Source: New Zealand Government
Good morning, everyone.
I would like to begin by thanking Kirk Hope and the Financial Services Council for the opportunity to speak to you all this morning. I’d also like to acknowledge our friends at the FMA and in particular the CE, Samantha Barrass, who you will be hearing from shortly.
I’m delighted to speak to you at the start of the year. I hope everyone is refreshed after a good summer, and ready for another big year of delivering for New Zealanders. 2024 was a big year. It was a challenging year. I know all of you in the room today would have felt firsthand the economic challenges. But we got a lot of important work underway and 2025 is shaping up to be an exciting year.
At this event last year, many of you will remember that I announced plans to reform the financial services sector. As you all know, things were not in a good place.
Over successive years, governments had layered up regulations, causing a lack of clarity and excessive conservativism. My mission when I took on the Commerce and Consumer Affairs portfolio was to simplify the financial services landscape. This meant:
Clarifying the roles of the various regulators to remove duplication; and
Tidying up laws and regulations that were constraining businesses from providing great financial products and services.
My guiding principle was to make it simpler to provide financial services, while balancing the need for appropriate guardrails and consumer protections. Over time this equation had become unbalanced and was so risk-averse that it was harming consumers.
Many of you will have heard me talk before about the perverse outcomes of making it too hard for Kiwis to access a safe loan from a reputable provider. I am very pleased to say that these financial services reforms are now well progressed.
Democracy is a wonderful thing, but the nature of developing good policy and running a thorough consultation process means it can take a long time to for change to work its way through the system. However, we are on track to have the Financial Services Bill passed through all stages by the end of Q1 next year.
Contracts of Insurance
One key highlight of 2024 was passing into law the Contracts of Insurance Act. This work was long overdue. The Law Commission recommended that our insurance law be updated in the 1990s. It is fantastic that we finally got it over the line.
In terms of other work, the Commerce and Consumer Affairs Minister is responsible for six crown entities including the Commerce Commission and the FMA. And, according to the Department of Prime Minister and Cabinet, the Minister is broadly responsible for:
corporate law and governance
financial markets
competition policy
consumer policy
protecting intellectual property; and,
trade policy and international regulatory cooperation.
It’s no small list. These are absolutely foundational pieces of architecture for our economy, and in 2024 I kicked off work relating to nearly every single thing on that list.
This year I intend to tick two remaining items off that list by progressing a review of copyright and intellectual property and launching a review of the Fair Trading Act.
The Fair Trading Act is a hugely consequential piece of legislation that covers everything from product safety and product descriptions, through to contract terms and advertising standards.
Unfortunately, the structural economic issues we face – whether that be declining productivity, lack of capital, a dearth of foreign investment, or over-regulation stymieing growth and innovation – means economic reform is urgent. As a result, you should hopefully have heard me in the media or at events like this talking about work I have underway to modernise our economy, including:
Reviewing the Companies Act and reforming our corporate governance laws; and
Related to this, launching a review of directors’ duties and liabilities led by the Law Commission;
Implementing a ‘consumer data right’ and laying the foundations for ‘open banking’ and ‘open electricity’ to inject more competition into our economy;
Creating a new model for the economic regulation of water services;
Initiating a more coordinated whole-of-government approach to combatting online financial scams;
Invigorating New Zealand’s capital markets by removing barriers to list on the stock exchange and making it easier for KiwiSaver funds to be invested in unlisted assets;
Reviewing our competition law to prevent excessive market concentration; and
Finally, responding to recommendations from the Commerce Commission to improve competition in the banking and grocery sector.
2025
2025 is all about delivering on this work. And I know it sounds like a long and unwieldy list, but you can broadly view all the work underway through the lens of two key themes:
Creating the conditions for businesses and private enterprise to thrive so that we can grow our economy.
As you have heard the PM talk about – a bigger, wealthier economy means more jobs and higher salaries for Kiwis, and it means increased tax revenue which pays for public services like schools, roads and hospitals.
This means making sure that the laws and regulations that determine the operating environment for businesses are modern, fair, and fit for purpose.
The second key theme is competition.
The reality is that New Zealand suffers from overly concentrated markets in several key sectors of our economy – whether that be banking, groceries, building supplies, or parking services.
The OECD and others have drawn a link between our lack of competition and falling productivity and the spotlight is well and truly focused on invigorating completion.
From the government’s perspective we will be going through every key initiative and programme of work line by line and asking ourselves and our officials: Will this grow the economy? Will this improve competition?
Will this help New Zealanders to take legitimate business risks? Will it enable them to hire more staff or access capital to invest in new equipment? Will it free up their time so it can be used more productively? Will it encourage innovation and enable them to offer new products and services? And if the answer is no, then don’t expect to see it progressed this year. If the answer is yes, then we will be working at pace to implement it.
One of my top focuses this year is improving competition.
Competition is one of the most important ways to drive productivity, grow the economy, and lift living standards. That’s why I have launched a two-part review:
First, I have asked officials to update the merger and competition provisions in the Commerce Act, to ensure our legal framework is fit for purpose.
Mergers can improve market efficiencies but can also entrench market power and create monopolies. Our merger regime has not been reviewed in over 20 years and since then our economic landscape has changed significantly.
I think everyone in this room can probably point to a merger or acquisition that – with the benefit of hindsight – did not serve us well.
I have also commissioned an independent review of the governance and effectiveness of the Commerce Commission to maximise its performance.
On the one hand, we need strong competition laws, and on the other hand we need a powerful and courageous regulator to enforce the law.
These are important structural changes and signify a strategic shift for our economy.
This year I am also continuing with reforms to unlock capital for the benefit of New Zealand’s economy.
I know that New Zealand urgently needs to address our falling productivity and failing infrastructure. That’s why I want to invigorate our capital markets, to encourage investment in infrastructure and productive businesses. As part of this, we are looking at changes to make it easier for KiwiSaver funds to be invested in unlisted assets, such as infrastructure projects and great New Zealand business.
We are also exploring adjustments to reduce the costs and barriers faced by companies listed, or listing, on the stock exchange. We will look at other aspects of capital markets settings in the second half of this year.
Consumer Data Right
As many of you may be aware, the Customer and Product Data Bill is currently being progressed and is set to have its second reading in Parliament’s next sitting block, which starts next week. This Bill will establish a framework to unlock the potential of customer data, driving innovation and competition in key sectors.
We recently consulted on applying the Bill to the banking sector to enable open banking and are beginning work on applying it out to the electricity sector too. The ability to provide new data-driven products and services is hugely exciting.
Possible applications for open banking include the ability to apply for a 10-minute online home loan and make instant, low-cost payments. Meanwhile open electricity will make it easier to compare electricity plans and switch providers.
Scams
Lastly, I want to talk about a big issue for the financial services sector: Scams.
Last year, New Zealanders reportedly lost around $200 million to scams, which is 15 per cent more than the previous year. However, some estimates suggest the real losses could be as high as $1 billion. This has prompted me to lead an all-of-government effort to engage with industry to tackle this growing issue.
I am working closely with telco, banking, and digital platforms and am watching the reforms being progressed in Australia. I expect to be in a position to announce progress on this work shortly.
Combatting scams is an important social and moral issue – scammers are causing harm and distress to Kiwis – but it is also a business and financial issue. As Kiwis become increasingly concerned about scams, they become distrustful and unwilling to do business online.
One of the by-products of scams is legitimate businesses are finding it increasingly difficult to get in touch with their clients. Consumers no longer want to pick up the phone to an unknown number, or respond to unexpected emails or text messages.
For all these reasons, it is vital that we work with industry to better protect Kiwis from sophisticated and devious scammers – most of whom are based overseas and fall outside our law enforcement.
ACC
Before I close, I just want to briefly talk about ACC, which is a new portfolio I have recently taken up. I am incredibly excited about my new responsibility.
ACC has nearly $50 billion under investment. And while there is a lot to be proud of about ACC, the scheme faces several significant challenges.
For the last 10 years, ACC’s performance – measured as rehabilitating injured people and getting them back to work – has continuously declined. And this comes at an enormous cost. The liability of existing ACC claims increased from $52 billion in 2022/23 to $60 billion in the last financial year. That’s an increase of $8 billion in a single year.
Clearly that’s unsustainable.
As employers, you will know that levies are set to rise around 5 per cent to help meet these rising costs. But we cannot meet the increased costs through levies alone. That’s why we have commissioned an independent review of ACC’s performance so we can address broader, underlying issues with the scheme. Turning around ACC’s performance is no mean feat. It is like turning around a super tanker.
There are a number of key actions that I will initiate early this year, but it will take a while for these actions to flow through to the front lines and for them to show up on the balance sheet. My job as Minister is to chart the course by creating a robust action plan and setting tight expectations so that within a few years, the super tanker is heading in the right direction.
I want to be clear that this is not about cost cutting. It is about ensuring ACC is fair and sustainable and can serve future generations without saddling them with unreasonably high levy increases.
One of the key principles of the ACC scheme is that future generations should not pay for today’s injuries. If we do not arrest the financial situation now, all we do is kick the can down the line and make it the next generation’s problem.
Close
As you can tell, 2024 was a busy year. And 2025 is shaping up to be just as critical. We’ve got several work streams on the go, which I’ve outlined today.
I expect to be progressing them at rapid pace, and I look forward to working with you to take our economic growth to the next level.
Thank you again to the Financial Services Council for having me here today.