Parker David: Westpac New Zealand Bill — In Committee 
Parker David: Westpac New Zealand Bill — In Committee 
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Hon DAVID PARKER (Labour) 
: 
 I am pleased to take a call on the Westpac New Zealand Bill. As earlier speakers have noted it is not a Government bill; it is a private bill brought on behalf of Westpac New Zealand in order to make changes to the assets that fall within that corporate entity rather than the prior corporate entity so that they are available effectively to creditors of the New Zealand Westpac bank in the event that something goes wrong. For example if there were losses on its loan book it would have a greater pool of assets to which depositors would be able to have recourse in order to be repaid the deposits they had lent to the bank. 
Of course this has arisen in part because the Reserve Bank back in 2003 noted that New Zealand was too exposed to risk as a consequence of our major banks being in part incorporated in Australia so their business and their deposit-taking might be via a New Zealand entity but the asset holding that lay behind the bank was not open to recourse from those depositors because those assets were held by a parent company in Australia rather than by the New Zealand subsidiary. The Reserve Bank went about changing that and since that time it has caused the New Zealand branches of Australian banks to be incorporated in their own right and to have substantial assets transferred into them. This is the latest example of that in that it transfers additional assets from the Westpac parent company into the New Zealand company. These are principally assets and liabilities that arise from the institutional banking business that will now be vested in Westpac New Zealand. 
There are a number of aspects to ensuring stability of financial markets and having properly capitalised banks is one important part of that. That is what this bill addresses. Of course of similar importance to the strength of financial markets in my view is the level of savings that one has in our country. Our country would then have sufficient levels of deposits available to banks or other financial intermediaries to lend to commercial enterprises coming from New Zealand sources. 
This bill does nothing to fix that and I think it is interesting that this bill is being considered against the background of the Budget that will be read tomorrow. That Budget has already been signalled by the Government as amongst other things restoring the default rate of contributions for KiwiSaver back up to 4 percent. It is interesting because we are now over 2½ years into the term of this Government—it is nearing the end of its term—and the centrepiece of its Budget this year is reversing its reversal of KiwiSaver. I think that is quite interesting is it not? In prior years National dropped the default contribution rate into KiwiSaver from 4 percent to 2 percent and it is now a year or two later reversing that—with some hooks obviously. It is reversing that by increasing the default rate from 2 percent to 4 percent. The centrepiece of National’s Budget is the reversal of its reversal. 
Amy Adams 
: Westpac bill. 
Hon DAVID PARKER 
: Amy Adams does not want to talk about this but it impacts on the security of financial markets. It is very relevant to the security of financial markets because if we do not have sufficient home-grown deposits to banks we are more reliant on overseas lines of credit and we are more likely to agree to extending the multiples that banks like Westpac can lend to make up for the deficit in New Zealand - based deposits born of New Zealand - based savings. Amy Adams might not want to talk about the fact that the centrepiece of this year’s Budget is likely to be the reversal of National’s prior reversal but I certainly think it is relevant. 
The Westpac New Zealand Bill is good in so far as it goes. It improves the security of New Zealand depositors in their deposits in Westpac by making sure that more of Westpac’s parents’ assets are in the New Zealand - based company— 
Craig Foss 
: Westpac New Zealand. 
Hon DAVID PARKER 
: —Westpac New Zealand. That is a good thing but it does nothing for other parts of the financial markets that are important. Notably one is the strength of our savings.