Part 1 Reserve Bank of New Zealand Act 1989
JOHN KEY (National—Helensville) Link to this
Madam Chair—Mr Chair; sorry. Clearly, you have not had a sex change. I am terribly sorry. Trust me when I tell you that I was deeply engrossed in a conversation of national interest.
Darren HughesWell, actually, “national” as in the wider country. I would be very happy to explain my logic to the member, if he wants.
I rise on behalf of the National Party to address Part 1 of the Reserve Bank of New Zealand Amendment Bill, which the National Party is supporting. I remind members that, really, the essence of the bill is relatively simple. In essence, under this bill, which is the result of deliberations by the Trans-Tasman Council on Banking Supervision—members of which include the Reserve Bank of New Zealand and the equivalent body in Australia, the Australian Prudential Regulatory Authority—both countries will have observance of each other’s jurisdiction, and give consideration to the financial stability and financial management of banks on either side of the Tasman.
To come back to the case in point, members will know that if they look closely at the banking scene in New Zealand, they will see that around 85 percent of banks are owned by Australian institutions. There is clearly a huge degree of integration of the Australian and the New Zealand banking systems. In fact, if one looks at the assets comprising financial institutions in New Zealand, one sees that around 75 percent of those assets come from Australian-owned banks in New Zealand. So the level of integration is extremely high. Of course, it makes tremendous sense to ensure that there is a huge degree of cooperation between the regulatory bodies on both sides of the Tasman.
Part 1 talks to a degree about the definition of financial institutions and, in fact, about what financial institutions are. Members will also be aware that what comes under the purview of the Reserve Bank of New Zealand in terms of financial institutions is actually quite different from what comes under the purview of the Australian Prudential Regulatory Authority. In New Zealand the Reserve Bank has regulatory oversight of only the major banks; finance companies, for instance, fall outside its purview. In Australia that is not the case. Under the Australian Prudential Regulatory Authority—as in the United Kingdom under the Financial Services Authority—there is a much wider review process that includes major commercial banks, as we would understand them, finance companies, as we would understand them, and insurance companies. That is also the case in the United Kingdom, but it is not the case in New Zealand.
This issue raises an interesting point. What we have seen over the last 4 or 5 years is an explosion of the assets contained within finance companies in New Zealand. I think those companies now control something in the order of $12 billion to $14 billion worth of assets. Those assets are controlled by institutions that are not reviewed by the Reserve Bank of New Zealand. They fall outside of this bill. I think it is interesting that we have seen in recent times the collapse of at least three of those finance companies. I suspect that we have not seen the last of collapses of finance companies in New Zealand. I suspect that over time there will be, as there already has been, a greater call from some parts of the community for greater forms of financial regulation of finance companies in New Zealand. That is a debate the National Party is happy to engage in at a later stage.
Secondly, let me make the point that it makes enormous sense for New Zealand to work closely with Australia. I could choose any of the Australian-owned banks, but for the purposes of this explanation let me choose Westpac in New Zealand. Clearly, if Westpac operates successfully here in New Zealand, then part of that success will come from the strength of its parent company. Clearly, it makes sense for the Australian Prudential Regulatory Authority to work very closely with the Reserve Bank of New Zealand, because it is extremely difficult for the Reserve Bank of New Zealand to go about its normal review process of Westpac in New Zealand unless it has full and frank knowledge and information. I was involved in global investment banks, particularly Merrill Lynch, whose main regulator was the Federal Reserve System, even though we operated on the ground in numerous countries. Let us take, for example, the UK.
The CHAIRPERSONJOHN KEY (National—Helensville) Link to this
One thing that excites me about my Part 2 speech is that I know that Mr Woolerton will also make a Part 2 speech, seeing as he missed getting the call in the Part 1 debate. I urge him to wrap both parts into one speech, because it is very similar stuff.
I rise to address Part 2 of the Reserve Bank of New Zealand Amendment Bill. This is the part that amends the Racing Act 2003. Members will be aware that the Reserve Bank of New Zealand Amendment Bill is an omnibus bill that makes alterations to both the Reserve Bank of New Zealand Act and the Racing Act. If people look at, in particular, clause 12, “Racing clubs may conduct equalisator betting”, they will see that it states: “Section 51(3) is amended by omitting ‘section 60(2) and (3),’ and substituting ‘rules made under section 52 stating the denomination to which dividends are to be rounded and paid out,”. I think members know that that means dividends will be rounded down, because of the withdrawal of 5c coins, to the nearest multiple of 10c.
My colleague Mr Tisch, who is very, very widely regarded in racing circles, led the charge for the racing industry at the last election. We saw horses parading before the election with “Fair Tax” tattooed on their hindquarters, which was all about getting some fairness and equity for the racing industry in New Zealand. When National announced its racing policy, I do not know how Lindsay coped, actually, with the sheer volume of cards, of emails, of phone calls, of messages of goodwill and thanks to the National Party. For once people saw the Labour Party’s true colours—that it is a party that does not believe in racing. I know that Mr Hughes wanders along to on-course betting at Ōtaki, at whatever races they have down there—they probably do not have any—
Actually, they do. I know the Otaki Racing Club is quite active. I know Mr Hughes goes there and tries, even now, to cajole the members of the club into thinking that Labour believes in racing, but the real truth is that the party that led this fair tax policy, which has brought out much greater support for the racing industry, was the National Party. In fact, even though my colleague—or my friend, I can almost say—from New Zealand First Mr Woolerton will get on his feet and try to claim some credit on behalf of New Zealand First, because the policy was part of its coalition agreement with Labour, the truth, as Mr Woolerton knows, is that New Zealand First got it as part of its coalition arrangement only because National had it. National introduced it and National brought it up. [ Interruption] Those members from Labour are chipping away here, but they are filled with grief, remorse, and guilt that they had not done for the racing industry what National in 5 minutes worked out was necessary.
Racing is a very important industry indeed. It has a huge impact on New Zealand. It is not just the betting side, which brings a lot of joy and enjoyment; racing also does a lot for “Brand New Zealand”, as I think New Zealanders recognise. I was interested this morning, as other New Zealanders would have been, to read in both the New Zealand Herald and the about Phar Lap being poisoned by arsenic. As I flew into Wellington Airport in the 140-kilometre-an-hour gales in my Boeing 737, I did whatever I could to deter my thought process from wondering what sort of obituary about me would appear in the paper this afternoon. Even though the horse died in 1936—or whenever it was—I asked myself what sort of individual would try to poison Phar Lap with arsenic, as I came into Wellington Airport sideways in a Boeing 737, with the pilot looking away from the runway with deep concern.
Let me just return to the Racing Act 2003, having allowed New Zealanders to understand who should be claiming the credit for the changes to the racing industry and the fair tax—[Interruption] That was the National Party, I say to Mr Gosche. I expect him to get on his feet and thank the National Party for doing that. But let me just make it clear that, in terms of dividends being rounded down by the Racing Board, we on the select committee had an assurance from the board that that will not affect the amount of dividends paid out. That will not change. I know that the chairman of the Finance and Expenditure Committee, Mr Jones—
R DOUG WOOLERTON (NZ First) Link to this
In speaking to Part 2 of the Reserve Bank of New Zealand Amendment Bill, I must say that Sir Patrick Hogan—beavering around in his stables, as he does, shovelling manure and all that sort of thing, as a good Waikato man—would be amazed to hear that speech from John Key. He would be amazed to know that Lindsay Tisch was racing around at the last election trying to promote taxation changes to the racing industry. Because he would know, being a sensible, very astute businessman, that he had hosted many, many functions on behalf of the National Party, and I have been to a few of them at his stud. He was on and on forever about the taxation of the racing industry, and National never listened. It never listened, and it took the Rt Hon Winston Peters and New Zealand First, in cooperation with the Labour Party, to deliver the changes that Patrick Hogan had been looking for all of these years.
He must be—and I am talking to Part 2 of the bill—a very disillusioned man to know that his hospitality, his generosity, and his famed ability to bring people on board has been treated in such a way for so many years. It took a relatively new party to deliver that which he had been promised but what was never delivered in all of those years.
It is true that this bill looks after the taking out of circulation of the 5c and 10c coins. It is true that it gives the Racing Board the ability to take care of its own business in the future—it will not have to come back to the House any more for this sort of legislation. It is true that dividends will be rounded down rather than up, but the board has assured us—as the chairman, and now Mr Key, has said—that it will take account of that in its expenditure, and it will make sure that it makes relevant savings and that the punters do not actually lose, out of that.
But I will say a couple of things more, and I say, in light of previous discussions in this Chamber around gambling, casinos, and those sorts of things, that New Zealand First understands that this is an industry that has approximately 30,000 to 35,000 people employed nationwide, that does have a gambling component, but that exports—and “exports” is the critical word. It is no good for National members to sit there saying that this Government, or New Zealand First, does not believe in exporters, because National, when it has the opportunity, does not put one incentive in place, does not put one tax right down in place, and does not believe in enhanced depreciation, otherwise it would have done it for the racing industry, as we have. It does not believe in any of those things. It would sooner support gambling and casinos that suck money out of this country—mainly from the poor—into the rich coffers, mainly of American and Australian owners.
We in New Zealand First think that that is wrong, because horse racing in this country, which we are talking about in Part 2 of the bill, puts money into New Zealanders’ pockets, and it makes sure that it stays there. It does not go offshore to the same degree that casino money does. So we have no hesitation in showing preference for this industry, over and above others. We think it is absolutely right that a Government should—yes, I will use the words—pick winners in this way. We do not pick the winners as in personalities, but it is certainly the job of a Government to pick winners when it comes to exports, when it comes to imports. This is an industry that fulfils all of the criteria, and deserves the help that New Zealand First has ensured it has, and we look forward to supporting it in the future.
SHANE JONES (Labour) Link to this
Kia ora, Mr Chairman. I stand to elaborate on one or three things that were said last week in relation to this Reserve Bank of New Zealand Amendment Bill, and to correct the predictable and tired rhetoric from our colleague on the other side of the Chamber Mr Key on this very important bill.
I am referring, of course, to Part 2. I know that he who rides a Shetland pony in the Waikato is soon to speak to this issue. However, I think of particular importance to this portion of the bill is the reassurance that the Finance and Expenditure Committee was given—[Interruption] OK, I hear all the nags whinnying from the other side of the Chamber. It is not my fault that a number of them are preparing for a dress presentation—a dress circle foray—or something like that. They are debating amongst themselves what sort of double or trifecta they will back. Of course, we have had one Mr English—an English horse—who got on the track too early. He had not actually had the experience of sitting in Opposition. It has taken him 5 years to try to find his stride. He has thrown everything on to the track—[]
Yes, Mr Chairman, I think a couple of scratchings on the other side of the Chamber would be in order. It would make those members disappear from the track for a time while we on this side, who are much more lucid and coherent contributors, make our points.
However, moving right along, I point out something those members said that was very, very silly and actually unwise. They said earlier today that our friends from New Zealand First did not have any role in, or did not contribute towards, the great reforms and improvements relating to the racing industry. Of course, as we on our side of the Chamber have intimated, we are only too prepared to look after the interests of those who know what stable Government is about and who know how to look after their friends.
I come back to the bill. We had a number of—
On the question of paying it back, I look forward to the next discussion we have about tax—in particular, GST—before I hear any more comments about paying it back. What if every businessperson, every horse owner, or every stable owner in Te Tai Tokerau, Matamata, or anywhere else in Aotearoa could actually wander off, gaily, unimpeded, tell their creditors to haera rā, and not fulfil their tax obligations! What we will actually see is the old grey gelding, Dr Brash, bring back a bill to try to make his arrears go away. No, no, no! Those members can think again if they think the New Zealand public will not hear about that. The public will hear about it a great deal. It is as if National thinks it is watching a winner. But it will not be a winner; it will be like a horse on the way to the knackers’ yard. [ Interruption] The member should not worry. We will serve that up with great lashings. In fact, it will be like the molasses served up in the Waikato. It will be like a bit of that old, dry hay that our man Mr Tisch gives to his horses, few of which have yet to yield much of a win.
However, let me go back to the very important content of this bill. Representatives from the industry came to the Finance and Expenditure Committee and reassured us that those who are regular participants in the fun and the betting frenzy at the various racetracks will not be disadvantaged. As I said earlier, the people on our select committee are a relatively competent bunch. Competence sort of ebbs and flows, depending on the issue, but I can reassure the Committee that it is generally at the high-tide mark where the chair is concerned. We were reassured that the participants in the industry—the regular contributors—would not be disadvantaged. I agree with Mr Key that in the event that that does not come to pass, it would be a very, very dark day for the people who represented the industry at the select committee, because we were approached and were reassured that that was the case.
I will continue on. John Key said earlier today that there is no site in Ōtaki for people to expend energy in the pursuit of racing gains. Well, if there is ever a reason why our man Mr Key needs to broaden his current level of interest, and address his very shallow level of experience, in what is happening up and down the country, and to come out of the money rooms, then it is to find out that Ōtaki is a very illustrious site in terms of the racing industry—of racing pedigree—and that the site belongs to Ngāti Raukawa. Kia ora tātou.
LINDSAY TISCH (National—Piako) Link to this
This is important legislation, and I can assure the previous speaker, Shane Jones, that my Shetland pony is running quite well. In fact, it ran third last week.
Hon Parekura HoromiaIt is called Mum’s a Honey. How is that for a name? The Minister should write that down. When it races this week, it will run better than third; it will run first.
But I have a bet for this Committee, and it is a trifecta. Do members opposite want inside information? In terms of this trifecta, I bet that at the next election Labour will be out. That is a sure bet. Members should put their money on the fact that Labour will be gone. That is a sure bet, and I know they will make money out of it.
Racing is important in the Waikato. If we look at the Mercedes awards just recently—
Hon Mark GoscheThis has a lot to do with 10c. Others have talked about it, but if we look at the New Zealand Thoroughbred Racehorse Owners Federation magazine, —and this is where the 10c is so important—we will see that it was a proud night for those from the Waikato, particularly the Piako electorate, which includes Cambridge and Matamata. Members should listen to this. The Mercedes Owner of the Year award went to Ann Brown from Cambridge. The leading jockey was Mark Walker from Matamata. The best contribution to racing went to Waikato Stud, owned and operated by Garry and Mary Chittick and Mark and Lisa Chittick. Of course, last year Garry Chittick of Waikato Stud won a Mercedes Breeder of the Year award. So there is a lot of support there, and I am proud to be able to stand up and support racing and what it means, not only to this region but to the country as a whole.
The member says we did not do a thing. It was National’s policy that New Zealand First ran with at the election. It was plain to us when we sat on platform after platform before the election that the Minister for Racing at the time had absolutely no interest in racing whatsoever. At Te Rapa Damien O’Connor had absolutely no interest in racing. It was only because we put pressure on that we are able to show the importance of racing and what it brings in the way of jobs—and to the brand, as John Key said—and what it means to New Zealand as a whole.
What does this bill actually do? If we are to be competitive, then we need to have some commonality with Australia. It is very, very easy to bet on Australian horses. If we are not going to be competitive and have the flexibility that is so important in racing, then we will lose our market offshore. It is very easy to bet offshore, and this bill will bring us some commonality in terms of what will happen with the 5c situation we currently have and our move to rounding off to 10c. The proposed amendments to the Racing Act will allow the Racing Board to round down dividends within the rules. Of course, from 1 November we are doing away with 5c coins. They will no longer be available.
But what does it actually mean in terms of the payouts and who will win and who will lose? The bet type will change its current deduction of 15.5 percent down to 14.5 percent. Deductions on a place type will go from 15.5 percent down to 14.25 percent. Overall, if we look at the turnover in 2005-06, we will see that it was $1.364 billion. The dividends paid to the punters, the customers, under the current system amount to $1.106 billion. Under the proposed rounding-down scheme, they will amount to $1.1105 billion. There is a $4.4 million advantage to the punters.
So National does support this legislation, because the customer, the punter, will not miss out. There were some thoughts earlier on that those people may be disadvantaged by this move, but that will not be the case. We have to have a rate determined by the Racing Board. We need commonality with Australia. That is what is so important. That is the flexibility to meet the market. National has much pleasure in supporting not only the whole of the Reserve Bank of New Zealand Amendment Bill but particularly, from where I am speaking, Part 2.
The Committee divided the bill into the Reserve Bank of New Zealand Amendment Bill and the Racing Amendment Bill, divided into Reserve Bank of New Zealand Amendment Bill, Racing Amendment Bill, pursuant to Supplementary Order Paper65.