Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill

Thank you, Madam Chair, for allowing me to take a call on this bill. Look, any bill that starts with the word “Friendly” must have me involved. So even though I’m not a member of the infamous, world-famous, globally sophisticated Finance and Expenditure Committee, they’ve got me in because I’m the Parliament’s most friendly parliamentarian. That’s all I needed to be here. It said “Friendly”—I’m there.

Can I just thank Mr Stuart Smith. This is obviously your life’s work, a lifetime achievement. If nothing else gets achieved, your passion, your world, will be achieved by adopting this. Look, well done, because it can take a long time, and it has, but there you are.

I was somewhat disturbed when there was some unfriendliness by the ACT leader, who spoke and started talking about unfriendly things. It started well when there were terms like “collective”, and, I thought, it sounds even better when you say “collective bargaining”. But we’ve got him to “collective”, at least—that’s a positive. He then mentioned the word “free”, and I thought, “Jeepers, something’s happened over recess.”, but none the less it was the same old. And no, Supplementary Order Paper (SOP) 40—no, no, and no. And thanks to the hard-working member for Christchurch Central, who’s got a quote, has come back with the proof, and said, “Look, it’s not as bad as what’s being promoted.” It’s typical of free enterprise to start saying, “We’re trying to make things easier. We’re trying to make things better.”, but it was just going to end in clutter, confusion, and horror, and go against the whole impetus of this, which is—as the MP next to me, Dr Deborah Russell, says—about mutuality, which is actually the cornerstone of what’s being proposed.

I’m really happy that this clarifies the legal status to that of an incorporated society. That’s what the submissions, as a quick flick through told me—that they needed to have that because they were wanting to be modernised and brought into this century to be able to operate effectively.

I was lucky enough, like many of you who took the time, to visit fire stations over the past month for International Firefighters’ Day. During that time, I visited four fire stations. It’s always a pleasure seeing the—well, I was going to say “Fire Service”, but it’s now Fire and Emergency New Zealand (FENZ). But the thing I did get to talk about was the Firefighters Credit Union at the central fire station here in Wellington, which, I found by reading somewhere, was born out of a night shift meeting there.

I had a long chat with many long-serving members who actually took me through. They said, “Look, what’s going on at Parliament?” “Heaps”, I said. Then we were able to bring this up. I said, “Look, I have seen your name—I do sit on the Governance and Administration Committee, where the Department of Internal Affairs, the Fire Service Commission, and FENZ report in to. But I have seen your credit union mentioned on another bill, and what do you guys think?” They were pretty supportive, and the great thing is that they tell you the stories about why. Members here in the Opposition have talked about that: why they got together, the thrift impetus, the ability to save in a trusted mechanism—that they were confident that they could get a return. It may not be much, but they felt safe knowing that their mates collectively were contributing to a scheme, and what’s being proposed would enable that to continue and face the technological and other changes in the century ahead.

So I’m happy that we’re clarifying the legal status. I’m happy that we’ve got the mutuality component cornerstoned or underpinned in this legislation, very happy that we haven’t gone and got all sort of silly around putting SOPs and things like that, and therefore I’m happy to commend this to the committee. Thank you, Madam Chair.

Oh, thank you. It’s a pleasure to be talking on this issue. Having been a member, the Finance and Expenditure Committee is—as the previous speaker, Paul Eagle, noted—an august body that spent a lot of time working through the fine elements of this bill. I think it’s a great opportunity to be here supporting my colleague, the MP for Kaikōura, Mr Stuart Smith, who I think has done an excellent job—excellent job—working through what is quite a technical bill into a piece of legislation that takes the industry from a very obsolete sort of framework into something that is now of a stage where it is flexible, modern, and progressive.

So it is with some alarm that I see Supplementary Order Paper (SOP) 40, tabled by the honourable member from Epsom, and it’s not like it’s just a one-page SOP. This is a substantial Supplementary Order Paper—

💬 David Seymour: Has the member read it?

I have been reading it, and I am staggered that the member who’s putting forward this SOP, who was actually in many of the discussions, has chosen to use this opportunity to present such a comprehensive SOP. I just can’t understand the rationale for the member to be wanting to put up an SOP that absolutely puts a dividing line through what is really a very small industry in terms of the number of operators—as we’ve heard before, 13 credit unions in New Zealand. I cannot understand the rationale for it. I cannot understand why a member from ACT would want to propose such an approach of having a two-stage framework.

Of course, these people represent 190,000 people across New Zealand, have $1.6 billion in assets, and look after good New Zealanders. As the previous speaker noted, it’s not only the fire brigades they look after; it’s a whole range of organisations, playing such an important part in all of our communities across New Zealand. That’s why I just want to say that I absolutely support this.

I think one of the key elements of this bill is in terms of making sure that the first thing is that the incorporation of credit unions could occur. They were locked into this prehistoric sort of framework, and what this has done is modernise that and given it a flexibility which I think is a very good move.

The second thing is—as the speaker Dr Deborah Russell across the way recently spoke about—the issue of mutuality. We spent some time on that, and it’s not an easy topic to understand, but, basically, a credit union has to operate in the best interests of all its members and for its members. That’s what, essentially, mutuality is about. What this does is it ensures—even though we’re putting through the other changes—that the credit union must still operate on those purposes, or those bases. I think retaining that provision is absolutely essential.

Not only that but, given that modernisation, what it also does is it allows credit unions to go and get more sources of capital. There’s a whole clause—clause 9B, which inserts sections 58A to 58E into the principal Act. What it does is it creates more opportunity, and makes it easier for credit unions to go and raise additional funds to meet their minimum capital requirements. As we all know, these entities are under the control of the Reserve Bank, and it’s important that they meet their prudential controls and also make sure that they run an operation that’s financially viable.

In terms of the area of operations, I think there is a slight widening of scope. One of the critical things we heard about was this inability for a credit union to lend directly to a member’s business or operation or non-incorporated entity, partnership, and all that’s been opened up, provided that member has greater than a 25 percent share. I think that creates a more modern vehicle to make sure that these things are much more relevant today. Also, with the accessing of other financial services like ATMs and all that sort of stuff using up-to-date platforms, this creates a vehicle for those 190,000 people, and hopefully more, to be able to continue to get finance from reputable institutions across New Zealand.

I feel I have a little bit to respond to. One in particular—if you don’t mind me saying, Madam Chair—is that Standing Order 302(1) says the committee of the whole House is here to “consider whether the bill properly incorporates the principles or objects of the bill as read a second time by the House.” I can’t help but comment that we’ve had a number of contributions—one particularly friendly one which failed to do that entirely but nevertheless managed to fill the five minutes. I think we could get a lot more done here if we stuck to some of these Standing Orders put down by our forebears.

CHAIRPERSON (Poto Williams): I do need to remind the member that relevancy is within my purview and not the member’s.

Absolutely, and we can each have a view on that. I’m just putting forward mine, but, ultimately, I respect your judgment, Madam Chair.

I want to also just reply to some of the speeches that I’ve heard. Dr Duncan Webb: I think his most substantial contribution was a dispute on what the legal costs might be, based on a quote provided from a law firm that he used to work for. Now, I’ll put aside the obvious conflict of interest and just say to people listening or watching at home that we’ve all had a quote from our lawyer that later turned out to be a bit of lowball when we got the final bill. I would put a lot more store in the credit unions’ estimates of the costs that will be imposed upon them if they’re forced to incorporate than in the quote from a member’s former law firm.

I’ll also just respond to what Deborah Russell, the Labour member that spoke immediately after him, had to say. She’s correct that the intention behind this amendment is not about mutuality, and other members have commented that that complaint has been resolved somewhat. It is about the requirement to incorporate. It is about freedom and choice.

I go back to Duncan Webb and just make a couple of comments. One day the member will learn, as he becomes more experienced, that politics not actually about winning arguments; it’s about winning hearts, minds, and votes. And you can be as snarky as the member would like, but, unfortunately, it doesn’t play well at home. He might like to consider that he himself is actually quite susceptible to personal attacks and throwing around insults, but it won’t get him far politically, and that’s why he’s going to be saved from some right now. But, nevertheless, he needs to start arguing on the substance. The fact that remains, and that nobody has challenged on the floor of this committee tonight, is that this amendment, if advanced, would save many credit unions—including some of those that represent the majority of New Zealanders who subscribe to credit unions—tens of thousands of dollars.

And I’ll take that opportunity to give people some help with understanding the ethos of the ACT Party, because they seem to believe it was strange that ACT would put forward an amendment that made a piece of legislation longer. Well, we don’t necessarily measure regulatory impost by the length of the legislation. What we measure legislation by is actually the impost that it puts on New Zealanders, and, even though this amendment would lengthen the bill—and, earlier, Andrew Bayly certainly pointed out that it is quite a long amendment, and I explained why that was in my earlier speech—what it would do is it would reduce the costs imposed by this Parliament on institutions in this country. That is what is consistent with ACT’s principles, but it’s also something that all members of this House should strive to do—to reduce the negative impacts that we impose on those people that we’re making laws for.

So I just appeal to the committee again. Some people may have gone off a bit half-cocked, but once they consider the wisdom of allowing those credit unions who do not wish to incorporate to have a track to not do so, to save them a large amount of money in the process—it may not be large to some members, but it’s large to those credit unions who will have to pay it—actually, we can have two tracks for credit unions in New Zealand. There’s no law or principle that says there has to be one type of credit union specifically. I think this amendment would be a useful addition to the bill, and I hope that members will consider it in due course.

Thank you, Madam Chair. I thank all of the contributors to this debate. It has been a very enjoyable and rewarding piece of legislation to work on, and the select committee stage was very collegial, as has already been mentioned. But I want to turn to Supplementary Order Paper (SOP) 40 in the name of David Seymour. I won’t go there in terms of what ACT policy is and ACT Party principles; I will stick to the SOP.

In terms of the cost, which has been referenced by several people and particularly Mr Seymour, I have had some quotes, not from Lane Neave but from other legal firms, and I’m assured that the costs that Lane Neave have come up with are pretty much the costs that were quoted back to me, as well. However, what I want to point out is I don’t want to spend other people’s money for them unnecessarily, but I would like to point out that this bill will actually lower credit unions’ costs in the long run because of the unnecessary need for trustees. So it will be a much more efficient process for them, and that will quite quickly save them more than that money, and so I don’t accept the member’s point.

I would also like to point out that other pieces of legislation—and all pieces of legislation that have come in in that sector—had a one-off cost when they were implemented, and particularly the Anti-Money Laundering and Countering Financing of Terrorism Act, the Financial Markets Conduct Act, and the Non-bank Deposit Takers Act all had far higher one-off costs on the introduction of those pieces of legislation. This is much smaller than that, but I do accept the point that we should not impose costs on people and sectors unnecessarily—and this one shouldn’t.

I think having a 26-page SOP dumped on the committee at this point without an opportunity for really close analysis of that SOP is really fraught with danger. I would like to point out that proposed new Part 3A has many cross-references that won’t work, and so that’s an example of something that’s not going to work in the bill. Provisions in new Part 3A conflict with provisions in Part 3, so if this whole piece of—

💬 David Seymour: Well, that’s the whole point.

No, it’s not the point, in fact. The legislation wouldn’t work. So if the point of the SOP is to make the law unworkable, then it would get a pass mark with probably an A+, but, unfortunately, that’s not the point here.

So I think the SOP may well be well intentioned to placate some credit unions that are unhappy with change, but change happens all over sectors and around New Zealand, and people do have to change with it because the world has changed. Under the provisions in the SOP, it’s not clear how these credit unions would ever be able to incorporate in the future, nor is it clear how they would be able to amalgamate with other credit unions. So those credit unions would be damned to a small cul-de-sac, in a legal sense, and it would be the end of them in the not too distant future. So thank you, Madam Chair.

The answer is very simple: they could shut down and reincorporate, unless the member Stuart Smith is saying that under the legislation he proposes there could never be a new credit union. The logic there is fairly simple.

I note that the member in charge said that proposed new Part 3A in my Supplementary Order Paper 40 conflicts with section 3 of the principal Act. Well, members, that’s the whole point. It’s supposed to change the bill and make it better. Yes, there are conflicts. I challenged him—and he heard me—to name one such conflict, given that the point of the committee stage is to debate whether the bill returned from the Finance and Expenditure Committee actually is consistent with the principles and objects agreed in the second reading, and he couldn’t name one. So I put it to the committee that actually this amendment does achieve its objectives and there is nobody here who could say why it won’t.

I just also—I know it’s treasonous to give advice to your enemies in war, even when the war is only a committee stage. But several members said, “Why on earth are you, David, putting this Supplementary Order Paper up in the committee stage when you could have done it in the select committee?” Well, I hate to tell members, but our forebears who put together the Standing Orders decided to have a committee of the whole House stage precisely so that members could put amendments to bills that had not been available during the select committee, or that a select committee had not agreed to but the whole House might nevertheless agree to.

If members making that argument want to argue that we should dispense with the whole committee of the whole House stage of our legislative process, then I guess they can go to the Standing Orders Committee and have their go at having the committee of the whole House abolished. Madam Chair, that would be terrible—you would be out of a job. So I just put it to members that there is nothing wrong and nothing illegitimate with putting an amendment up at the committee of the whole House stage. That is the whole reason for it.

When challenged with reading the amendment and working out why they can’t support it, I’ve sat here all afternoon and I still haven’t had a member who can come up with a specific. The best arguments that they seem to be able to make is that they would not like to impose excessive costs on New Zealanders but they’re going to do it anyway. In fact, that’s the generous version. The member in charge is aware that it’s wrong to impose excessive costs. He just thinks it’s OK to do it this time, and the members on the Government side of the House, unsurprisingly, have little concern about the costs they impose on New Zealand business and society whatsoever.

So here I am. I appeal to the committee of the whole House one more time. If you would like to make better law, if you would like to promote freedom and choice, if you would like to give—

💬 Dr Deborah Russell: Text “David” to 3333.

—protection and self-determination to those people—and Deborah Russell says people should text “David” to 3333. And I just say to anyone living at home that that is a good idea. Thank you for that interjection, Deborah Russell, which legitimised me mentioning that in the Chamber.

But I put the more serious appeal to people that, actually, I’m here today with this amendment that would improve the legislative framework for the credit union sector, and I hope that members will give more consideration than has been evident so far when they come to cast their votes on this amendment. Thank you, Madam Chair.

I move, That the question be now put.

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 40 in the name of David Seymour to replace clause 4(3) and to insert new clause 42A be agreed to.

A party vote is called for. The Clerk will conduct a party vote. [Interruption] It will be done in silence. [Interruption] Order! Votes will be conducted in silence.