Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill

I move, That the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill be now read a third time.

It is a great day for me and for the credit union and friendly societies sector to have a much needed upgrade to outdated and inadequate legislation. This has not been for the want of trying. This particular bill has had several lives but never quite got in front of the Parliament. It’s here today, and I hope, with great anticipation, that it passes through the third reading today. It has had unanimous support to date.

I would like to thank all of the submitters to this bill and the Finance and Expenditure Committee for the hard work that they did. The submitters, they weren’t unanimous in their support, unlike the Parliament has been to date, but their concerns were allayed in an amendment that we put to the bill, which underlined a belts and braces—bulletproof, if you like—amendment to ensure that mutuality would not be impinged by this bill. I thank the select committee for the collaborative and cooperative way that they worked to ensure that we could get that amendment in place.

I also would like to single out Michael Webb, who’s in the gallery, who has been a fantastic resource for technical information. This is a very technical bill, and it is, actually, amending a very technical Act. I have had a great journey learning a lot about the sector, but I’d like to acknowledge Michael Webb for the contribution he made, so I thank him.

So this sector has been operating for 60 years and touches nearly one in 20 Kiwis, servicing their financial needs, and it’s a significant contribution to the New Zealand economy. The bill will allow additional growth for this sector, which has been constrained by the legislation. The scale and efficiency gains will enable them to deliver the services to their members at a time when competition in this sector is most needed.

I can point to provincial New Zealand, where small communities are in a position where, often, the trading banks are consolidating into large communities, and they are left without any face-to-face banking service. Often, what they’re only left with is an automated teller machine (ATM), and, when a person needs to go for a face-to-face meeting, they have to travel some distance. This is an opportunity for credit unions to get out there and to service those communities, and that will be greatly appreciated.

The credit union sector and mutual buildings sector have assets of $2 billion—so it’s not an insignificant industry at all—and they operate in 68 branches from Whangarei to Invercargill, and I anticipate those branch numbers will increase as a result of this legislation.

As I said, it’s antiquated and outdated legislation, although this sector services 190,000 members. Despite the legislation, the sector has shown that it is quite nimble and able to work, even with the fettered legislation and rules around the sector. They are offering transactional banking, internet and mobile banking, EFTPOS and MasterCard and debit cards, and a nationwide ATM network, and it’s all underpinned by a tier one core banking system, and that is also with a sophisticated anti - money-laundering system. It also has an ATM switch that also connects a third of New Zealand’s ATMs, so it’s quite significant.

So now, I want to turn to what the bill does. The bill allows credit unions to become bodies corporate, giving them what is known as the capacity and powers of a natural person. That will bring them into line with other mutuals and building societies and cooperative companies, and that will do so without lessening any of the particular characteristics of credit unions, such as the mutuality, common bond of the credit unions, one member one vote—all of those things that we know credit unions for. And it will reduce uncertainty and compliance costs. Sometimes, it has been that credit unions have had to seek often conflicting legal advice to tidy up and to ensure what they are doing is correct, and that has been, really, through no fault of anyone other than that the law has fallen behind what is common practice today.

Making the credit unions bodies corporate means that they will no longer have to have trustees to hold assets or operate. This was an inefficient and bureaucratic requirement which really did fetter the credit unions, and doing away with that need for internal trustees will reduce another layer of administration and cost and make it much simpler to do business.

I can give you an example. Any decision currently that a board makes that involves a credit union’s assets also needs a resolution to go through the trustees. So that has to be prepared by the board. Then, if a trustee is going to be overseas at that time, the credit union is required to put in place a temporary power of attorney so that someone can step in for that person—that trustee. And you can imagine the times when they’re running around town trying to get someone to sign a piece of paper just so that they can operate in a normal and modern way. So this legislation will make sure that that is done away with. It also removes the uncertainties as to who is responsible for the governance of the credit union. So I think that’s a very important point as well.

A further major change will allow credit unions who wish to do so to generate new sources of revenue and to expand their services. And, in particular, it will allow them to lend to small and medium sized enterprises (SMEs) that are related to its members. Those activities have, in fact, been lost to the major trading banks. So we’ve often seen a member of a credit union who has a small to medium sized enterprise who cannot borrow money directly for that SME through a credit union and they have taken all of their banking to a trading bank, and that’s not in the spirit of what we would like to see.

That will also be very important in rural and regional New Zealand and the smaller parts of cities, where, as I said earlier, the trading banks have—“abandoned” might be too strong a term—consolidated into the larger centres. So the day-to-day need to see face-to-face banking for a SME’s business needs is much higher than just making a home loan, although that’s important as well, and that will mean the space available for credit unions to operate successfully within small areas and small towns will be greatly enhanced by the change of this legislation. In fact, I understand one credit union is already looking at entering into this field and is allocating significant resources, in anticipation that we will pass this bill today, so that it can help its members who have small to medium sized enterprises.

This will also streamline the objects and powers of association for credit unions and Co-op Money is a credit union that operates here in New Zealand, and it offers the banking platform that credit unions operate under I alluded to before. That would be far too expensive for an individual credit union to operate on its own, but being able to utilise that with a cooperative association is much needed and has cleared up also that an association can provide services to third parties to the benefit of the member credit unions, and that was in some doubt under the law.

So, in summary, this is a much needed update to the legislation. It will be welcomed by the sector, and in a fast-changing world we’re actually seeing that the credit unions have a much bigger space to occupy than we would have thought a few years ago. This legislation will enable them to provide those services to their members. While I knew very little about the credit union sector before I got involved with this legislation, this is a vital part of our financial system, and it will actually provide some much needed competition into that area. I welcome the bill, and I commend it to the House.

Can I acknowledge Stuart Smith, the member who has just resumed his seat, and congratulate him and put him out of his misery—we will be supporting the bill, as we have—[Interruption] You looked like you were a bit worried, Mr Smith, but I acknowledge and congratulate you for getting this bill to this stage. I think members’ bills can be used in a number of different ways. You can put one in the biscuit tin purely to get a headline, knowing that the bill will fail, but Mr Smith has chosen an issue which might not necessarily be on the top of mind of most New Zealanders but has managed to get the bill to the third reading stage and will be passed. So I acknowledge that and congratulate him for his work. I believe the bill was pulled out of the biscuit tin well over a year ago, but, even though we’ve had a transition of Government, Parliament has seen fit to continue the work put forward by Mr Smith. So I congratulate him for that as well.

I also want to acknowledge some of the work done in and around the select committee table—the Finance and Expenditure Committee. I understand that my colleague Duncan Webb has done quite a lot of work with Mr Smith ironing out some issues that made their way to the select committee during the select committee stage. So this is one of those opportunities where both sides of the House can work together to make sure we get a good outcome. I also acknowledge some of the leadership shown by Co-op Money NZ in promoting the reforms contained in the bill that will be passed today.

Some of the issues that were looked at the select committee include making changes which will make it absolutely clear, as Mr Smith has said, that the core credit union principle of mutuality is being fully retained, and I congratulate the select committee for their work there. The bill will amend the Friendly Societies and Credit Unions Act 1982. As Mr Smith has said, the Act is outdated and inflexible, and, although there have been ad hoc amendments, the Act has not been modernised to reflect the huge changes to the social and business environment that credit unions operate in. Thirty-five years ago, credit unions were managed by enthusiastic volunteers who are committed to core credit union principles, such as mutuality, along with “people helping people” philosophies. They retain those philosophies, but they are now managed much more professionally. In that environment, back in the 1980s, I understand that at its peak there were a little over 300 credit unions in 1983, but we understand there are only 13 today. However, the total assets under the control of the credit unions has been concentrated and quadrupled in real terms over the same period of time to more than $1 billion, so it is not insignificant, and the average credit union today is about 80 times larger than they were in 1983.

The bill does make a number of important changes that place credit unions in a much stronger position to meet the banking services needs of their members and to expand their membership. The bill will provide credit unions with a legal personality, and I know that not all credit unions supported this change. However, as reported in a Law Commission paper in 2011, the law that governs unincorporated entities is unclear and uncertain, and it is essential to remove these uncertainties from the credit unions for the benefit of their members and to protect the interests of third parties who will be able to transact with credit unions in good faith from now on.

In terms of loans to businesses, at present credit unions need to go through a cumbersome process in order for loans to be made to businesses associated with members of the credit union. They first must lend the money to the member, who then on-loans to the business, and the bill will avoid the need for that two-step process in the future. There were some issues, I’ve been told, around the details of those changes. However, Mr Smith and Mr Duncan managed to work through those changes through the select committee, and those changes would not have changed the credit unions’ membership focus.

The bill will also provide welcome clarity about the objects and powers of associations of credit unions, and those were addressed in a High Court decision in late 2017, which has obviously helped clarify this, and the bill will make this much clearer as well. The bill also confirms the general direction of the High Court decision by making it clear that credit unions can provide services to associate members and non-member entities as long as their rules provide for that, and I’m sure that will happen pretty fast as a result of this bill.

The journey is not quite over yet, though. The next step for credit unions will be to apply to their Registrar of Friendly Societies and Credit Unions for incorporation, and, once that transitional period is over, credit unions will be able to move forward with confidence and certainty. The reforms in this bill, as Mr Smith has said, are long overdue. They do provide a strong platform for credit unions to be more effective providers of banking services for years, if not decades, hopefully, to come, and this is particularly so with areas that credit unions have traditionally operated in, such as providing banking services to individuals who are unable to obtain those services from registered banks.

Just before I finish up, the ability for the credit unions to move into this space, as has been already mentioned in this debate, will allow them to, essentially, compete on even terms with the likes of the big banks. Some of this legislation has held them back, and there are opportunities in terms of technology that are available to banks and now, hopefully, credit unions which, hopefully, now they will now be able to take much more advantage of.

I think this will take them from what they used to be back in the 1980s—being community-based organisations, and, obviously, they’re being professionally managed now—to be able to take that further step, having the shackles of the old legislation taken off, and then to be able to be motivated to move into the areas of technology that other banks are moving into as well. I hope that that is a challenge that they take up, to offer to their members who obviously aren’t motivated enough to be a customer of one of the main banks and have done that for reasons that they know themselves.

I know Mr Smith is still in the Chamber, so I’d like to congratulate him once again for the effort he has put in over a long period of time. Again, I acknowledge the work and cooperation he had around the Finance and Expenditure Committee as well, to get to the stage where this bill—

💬 Andrew Bayly: Three more minutes.

I’m waiting for your dulcet tones at some stage, Mr Bayly, but it won’t be as good as Mr Smith’s, I can tell you that. So on that note—because Mr Bayly probably wants me to be quiet—I say that we look forward to this bill passing through the House.

Thank you, Madam Deputy Speaker. I want to congratulate Stuart Smith on working through all the issues to do with this Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill. It has been a bit of a process, quite technical, and he’s worked his way through those.

I want to acknowledge the Hon Kris Faafoi for his comments around the credit unions. As Minister of Commerce and Consumer Affairs, he will be well familiar with the issues that have surrounded the credit unions, and he outlined some of the history of that in his contribution. But today belongs to Stuart Smith, because he is making, through the passage of this bill—and it is very good for Stuart to have the support of the Minister and also the Labour Party on this bill. The impact of the passage of this bill shouldn’t be underestimated, and I want to focus, in particular, on communities and then small business.

From the community perspective, it is the credit unions who will go into a community and provide banking services when the trading banks pull out. That is just a reality of what has been happening in New Zealand. In a prior reading of this bill, I did talk about the small rural town of Palmerston. Their last banking service moved out of town. The local authority held a meeting with local members of the community and acknowledged that business owners in particular, but also elderly people—and, indeed, everybody—needed a banking service to remain in that small town. Credit Union South then stepped in, and there is now a cash machine located in the library of that small rural town. We need to acknowledge that degree of community service that credit unions and friendly societies do bring to the banking scenario in New Zealand.

But, looking forward and to the other tranche of what I wanted to say, the benefit that the enactment of this bill will bring to small and medium sized enterprises (SMEs) is potentially quite significant and potentially—and it will be, I believe—hugely helpful for those small businesses who find themselves, at the end of the month, generally around the 20th, not in a positive cash-flow position. The reason they find that—there are a number of reasons, but this is one of them—is they are waiting for their debtors to pay them so that they can go on and pay their own accounts and their wages bill.

Too many small businesses in particular trade off their credit card, and we all know the expense of trading off your credit card. So it would seem to me that the enactment of this bill and the focus of the credit unions and friendly societies will support SMEs, and, in particular, small businesses, who are not always well resourced—start-up businesses, family businesses, small tradie businesses; you know, the garage or the sole electrician who is not well resourced and has to come and go through cash negative and positive and resort to expensive credit. Well, if the credit unions and friendly societies make funding available to those small businesses, then bring it on, I say. I also say congratulations to them for having their focus on their initial reason for being, which is to support their members.

There are a number of other provisions in this bill which have been raised by the member in charge—the Minister over the other side of the House—and, no doubt, many other members, but I just wanted to reinforce the point that the enactment of this bill is going to have a significant effect on banking and the support of small business in New Zealand. I congratulate Stuart Smith, and I commend this bill to the House at its third reading.

I am very pleased to stand up and speak in favour of the further and final progression of the bill in the House. In a former life, I was a trade union organiser and negotiator for the finance sector union FinSec, and a part of my role was negotiating collective agreements across that sector, including with credit unions. While I was in that role, I grew in my appreciation for the role and the value that credit unions play in many of our communities. They have an incredibly interesting history, and they form quite a unique part of the financial services sector in New Zealand.

There are around about 194,000 New Zealanders who are members of credit unions, and I think, in a day and age in which, increasingly, in sectors like the financial services sector, the big players are seen to dominate and have significant market share, it’s incredibly important that we do actually provide our citizens and consumers out there with some different providers who might meet different needs. In the case of credit unions, the significant value that I saw in them is that they often provided unique and tailored services to communities who otherwise wouldn’t have access to financial services.

Some of this goes back to the history of credit unions, which were formed on the basis of what is called a common bond, and that’s something I’ll talk about a little bit more later, where they were initially formed either through the common bond of people who lived in a particular geographic area or people who had a particular common bond, perhaps through working in a particular workplace. So, for example, we have credit unions such as the New Zealand Police Credit Union, the New Zealand Firefighters Credit Union, or Steelsands Credit Union, which services workers in the steel sands and broader steel industry. So that’s a common bond, and so workers are able to pool their resources and access financial services through these credit unions.

Over the last 20 to 25 years or so, as we’ve seen some of the larger financial institutions retrench from some of our communities, sometimes the only financial services provider who’s actually stuck around and provided those services to people—to workers and to their communities—has been the credit union. I’ve been particularly critical in select committees and in this House of some of our larger financial institutions for walking away from providing direct branch services in some of our lower socio-economic communities. I think that is an abrogation of the social compact that those large organisations should hold. Very often, it’s the credit unions who have continued to provide those services, and I take my hat off to them for that. What the bill advances is a future for credit unions in which they can be more efficient and more effective and continue to not just exist but, hopefully, grow in terms of the range of services that they offer.

I do want to commend the member who’s brought this bill to the House, Stuart Smith, and all the other people who have shepherded it along the way. The Finance and Expenditure Committee, of which I’m a part, was unanimous in its support for this bill, and a range of members worked with Mr Smith to make sure that we got a bill that was in really good shape and that can continue to enjoy broad support. I want to acknowledge my colleague Dr Duncan Webb, who at select committee, in respect of a particular issue that was raised in submissions around the question of mutuality, did some work with Mr Smith to ensure that we’re meeting some of those concerns in respect of the bill.

The bill makes a number of quite important changes. One is to reform the current internal trustee structure, which is quite a sort of cumbersome, old-fashioned structure that credit unions are currently required to have if they want to hold property or to conduct business. Instead, what we’re replacing that with is a relatively simple, straightforward, and modern incorporation structure. This is going to make things much, much simpler for the operation of credit unions.

The other significant change I just want to touch on is the ability of credit unions, under this new piece of legislation, to be able to make loans to small to medium sized enterprises. This was really put through to us in a range of the submissions that came before the select committee. We have the situation at the moment where, quite often, people are loyal customers of credit unions, they see the value of a credit union, they or their family have perhaps had a relationship with it for many years, but they want, I don’t know, a $10,000 loan for a small business, a small lawnmowing business or a hairdressing business, or something like that. At the moment, the regime that we have prevents that credit union from directly making that loan to that person’s business, even though that person may in fact be an existing customer of the credit union and they might meet every other criteria that they would otherwise need to meet if they went to another financial institution to get that loan.

You have to have sort of funny work-around options where the loan is made to the individual, who will then loan it on to the small business. What some of the credit unions told us is that this actually resulted in people simply taking all of their business, including their personal business, away from the credit union, because it just didn’t work for them. There doesn’t seem to be any particularly good reason, as long as, of course, credit unions behave in a prudential way—that they do their due diligence—to prevent them from making loans to small to medium sized enterprises.

We were able to sharpen up some of the provisions around this at select committee stage, to make sure that the loans were going to businesses that were small businesses, and these are businesses in which the individual who is a credit union member, I think from memory, has at least a 25 percent stake and they need to employ fewer than 20 employees. So it’s not setting up credit unions to kind of grow overly big and mighty and get into risky situations. Again, it’s dealing with the small end of town, people who are credit union customers—owners, in fact—who want to expand their relationship with that credit union, and I think that’s important.

It wouldn’t be appropriate in this debate for us to not comment on the fact that there are a range of different views in the credit union community. We did have submissions from credit unions who were in favour of this direction very strongly and some credit unions who would have preferred that we stayed with the existing regime, and we have had to balance that carefully in this Parliament and at the select committee. Certainly, the view of the select committee, when we were considering it, was that credit unions do need these changes to remain efficient and to remain viable into the future. There were some comments about the costs that may be imposed on credit unions as a result of these changes. There probably will be some costs, but at no point were substantial costs substantiated in the evidence that was put before us.

I do need to comment that at the committee stage of this debate, there was Supplementary Order Paper 40 put up by David Seymour in the committee of the whole House, which would have proposed that we, effectively, have two different regimes—that we allow some credit unions, who wish to, to remain with the current regulatory regime and others to shift on to the new regulatory regime. This was something that was actually raised at select committee, that was thought about, and that was soundly rejected. And really, if you think about it, it’s completely absurd. This is a relatively small sector in New Zealand—they are not big organisations—and it simply makes no sense to add the complexity of overlapping and different regulatory regimes. Would we, for example, even when dealing with large organisations like the major trading banks, think that it was wise to have two separate regulatory regimes to govern them, depending on the preferences of the particular banks? It simply doesn’t make any sense in terms of good lawmaking, and, quite rightly, this House at committee stage rejected that approach.

This is a good bill. It makes some very real changes, some valuable changes, to quite an important little—but valued—sector of our economy and of our financial services landscape. I want to commend everyone who has participated and worked on this bill, including the members that I have mentioned in this speech; the officials, who gave very good advice to Mr Smith and the select committee along the way; and all of those people in the broader credit union community, including the leaders of credit unions, the staff of credit unions, who I had the privilege of representing in those union days, and all of those customers who have kept faith with the credit union movement over many, many years.

This is a really positive bill, and I think that most of us in this House are very happy to see it proceed to this stage in debate today and to be very close to being made law. I commend it to the House. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker. It’s a pleasure to rise on behalf of New Zealand First to continue this contribution in the third reading of this friendly societies legislation. Can I carry on where the previous speaker, Michael Wood, left off and say what a pleasure it is to be at this stage of the legislation, to have arrived here and to be able to, as a Parliament, come to universal agreement and be able to pass this legislation in the House.

What I’d like to do is put that in context, because it is worthy of reminding the House and the people of New Zealand just what it is that our friendly societies and the likes of credit unions have been trying to achieve for years and what they’ve been trying to do under legislation that is—I think it was 1982 that the last piece of legislation was written in this area. So what they have been trying to achieve and what they’ve been able to deliver is a personalised service—a customised service. For me, what struck me in my conversations with the submitters and, actually, with members out in public engagement was the nature of the engagement—so this is actually members working for and with members. That’s quite a significant mentality, and it speaks to the nature of the operation of these endeavours.

What I’d like to add to that is to reinforce some of the contributions from earlier speakers about the nature of that provision in a kind of geographical sense. So when we talk about the provision of service by members for members, what we saw was that personalised service, and what we see in New Zealand is credit unions being incredibly successful in the smaller towns and provinces of our country because, essentially, it is people working for and with people. So that need has very much been a strong need over the decades, and continues to be so. I just wanted to take this opportunity in the House to commend those people, to commend those friendly societies, for the work that they have done and to remind the House and those listening that this affects nearly 200,000 direct customers of these credit unions, and to, essentially, celebrate that fact. So, as I said, it’s great to be able to speak in support of this.

Now, as I said, this is 35- or 36-year-old legislation, and the businesses have been struggling to operate in what has become antiquated legislation, so for quite a while, actually, the membership—those representing the friendly societies—have tried to engage with politicians on both sides of the House. So, in that, I think what we saw when it finally made it to select committee—and it’s controversial, the way it made it there, but this is not the time to bring that up. It got there, and we’re here now, and that’s worthy of celebration. I think what we saw in select committee, in the membership of the Finance and Expenditure Committee—of which I was privileged to be a part in the last term and continue to be so now—was this unanimous drive to see good outcomes for the societies. So we agreed, in principle, that the evolution of the legislation was necessary, and the question was how do we get there.

Initially, this legislation came before the House, or tried to come before the House, in an omnibus piece of legislation which was supposed to be non-contentious. Then we found out that some of the membership did have issues with the legislation. So I recollect, in my first contribution to the House in the first reading, that we made a commitment to those who had dissenting views that the select committee would hear their voices. Indeed, the select committee took on board very much and very strongly the words of those submitters who disagreed, I have to say, in principle with what was being done with the legislation, but I think I would have no debate here because, clearly, we’re all in support. We have found a way forward in this legislation, and, again, that is something to be celebrated.

What I haven’t touched on and would like to point out is that in pushing—well, not “pushing”; in supporting this legislation through the House, we’re empowering these credit unions to operate with good, modern technology. That was kind of their original drive. They wanted to offer facilities and services that the previous legislation made incredibly difficult. So, for New Zealand First in particular, in Opposition and now in Government, I think that’s something to be celebrated, where we have New Zealand firms and New Zealand money being empowered to work for New Zealand people. It’s good, old-fashioned competition in the banking industry and something to be celebrated, and I wish them all the best in their endeavours to be good competitors for our banks.

As the previous speaker noted, they’re not trying to be direct competitors, and they are constrained in the way that they can lend money, but what we do need to acknowledge is that one of those restrictions was that a member of a credit union would go in and talk to the manager there and say, “I’d like to borrow some money for my plumbing service. I’d like to buy a new van”—for example—“and I need to take a loan out”—

💬 Andrew Bayly: Harley—Harley.

Stop interrupting my flow, Mr Bayly. They want to take out a loan on some capital investment for their small business.

💬 Andrew Bayly: Take it over from him, Erica.

Be quiet. What the credit unions were having to do was create workarounds so that they actually—because they couldn’t lend to the business entity itself. They had to lend to the individual, and it made it very difficult and, in fact, created kind of obscure tax liabilities as often as not for both the credit union and the business operation.

So what we see now is an ability for that direct lending and an ability for the credit unions to loan directly to small businesses, and, as noted, the services are predominantly offered in the smaller communities and in our provinces. So this is a great outcome for these credit unions who want to be able to offer more to their customers.

The other thing I wanted to touch on—because, as mentioned, there were some contentious issues—was the issue of mutuality. It was incredibly important to submitters, and, in fact, what I celebrated in select committee was hearing the submissions—whether I agreed with them or not, what I celebrated was the passion behind the submissions. In all cases, the people who came to speak to select committee were passionate about what role they had in terms of the business and the way they provided services to their customers.

Now, what we have done—what the select committee has done and what this House does through this legislation—is make it very clear in the legislation that this continues to be an endeavour under mutuality and will continue to be so, and we believe it makes it very clear to those who are passionate about that aspect of their business that they can and must operate in that way going forward.

So, look, those were the big issues. It is a celebration. I’m going to speak longer now—thanks, Mr Bayly. It is a celebration. I would like to take this time to celebrate the good work of the select committee. We came in with a positive frame of mind. We came in with a thinking that we needed to help this industry modernise, and I genuinely think that we worked together incredibly well on both sides of the committee to work on those solutions.

I just wanted to finish by acknowledging the sponsor of the bill, Mr Stuart Smith. He worked with—

💬 Chris Bishop: He did the whole 10 minutes—very impressive. He did the full 10.

—an earnest passion to make sure that this—did it feel like 10 minutes?—and I congratulate him on it. Thank you.

Thank you, and it’s a pleasure to be talking at the third reading of this important bill, the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill. Of course, after that last speech, I thought we needed to move on to some new areas of discussion. But, before I do that, I just want to acknowledge the sponsor of this bill, Stuart Smith. He is a dynamic local MP. He is one of the best MPs I’ve seen in this place.

💬 Rt Hon David Carter: The member could learn something from him!

Yes, I could. I could learn something from him. He represents the people of Kaikōura in a very good fashion—very conscientious. And, of course, he is an expert in financial matters, and that’s why I think it’s most appropriate that he was promoting this bill, which, I’ve got to say, was at times slightly testy, and we had a whole range of submitters. It showed to me that this was a dynamic industry where we don’t just have everyone aligned and trying to be self-serving when seeking a change to this piece of legislation. We have real tension across the industry. Most of them wanted many of the changes that we put in place, and some didn’t. And I think that’s a hallmark of a dynamic industry as well.

And, of course, what this is about, this important bill, which we’re going to talk about and, hopefully, pass today, is something that brings New Zealand into the modern age. And we’ve just heard that it’s a very old Act, and what this does is allow New Zealand credit unions and friendly societies to operate in a much more effective and, I’ve got to say, I think, a commercial manner.

And, of course, I think that most people forget how big the credit union / friendly society industry is. I was fascinated to see that there are 235 million members overseas, in 109 countries, with 68,000 credit unions. In New Zealand, we have roughly 200,000 members, and we’ve got about $2 billion worth of assets—financial products—that they’re holding on behalf of their members. And I think, from the perspective of what we’re trying to achieve, the 1982 Act was very inefficient. The wording was out of date. And what this has done is bring us up into the 21st century.

I think one of the most difficult things was the whole issue around how credit unions operated, the number of members in place—and one of the changes we did make was to reduce from seven to two the number of members required. And I think the other major point is about making sure the credit unions can operate and effectively sit alongside banks and, in some cases, compete with banks. And these are all good aspects, and I think one of the underlying structural changes we made was to enable credit unions to become bodies corporate. And, of course, Mr Smith talked about this in his summary at the beginning of this debate. Basically, what that means is that credit unions have the power of a natural person, which means it’s much easier to be able to operate and pursue what they’re going to do.

In essence, what the bill does is remove unnecessary operating and compliance costs—very important if you’re going to compete with banking and offer financial services; promote greater efficiency, innovation, and accountability; bring credit unions into alignment with other financial institutions; and maintain the element of mutuality, which I know we’ve talked about before. But, as we all know, mutuality is about having these entities that are focused on providing services for their members and only for the purposes of their members.

💬 Dr Duncan Webb: Haven’t I heard this speech before?

So you cannot see third parties coming; it’s all about working for their members. And that is the concept of mutuality, which I know Mr Duncan Webb understands well.

To achieve these aims, the measures in the bill simplify the statutory objectives of the association to cover the conduct of activities and provide for the incorporation of credit unions and enable credit unions to also provide financing directly to their members. And one of the issues, we all know, with credit unions under the current Act is that they cannot lend money to their members’ businesses. So, in effect, we had this convoluted process where it’d have to go to a member and be a trust and then it’d be on lent to the member’s business, which wasn’t really practicable, and what this bill does is deal with that and permit that as an operation.

So I think this is a great bill. I want to acknowledge Mr Stuart Smith. I also want to acknowledge all the submitters—I think they added to the robustness of that—and also the advisers, and I’m looking forward to seeing this pass into legislation.

Thank you very much, Madam Assistant Speaker. To all of the New Zealanders that are out there right now watching us, they probably think that this is the ideal Parliament. We’re both sides of the House, we both agree, we’re both putting our best into the select committee process, and both agreeing with the piece of legislation going forward. And that’s exactly what the case is right here.

I’m happy to be standing here—the third reading now for the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill. This here is a triumph for the member, as has so aptly been talked about this afternoon. Thank you, Stuart Smith, my colleague, for putting this through. It’s also a triumph for our select committee, the Finance and Expenditure Committee. I also want to acknowledge the work of Duncan Webb, one of my colleagues, who did a pretty stunning job in terms of carrying the load on this one with his detailed analysis of the bill in his contribution into that too.

But this is also a triumph for democracy. This is how it works, right? We actually listen to our communities, they put forward suggestions, we come up with a piece of legislation, we invite submissions, we go through the select committee process, and we get to this point where we’re able to put forward a pretty solid piece of legislation as a contribution into the law books. So it’s a great piece of legislation. This Government supports the bill. The Opposition supports the bill. This is something that when the—

💬 Barbara Kuriger: It is an Opposition bill.

—the submissions taking—what was that?

💬 Barbara Kuriger: It was an Opposition bill.

An Opposition—

💬 Hon Member: It’s a member’s bill.

It is a member’s bill. And this is a bill that was well needed. The call from a lot of our submitters when they came and presented to the committee was that it was in need of modernisation. Those people that work in the friendly societies and the credit unions out there across the country were very keen and very supportive for us as a select committee to be hearing their concerns, and that we did. We sat there through many submissions. We had 20 written submissions, 24 that actually presented; 13 of them made oral submissions and most of the submitters actually supported the bill. The majority of the credit unions that submitted also supported the bill. So it was pretty good.

I just want to take this opportunity to talk about Supplementary Order Paper 40 that was submitted in the name of one of my colleagues, David Seymour. This was something that he put forward because he thought that it was needed. He was wanting to amend the bill to allow unincorporated credit unions to operate. He thought that that was the right way to go. He claimed that the cost of incorporation was going to be a crippling factor to some credit unions. Well, during the select committee process we actually canvassed some of the other members who actually disagreed with his point of view too. So his amendments were not agreed to. He was outvoted—just like his dancing career was earlier this week, but I digress.

ASSISTANT SPEAKER (Poto Williams): That’s a little uncalled for.

Apologies, Madam Assistant Speaker.

Let’s drill down into some of the nuts and bolts of this particular piece of legislation. This bill is going to allow friendly societies to offer securities to their members which would allow them to raise additional funds to meet their minimum capital requirements. This bill is also going to put in provision for the incorporation of credit unions. It’s going to create requirements for credit unions to retain their mutuality. And I can’t say this enough. This was something that a lot of our submitters were very passionate about; making sure that credit unions retain their mutuality, it was very important to them, for a lot of these organisations. That’s where the whole credit union movement started. It was based on this idea of mutuality, and they were very keen to ensure that any future incarnation of the legislation retained that mutuality.

Also the bill is making sure that we have the ability for High Court powers to be able to do their thing if there was any organisation that was acting contrary to the Act or its rules. One of the biggest parts, which I was most excited about too, was the credit unions were submitting saying that they really wanted to make loans to enterprises related to their members. They made the point that it was happening anyway; they were just finding a way to kind of circumvent the process. But this actually makes it nice and clear. It creates a process whereby credit unions are indeed able to make loans to enterprises related to members. And that is actually a triumph for the small and medium businesses out there that are linked into credit unions, that sometimes find it a bit hard to raise the kind of capital that it takes to be able to operate your small business, especially when you’re just starting out. So the ability for credit unions to be able to do that is huge, needless to say. And it also allows credit unions the ability to provide services to non-members as well.

As I say, my colleague Stuart Smith from the other side of the House has put this forward as a bill that is going to modernise the friendly societies and credit union sector. There are 194,000 people spread out across Aotearoa that belong to either credit unions or building societies. So they will be all very happy, I’m sure, to hear about the progress of this bill through the House—the fact that we as a committee actually opened our ears, we listened to the submissions, and we stand here united as a House, actually, putting this piece of legislation forward. I have no problems in supporting this bill.

Kia ora, Madam Assistant Speaker. Ngā mihi nui ki a koutou, kia ora. I rise to support this legislation. When you look at the last time New Zealand had a fundamental look at our friendly societies and credit unions legislation, it was all the way back in the past, in 1982. I mean, Muldoon was stalking this House. His wage and price freeze was stalking the country. The All Whites were at the World Cup finals in Spain. And I just quickly checked what New Zealanders were listening to back then, and the top single back then was “Beautiful Woman” by Toots & The Maytals. I’ve never heard of them before but they must have been good. We saw David Bowie up there, and Dexys Midnight Runners. Prince Tui Teka was sixth, and the world and New Zealand has changed since 1982.

I commend the member Stuart Smith for moving to modernise our friendly societies and credit unions legislation, because, as the member has pointed out, credit unions, up to this point, as we pass this legislation, are unable to incorporate, to lend to small or medium sized enterprises. Currently, loans have to be passed on to a business through a member. They couldn’t incorporate. They had to have internal trustees to hold property and conduct business. This wasn’t in line with the wider financial sector. And, in fact, for those 194,000 credit union members that we know we have in New Zealand, they weren’t operating on a level playing field.

So the Green Party supported this bill through all the stages. It’s in our policy to support legislation such as this. We note it was improved in the select committee process, and I acknowledge those who submitted and those who participated. Unfortunately, I wasn’t fortunate enough to be on the select committee for that process, but I know there was that huge discussion of mutually, which has been canvased in this debate and in previous ones. But you’ve just got to stop and think what a different country we would have if more companies and entities operated on the process of mutuality instead of competition red in tooth and claw, as many of our corporate entities do.

So I want to once again congratulate the member. It’s a good spirit of a member’s bill introduced to this House. A reasonable, common-sense proposal to fix what I think many members would think is an oddity—just that the laws hadn’t caught up to modernise those 82 laws, and it’s now being passed in a unanimous fashion. While we’re doing this, we also need to have a conversation about our wider banking sector, noting the almost $5 billion from profits we saw, basically, sent across the Ditch. While we modernise our financial services legislation, we also need to keep an eye on the wider sector as we modernise this to protect Kiwi markets and to protect Kiwi bank accounts. But, look, we’re very happy to support this very sensible, reasonable, and effective legislation.

I rise to speak on this bill and to tell a story about the people and the organisations it will help. I want to tell a story that started on 5 May 1976, because, on that day, a meeting was held in Oriental Bay, here in Wellington, at the Central Fire Station. The meeting was one of the Brown Watch Night Shift. They had called along guest speaker Mr Peter Hills. And he spoke on credit unions and how they work. At the end of the meeting, by a show of hands, the Brown Watch Bank was formed, here in Wellington. It took initial deposits of $120, and within days the first loan of $100 had been made. The Firefighters Credit Union, which it later went on to become—that Brown Watch Bank—became an institution in this city. They were often seen standing outside the Wellington Pay Office collecting dollars, collecting cash for deposits and loans to their members. Sometimes a fire engine would even be seen outside members’ homes conducting the business of the credit union.

Today, that credit union, started here in Wellington, has grown to become a New Zealand - wide union. In 1981—also the year I was born—it became the New Zealand Firefighters Credit Union. And, today, that union has 2,200 members, $13 million in total assets, and an office in Petone; unfortunately, no longer in Wellington Central, but in the esteemed Hutt South electorate, represented by Chris Bishop. Today, that credit union provides savings, lending, and transactional banking services to firefighters and their families. To quote that union, “the dream in 1976 has become reality and we have an organisation of people helping people that we can be proud of …” saving and borrowing with the people we trust most, ourselves.” And so that is the kind of organisation, members of this House, that this legislation, brought forward by Stuart Smith, will help.

As an organisation, the firefighters union is very much looking forward to working in a more level playing field and simplifying the compliance work which has, at times, distracted them from the work they are there to do, which is to serve their members. It will also allow them, of course, to lend to small and medium enterprises, thereby increasing the benefits of their work. Quite simply, this bill allows credit unions and friendly societies to serve their memberships within a legislative context that better reflects banking services today. So I want to give credit to my colleague, the MP for Kaikōura, for bringing forward this legislation. This is an area of law that is complex, that is difficult, but it is by making these kinds of reforms that this House can allow historic institutions to continue to evolve with the needs of the day. Let us remember that back when the 1982 Act was written there was no internet banking, there were no smartphones, there was no email, and all of those things are now seen as essential to modern banking. So, by allowing credit unions and friendly societies to continue to serve their memberships and evolve to meet these things, we’re allowing them to survive.

I also want to give credit to the Finance and Expenditure Committee, whose collaborative work on this legislation has meant that the problems and issues within it have been able to be ironed out. As previous members have said, it is always a credit to this House when we are able to work together to serve the people we represent. That is possible, of course, when good legislation is brought forward with good intent. When I think of the New Zealand Firefighters Credit Union and its long history of serving its members, and I think of its ability to continue to do that to this day, it is clear to me that this is a worthy bill and something that this Parliament can be pleased to pass into law. Thank you.

Thank you, Madam Assistant Speaker. I’m really happy to be here, because I had to fight my way to get here. When I met with the chief whip last night, I wasn’t on the speaking list. I said, “How can Parliament’s most friendly MP not be talking about any bill that starts with the word ‘Friendly’?” It was a long meeting, long into the night. She said, “Oh, I don’t really know. I wasn’t happy with you last week. We’ll have to see. Do 10 press-ups.”—that was hard. But here I am, through the door. I had to get past the Hon Alfred Ngaro eating fish and chips for lunch, but I’m here. And, as I said last time, I’m not part of this—what is it?—Finance and Expenditure Committee. I’m not a member of that, no, no, no. If there was a “Friendly Committee”, then I would probably be one of a few members on there, and—

💬 Angie Warren-Clark: Hey! I’d be there.

—a couple of colleagues. But here I am today.

We’ve been dancing around thanking Mr Smith, but, look, as I said last time, this is his lifelong journey. He got here in September 2014 and said, “I’m going to sort this out.”

💬 Hon Member: He can retire now.

Yeah. If he doesn’t run in a few years’ time, his life’s work is done. When I looked back at some of the notes, I thought, “He was so conscientious back then.” He actually said that, under the existing Friendly Societies and Credit Unions Act of 1982, credit unions faced too much regulatory oversight and they were limited in what they could do. That’s what a good electorate MP does. He also said that credit unions were unable to incorporate, they must have internal trustees to hold property and conduct business, and this was not in line with other financial institutions.

This is no ordinary bill, and I am really happy to say that despite a little distraction—we did have an attempted derailment, and that’s relevant—from an Auckland MP by the name of David Seymour, who introduced a really unfriendly Supplementary Order Paper (SOP). He tried to undermine it. It was a distraction, as the member for Mt Roskill here said. But, luckily, Dr Duncan Webb came out and said, “I’ve got a quote.” That really said it all. There is nothing like a bit of evidence, even though it was from his own former legal company, but never mind. We have the evidence.

💬 Anahila Kanongata’a-Suisuiki: He’s friendly now.

Friendly evidence that said, actually, this is the proof that we need to say, “No, no, no.” to what he was proposing. The great thing here—and there are a couple of happy moments. One is this clarifies the legal status of credit unions and friendly societies to that of an incorporated society. The submissions reflected that. We’ve heard in the House today how times have changed, we need to modernise, and that is all part of why that needs to be done.

The previous speaker, Nicola Willis, spoke about the New Zealand Firefighters Credit Union, and I mentioned, last time I was in the House, a visit that I took there. She was absolutely right, you know—that’s a fine institution and entity that has that mutuality, that has a membership based on people who know what each other does, a common work system, and a mechanism to ensure that their savings and hard work are put into a financial institution or entity that is safe. That’s underpinned in this legislation. That’s the cornerstone of what’s being proposed here. So there’s no change there, and I think that one of the things that most upset me last time was not only this unfriendly SOP but the intent that that would do to derail that.

This is a glorious afternoon for the member for Kaikōura. This defines his time here, his role.

💬 Hon Member: He’s only just beginning.

I think this is his work done. They often say that sometimes if you can get one of these through, well done. So if this is all the member does, then he’s contributed to a better Aotearoa New Zealand. I commend this bill.

Thank you, Madam Assistant Speaker. I was going to follow the previous speaker with a great dissertation about the wonderful member for Kaikōura, but I don’t need to, because the previous speaker did it for me. I think to get a member’s bill as complicated as this one and get it through in the form it’s got through is a great credit to both the member, the people that helped him, and, actually, to the Finance and Expenditure Committee, because member’s bills are not that simple, because you don’t have quite the monolithic bureaucracy behind you that you have with an ordinary normal Government bill, and to get something through as complicated as this I thought was pretty good.

I’m not going to go into detail on the bill—that’s been done—but I did want to talk a bit about why this is such a valuable part of New Zealand society. If you look at the financial institutions today, I think a lot of people find they’re extremely intimidating, and the great thing about New Zealand and if you look at our mutual history in New Zealand, we’ve had some very strong mutuals of all sorts—and, clearly, credit unions and, I guess, friendly societies are types of mutuals. They all have a situation where you’re all equal, effectively, and the boss and the person who puts the money in the bottom end or who turns up for association or for insurance or for assistance with building loans or whatever—they all have the same interests and the same, I guess, mutual aspirations. Consequently, there’s not the pressure on them you get in the normal commercial financial institution model or the normal commercial insurance model.

I think that’s hugely important for people, because I think an awful lot of people, or a large number of people, in New Zealand and in the world, of course, don’t really feel comfortable dealing with financial instruments and all sorts of matters that pertain to the finances of a family. I think that’s where these friendly societies and credit unions and building societies—and mutual insurance companies, for that matter—all have a great role to play in our country because they are organisations that deal with family issues in a much, I guess, more simple or easier manner than many others do.

I think they also give the public a greater deal of confidence in the financial sector, because you feel like you’re a part of an institution that—

ASSISTANT SPEAKER (Poto Williams): Order! I have let the member go a little bit, but could the member please substitute “one” for “you”. That might just help with not bringing me into the debate. Would that be OK?

Oh, well, I’m very sorry, Madam Assistant Speaker. I certainly didn’t intend to give you that advice. Ha, ha!

ASSISTANT SPEAKER (Poto Williams): Thank you.

I’m very sorry. I’ll talk about “one” instead of “you”.

ASSISTANT SPEAKER (Poto Williams): That would be great, thank you.

I think that public confidence in these types of organisations is really very important for people. People’s ability to understand the financial sector and the need for trust in that sector is also very important, and these institutions inevitably give people that sort of confidence, I think.

I also was surprised, really, that almost 20 percent of New Zealanders associate with or have dealings with friendly societies, credit unions, and, as I said, mutual insurance companies and the like. It’s really important that we encourage and enable those institutions to act with all the advantages that any other organisation in the financial sector has.

I think the other point I wanted to make was that every little town in New Zealand has an association with one of these types of organisations, and that’s part of our history. In fact, they go right back to 1842, which is pretty amazing. I think most of the commercial banks in New Zealand arrived here in about 1870, so it’s interesting that they have been here a lot longer than the banking sector as we know it today.

I want to congratulate the member Stuart Smith on his bill, getting it through to the third reading, and, obviously, with the support of the whole House, getting it through the House. I also thought, as I said earlier, the committee of the whole House and the select committee did a great job. I have no problem commending this bill to the House, and I wish all those friendly societies and credit unions all the best as they implement it in the future. Thank you, Madam Assistant Speaker.

Tēnā koe, Madam Assistant Speaker. It is with great pleasure that I stand to speak to this Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill, and I think it’s important that we understand exactly the place that friendly societies sit. In a sense, they’re really a form of social enterprise. They are a community that’s getting together to help each other, and the purpose is set out in the Friendly Societies and Credit Unions Act, which talks about not only mutuality but also thrift, cooperation, and, essentially, the relief of poverty.

I must say, after I last spoke on this bill, one of the members of a credit society—Victor Martick of Westforce Credit Union—took the time to email me because I had the temerity to suggest that they occupied a space which wasn’t of the, kind of, low-interest rate. They were paying slightly higher interest rates and he was very quick to correct me, and I thank him for it. He, in fact, sent me a spreadsheet which showed the place in the market that credit unions occupy, showing, in fact, that on some occasions they may even provide cheaper finance than a trading bank, but certainly considerably cheaper finance than most other non-bank lenders. So I commend him for pointing that out to me and showing, importantly, that these credit unions serve a sector of the community—often low-income, low-asset sectors of the community—that can’t otherwise get reasonably priced finance.

So it’s great to see that this bill of Mr Stuart Smith is enabling these credit unions to move into the modern era and to, in fact—despite what Mr Seymour would have us think—streamline their processes and lower their costs by this regulatory reform, and also to, kind of, meet the demands of modern society, where a lot of people do have small businesses. They may be low income and low asset, but they need finance for small businesses. A courier driver would be a really good example: needs $40,000 to buy his or her van, doesn’t have the asset backing for it, doesn’t want to pay horrendous interest rates. They can now go to the credit union and say, “I’m part of this community, I belong to the credit union, I’ve got a business plan”—which the credit union may well have helped devise—“can I have this $40,000?” Rather than going through some tortuous process of not lending it to an incorporated entity, they can lend it straight to that entity because the credit union member has a controlling interest in it. So those kinds of steps are fantastic and they are modernising, as the title to the bill says.

It’s worth noting that the credit unions and friendly societies have been around for centuries and centuries, and this is just another iteration of them. Of course, the critical thing and the item which caused the most consternation was the incorporation of these credit unions and friendly societies. To my mind, it really is, as night follows day, the right thing to do, because the need to have an incorporated vehicle so that the credit union and its members can be protected from the legal risks and can act as a single entity is really, really quite important. The trustee framework, which currently exists but will be changed when this legislation comes into force, is simply not workable, even from the simple requirements of signing documentation. If the credit union has to enter into a legal arrangement, you have to go around and find the trustees in order for each trustee to sign. That’s not workable. An incorporated framework is much, much more sensible.

It is also important to recognise that tucked away in there are important enforcement mechanisms. So, for example, the High Court can make restraining orders if these credit unions step outside of what they ought properly to do, and I think that is important and it can give some considerable comfort to those objectors who were concerned that the whole essence of what it meant to be a credit union would fly to the wind, that this whole idea of mutuality would go out of the window. Well, if there are concerns there, the members of the credit union or any interested party can approach the court and can say, “Stop these arrangements, stop this activity.”, so that, indeed, the rules—the essence, the mutuality—are adhered to.

It is important to recognise that mutuality and the idea that this is not a for-profit organisation. Members are not shareholders; members are very much members of a single community who have something in common, whether it be their ethnicity, their neighbourhood, or their workplace. They have some common bond by which they come together and agree to cooperate and support each other, and I think it’s really important to recognise credit unions having that function in society.

If I can just note, there are real concerns about non-bank lenders in the market place, and the Minister of Commerce and Consumer Affairs has—today, in fact—released a discussion paper on this to make sure that non-bank lenders are behaving properly. I would encourage anyone in this House or who is interested in this to make a submission on this matter, because there is advantage-taking that goes on out there. It doesn’t take much to start lending money out in the market place; all it takes is a bit of cash and a few forms, and there is a lot of advantage-taking and misbehaviour because of the underlying motives of some non-bank lenders, because they’re simply there for profit. They comply with the letter of the law and have, frankly, rapacious interest rates, rapacious fees, and rapacious penalty clauses. Now, that needs to be stamped on. It is my hope that with this modernisation framework, the costs of credit unions will fall, the accessibility of credit unions will rise, and, therefore, credit unions will expand and fill this part of the market, because there is a real place for people who know each other and who have something in common with each other to get on and help each other out in this way.

It was disappointing to see Mr Seymour introduce Supplementary Order Paper 40, which would have undone all of the good work of Mr Stuart Smith. It was, frankly, just a silly piece of gaming. I don’t know who he was pandering to, but it certainly wasn’t going to get anywhere in the House, and it’s interesting to see that when it came to the vote, the House voted against it. Only one member voted for it, and, really, it’s hard to see what he was thinking.

💬 Hon Ruth Dyson: Name that member!

Yeah, I think that was David Seymour, the current MP for Epsom. Of course, the other thing to note is that this bill enables credit unions to, essentially, enter into the modern financial world in terms of entering into securitisation arrangements, so that they can go out and get money on the market, whereas previously it was deposits only. Now, the deposit-only framework, getting money only from members, that is a very limited market. It is necessarily going to constrain any growth in credit unions and constrain their ability to lend increased amounts of money out there. The ability to amalgamate more readily is another great move, so that when it’s appropriate the credit unions can band together, as is the ability to belong to organisations which aren’t simply organisations of other credit unions, so they could belong to a complaints scheme or a union of other deposit takers, or whatever it might be.

So really, this is a fantastic piece of modernisation and it really is my genuine hope that credit unions expand, because this kind of modern, social enterprise that recognises community, that’s not-for-profit, but at the same time recognises the place for interest-bearing credit is really important and it’s something that we need to recognise more—not only to relieve poverty but to grow business as well. This is a fantastic way for people to see small businesses in communities—that they can grow across any gender, ethnicity, community, income bracket.

So look, it was a great introduction, if you like, because I think it was one of the first things we did, me being a new member on that select committee. It was good to work with Stuart Smith on this piece of work and to see how we can make the law better. But really, my hope is that this is a piece of legislation which helps and strengthens our communities. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker. First of all, I too would like to congratulate Stuart Smith on an excellent bill. Others have said it before me; I’d like to repeat it for the record. The second point I’d like to make—and it won’t be very often that I agree with the previous speaker, Duncan Webb, almost wholeheartedly. I’d like to commend his contribution that he has just made. I thought it was a very good one, particularly around the amalgamation and incorporation points that he made, and I’d like to acknowledge his contribution—already acknowledged by Stuart Smith, where Dr Duncan Webb contributed by amending and inserting new subsection (1AA) in section 101, which makes it very clear that these credit unions are, to quote, “for the mutual benefit and assistance of its members.” That, obviously, was of some contention, but the bill as amended has made it very clear that it is for the purpose of the members and must remain so.

Another couple of quick points I’d like to make: the fact that the members no longer have to go to trustees and so on to receive financial support from the credit union—that’s been touched on. That enables the credit union to compete with trading banks in facilitating loans. I was quite interested to hear Dr Webb talk about the interest rates that were lent. I too would have expected credit union interest rates to be well higher than trading banks, and Dr Webb gave an example where, in fact, the union lent at a relatively low or cheap rate, or below market, even. That’s because the people, the members, know each other. They know the risks. They know the businesses intimately that they’re lending to and assess the credit risk of the borrower accordingly, and more intimately. So that is also a benefit of these credit unions: they know each other, they’re a relatively tight community, and they support each other.

I’d like to touch on a point which not too many of us have contributed to or talked about, and that is the ability of these credit unions to be able to raise funds from their members—so, issue securities to grow the business; rather than wait for some sort of term deposit, to actually go out and issue to their members securities to enable the business to quickly grow, and to lend and grow their asset base accordingly. So I can imagine—just imagine, Dr Webb, that, one day, this credit union, friendly society, goes to its community, a rural community—rural community’s been talked about this evening—raises 20 million bucks, $30 million, and goes and invests that money and buys the buildings of the local school. Just imagine that and how that might affect that community, and imagine the lease payments that would flow into those communities from central government that would fund this school.

💬 Hon Iain Lees-Galloway: This is going to end up in the general debate again, right?

Oh, well, you invited me to—I had to comment, given the general debate, so I had to come back with something, didn’t I, Mr Lees-Galloway?

So that is the advantage of these credit unions. They are very focused on their communities, supporting their communities, and with that, I commend the bill to the House.

Bill read a third time.