
R DOUG WOOLERTON (NZ First) 
: 
 Before I follow on from where Mr Foss left off I would like to say in recognition of Mr Foss that he is an ex-banker with a level of financial literacy far above the norm. I will not speak for any other levels of literacy that the man has but certainly his financial literacy is far above the norm. The Reserve Bank of New Zealand Amendment Bill (No 3) is designed to attend to problems encountered by people with a normal standard of financial literacy and it is for people who just want to be assured that their money will be looked after. So part of this bill is to enhance the transparency of what goes on and to ensure as Mr Foss has been talking about that some money is put aside if everything goes wrong. 
We talk of deposit takers having a risk management programme and they should tell people in broad terms what they intend to invest in. Mr Foss has covered that. Other parts of the bill deal with governance and it tries to attend to the sort of thing we have seen recently where finance companies have ostensibly been out there to take deposits from the public and to on-lend them to business people developers and the like. 
We are finding now—and I am sure many people are startled to find this—that in many cases the people who own and run these companies are the very same people who are borrowing and in fact they are developers who have set up a finance company to get money off the public to finance themselves in some of their very risky ventures. In many cases there are not the capital ratios that Mr Foss speaks of and the people who miss out are the innocent members of the public who think when they put their money in that they are investing for their retirement that they are helping business in New Zealand and that they have some backing from financial institutions and some regulations that will ensure the return of their capital plus a return of interest for the risk they have taken. Very few of them look seriously at the risk and in particular at the categories of risk that are so familiar to people like Mr Foss and to the people who live in his world—or the one he used to inhabit. 
I am not saying that with any sense of nastiness. I have a high regard for Mr Foss in his previous occupation. But people are searching for a guide when they are investing. This bill goes some way towards that. We would all like to see it go further but as Mr Tremain was talking about—or maybe it was Mr Foss in his earlier speech—it is a question of balancing the entrepreneurial activity that we require in a free and open economy and ensuring that there is enough regulation to encourage people to put money into a financial institution in order to encourage the growth and the entrepreneurial activity to take place. Unless both sides of that equation are satisfied we will be starved for capital. In fact that is what is happening worldwide at the present time—the depositors have taken flight.