Nash Stuart: Westpac New Zealand Bill — In Committee 
Nash Stuart: Westpac New Zealand Bill — In Committee 
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STUART NASH (Labour) 
: 
 Sorry Mr Chair; I was a couple of seconds late in getting to my feet because I thought the member in the chair might have taken a call to answer some of the questions that my learned colleague had asked. She had asked a number and I think they were probably reasonably important. 
As mentioned this is a bill that everyone in the Committee supports although we got off to a little bit of a false start when the Maori Party thought it did not support the bill then determined it would support it. But that was good; the party saw the light in the end and decided it would support a bill that it had supported all the way through the select committee process. 
Hon Ruth Dyson 
: There’s time yet. 
STUART NASH 
: Exactly. I will talk a little bit about what my colleague Lianne Dalziel was talking about. It may even answer a couple of questions because as a member of the select committee—unlike Ms Dalziel who chairs the Commerce Committee and incredibly well I may add—I can tell members that we made it very very clear that a customer of Westpac will probably not notice any difference whatsoever. In fact when we look at clause 9 entitled “Relationship with customers and customers’ rights and liabilities” we see it talks about “(1) The relationship between Westpac Banking Corporation”—which is of course the parent company—“and a customer in relation to the designated assets and liabilities immediately before the appointed day …” and immediately afterwards. So I do not think that customers of Westpac will notice any sort of difference whatsoever. They will not get a differently coloured card and probably will not receive a letter in the mail because there is probably no reason for that. I must admit that like Lianne Dalziel I am a customer of Westpac myself and I would like to think that it will spend money cutting my headline rate as opposed to sending out a letter to me to tell me something that will probably have no consequence whatsoever for everyday banking. 
I will spend a little bit of time talking about the lack of the impact on customers of this merger. As we have outlined in the preamble and Part 1 this bill is a pretty simple piece of legislation in the sense that customers will notice absolutely no difference whatsoever. Having said that I also say there are 20-odd pages of legalese in there and I think that customers of Westpac bank will probably be asking themselves whether this legislation will impact on them at all. In fact suppliers will probably want to know whether there will be any impact on them—whether they should be sending invoices elsewhere or making calls to some other place etc. But the legislation has been pretty clear on that; as a select committee member I seem to remember that we made sure there would be no impact on the day-to-day business of Westpac New Zealand. Customers will not notice any difference. Clause 9(2) states: “An account between Westpac Banking Corporation and a customer that is comprised within the designated assets and liabilities”—it should say “or liabilities”—“on and from the appointed day”— 
Hon Ruth Dyson 
: Say that last bit again? 
STUART NASH 
: —“on and from the appointed day becomes an account between Westpac New Zealand and that customer and is deemed for all purposes to be a single continuing account.” I suppose it comes back to my point that I do not think any customer will notice any difference whatsoever. 
It is the same if we go to clause 14 “Contracts for supply of goods or services”. The clause states: “A contract that immediately before the appointed day provided for the supply of goods or services to Westpac Banking Corporation”—which is of course the name of the parent company—“(whether or not that contract is vested in Westpac New Zealand) is to be regarded as permitting the on-supply of those goods and services between Westpac Banking Corporation and Westpac New Zealand to the same extent that that on-supply would have been permitted if Westpac Banking Corporation and Westpac New Zealand were a single legal entity.” I think that what we will see throughout this legislation is the very common theme that customers suppliers and employees will notice very little difference whatsoever. 
That brings me to clause 15—and Lianne Dalziel has talked about this to a certain extent—which is about the transfer of employees. Ms Dalziel has asked some questions on rights and obligations— 
Hon Ruth Dyson 
: But they haven’t been answered. 
STUART NASH 
: They have not been answered and I am hoping that the member in the chair Craig Foss will stand up because it is quite an important point. Ms Dalziel made some very good points especially in this day and age when we have record high unemployment and when banks are making record profits. Let us be honest about that. The chief executive of Westpac pulls down a salary of about $5.25 million— 
Darien Fenton 
: How much? 
STUART NASH 
: It is about $5.25 million a year. In fact he collects a tax cut of around $5000 a week I understand but that of course is a debate for another day—probably tomorrow. 
In this bill we have made it very clear to all classes of people who deal with Westpac or who are employed by Westpac that this transfer will be seamless. The one thing that I suppose we have to look at in clause 15 is subclause (5) which states: “The employment of a transferring employee is not new employment for the purposes of the KiwiSaver Act 2006.” Unfortunately there is a little bit of a hook there because apparently tomorrow in the Budget those employees will be worse off but I do not think it would have made any difference whether they were employees of Westpac Banking Corporation or employees of Westpac New Zealand Ltd. They will be worse off no matter whom they are employed by. The cuts to KiwiSaver do not differentiate at all; they will affect just all Kiwis I am afraid. 
I come back to clause 15(1) which states: “A transferring employee ceases to be an employee of Westpac Banking Corporation and becomes an employee of Westpac New Zealand on the appointed day.” There are protections there under clause 15(2) in the sense that “(a) his or her employment contract is to be regarded as not having been broken by any provision of this Act; and (b) the period of his or her service with Westpac Banking Corporation is to be regarded as having been a period of service with Westpac New Zealand.” 
I move to clause 15(3): “A transferring employee’s terms and conditions of employment with Westpac New Zealand on and from the appointed day are identical to the terms and conditions of his or her employment with Westpac Banking Corporation immediately before the appointed day and are capable of variation in the same manner.” I suppose we are saying there that employees will notice no difference. If they do notice a difference and if in fact Westpac New Zealand uses this as a reason to make a change to an employee’s terms of contract then we will want to know about that because the law would have been broken. I am not saying that that will happen but that certainly was not the intention— 
Darien Fenton 
: But they’re not going to have a 90-day trial. 
STUART NASH 
: They will not have a 90-day trial period because they will have been deemed to be— 
Darien Fenton 
: New ones will—new ones will. 
STUART NASH 
: People who are employed by Westpac New Zealand and who are starting any day now will have that 90-day trial period—which is outrageous to tell the truth; it really is. But we are talking here about legislation put in place to protect everyone. We know that employees are most important and that we must protect their rights. 
As the member mentioned this legislation is tax-neutral. We talked about that in the select committee because we had to make sure there was no opportunity for arbitrage. We all know that the big banks are masters of that and I think there were out-of-court settlements between some of the big banks that totalled about $2 billion. We really wanted to make sure that there was no option for arbitrage and that this was not some ruse by Westpac to come up with some way to arbitrage its losses in Australia and profits in New Zealand or vice versa. This bill is simply to increase the liquidity for Westpac. 
The legislation states in clause 23(2): “For the purposes of the Income Tax Act 2007 if Westpac New Zealand incurs an amount of expenditure or loss on or after the appointed day in respect of a designated asset or designated liability Westpac New Zealand is entitled to a deduction for the amount of that expenditure or loss if Westpac Banking Corporation would have been allowed a deduction for that amount …”. Again the common theme is that there will be no difference. Not even the taxman—or taxwoman—will notice any difference whatsoever. We have been pretty clear on that and I think Mr Foss did a reasonably good job of ensuring it. 
One interesting point is found in clause 24 entitled “Use of information and intellectual property”. I will quote the provision if members will give me that indulgence. Subclause (1) states: “Westpac Banking Corporation and Westpac New Zealand may each collect use disclose or send any information if that collection use disclosure or sending would be permitted if Westpac Banking Corporation and Westpac New Zealand were a single legal entity.” I suppose it is saying that that is completely seamless. I was trying to think of some mischief that might occur there but I do not think any could. If a New Zealand company had a branch in New Zealand and a head office in Australia or a head office in New Zealand and a branch in Australia I suppose that if they were acquiring a loan from Westpac Banking Corporation as opposed to Westpac New Zealand they would have to disclose all the financial information anyway and there would be no mischief in terms of the use of information and intellectual property. That is something we needed to be clear about because the last thing we want or anyone wants—and we talked about trade secrets before—is any sort of disadvantage to New Zealand companies. Thank you.