Lawyers and Conveyancers Bill

This part renames the New Zealand Law Society’s special fund as the Lawyers and Conveyancers Special Fund. The special fund consists of a proportion of the interest paid by banks on trust accounts. The bill allows banks to retain the remainder of the interest in lieu of fees and charges. Special fund proceeds must be paid to the Legal Services Agency to fund community law centres. This is a change from the current Act, which requires funds to be distributed to community law centres and the New Zealand Law Foundation. In practice, the community law centres’ funding requirements meant that the Law Foundation seldom received any funding from the special fund. The new provisions reflect current practice.

The bill as introduced provided for community law centres to receive 55 percent and banks to receive 45 percent of the interest on trust accounts. The Justice and Electoral Committee’s amendments increase community law centres’ share of the interest to 60 percent, with the banks’ share reducing to 40 percent, in response to submissions made by the Bankers’ Association and community law centres. I know that the select committee again debated this at considerable length. The committee called various parties before it and sought further advice in order to try to find the right solution to what is a balancing act. I commend this part to the Committee.

The Minister in the chair, Lianne Dalziel, has very adequately summarised what Part 9 is all about, and from the National Party’s point of view there is no dispute. The heart of Part 9 is clause 273, which, as the Minister has said, provides that all money standing to the credit of the fund at the appropriate time or times must be paid to the Legal Services Agency for the purpose of funding community law centres. So that really repeats what is already provided for in the Act, with the exception of the Law Foundation matter that the Minister referred to. Nothing is really new; it reflects existing practice.

The CHAIRPERSON (Ann Hartley): The question now is—

I raise a point of order, Madam Chairperson. I seek leave to formally aggregate the questions in Dr Worth’s Supplementary Order Paper 344 to amend clause 264.

The CHAIRPERSON (Ann Hartley): Is there any objection to that course of action? There is not.

Madam Chairperson, I offer my apologies. I am aware that if the voting has begun, then that is the end of the debate, so I seek to pre-empt the commencement of the voting by seeking leave for a call.

The member is seeking leave because he did not realise that the vote had been put. Is there any objection to the member speaking now on Part 9? There is not.

I simply want to draw the attention of the Committee to a proposed amendment in my name to clause 276(5), which relates to the proportion of the interest on the special fund that the banks will retain as payment for their services in administering nominated trust account funds. Members will be aware that for some time the banks have taken a pretty substantial cut of the interest; it has been, up to this time, 50 percent of the interest. I think that many members, when they understand that that is what the bank takes, find that pretty astounding.

The bill as it was introduced originally sought to amend that provision so that the banks would retain 45 percent, and the community law centres would receive 55 percent, of the interest. In the Justice and Electoral Committee we discussed that further because, as the report states, we were still not convinced that that was a reasonable amount for the banks to take. Members may be aware that there was some discussion in the committee as to the appropriate proportion for the banks to retain, and we had submissions from the Coalition of Community Law Centres of Aotearoa and from the banks themselves. The banks put forward a figure that they claimed was the cost of the service that they provided. That figure was disputed by the coalition, and when the select committee invited the banks to substantiate their claim, they simply refused to do so. They refused to provide any information to the select committee, and acted in what I would call a contemptuous manner, actually.

The question of the true cost of the service has never actually been resolved to anyone’s satisfaction, so I am moving to amend the proportion the banks would now retain from 40 percent to 30 percent. The concern about the proportion is that, if we get it wrong, the banks may cease to provide the service. However, it seems to me that the banks would still be retaining a pretty substantial margin in return for the service they provide, and 30 percent of the interest on those funds has to be a pretty good whack, by anyone’s account. I would encourage members to support the amendment to change that proportion to 30 percent, and I hope I have the support of the Committee on that.

The question was put that the amendment set out on Supplementary Order Paper 344 in the name of Dr Richard Worth to the heading of Part 9 be agreed to.