Westpac New Zealand Bill

I move, That the Westpac New Zealand Bill be now read a second time. This private bill, promoted by the Westpac Banking Corporation, provides the mechanism to enable Westpac Banking Corporation’s retail business in New Zealand to be vested in a New Zealand incorporated subsidiary—Westpac New Zealand Ltd. Westpac Banking Corporation has operated in New Zealand since 1861, and currently operates in New Zealand as a branch of the Australian parent. The establishment of a subsidiary enables Westpac to comply with the Reserve Bank of New Zealand’s local incorporation policy, introduced in 2003. That policy provides that foreign-owned banks over a certain size are required to establish a New Zealand subsidiary with its own board of directors, members of which are required to comply with New Zealand company law.

I wish to offer particular thanks to members of the Finance and Expenditure Committee, who ensured the timely return of this legislation to the House. Their work on this bill has gone a long way to help Westpac New Zealand Ltd meet its intention to allow the transfer of its assets and liabilities on 1 November 2006.

When I moved the first reading of this bill, I noted that Westpac and the Reserve Bank negotiated for some time over whether it would be necessary for Westpac to establish a subsidiary or whether there was another suitable solution. Ultimately, the Reserve Bank was not satisfied that another suitable solution could be found, so this bill creates a legal framework for the vesting of assets of Westpac Banking Corporation’s New Zealand retail business into a New Zealand company, Westpac New Zealand Ltd. The select committee was advised that the Reserve Bank, Treasury, and the Inland Revenue Department agree that legislating is the best way of transferring the relevant parts of Westpac New Zealand’s business to the new entity. The committee has also been assured that Westpac New Zealand Ltd’s application to be registered as a bank will be assessed against the Reserve Bank’s standard requirements, and that registration will need to occur before the transfer of assets and liabilities facilitated by the bill takes place.

It has needed a very tight and intricate time frame to get all the actions within the correct time sequence, but the public should take comfort that the change in corporate form of the New Zealand branch of Westpac will have no adverse effect on Westpac’s customers, employees, and suppliers of services, or its ability to meet its obligations to Government entities. Four technical amendments were proposed; those have been accepted by the committee and are laid out in the bill.

Once again, I offer my thanks to the committee for its thorough examination of this bill and for the timeliness of it. I ask the House to move this bill through the remaining stages as expeditiously as possible, in order to meet Westpac’s finely balanced time line.

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.

It will not be me who refers to the fact that the Westpac New Zealand Bill is a private bill. It is not common in our Parliament that an MP brings such a bill to the House. I observe that this bill is a big bill in terms of its implications. I will not point out that the member whose name is on the bill is not even here. I will not do that, not at all, not once. I should also point out that the ACT party will be, sadly and unfortunately, opposing this bill and I will set out why.

I was interested to hear my colleague Mr Craig Foss speak on this bill and raise some concerns, and then say he will vote for it anyway because the Reserve Bank and Westpac have given him assurances that everything is OK. The difficulty with that is that the Reserve Bank does not guarantee any bank in New Zealand, and the Government does not guarantee any bank in New Zealand; people are out there on their own as customers. I must say that when I see a bill with Marian Hobbs’ name on it, experience has taught me to look most carefully at what is going on. There is a reason she is no longer a Minister and is able to bring forward a private bill—it is because she was not very good at it. So Marian Hobbs, who—and I do not think this is unparliamentary, given what has gone on here today—has been referred to in the media as “Boo Boo” because of her constant screw-ups while a Minister, now has a bill that affects 1.3 million customers and involves a transaction of $35 billion to $40 billion. Would one put that bill in the charge of someone whose nickname became “Boo Boo”, who never rose above Minister of Broadcasting, and who got fired from that job?

National members are quite happy to vote for the bill because they have had an assurance from the Reserve Bank that everything will be OK. Let us examine this. When people go and put money into a bank, it is no longer their money. All they have is a credit against that bank. If that bank falls over, which would be a terrible thing, they lose their money and the Government ain’t going to bail them out, the Reserve Bank ain’t going to bail them out, and Marian Hobbs is not going to reach into her back pocket and bail them out. No, they lose their money. I am amazed that this House is going along so casually with this. So let us just think what happens. Right now, if you are a Westpac customer, you have a claim against Westpac, which is a large bank across Australia and New Zealand. You know, through the disclosure regime, the assets and liabilities of that bank, and you know it is a large bank.

The ASSISTANT SPEAKER (H V Ross Robertson): The member keeps on bringing in the Speaker.

Why?

The ASSISTANT SPEAKER (H V Ross Robertson): You know that you cannot bring the Speaker into the debate. Please continue.

I would not do that, Mr Assistant Speaker, but I can talk about customers—and that is what I am talking about, Mr Assistant Speaker. I know that you do not bank with Westpac, but I can talk about a person going and putting his or her money into the bank. Right now, customers have a claim against Westpac, including its operations in Australia and New Zealand. But when this bill comes into effect on 1 November, suddenly their claim will be against another legal entity. Is that not true, Mr Foss? It is now a much smaller entity, is it not—it no longer represents the bank in Australia and New Zealand; it represents the bank in New Zealand. So what customers are banking with has changed. The legal entity has fundamentally changed. Customers did not agree to that; Parliament is doing it.

💬 Craig Foss: Yes, but they’re ranked higher.

Oh, well, Mr Foss says they are ranked higher. He actually does not know that, because the next kicker is that that has been done before, in the 1970s. Of course, Parliament then, when it drafted the bill, included in the bill the assets and liabilities that were being transferred across. What do we discover in this bill? There is no description of the assets and liabilities that will be in Westpac New Zealand. I defy anyone to tell me what the assets and liabilities of Westpac New Zealand will be. So that is interesting—we are setting up this legislation, but who will decide that?

💬 Chris Tremain: The Reserve Bank.

Oh, well, that is a worry—Mr Tremain yells out that he thinks it will be the Reserve Bank. I tell him that, no, it is not; it will be the Minister by Order in Council. Is that not correct?

💬 Shane Jones: Yes.

Shane Jones is on to it; at least he kept awake during the hearings. So now we will have Michael Cullen, that economic wizard—it goes from Marian Hobbs, who is the author of this legislation, to Michael Cullen—and we all know to trust him, do we not? Here is the National Party now saying; “Don’t worry, you 1.3 million customers; you can trust Michael Cullen.”—Yeah, right! So for those 1.3 million people, by Order in Council—Mr Jones has confirmed that; a very good chairman he has become, I might add, and that will sink his career—Michael Cullen will decide what the assets and liabilities of Westpac New Zealand are. Well, bloody hell, as they say! So people go to bed one night with their money in Westpac, but they wake up next day and, because of what we are passing here today, in part, it is a new legal entity. The assets and liabilities of that entity have been decided by the Minister of Finance, Michael Cullen, with no parliamentary scrutiny or check.

It might have escaped members’ attention, but there is a dispute on between the New Zealand Government and Westpac, over a small tax bill totalling $750 million, not including penalties. If we put the penalties in, the sum goes to a billion dollars. The question has to be asked: “Oh, I wonder who’s going to end up carrying that?” The Reserve Bank advised us not to worry; it would not be Westpac New Zealand. If we ask why not, the bank says that it would never advise the Minister to sign that. That is how shonky this is. And I say to the House that if we are to agree to something that Marian Hobbs, having been fired as a Minister because she was a booboo, has come up with; if we let her come along here with a private bill for which she cannot even sit in Parliament and listen to the debate on; if we are just to rubber stamp the bill for 1.3 million people—the bill that involves a transaction forced, by compulsion, by this Parliament, with no customers agreeing to this, they do not have a say—if we are going to be doing all that, then we do need to worry.

Let us imagine that everything is kosher and absolutely as the officials have advised. Let us imagine that Craig Foss is right—that we can trust everyone who comes before a committee and says not to worry, because everything will be OK, Michael Cullen will do a great job, and Marian Hobbs knows what she is doing. Let us imagine all that is true, which is hard, then even if all that is true, I still think the process is wrong. I am not criticising Westpac here; I am actually criticising Parliament. I do not believe that we have given this bill proper scrutiny, we have not considered it properly, we are not following a correct process on behalf of 1.3 million customers, and we are not actually considering the gravity of a $35 billion forced transaction. So the ACT party, proudly, on its own, stands opposed to what is a shonky process.

I want to take a brief call on the Westpac New Zealand Bill, firstly, to say that we have in the Reserve Bank of New Zealand a world-class institution. In previous lives before coming to Parliament, I was aware of some of the work the bank does in its prudential supervision role of the New Zealand banking system. It is at the bank’s request and at its initiation, in undertaking that role, that we have this bill before us. The Reserve Bank had formed the view—and, I think, quite correctly—that a mere branch of a major Australian bank operating in New Zealand, with hundreds of thousands of New Zealand customers, and answerable completely as a branch to the board of Westpac based in Australia—if you like, in a foreign jurisdiction—has risks from the point of view of people depositing with that bank in this country.

For example, if the Westpac Banking Corporation holding company, the bank that actually runs the operation in Australia, were to come under stress for whatever reason, which could perhaps be completely unrelated to anything happening in this nation, then, under the four pillars policy of the Australian Government, it is my understanding that Australian depositors in Westpac would be given preference over New Zealand depositors in the New Zealand branch of the Westpac Banking Corporation. That, of course, is a most unsatisfactory situation from the point of view of New Zealand depositors. In fact, it is the Reserve Bank’s role to protect those depositors.

I say, in all honesty, that those of us who were at the Finance and Expenditure Committee when the bill was considered would find the comments of the previous speaker, Rodney Hide, somewhat strange and, I would have to say, greatly misinformed. Why that should be probably has something to do with his preoccupation with dancing during the relevant period.

But the reality is that the Reserve Bank of New Zealand has a thing called a capital adequacy ratio. Therefore, when this new bank is incorporated in this country, the Reserve Bank will ensure that the capital, which is the difference between the assets and the liabilities of the bank, will be sufficient and in line with best banking practice. Exactly the same thing will occur if Westpac New Zealand has to settle a large tax bill. To the extent that doing that drains the local company’s capital—[Interruption]—it will be required, I tell Mr Hide, to inject new capital so that the protection of its New Zealand depositors is continued long on. So really, the pride the ACT party has in its lone voice on this issue is, I think, somewhat misplaced, and perhaps a humbler approach would be more appropriate in the circumstances.

With those few words, I just say that United Future will support the second reading of this bill. We will support it going through all its remaining stages in the House, which I understand will be on the next members’ day, 6 September.

I rise to speak on the Westpac New Zealand Bill. It seems somehow inappropriate to be debating the Westpac New Zealand Bill at the same time as many great State events have taken place in our nation in recent days—the tangi of a Queen; the coronation of a King; the swearing-in of a new Governor-General; and the Westpac New Zealand Bill.

Firstly, I congratulate Anand Satyanand, and his wife, Susan, on taking up the role of the 19th Governor-General of this great nation. I believe that his speech today was reflective of where our nation currently sits, and that his use of Witi Ihimaera’s quote was timely given the passing of our Māori Queen and the outpouring of grief surrounding her tangi. If that quote sets the framework for the new Governor-General’s term, then indeed he will be a man for our time. I wish our new Governor-General and his wife the very best in their new role.

I will be returning to the bill in a minute, Mr Assistant Speaker. I just wish to acknowledge the passing of our Māori Queen before I do that. My sympathies are shared with all New Zealanders over the passing of the Māori Queen, Te Arikinui Dame Te Atairangikaahu. Her funeral marked the occasion of a great humble leader under whose tutelage we saw remarkable steps forward for her people and, at the same time, for all New Zealanders. I take this opportunity to wish the new King Tuheitia Paki a reign marked by achievements for his people and for all New Zealanders. Finally, I mihi him with a proverb I used in my own maiden speech: “Whāia te pae tawhiti kia tata, Whāia te pae tata. Whakamaua kia ū, kia Tī-na!” Reach to the stars for New Zealand. For your people, pull them close and hold them tight.

So in this vein it is somewhat of a let-down that we are debating the passing of the Westpac New Zealand Bill as the first legislation before Parliament following such great events. As with the new Māori King and the new Governor-General, there are very few dissenters—with the exception of the ACT party in this case—and this provides somewhat of a comparison with the Westpac bill, which all sides of the House support, with the exception of ACT. But I guess that is where the comparisons cease.

This bill will enable Westpac New Zealand to sever the apron strings currently binding it to its Australian parent. The bank hopes to achieve that goal in November, provided that this legislation is passed through the House in good time. In that regard the new Governor-General does have some authority and connection in the granting of Royal assent to this bill. However, as Marian Hobbs, who is no longer in the House, pointed out in regard to this legislation, there needs to be an expeditious nature to the bill to get it through by 1 November.

If the legislation is timely, Westpac will incorporate on 1 November, passing all its retail assets and liabilities to a new company registered here in New Zealand. Westpac is currently the only one of the four major banks in this country not locally incorporated. Reserve Bank policy is that systemically important banks should be locally incorporated to wall off the country’s financial system from problems with overseas parent banks—although I take the point made by my colleague Craig Foss, who pointed out very clearly that problems in the Australian market will have a significant impact on the New Zealand market in our banking institutions.

Local incorporation requires the establishment of an entity with its own board. Under the Reserve Bank’s conditions, the New Zealand board must operate solely in the best interests of the locally incorporated bank, even if this is in conflict with the parent bank, and to an extent this caters to Mr Hide’s concerns. It brings an added degree of protection otherwise not available to the bank in its current structure. This is especially the case given that the Reserve Bank can veto the appointment of directors and the chief executive to their locally incorporated bank, once again giving a protection to local consumers and local suppliers that the bank will be in safe hands going forward. In addition, the assets and liabilities of the bank must be transferred at the same time to the New Zealand company. It is important to understand that this includes only the retail arm of the Westpac New Zealand business, and that the wholesale arm will remain in a separate company that will continue to be registered in Australia.

There is no doubt that an Act of Parliament is the best way to implement local incorporation. To do it in any other way, with a transaction of the size we are talking about, would be simply crazy. An Act of Parliament will result in the least disruption to all parties concerned, and there are many in this case. We should remember that this bank is one of New Zealand’s four largest banking organisations and it is a transaction in the vicinity of $35 billion to $40 billion, and that we are talking about 1.3 million customers and over 6,000 staff. We should also remember that the bank’s biggest customer is the Government of this nation. On top of that, the bank deals on a daily basis with thousands of suppliers who will also be connected with this change. The potential for disruption in the New Zealand economy is significant and therefore it is important that this change happens quickly and efficiently. Only an Act of Parliament will allow Westpac’s retail banking operations to be vested within Westpac New Zealand without affecting the conduct and continuity of the bank’s operations.

Firstly, this Act will reduce the impact on customers, with very little or no disruption. Mr Hide points out that customers should have been consulted, and each and every one of them should have had a copy of the bank’s new balance sheet. Well, this is not to belittle customers of the Westpac Banking Corporation, but I suggest that by far the majority of them would not understand the balance sheet and do indeed put their trust in the Reserve Bank of this country and in the Government to ensure that the financial capacity of the new bank is strong and that the prudential ratios are ensured.

The bill will ensure that customers’ accounts and loans, the assets and liabilities, will automatically vest immediately in Westpac New Zealand. It will ensure that customers have the same relationship with the bank. It will also ensure that customers are not required to sign new security documents on the transaction changeover date. In essence, the transfer should be seamless.

Secondly, the bill will also reduce the impact on the employees of the bank, of which there are over 6,000. The relationship between employee and employer is unaffected. There are no new employment contracts that need to be signed to effect the change, and there is no detriment on employees losing their jobs or on the employer being in the position of having to pay out redundancy in this situation and then having to rehire. In this regard the transaction should be seamless. Thirdly, the bill will reduce the impact on suppliers, and in this regard suppliers will not have to re-contract with the bank on the day of the transfer.

Most important, the bill will minimise disruption to the banking system. It allows for the assets and liabilities to be vested immediately into the new entity, therefore allowing a seamless change. It also provides for any proceedings, arbitrations, actions, or claims against the bank to continue. Importantly, it provides that property registers do not need to be changed. One can imagine having to go out there and find every property that has a bank mortgage registered against it and changing it on the property registers around the country. It would be virtually impossible.

The bill will ensure tax neutrality. It is a key thing with an organisation of this magnitude that on GST, the tax payable, neutrality is maximised. As a result of this, compliance with the Reserve Bank’s New Zealand incorporation policy is achieved in the most efficient manner possible for customers, for staff, for the banking system, and for suppliers. So, with the support of both sides of the House, this bill should pass within the necessary time frame to meet the bank’s goals of a transfer on 1 November; failing that, the transfer will be delayed until April 2007.

Finally, this may be one of the first bills for which our new Governor-General, Anand Satyanand, will need to provide Royal assent in order for it to pass. I am sure it will not be his most controversial, but it will be an important Act for this country.

I te tuatahi, me mihi atu ki taku hoa ki a koe, Chris, e tuku poroporoaki ki tō tātou Kuini a Te Atairangikaahu. E mihi atu anō hoki ki tō tātou Kīngi hōu a Tuheitia me tēnā wawata anō hoki, kia tū kotahi ai tātou a ngā rā kei te haere mai. First of all, I thank my colleague Mr Chris Tremain for his gracious farewell to our Queen, for his best wishes to our new King, Tuheitia, and for his hopes that we may move forward together as a nation as a result of the events in the Waikato of last week.

Being mindful of those events, I did a bit of research. I found that King Tawhiao had a Cabinet of some 12 Ministers and raised revenue himself through a variety of means—donations, taxation charges, fees, fines, and, in a big way, the tithing of the salaries of Māori who worked for the Government. The idea that big banks should be locally incorporated is consistent with the well-established history of Māori supporting banks that themselves support local practice.

At the first reading of this bill, I talked of the Maungatautiri Whare Uta, the Māori bank established in the 1880s because local Māori were concerned that they were being cheated by Pākehā bankers and wanted control over their own economic sovereignty. In Taranaki in the 1800s Te Whiti operated a bank that apparently held many thousands of pounds. Early in the 1900s Rua Kēnana established a bank under his council of elders to promote savings and to attract capital. During the 1920s Rātana’s followers also established a bank to advance funds to needy members, to gather contributions, and also to force the Government to recognise its obligation to provide for Māori welfare. If we fast-forward some 60 years to the very first reports admitted to the Waitangi Tribunal, we find a claim by Joe Hawke, and others, to form the Bank of Tāmaki, to be administered by Ngāti Whātua.

When Marian Hobbs referred this bill she made the comment that she did not think that the Finance and Expenditure Committee needed to do the detailed work suggested by the Māori Party or the Greens. But why not? Just because my whanaunga, the chairman of the committee, told the House that consultation meant a fortnight’s advertising, and that giving the bill to Westpac, the Reserve Bank, Treasury, and the Inland Revenue Department was enough, does not mean that the select committee should not look at positive initiatives to assist Māori development. In fact—and I am sure Mr Jones himself would agree—there are likely to be some very good ideas coming out of some of the big Māori agencies, such as the New Zealand Māori Council, the Federation of Māori Authorities, Ngāi Tahu Finance, Te Ohu Kai Moana itself, the Poutama Trust, and even Māori Women’s Development Inc., launched back in the 1980s to provide loans to Māori to help set up and expand existing businesses and to provide financial advice and mentoring services. Interestingly, Māori Women’s Development Inc. grew out of the Hui Taumata of 1984, when it was suggested by Mr Jones’ relation, Rīpeka Evans, that Māori should revolutionise the tax system and channel all taxes back into a Māori development bank. Sir Tīpene O’Regan himself also supported the call for a Māori development bank to enable Māori to better utilise the equity tied up in tribal lands. Even Denese Hēnare spoke in support of a Māori bank to administer finance for housing, land purchase, farming, and business development.

The idea of Māori owning a bank, and controlling local savings and investments, even came up at last year’s Hui Taumata. In fact, this is an idea whose time has come. The Toi - Economic Development Agency, which promotes regional development in the Eastern Bay of Plenty is a good example. This group involves economic leaders such as investment banker Taari Nicholas; Rikirangi Gage, chief executive officer ofTe Rūnanga o Te Whānau a Apanui; Joe Mason, director forNgāti Awa Group Holdings; and others. Since successive Governments have been unwilling to provide the necessary financing for Māori, initiatives such as the Toi - Economic Development Agency are important in laying a path towards self-determination.

We recognise Westpac’s urgency in getting this bill through by 1 November to ensure the vesting of assets and liability to Westpac New Zealand, but our support for this bill is because we absolutely support the principle that the rules of this nation should control the banking system of Aotearoa. That support is also in line with the longstanding call in Māoridom for banking to reflect local economic development. We note, however, that little has changed, really, since 1984 when Koro Wētere suggested that banks and development corporations look seriously at how to assist Māori to foster commercial and banking skills to drive our economic advancement.

There are other areas for improvement before this bill becomes law. Firstly, the haste to get this bill through must not occur at the expense of poor industrial relations. As my friend Sue Bradford mentioned at the first reading, Westpac, the winner of the Roger Award for the worst transnational operating in New Zealand in 2006, has dropped 25 percent of its staff over the past 10 years and has forced the reduced staff to increase their profit output by 110 percent, and net profit by nearly 400 percent. Westpac also has a very poor record with the finance workers union in respect of holiday infringements, working overtime without compensation, high workload, pressure to work through sickness, injury, and pregnancy, poor staff support, and huge performance expectations that are not matched by performance payments.

Secondly, Westpac might wish to review its lending and investment policies and its assistance to Māori to ensure that investment does not lead to failures such as those that have happened in the past as described by Denese Hēnare—failures in terms of poor land utilisation, inactive trusts, underfunded development schemes, poor business planning, and inadequate lending for housing.

Finally, we note the point raised by Mr Rodney Hide, who warned against Westpac customers being forced into a new company without knowing what assets and liabilities would back their investments. Westpac’s record profit of $708 million suggests that it certainly has the money for a simple mail-out to advise companies of the implications of the transfer of assets and liabilities.

The Māori Party will support this bill at the second reading, but we look forward to seeing a huge improvement in Westpac’s employment relations, and an equal improvement in its helping to advance Māori interests for the benefit of the whole nation. Kia ora tātou katoa.

I rise to take a short call in relation to the Westpac New Zealand Bill. I had the pleasure of chairing the Finance and Expenditure Committee that dealt with this bill. Yes, we did form a view that consultation regarding every nook and cranny was not necessary. Yes, we were conscious of the time exigencies related to this bill. We sought and took quality advice from helpful agencies, including the Reserve Bank.

I refer in particular to a point that the honourable member Mr Hide made. Although he made a very good point, I rather fear that the one or three members of the public who might be interested in listening to this debate—which is actually rhetoric in inverse proportions to the content of the bill—may be left with a mistaken assumption. The bill most certainly provides for safeguards in relation to the construction and presentation of a proposal to enable the transfer of assets to take place.

Earlier, Mr Hide reflected his deep anxieties that because the Minister, and not members of this House or some other organ of the House, was dealing with the proposed transfer, there might be a weaker accountability. Part 2 deals with the vesting of designated assets and liabilities, and in clause 6 the Governor-General, on the advice of the Minister, after he or she has received the recommendation from the Reserve Bank of New Zealand, will, or shall, consider and may approve a proposal. That proposal not only specifies the appointed day but also describes the designated assets and liabilities. Along with Mr Gordon Copeland, our committee was left with no doubts about the quality of judgment and the expertise of a prudential nature in the Reserve Bank to provide a high-quality stream of advice to the Minister.

Yes, this is a massive enterprise. Yes, there are many savers and employees, and the sums of money are large, but it is based on an important principle. The principle is that in the event that there was a failure of a systemic nature and it had Australasian dimensions, then those assets and those aspects of Westpac’s business that are domiciled here in Aotearoa New Zealand must not, cannot, and should not be spirited away to solve other problems in the massive network of the Westpac bank.

Of course, that is a subset of a large issue, and the issue is between the Reserve Bank of Australia and the Reserve Bank of New Zealand. Given the development of closer relations in our Australasian interests, how are we to ensure that the very banking system that we rely on to provide the lifeblood of day-to-day business and the smooth functioning of the economy remains under adequate prudential oversight? I followed with considerable interest over the last couple of years whether the role that our own Reserve Bank of New Zealand might occupy in that prudential exercise is to be as an adjunct or subservient to the Reserve Bank of Australia.

In the course of consideration of the bill, the side issue of whether our Reserve Bank of New Zealand would be capable of fulfilling this role was discussed very briefly. We were told that not only would it have the ability to discharge its role in relation to prudential oversight but also that we, and the bank, would not be surrendering an unnecessary level of control to the Reserve Bank of Australia and that there would be more news and developments on that matter. But it is a key point that goes to the nature of our status and the ability for us to rely on political or governmental sovereignty when we make laws to ensure that we are not surrendering far too much to the Reserve Bank of Australia. So for those who are doubting Thomases and are bothered as to whether our Reserve Bank has the ability to fulfil the task, I feel, and said so at the time during the course of the Finance and Expenditure Committee’s considerations and discussions, that those fears are misplaced.

This is a big enterprise. The bank is looking forward to us dealing with it expeditiously. The committee, I feel, dealt with it in a very professional and thorough manner, and like all matters of a technical nature one relies on the quality and the integrity of the advice. That came from other places, yes, but predominantly from the Reserve Bank of New Zealand, and I have not a sliver of doubt about the quality of the advice we received.

The Green Party will be supporting this bill. We think that legislating the incorporation of Westpac is a move in the right direction. Westpac has been the hold-out bank that resisted pressures in that direction through 2004, arguing that it was very unlikely there would be a collapse of the bank, so people did not need to get worried. But as Rodney Hide pointed out, there are no guarantees against a bank failing. The problem is that if the bank had failed, as a purely Australian bank New Zealanders might not have got anything out of it. There were no guarantees that what money there was would not have been paid to Australians before New Zealanders.

We have had a history of failure of financial institutions in New Zealand, including banks. The BNZ in the 1980s was a prime case from the banking system. Of course, systems have been improved since then in terms of the monitoring of banks, and speakers today have referred to some of the ways in which the newly incorporated Westpac bank will be monitored.

I think there is some problem for New Zealand society in the way that all our banks, except for the TSB Bank, have been taken over by foreign banks, particularly Australian banks. It is a large part of our bigger problem of having $80 billion of foreign-owned assets in New Zealand, whereas New Zealanders own only $20 billion in assets overseas. That difference, in terms of dividend transfers, is a major contributor to our huge current account deficit of $14.5 billion. As Hone Harawira just pointed out, the profit of the Westpac bank is $708 million, and a lot of that profit is being sent back to Australia, along with profit from all the other banking institutions that are Australian owned. It is a big problem, as I say, in our current account deficit.

Australian-owned banks, including Westpac, have not always played very fair in New Zealand society. There was, of course, a big battle with the Commerce Commission over currency transaction fees relating to credit cards. It is interesting to note that Westpac was the worst offender in that respect. As of 2004 it had four types of credit card, and the currency conversion rates ranged from 2.95 percent to 3.05 percent, whereas the New Zealand-owned bank, the TSB Bank, had the lowest rate of 1.75 percent. The banks that offended in that way were forced by the Commerce Commission to apologise to their customers. The banks’ argument that the currency conversion fee could be seen just as part of the exchange rate was not accepted. So we are not looking at owners who have New Zealanders’ interests foremost, in that respect.

Another problem for New Zealand society is the way in which the banking system has operated, particularly in the absence of any capital gains tax on housing—not, of course, in terms of one’s own home but in terms of investment housing beyond one’s own home. In respect of that, investment money has really poured in from Australia. I think there has been about $30 billion of foreign-owned money pouring in over the last 2½ years, and that is essentially equivalent to the extra amount that has gone into housing, with the value of housing loans over the last 8 years going from $55 billion to $130 billion. That is a huge burden on this economy, and when we pay our mortgages a lot of that money does disappear back to Australia, and a lot of it does disappear back to Westpac.

So that is a problem we have to bear in mind, and we have to keep a very close scrutiny on those Australian-owned banks. It is good that they will now be locally incorporated and that we will be able to apply proper supervision to them.