Foss Craig: Westpac New Zealand Bill — Second Reading 
Foss Craig: Westpac New Zealand Bill — Second Reading 
[Volume:633;Page:4798] 
CRAIG FOSS (National—Tukituki) 
: 
 The National Party continues to support the Westpac New Zealand Bill through the House. This private bill allows the incorporation of Westpac New Zealand Ltd from the old Westpac Banking Corporation. First of all I thank all the officials who have been involved with the formulation of the bill. I know they have spent many many hours on the bill. I also thank the honourable member Marian Hobbs for bringing the bill to the House and helping us get it through the Finance and Expenditure Committee. I also thank our committee members for their well-considered examination of the bill and for the time they spent on it and the questions they asked of officials. 
When we look at the environment in which the bill is being presented we see that the Reserve Bank of New Zealand Westpac and various other Government agencies all operated with good intent and good faith. Their focus was on a good and fair outcome at the very least for the depositors in Westpac in its current form in New Zealand and in a greater sense the taxpayers of New Zealand who if anything untoward were to happen to Westpac would no doubt be called to help out. 
It cannot go without note that this financial transaction is probably the largest-ever in New Zealand’s history. It is quite possibly the largest transaction affecting more New Zealanders than any other I can think of. About 1.3 million customers of the existing Westpac will be impacted by this change-over. To be fair—and in Westpac’s words I think—the transaction will be almost invisible to those 1.3 million customers. But we need perhaps to consider the information and the awareness that those New Zealanders have of the institution into which they are putting their funds. I think the size of the balance sheet is about $30 billion to $40 billion. That is New Zealand’s largest-ever transaction. Although this is largely an administration bill I am sure some members are noting that the transaction is huge and on 1 November 2006 let us say $35 billion of New Zealand’s assets—deposits mortgages liabilities etc.—will be transferred at the stroke of a pen. That is a quite phenomenal amount and it still surprises me somewhat the lack of media interest and public interest in the bill. Having said that I am aware that some members have tried to raise this issue and perhaps we will hear more from them later. 
Overall the Westpac New Zealand Bill is a win to the Reserve Bank of New Zealand to the depositors in Westpac and to the New Zealand taxpayers. It is a small win perhaps because most of the other Australian-owned banks are already of this form. I guess wins for New Zealand institutions—governmental institutions in particular as they contest and even argue and fight regulatory arrangements with our Australian cousins—are few and far between. We have had another one today with the announcement that New Zealand stone fruit will be allowed into Australia but a cynic may argue that stone fruit was traded for importation to New Zealand of Australian honey. Of course being a patriotic Hawke’s Bay member of Parliament I note that New Zealand apples are still not yet going into Australia. 
The Reserve Bank has spent an awful lot of time and resources on formulating this bill and getting it through the various hoops and perhaps that is why the bank may have taken its eye off some other matters. I will come back to that in a moment. Why is this bill necessary? Bank failure in Australia or some systemic failure over there could have—will have—a resounding impact on New Zealand. That is not healthy for New Zealand. But I think we have to note that regardless of what this bill does—and yes it securitises New Zealanders’ assets within New Zealand—quite frankly if there were to be a large bank failure in Australia then the financial system of New Zealand would also probably be in a pretty poor state. I again argue that the risk of an Australian problem no longer having an impact on New Zealand does not hold much water in a practical sense. I certainly hope that will never happen or need to be tested. 
I note that the select committee had constant solid assurances from officials of Westpac in its various forms that there would be no restructuring that there had been no arbitrage possibilities and that there has been no exploitation of New Zealand tax law regulatory law Reserve Bank prudential requirements etc.; they were simply agreeing to do the right thing in the eyes of the Reserve Bank. I am sure they will hold to those words. The Reserve Bank also assured us that the prudential requirements of the new balance sheet of the new entity—Westpac New Zealand Limited—has and will pass all its prudential requirements asset ratios capital asset ratios etc. Again at first cut that looks good and solid for New Zealand. We are also assured that Inland Revenue Department officials were quite comfortable and were convinced that this was a tax-neutral transaction and that there were no fiscal risks surrounding the transaction. Again the outcome was in fact the best outcome that could be envisaged for New Zealand. 
Concern was expressed over the line in the sand of 1 November 2006. Officials came back to the committee and gave various assurances that that date was not quite as risky as I had earlier thought particularly when I first read the bill. But I still reserve an opinion there because in this current form we do not know where banks bank officers their servers their back office and so on—all contributing and helping to make this happen on 1 November—will be based. They could be in Melbourne in Sydney or in New Delhi—we do not know. New Zealand law of course cannot extend that far but I always look for any risk and try to manage it out of the transaction. I certainly hope nothing untoward happens on 1 November so all speed to everyone involved. 
I noted earlier that the Reserve Bank has spent a lot of time resource staff-number hours and outside consultation on this bill. Perhaps that is why the eyes of bank officials might have gone off the inflationary ball. The economy is under threat. The historic consumer price index is now running at 4 percent. The consumer price index is projected to stay at 4 percent or higher for the next 18 months. 
The Reserve Bank certainly needs to pay somewhat more attention to what is happening in our economy as a result of the actions of the Minister of Finance. In the current environment growth is running at only 1 percent. State sector wages are absolutely exploding at the cost of private sector wages. No one will see any productivity gain for New Zealand in that and productivity gains are the only way out of the current demise of the New Zealand economy. The Reserve Bank has not adjusted monetary policy to counter the actions of a flippant Minister of Finance—the over-taxation the inflationary spend-up the waste and the unproductive use of taxpayers’ funds. A prime example is the pledge card we have been hearing so much about today. 
Finally National welcomes this bill and supports its passage through the House. I am concerned though about the new Westpac New Zealand’s ability to retain its staff given the higher incomes available in Australia and the proposed capital gains tax and the effects that will have on their remuneration. I certainly hope the new officials do not join the 640-odd other New Zealanders going to Australia every week and apply for jobs at Westpac New Zealand’s head office in Australia.