Jones Dail: Questions for Oral Answer — Questions to Ministers 
Jones Dail: Questions for Oral Answer — Questions to Ministers 
[Volume:624;Page:19221] 
1. DAIL JONES (NZ First) 
 to the  
Minister of Finance 
: On whose advice did he decide to establish a Joint Trans-Tasman Council on Banking Supervision and what is the purpose of the council? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 It was on the advice of the Reserve Bank Treasury and the Ministry of Economic Development in a joint report dated 28 January. The council’s terms of reference are to enhance cooperation review trans-Tasman crisis response preparedness advise on policy harmonisation and report on possible legislative changes to ensure the Reserve Bank and the Australian Prudential Regulation Authority can support each other in the performance of their current regulatory responsibilities. 
Dail Jones 
: What does the Minister have to say about the comments made by Professor Edward Kane the James F Cleary Professor in Finance at Boston College who was a professional fellow at the Reserve Bank of New Zealand who recently described the proposed joint regulator as “incompatible” with New Zealand’s current regulatory system and a “dangerous step”; and given that that view is consistent in my understanding with that of the Governor of the Reserve Bank Alan Bollard Treasury and the Ministry of Economic Development as reported in the  
Dominion Post  
on 24 February is not the Minister’s decision a clear example of a dereliction of his duty to protect New Zealand’s national interests? 
Hon Dr MICHAEL CULLEN 
: No. 
Clayton Cosgrove 
: Is the Joint Trans-Tasman Council on Banking Supervision tasked with exploring the establishment of a single trans-Tasman regulator? 
Hon Dr MICHAEL CULLEN 
: That was explicitly excluded from the terms of reference after discussions between myself and Treasurer Costello. 
John Key 
: Does the Minister agree that a regulator with the oversight of an entire banking group’s operation could have a more complete picture and therefore thorough understanding of that group’s combined financial strength; if so does he therefore agree that over time that could provide more security not necessarily less security to New Zealand depositors? 
Hon Dr MICHAEL CULLEN 
: There is something in what the member said but I would qualify that in a number of ways. Firstly I think it is important we recognise that there are circumstances in which a regulator in New Zealand would want to have the capacity to act independently of a regulator in Australia in relation to a systemic issue in New Zealand alone. Secondly there are issues of course around whether the current framework in Australia is best practice in terms of regulation of the banking system—although I think as my colleague the Minister of Justice has already announced there will have to be some moves in New Zealand that will actually take us towards the Australian system in any case for other reasons. 
Dail Jones 
: What will be the situation with regard to New Zealand’s economic sovereignty as a result of the establishment of the Joint Trans-Tasman Council on Banking Supervision and is the Minister certain that we will not be sold down the road to the Australians while we pursue the economic nirvana of this Deputy Prime Minister and Finance Minister to have a single economic market given that this type of regulator could surely be a stepping stone to a single currency and a single reserve bank and a further step towards economic colonisation by Australia and by foreign-owned banks? 
Hon Dr MICHAEL CULLEN 
: I certainly favour the development of a single economic market. It is clear that that would have enormous benefits from New Zealand’s perspective. But the member is jumping any number of hurdles simultaneously and is at serious risk of doing himself some physical damage as a consequence. 
Dail Jones 
: What assurance can the Minister of Finance give the House that he will accept the warning of the Governor of the Reserve Bank that New Zealand does not come under the control of an Australian-dominated system which would have the effect in the event of a banking crisis of Australian creditors being paid out first and New Zealand creditors receiving nothing bearing in mind that the priority would be Australians first and New Zealanders taking whatever remained—if anything? 
Hon Dr MICHAEL CULLEN 
: That is a very helpful question because although the Government has made no commitment to proceeding to a single regulator of either limited or broad powers the Australians have put on the table the extension of depositor preference to New Zealanders in the event of a single regulator developing.