Chauvel Charles: Insolvency Amendment Bill — Third Reading 
Chauvel Charles: Insolvency Amendment Bill — Third Reading 
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CHARLES CHAUVEL (Labour) 
: 
 It is a pleasure to follow my friend Katrina Shanks to take a call on the third reading of the Insolvency Amendment Bill. As we have heard the bill will address a small number of concerns that have arisen since the enactment of the principal Act. It will also amend the public register provisions so that creditors can make informed lending decisions by ensuring that a public record of people who have been discharged from the no-asset procedure is available for a period and by providing permanent public records when a person has had multiple insolvency events. 
The House has already heard that Labour has a couple of issues with this bill. The first issue is the proposed length of time that people will be on the public insolvency register. Labour members feel it would be better to deal with this matter separately not in this bill. There has not been proper consultation on it and we view the proposed change as a knee-jerk reaction. The Commerce Committee ably chaired by Lianne Dalziel heard submissions that lengthening the time a no-asset procedure debtor remains on the public register would delete the important distinction between bankruptcy and the no-asset procedure. That procedure was introduced to provide a one-off opportunity for financially distressed people to avoid the stigma of bankruptcy and to rebuild their lives. The Privacy Commissioner’s view with which we agree was that a total of 3 years on the public register in the case of the no-asset procedure would be much more consistent with the overall purposes of the procedure. Lengthening the time really does mean that there will not be the same distinction between the no-asset procedure and bankruptcy as there was before. 
It is the view of members on this side of the House that there has not been sufficient consultation with key stakeholders and this was reinforced by the concerns that were expressed by the Office of the Privacy Commissioner. Veda Advantage recently stated: “The numbers of New Zealanders unable to meet their financial obligations continue to run at high levels as the country weathers the recession. In the month of July 2009 461 New Zealanders applied for either bankruptcy or the no-asset procedure.” I think that shows that there is a need for this type of legislation but the greater need is to do more to provide assistance for people so that they do not get into this sort of position in the first place. It is incredibly sad that 461 people have needed to apply for either procedure. 
The Government’s claims that it is blunting the sharp edges of the recession are not helping. Veda Advantage’s statement shows how tough it is for many New Zealanders right now who are heading towards insolvency because of situations that they have no control over. The problem with the Government’s approach is that there is not any overall plan to prevent these sorts of insolvencies. That would have been a much more useful focus than rushing this sort of legislation through the House and claiming to be doing something. 
Members on this side of the House believe that much more has to be done to prevent insolvency and people applying for bankruptcy and non-asset procedures in the first place. The Government has to concentrate on putting people into jobs and move on from its line by line reviews of Government departments which continue to make more people unemployed in the first place as so ably pointed out time and time again by my colleague Grant Robertson. We have seen hundreds of Telecom service technicians and engineers laid off recently because Telecom has been foolish or craven enough to try to bring in a new contracting arrangement aimed purely at driving down labour costs and skill levels in an environment where those skills will be vital—very shortly—to roll out broadband across the country. Let us hope those skilled people do not simply decamp to Australia in the interim and we do not lose that skill set. 
Redundancies are rife in this country right now. It is estimated that more than a thousand people are being laid off every week with little or no redundancy pay leaving them to struggle to pay mortgages and rents and support their families. This is horrendous when we consider the impact on the lives affected. So in this third reading speech I am very proud to be able to refer to Labour’s associate spokesperson on labour issues Darien Fenton and her campaign to boost support for her redundancy protection bill to give workers a fair and decent level of protection in redundancy circumstances. Her campaign is called A Fair Deal in Hard Times. It has the backing of Labour the Maori Party the Green Party unions and community groups. It aims to drum up additional support in Parliament to get the redundancy protection bill to the select committee. A fair and decent system of redundancy protection is becoming increasingly urgent in this country as more people’s jobs are at risk. The redundancy protection bill is just common decency; it allows these Kiwis a reasonable financial buffer to help them keep their families together while they look for new work opportunities. 
In a similar vein I have a bill in the ballot entitled the Credit Reforms (Responsible Lending) Bill. That bill is designed to provide some real protection to people in distressed situations not the sort of window dressing and cosmetics that we see in the Insolvency Amendment Bill. My bill would do two things. First it would allow for the prescription of a maximum interest rate by the Governor of the Reserve Bank. There is no such power in the country at the moment. I know that you Mr Assistant Speaker Roy are as astounded as I am by that but we would be able to see that power put in place if that legislation was adopted. Second we would see the requirement that there be responsible lending practices put in place by fringe or pay-day lenders who at the moment charge 8 percent per week which when it compounds—for those who do not understand these things—has the effect that people pay between 2000 and 3000 percent per annum to effectively loan sharks. We must regulate that sector. I have written to the ACT Party and National and asked them to give their support to this measure which is the expression of a bit of basic common human decency in a time of economic distress. I do hope there will be positive responses to that plea. 
In closing Labour believes that this bill is generally a good bill. We will support it but we think it would have been better to review the processes that were put in place around the no-asset procedure to ensure that there are no unintended consequences rather than the piecemeal amendment to the time on the register that we see in the legislation. That approach is not supported by the Privacy Commissioner. She is reviewing the time that credit agencies can retain this information and she should be allowed to complete that process. 
Labour would like to see this Government focus on the bigger issues that really matter right now: keeping New Zealanders in jobs preventing redundancies ensuring good redundancy provisions are in place ensuring that there is an environment where people are less likely to become insolvent and ensuring that people are protected from loan sharks when they are financially vulnerable.