Securities Disclosure and Financial Advisers Amendment Bill — In Committee 
Securities Disclosure and Financial Advisers Amendment Bill — In Committee 
[Volume:655;Page:4975] 
Securities Disclosure and Financial Advisers Amendment Bill 
In Committee 
Part 1 Securities Act 1978 
Hon SIMON POWER (Minister of Commerce) 
: 
 The Securities Disclosure and Financial Advisers Amendment Bill primarily addresses three areas. It deals with the simplified disclosure prospectus; categories of persons who are exempt from the disclosure requirements for offers of securities under the Securities Act; and the Financial Advisers Act through the correction of a minor error. We saw that Act pass under the previous Government. One or two technical areas in it need to be sorted out. 
With that in mind it might be worth with the leave of the Committee briefly going through the two Supplementary Order Papers in my name that have been tabled on the bill. 
Hon Darren Hughes 
: I think so. 
Hon SIMON POWER 
: The shadow Leader of the House indicates that that would assist his members in making a contribution to the Committee stage of this bill. This is likely to be my only contribution to the Committee stage but I am happy to lead the charge in that regard. 
The first Supplementary Order Paper Supplementary Order Paper 29 is in effect a proposed motion to divide the bill into two bills the first being the Securities (Disclosure) Amendment Bill and the second being the Financial Advisers Amendment Bill. It is a pretty straightforward Supplementary Order Paper and we will not dwell on it for too much longer. The second Supplementary Order Paper Supplementary Order Paper 30 relates to some amendments to ensure that the offers of securities that are made to eligible persons and persons who fall within one or more of the categories set out in subparagraphs (i) to (iii) of section 3(2)(a) of the Securities Act be also made to apply to persons outside New Zealand. That is really the extent of Supplementary Order Paper 30. 
I note that the Labour Party the ACT Party and other political parties have been supportive of this legislation. I look forward to a constructive but swift Committee stage in respect of these matters. 
DAVID BENNETT (National—Hamilton East) 
: 
 Having heard that introduction from the Minister Simon Power I think it is important that we get a feel for the Securities Disclosure and Financial Advisers Amendment Bill. It is a very topical issue when we consider the nature of the financial stress that much of New Zealand and the world economy is under at the moment and has been under in the last 9 months or so. There is always talk about what can be done to avoid that kind of stress occurring in the future. One of the ways of doing this is around securities disclosure and financial advice. It has been a perennial problem from the time of the old days when New Zealand was seen as the Wild West of financial markets. Various Governments have tried to address this and they have done so with a piece by piece approach. This is another piece in that jigsaw; it is very difficult to set up one of those systems straight away from scratch that covers all of the issues. 
Part 1 deals with the Securities Act 1978. A number of clauses in Part 1 which we will debate over the course of this evening are there to aid in the disclosure and also to assist investors so that they get the fullest information they can in order to make the right investment decisions. That is a crucial part of the Government’s role in this Securities Disclosure and Financial Advisers Amendment Bill. The Commerce Committee which I was not on considered this legislation and I am sure under the guidance of the Minister the Hon Simon Power it has done a very detailed and thorough analysis of what is required to deal with some of the issues. 
The objectives of the bill are twofold: to respond to the global financial crisis by removing unnecessary impediments to raising capital in New Zealand and to ensure the timely disclosure of relevant information to prospective investors. That is the nature of the objectives of this legislation. The Securities Act 1978 provides exemptions from standard disclosure requirements for certain investors who because of their experience and knowledge for example are assumed not to require the standard level of protection that the Act offers. The appropriateness of these exemptions will be reviewed in the current full review of the Securities Act. In the meantime however this bill proposes some amendments that by removing minor anomalies in the law will make it easier for businesses to raise capital. Although those changes would apply to both listed and unlisted companies they would particularly benefit private companies that tend to approach investors for capital directly often in cases where the investor is well known to the issuer. That is what we often call a closely held company; it may not be listed but it is a company that has issues around the investment and the capital that is needed. Basically that covers a lot of New Zealand investment because we have a very big small-business community in New Zealand that makes up a huge part of our business community. So the investment in those small to medium sized businesses is crucial to the economic growth of this country especially in these uncertain economic times. 
The select committee recommended exemptions from standard disclosure for subsequent offers which after an initial subscription of $500000 would be allowed to include offers for different types of security rather than just being limited to securities where the rights privileges limitations and conditions attached are identical to those initial securities. Basically what the select committee is doing there is looking at the different types of securities that are outside the previous ambit of the initial security offer to give a little bit of flexibility to those that are making the offer so that investors have a bit more comfort in investing in the company at stake. The committee looked at the extension of offers to subsequent offers made within 18 months of the first allotment rather than the 12-month process. 
AMY ADAMS (National—Selwyn) 
: 
 I also am delighted to take a call in the Committee stage of the Securities Disclosure and Financial Advisers Amendment Bill. In looking back to the first reading debate I think that the points raised there were absolutely correct. They focused in large part on the absolutely fundamental importance in a climate like we have in front of us of access to capital. Businesses in this environment more than in any other will be fairly clear on the point that the ability to access capital is one of the key criteria that will determine the success or failure of many a business over difficult times. Issues around liquidity and cash-flow management are absolutely essential to that debate. 
Like many of the issues we have been discussing this is the journey of a thousand miles. We cannot fix it with one simple piece of legislation that will make all the ills of the world—all the capital and liquidity issues—drop from in front of us. We have to take a number of small steps and this bill is certainly one of those steps. 
As the Minister of Commerce has already told us in his opening remarks tonight this bill will simplify capital raising by identifying where information is already in front of markets and in front of the prudent investor and removing the need for those companies in particular companies that are listed on the stock exchange to have to jump through hurdles and reproduce re-present and re-disseminate that same information. That sounds very sensible and very clear-cut but of course the difficulty and the challenge for a Government in doing that is to ensure that the change does not go beyond removing duplication to in any way undermine investor confidence in the markets. That must be ensured. 
Equally however if areas can be identified where there is simply unnecessary duplication and that duplication not only is putting cost on business but is delaying their ability to access funds and is making those funds harder and harder to access then it is absolutely our duty and our responsibility to say that we will not have bureaucracy for the sake of bureaucracy. There is no point in keeping bureaucrats busy with busywork. If those requirements will not add to investors’ protection in the market then there is no need to have them. Under this bill we have the ability to exempt certain businesses from providing information that is already provided where that information can be shown to already be in front of the market. Those who offer certain debt and equity instruments will be able to take advantage of that simplified disclosure regime for their prospectuses. 
Having worked with the Securities Commission on behalf of clients for many years I am well aware what a prudent and effective watchdog of investor rights it is. I think it is worth pointing out and putting on record that that scrutiny and those protections that already exist within the Securities Act are very much maintained and that the changes here although they will make it easier for business are not doing so at the expense of the investing public. I think that point is worth making. 
The other part of the bill that I particularly want to talk about in this part of the Committee stage is the changes to section 3(2) of the principal Act inserted by clause 5. This clause inserts a further category of exempt persons clarifying the law around exempt persons and effectively says that investors who have already invested $500000 in substantially similar securities can be regarded as having more awareness more competency and more involvement with and oversight of the activities of that company. They are not in the same category as a mum and dad who saw an ad in the paper and thought they would sign up for a couple of thousand shares because the guy down the road thought it was a very good idea. Investors in this category have identified themselves by that sort of large investment as investors of a certain level of skill and experience and as regular habitual investors. The bill creates this additional safe harbour category. I think that is important because in many situations business partners who are very experienced and very careful and who are used to doing these sorts of transactions are being forced to jump through a whole series of hoops that they neither want or need. Again it is about getting the balance right so that we allow people who know what they are doing who have proven their experience in that field to get on and do it. 
This is about information that is already available. The information is already out there for investors. We are simply saying once more that here is an area where the Capital Market Development Taskforce has identified some unnecessary red tape and unnecessary bureaucracy and we as a Government in our push to make business easier in troubled times and to get this economy growing will address that. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 New Zealand is probably alone in the world in deregulating in the face of what has occurred overseas. I would be very interested to hear what other members of the Government have to say about that issue. 
I will speak about one particular issue which is the whole question about experienced investors and wealthy investors. The issue the previous speaker has not taken into account is measuring somebody’s ability to invest without proper advice being given to them and not having all of the detailed information that is available through a prospectus explained to them. Just because someone has a large amount of money it does not necessarily make him or her someone who needs to be protected from this overregulation which is how we have just had it described. 
I make the point that there are business people in this country who have retired who put every single last cent of their money into ING and they are now facing a 60 percent return on that investment. Those people deserve to have the full ramifications of their investment explained to them. I have made the comment on more than one occasion that ING in offering 60c in the dollar really owes the country an explanation as to why it says that those who accepted the 60c in the dollar should release ING from any consequences that may flow from a Commerce Commission investigation. I cannot believe that members of the Government think that that is OK because it is not OK. 
That is why I have raised a concern both at the select committee and in subsequent comments that I have made on this legislation that although we are not opposing the specific amendment around wealthy investors some of us are very concerned that changes are being made to the exemption when the exemption itself may be repealed as a result of the review of the financial products and providers process. 
Personally I think the exemption should be repealed as the discussion document stated. The people who proposed these changes the Capital Market Development Taskforce when they appeared before the committee had not even read the discussion document that had been put out on this very subject of wealthy investors. I think it behoves us to give this matter a little bit more careful consideration. 
The discussion document describes the wealthy investor category as the least principled exemption in the Securities Act. It is very important that we look at the recommendations in that discussion document which are to beef up the provisions around sophisticated investors. These are the real people who are prepared to take the risks. The professional habitual and experienced investors are sophisticated investors. Let them make a choice about where they get their information from. I have no objection to that. But we should not say that somebody is able to make those decisions without having the protections that the law is supposed to give. I know that the Government likes to talk about it as regulation; let us talk about it as protection. Someone cannot just give up that right to protection simply because he or she has a large sum of money at a given moment in time. I would expect someone selling a business to have more than $500000 in the bank if he or she has been any good at running a business. That does not necessarily mean that that person will be able to make a good decision on where to invest that money in terms of how it will support him or her in retirement. 
I think the Minister should respond to the question about why we are making an amendment to the wealthy investor provision when in fact we will be undertaking a serious review of the legislation as a whole and we will be looking I hope at beefing up the professional habitual and experienced investors category. 
I should also make the point that we have clarified in this bill that somebody who is asserting this exemption will sign a document stating that he or she will not be receiving any of the information that is usually provided by an issuer offering securities to the public. Again that is a very clear statement that the investor is accepting the responsibility of going ahead with the investment without having that particular information. I would like the Minister to respond to that question. 
AARON GILMORE (National) 
: 
 I am pleased to rise to talk in support of this bill. It is an interesting bill for me in that in my professional capacity I used to raise a lot of money for venture capital companies. In fact I was an investor this bill would apply to in many ways in terms of investments of half a million dollars. I will talk a bit about some of this stuff. As someone who has gone through a prospectus and the situation of spending $10000 to $50000 on legal costs probably in Mr Chauvel’s old firm— 
Charles Chauvel 
: You can’t leave the lawyers poor. 
AARON GILMORE 
: —no let us see how we go—I know that to go through the process of raising an investment statement costs anywhere between $10000 and $50000. That is a dead-weight cost for somebody who is going to invest anyway. The previous speaker talked about the worry for those people who may be investing in this category. I think it is interesting that the previous speaker was the Minister of Commerce for a number of years; she had opportunities to do many of these things but never took them up. 
One of the interesting things that exist in clause 7 of this Part 1 is the really good amendment in subclause (7) allowing people who have the opportunity to take up this choice to disclose. They will have the ability to sign away and know that they have had that opportunity to turn down a prospectus or the investment statement that is normally given to investors. I saw a number of examples in my prior job and the man who chaired and ran the Capital Market Development Taskforce was my former employer my former boss. He is an interesting gentleman and he came up with some interesting changes to the scheme outlined in this bill. I think they are positive changes and they will allow venture capitalists to raise capital faster. The costs going to lawyers and accountants will be reduced and I think that is a good thing as some of those costs are completely wasted. My friends in the accounting and law professions will not be happy with that but it is a step in the right direction to reduce some of the costs that exist for raising capital across New Zealand. If we look at the capital raisings that have occurred in New Zealand that this legislation will apply to we can see that millions of dollars in time and effort could be freed up and used for more productive purposes. Those investors could apply those millions of dollars to productive parts of the economy and that would be a wonderful thing. If it allows one or two new businesses that are fast growing to raise capital they otherwise would not have raised because it would have been wasted on accountants and lawyers then that will be neat. 
The amount of capital that was used to set up TradeMe for example was in the order of a couple of hundred thousand dollars initially. Maybe another five or six “TradeMe” companies could be created as a result of fees being freed up from lawyers and accountants because of this bill because people will enrol in this and sign away their rights and will not have to spend so much money. They will knowingly have the ability to say that they do not need an investment statement; they will have the professional capacity and knowledge to make a decision on that. I think it is a really positive move. 
Hon Lianne Dalziel 
: What are you going on about? TradeMe didn’t do that. 
AARON GILMORE 
: Unlike the member on the other side I have raised millions of dollars in this sort of thing before. I have seen it in practice I have seen it working and I have seen the amount of time and effort that is— 
Hon Lianne Dalziel 
: You’ve done everything! There is nothing you haven’t done! 
AARON GILMORE 
: That member might think so and maybe that is right. Maybe there is a bit of envy on that side of the House; I think it is really interesting. But if we look at what this bill will do we see that it will free up the ability for investors to do positive things. Maybe the members on the other side are a little bit jealous because they do not have the ability to take up this opportunity—maybe; I do not know. This bill will allow some investors to improve their ability to invest in companies they want to invest in. It will reduce their costs and speed up the time and the effort for them to do so. I think that is a good step. If those members on the other side of the House are against that then that is their prerogative. If they are all for giving lawyers and accountants more fees and not having that money invested in productive parts of the economy then that is an interesting thing given we are in the middle of a recession and we want to reduce our red tape. But I think these are positive steps. 
There are many aspects of this bill that we could touch on in this initial part and the other exemptions that exist in other parts of the bill are all positive steps. There are some questions over the move from 12 months to 18 months that the committee has made some decisions on but they are positive moves. I can understand that and I think it is a positive step in the right direction. There were a number of questions and issues raised by the previous speaker but they are not in the scope of this bill. As I said this bill is designed to free up the ability of people who are what we call in the Securities Act “habitual investors” to invest and to reduce the cost of their investing so those companies that are trying to raise capital in the capital markets can do so cheaper and faster. 
Hon Lianne Dalziel 
: The wealthy—it’s another section that deals with experienced investors. 
AARON GILMORE 
: You know that member went through the select committee on this bill. Thank you. 
CHRIS TREMAIN (National—Napier) 
: 
 It is always a pleasure to rise and speak after a member who has the level of experience in the business community that Mr Aaron Gilmore has. 
Charles Chauvel 
: Self-confidence! 
CHRIS TREMAIN 
: No it is. 
Hon Darren Hughes 
: Stop laughing! 
CHRIS TREMAIN 
: It is an absolute pleasure to have members on this side of the Chamber who have been out there raised capital in the financial markets and dealt with the issues that come along with that. 
Tonight I want to focus on the Securities Disclosure and Financial Advisers Amendment Bill and at this point in the debate on Part 1 I want to discuss clause 4 “Interpretation” and also clause 5 “Construction of references to offering securities to the public”. Before I do that I say that this particular bill responds to the current international financial crisis by removing unnecessary impediments to the raising of capital while ensuring the timely disclosure of relevant information to prospective investors. Members of the public will be wondering how this particular bill helps businesses to raise capital and what the issue is with regard to that. The fact of the matter is that we have been through a financial crisis of huge magnitude over the last year to 18 months. The issue here is the credit crunch which has made it very difficult for businesses to raise debt on financial markets. 
One example from the Hawke’s Bay of this issue is a business with a total balance sheet of about $10 million that had about $8 million in borrowings and about $2 million in equity. All of a sudden with the credit crunch the banks came back to this particular company and said they were no longer prepared to lend to the level of debt at 80 percent and equity at 20 percent and they wanted to see that come back to debt at 60 percent and equity at 40 percent. That was all very well but for a company like that to come up with $2 million in equity overnight is quite simply impossible. It is just impossible for shareholders in a small company to raise $2 million out of their back pockets. It puts huge pressure on these companies to raise extra equity and that starts to push them very close to a position where the banks come in and say they are actually going to wind the businesses up. That has a huge impact on jobs in this country and has a downstream impact on suppliers who provide goods and services to those companies. 
That is why a bill like this is so important. It puts a focus back on what is a rare commodity at the moment: capital. Over the previous year or so we have been financing companies by debt and now there is a focus on bringing more capital into them so a bill such as this is particularly important. Under the runaway credit economy businesses were able to get to a position where they were financed by up to 90 percent debt and 10 percent equity. Although that might have provided a much better return on invested equity for shareholders the fact is that it became pretty risky. When the credit markets tightened and banks came in and said they were sorry but 10 percent equity was no longer any good and they wanted companies to be back at a level of 60 percent debt and 40 percent equity that put huge pressure on companies. This Government through Minister Simon Power has stood up and asked how we can make it easier even in difficult conditions—because capital is really rare at the moment—to get more capital into those businesses. That is what this bill does. 
Part 1 deals with the Securities Act 1978. It is a substantive part of this bill and it deals with a number of sections of that Act. In the interpretation clause there are a couple of definitions that simplify disclosure and prospectuses. We are trying to take the compliance costs out of complex prospectuses once again making it easier for capital to get into not only small businesses but also medium-sized and larger businesses. Having a simplified disclosure prospectus will certainly do that. Part 1 does a range of things. The amendments will make things easier for both stock market - listed companies and unlisted businesses. Overall I think Part 1 will improve that Act. 
CHARLES CHAUVEL (Labour) 
: 
 It has been interesting to listen to the debate so far in this Committee stage on the Securities Disclosure and Financial Advisers Amendment Bill. Both the previous speaker Chris Tremain and Amy Adams spoke about the importance of broadening and deepening New Zealand’s capital markets and no one on this side of the Chamber would argue with that proposition. But it is fascinating to hear this bill being trumpeted as a contributor to that exercise; I would have thought that if anything this bill will make a relatively small contribution to it. 
If we were really serious about broadening and deepening capital markets in this country then we would encourage better savings as David Parker has just said. We would not have refused Kiwibank permission to get itself into a better equity permission which is what I understand Ministers have told the New Zealand Post board. We would not have decimated the New Zealand Superannuation Fund contributions in the way that the Government did in the Budget and frankly KiwiSaver contributions would not have been cut in half either. Those are the long-term paths to increasing savings in New Zealand and to broadening the sorts of capital markets that speakers have been referring to. The proof of the pudding in that of course is the Australian example. The superannuation investments that have been made there over the last 10 or 15 years since Paul Keating put in place the compulsory superannuation that Australia now has have really made a difference. They have created a huge pool of capital savings upon which businesses can draw for investment. 
It was interesting to hear Aaron Gilmore’s contribution and of course very entertaining. The problem with using TradeMe as an example is that I am not entirely sure that the provisions of this legislation would have applied to TradeMe. As I understand it that was a privately owned business until it was acquired by Fairfax so there would not have been a requirement for a prospectus at all when that business was started. But I may be wrong and if I am I bow to that member’s clearly superior intelligence and experience. 
Dealing with the substance of Part 1 the major amendments recommended by the Commerce Committee are to clauses 5 and 7. In respect of clause 5 the recommended amendment would allow subsequent offers after an initial subscription of $500000 to cover different types of security rather than limiting this to securities carrying identical rights privileges limitations and conditions to the initial securities. The recommendation from the select committee was that the bill should allow offers subsequent to an initial $500000 being made within 18 months of the first allotment rather than 12 months as was originally proposed in the legislation. That amendment appears in the bill as it is reported back and although as speakers on this side of the Chamber have indicated we do not regard this reform as particularly ambitious we are not opposed to that amendment. 
The select committee also came to the view that it was unnecessary to restrict the securities to those identical to the initial securities. If that premise was accepted limiting the securities to the original offer would needlessly restrict a company’s ability to use a range of investment vehicles to raise further capital from its initial investors. Following that logic there are amendments to clause 5 and again those amendments are supported by members on this side of the Chamber. 
Then there are the provisions on experienced investors the changes that are reflected in clause 7 and which are made in the bill. As I have said although Labour does not regard these changes as particularly ambitious we do not oppose them. We can see that they make sense. 
I hope that the Minister in the chair the Hon Simon Power will take a call and that we will hear from him in response to the questions that were posed by my friend and colleague Lianne Dalziel on the question of wealthy investors. It seems to me that there are some important unanswered questions on that topic and it would be good to hear from the Minister on them. 
MICHAEL WOODHOUSE (National) 
: 
 I am delighted to take just a quick call on Part 1 of the Securities Disclosure and Financial Advisers Amendment Bill. Before I do I feel the need to defend my colleague and the future member for Christchurch East Aaron Gilmore. He is one of the few members of this House who has actually had a little bit of experience in the issuing of securities. I find it quite extraordinary and rather sad that our friends on the other side see it as some sort of humorous joke that Mr Gilmore is prepared to share the benefit of that experience and the need to raise these securities and invite empathy with his past taking of the risk and somehow that is a bit funny. Well I find that particularly sad especially given the dearth of business experience on the other side of the Chamber. Yes the Opposition has a few lawyers which is always good. The world needs more lawyers I am sure the public will agree but really there is an absolute dearth of business experience among members opposite and I find it really sad that somehow that should be seen as a bit of a joke. 
I will also touch on the comments made by the soon-to-be former member for Christchurch East about her investing without proper advice being available. Let us bear in mind that the whole purpose of the amendment we are discussing is that the provision is for people who have already invested at least $500000 in the organisations that are issuing securities and have already gone through the necessary due diligence to assure themselves that they have all the information on which to base their initial investment decision. Yes we can talk about what other information they need and about the time frame between 12 and 18 months. I think that is probably semantic but it is an appropriate response given the select committee’s careful consideration of that issue. 
I also acknowledge Mr Chauvel’s contribution about this legislation being seen to broaden and deepen the financial market’s ability to raise cash. I think he said the bill is a small contribution to that goal and not ambitious. I find that somewhat disingenuous particularly in the light of the very deliberate but rather small steps the previous Minister of Commerce took in this regard. Of course every journey starts with an initial step and it is quite clear that these amendments will improve the ability not only of investors to invest easily but also there is the issuing of securities which is a significant burden on the issuer and we have not talked so much about the benefits of these changes on the issuer themselves. Obviously this is a less invasive regulation that they need to comply with and something they will benefit from. 
I applaud the Commerce Committee for the work it has done on this legislation. I am also interested in the comments made about whether there will be an inquiry into the failed finance companies. I am not sure whether that decision has been made and I will certainly defer to the chairperson of the Commerce Committee in that regard. What is certain and I understand the Minister has said this too is that we should not cut across the existing inquiries by the Commerce Commission and other authorities into that collapse. We need to tread carefully in that regard and I am sure the committee will. I support this bill. I think it will be extremely positive. It is a small but significant step in reducing the compliance for issuers and taking away some of the problems for experienced investors. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I rise to speak to Part 1 of the Securities Disclosure and Financial Advisers Amendment Bill. The bill is a step in the right direction in this recession a recession the likes of which we have not seen since the 1930s. The bill attempts to deal with some of the struggles that businesses are facing in raising capital giving certainty to those companies. 
Around 11 New Zealand finance companies are unaffected by receivership moratoria or restructure according to a report that was considered by the Commerce Committee. That report was the very helpful  
New Zealand Finance Companies Report 2008 
 prepared by McDouall Stuart. There used to be a lot more of these companies before the pinch of the recession and many of them are presently busy restructuring and dealing with falling levels of reinvestment from retail deposits. 
This bill attempts to deal with the struggles that finance companies are having by providing for the use and regulation of a simplified disclosure prospectus by stock exchange - listed issuers offering certain debt and equity securities. Amongst the sector there is some hope though thanks to the previous Labour Government’s fast attempts to guarantee retail deposits in these tough times. Until the guarantee scheme was announced we did not see a recovery from the debenture downturn that was being faced by most of the sector. 
The “buy now pay later” approach that has become so ingrained in many New Zealanders is over. New Zealanders have traditionally had a poor record of savings in New Zealand and that has been worrying. Savings are important during recessionary periods because we can never be sure of what is around the corner. That is why KiwiSaver—a Labour Government initiative—was so important. Unfortunately KiwiSaver is now being eroded. 
The poor savings record of New Zealanders has resulted in a reliance on offshore funding and KiwiSaver simply makes sense as a voluntary savings initiative that was designed to make it easier to save for the future. But on the election of this Government one of the Government’s priorities was to examine KiwiSaver. As with many initiatives the Government decided there was room for change and then it decided to gut the scheme. Any of the changes made to KiwiSaver simply go against what the scheme was set up for. 
With regard to global pressures I tell members there has been encouragement in the recovery of household savings. That should contribute to an improvement in New Zealand’s external balance over the next few years according to a May press statement from the Reserve Bank stating that the global financial crisis is still affecting New Zealand. 
The explanatory note of the bill states: “The Securities Disclosure and Financial Advisers Amendment Bill responds to the current international financial crisis by removing unnecessary impediments to capital raising while ensuring the timely disclosure of relevant information to prospective investors.” Finance companies have been heavily hit by the recession because they were typically the holders of second or subsequent mortgages that took direct hits and it was the start of the property market downturn in 2007 that was the crucial turning point of the collapse of New Zealand finance companies. 
It is interesting that of those finance companies that struck problems most opened their doors only 5 or 6 years ago. It was Labour that set up the Capital Market Development Taskforce in July 2008 which is where I understand many of the proposals contained resulted from and I thank the Hon Lianne Dalziel for taking that initiative. 
Another initiative that this Government could have taken but decided against was the inquiry into bank profits by the Finance and Expenditure Committee. Today Labour the Greens and the Progressive party will hold the equivalent of this inquiry as announced today in a joint statement. Labour wants ordinary New Zealanders to share their views—and we are listening unlike Government members on the other side of the Chamber. 
TIM MACINDOE (National—Hamilton West) 
: 
 I am pleased to hear the new member for Dunedin South taking a reasonably serious response to this issue because like my admirable colleague Mr Woodhouse the future member for Dunedin North I have been particularly concerned as I have sat in the Chamber for the last three-quarters of an hour— 
Hon Members 
: Ha ha! 
TIM MACINDOE 
: It has happened before I say to members opposite and it will happen again. It was not so long ago that Dunedin North was held by the National Party and if ever the conditions were right for us to recapture the seat they have to be right now. And if ever there was a member more likely to do it it would have to be Michael Woodhouse. I look forward to seeing Mr Woodhouse emulate the feat of Richard Walls in 1975 and it is tremendous to be able to welcome the retiring member the Hon Pete Hodgson into the Chamber as I do so. 
It has been a bit disturbing to hear members opposite tonight taking a fairly cavalier approach to what is a pretty serious issue so I am delighted to be able to take a call to lend my support to the amended Part 1 of the Securities Disclosure and Financial Advisers Amendment Bill. I commend the Minister the Hon Simon Power for yet another measure that he is personally spearheading through this House. He is tackling an issue of tremendous importance to many New Zealanders. I also acknowledge the hard work of members of the Commerce Committee. Like my good friend and colleague Mr Bennett I was not a member of that committee but I am aware of the fact that a huge amount of work has gone into this bill as members have considered many amendments and I am sure they have brought forward a bill that is much improved as a result of their efforts. 
I am surprised and disappointed that although some members opposite have occasionally risen tonight to take an inaudible and incoherent call or to make the odd interjection they have broadly speaking shied away from speaking as often as they could despite apparently as we have just heard from the previous speaker and from Ms Dalziel being pretty much in favour of this measure at a time—and this is the really important point—when businesses around this country and certainly in my electorate are really crying out for capital to enable them to continue producing and trading in these incredibly challenging times. I am really pleased to be here tonight to represent those in my electorate who say that this measure is desperately needed and to stand in strong support of my colleagues who have received the same message. This is a Government that is listening to the needs of the people this is a Government that is listening to the needs of the business community and this is a Government that is producing pragmatic appropriate steps as the need arises. This legislation is definitely an approach to economic management that is finding favour in the community at large. 
I doubt whether there are many constituency MPs who are not being contacted by local business owners in their electorates almost on a daily basis who urgently need to be able to raise capital to continue operating to continue employing and to continue producing and trading to earn foreign exchange. 
Hon Lianne Dalziel 
: How many of them issue prospectuses? Seriously how many have contacted you? 
TIM MACINDOE 
: Undoubtedly that is why most submitters I tell Ms Dalziel were in favour of the overall thrust of this bill—she can carry on talking but she has to say something that is worth listening to—and in particular in favour of a simplified disclosure regime. 
My colleague Aaron Gilmore drew on his vast international and commercial experience to highlight the obvious benefits of this measure much to the obvious delight of Opposition members and we on this side of the Chamber share their deep appreciation of his expertise. As he and my colleague the member for Napier both noted this bill is yet another important measure in the National Government’s prudent pragmatic and determined commitment to guide New Zealand through—let us remember—the worst global recession not only in my lifetime but since the great recession of the 1930s. Inevitably with a measure— 
Hon Lianne Dalziel 
: Look how many issuers have approached you? Tell me; name one. Name one issuer— 
TIM MACINDOE 
: I could name many of my constituents but as an experienced member like Ms Dalziel well knows that would be totally inappropriate. However I am more than happy to have that discussion with her outside this Chamber and look forward to doing so very soon. There will always be some who claim that a Government is not going far enough and sure enough that came through in the submissions. 
RAYMOND HUO (Labour) 
: 
 Labour supports the Securities Disclosure and Financial Advisers Amendment Bill— 
Hon Members 
: Hurrah! 
RAYMOND HUO 
: Thank you for that. The bill is intended to make capital raising more efficient through reducing costs to issuers while ensuring that the level of information provided to potential investors is not reduced. 
The bill is in two parts. Part 1 amends the Securities Act 1978 and Part 2 the Financial Advisers Act 2008. After this Committee of the whole House stage the legislation will be divided into two separate bills: the Securities (Disclosure) Amendment Bill and the Financial Advisers Amendment Bill. The intended benefit of the reform is usefully summarised by Bell Gully: “The obvious advantage for listed issuers is to reduce the time and the cost of complying with the full (prospectus and investment statement) disclosure regime. The simplified disclosure prospectus would not seek to reduce the amount of information available to investors instead simply to reduce duplication. As a result relevant announcements and information made through the continuous disclosure regime will need to be referenced (incorporated by reference) in a simplified disclosure prospectus and made available to investors.” 
At the bill’s second reading I cited as an example of the simplified disclosure prospectus that an offer of fixed-rate bonds for Auckland International Airport Ltd—which was prepared for illustrative purposes—could be succinct enough to be limited to 25 pages compared with the 300-pages of the original investment statements and prospectus. That demonstrates the simplification that is possible through avoiding the duplication of material including material released under continuous disclosure. I thank officials for the great efforts they have put in. 
Part 2 amends the Financial Advisers Act 2008— 
The CHAIRPERSON (Lindsay Tisch) 
: No we are on Part 1. 
RAYMOND HUO 
: Part 1 yes. The Commerce Committee of which I am a proud member spent a considerable amount of time deliberating clauses in relation to exemptions. The Securities Act 1978 provides exemptions from standard disclosure requirements for certain investors who because of their experience knowledge wealth and existing relationship with the issuer are assumed not to require the standard level of protection the Act offers. The appropriateness of those exemptions will be reviewed in the current full review of the Securities Act which forms part of the Review of Financial Products and Providers. 
However Labour members of the Commerce Committee have concerns about the wealthy investor category. As the Hon Lianne Dalziel and my friend and colleague Charles Chauvel said earlier although we do not oppose the specific amendment we are concerned that changes are being made to the wealthy investor exemption when that exemption may be repealed as part of the review of the Securities Act. I note that in the relevant Review of Financial Products and Providers the discussion document described it as the “least principled of all the exemptions.” 
To conclude I say that this bill is designed to remove impediments to raising capital without undermining investor protection. Labour supports those proposals which are the outcome of recommendations made by the Capital Market Development Taskforce in November 2008. The Labour-led Government launched the task force to identify ways to improve access to capital. It is great to be able to support legislation that we began. I congratulate the Hon Simon Power on adopting this great initiative. Thank you. 
HEKIA PARATA (National) 
: 
 Tena koe e te Heamana huri noa i te Whare tena tatau kia ora tatau katoa. 
[ 
Greetings to you Mr Chairman and to us all throughout the House greetings. 
] 
Te Ururoa Flavell 
: Kia ora. 
HEKIA PARATA 
: Kia ora tungane. I am pleased to rise and take a short call on the Securities Disclosure and Financial Advisers Amendment Bill tonight. This is one small step as has been pointed out by others at a time when we are discussing landing on the moon but it is a small step of a different kind. As my colleague Mr Macindoe indicated it is characteristic of the approach of this Government which is pragmatic and practical. The approach is characterised by a short medium and long-term outlook in relation to all that we do. So although some of these initiatives such as the one we are debating tonight are small in the scale of things they nevertheless contribute to the longer-term outlook on how we free up the environment so that businesses in New Zealand can be successful not only now while we face this recession but also long into the future. 
We are facing one of the biggest challenges of our time and it is important that we bring to bear a range of possibilities that will make it easier for New Zealanders to achieve the goal of this Government which is to facilitate a better quality of life for all New Zealanders. The way that quality of life will be achieved is by ensuring that we can grow our economy that there are jobs and incomes available to New Zealanders and that they are not buffeted too badly in the recession and more than that that in the medium to long term they are able to invest in businesses with confidence and confidently attract investors. This bill contributes to that kind of environment. In Part 1 we are concerned to ensure that investment can continue that businesses are able to raise capital and that we can simplify disclosure while at the same time allowing businesses to focus on their business rather than being overburdened by compliance and reporting. We want all businesses to benefit from this kind of simplified environment whether they are small medium or large. 
As I have said the goal of this Government is to increase growth and productivity such that we can look forward to an improved quality of life for all New Zealanders. How does this bill contribute to that? It amends two separate Acts: the Securities Act 1978 and the Financial Advisers Act 2008. The objectives are twofold. In the first instance the objective is to respond to the global financial crisis by removing unnecessary impediments to raising capital in New Zealand while also ensuring the timely disclosure of relevant information to prospective investors. The bill implements changes to simplify this process and to reduce the costs of compliance with existing securities legislation. The bill addresses a number of the recommendations made by the Capital Market Development Taskforce and as I have already said it is part of an urgent response to the current global financial crisis. It is part of the Government’s commitment to helping New Zealand get through the economic downturn in the best possible condition. 
I understand that there were a number of submissions on the bill. Like my colleagues before me I congratulate the Commerce Committee on the work it has done. I also acknowledge the previous speakers on this bill in particular my colleague Mr Gilmore. I share in the comments of my colleagues Mr Woodhouse and Mr Macindoe that it is a sad day indeed when members choose to disparage the experience and competence of someone who has direct experience in the industry when that person has the opportunity to bring that experience to bear in the Chamber. I should have thought we would be able to celebrate contributions of the kind that Mr Gilmore has been able to share with us. I look forward to continuing contributions of the calibre that Mr Gilmore has to offer us. 
Returning to the bill I say that I have personal experience— 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I want to remind people what the Securities Act 1978 is about. It is investor protection legislation. It is not there to make it easy for business to raise capital; it is designed to protect investors. That is its function. I will set out for members opposite—because it is obvious that they have not been listening—why we agree with this particular amendment. But I also point out that anyone who stands in this Chamber and ignores the fact that the Act was designed in 1978 under a National Government to provide investor protection should remember that that is what the legislation is for. 
The premise underlying the Act is that the best protection for investors lies in full timely and accurate disclosure of information material to investment decisions. This allows investors to make informed decisions on the potential risks and rewards of their investment choices and to take responsibility for their own investment decisions. 
Let me make another point. Everyone who has spoken has talked about the recession. Everyone has spoken of it. Why did it happen? Can anyone remember what started the global financial crisis? Members on the other side of the Chamber want to ignore the fact that people were allowed to get away with dishonourable immoral and unethical conduct in the business world whereby they took money off investors knowing full well that their interests had not been disclosed and explained to those investors. They allowed investors to lose a considerable amount of money as a result. At the end of the day New Zealand was protected from the full impact of what happened internationally by banking regulations that were enforced and were not able to be opted out of with a sweetheart deal on insurance as was the case with AIG in America. 
I think people should remember that regulation in this area is absolutely vital to investor protection and to confidence in the markets. When that confidence goes look what happens! We have heard people talking about finance company failures in New Zealand. When one fell over it had an impact. When two fell over it had more of an impact. When three fell over the rest started to tumble. Investor confidence must be drawn back into our capital markets. That is one reason why we established a Capital Market Development Taskforce. 
Labour accepts this bill because it is a relatively small adjustment to the rules. It is a relatively small adjustment and we do not see any great risk associated with these particular amendments. They go nowhere as far as the Capital Market Development Taskforce wanted to go. These changes are very minor compared with what it asked for. But we are prepared to go with the bill because we have assessed it against the level of risk that people will be asked to take. I think this House is in danger of overstating the importance and impact of this particular legislation. 
The one matter I have an issue with and one that the Minister will not respond to relates to why we are adjusting the wealthy investor provision at all when in fact I hope it goes as a result of the fuller inquiry now being undertaken into the Securities Act with the review of securities offerings. We mentioned it in the report back from the Commerce Committee because it is stated to be the least principled of all the exemptions. Just because someone has a lot of money at a particular period of time does not mean he or she is no longer in need of protection in terms of full timely and accurate disclosure of information. 
It is really important that we get on with the major piece of work that is coming in terms of the review which is why I am disappointed that the Minister has not responded to the question about why we should bother amending the wealthy investor provision. I hope he will give us some guidance as to where the Government might be going with that particular review. I hope that matter is before the House in the not too distant future. 
KEVIN HAGUE (Green) 
: 
 I agree with the analysis that has just been presented by the Hon Lianne Dalziel but I differ from her conclusions. The origins of the Securities Disclosure and Financial Advisers Amendment Bill predate the financial crisis. I have spoken in the Chamber on a couple of occasions now about the events that have occurred in the world since 2006. The crisis if anything must surely have taught us that the balance proposed by this bill between access to capital for businesses on the one hand and protection for investors on the other hand has been struck in the wrong place. The events of the crisis should have caused the Government to rethink where that balance is to be struck. In this case the increased risk to investors on the one hand outweighs the marginal benefit to businesses from somewhat increasing their access to capital. The Green Party opposed the bill at its first two readings and will continue to do so. 
I will talk about one of the matters at the heart of the bill because it is a fundamental matter of political philosophy. It is the extent to which people should be protected from the consequences of their own decisions when those consequences are adverse. This bill touches precisely on that point. It is all very well to say a fool and his money are easily parted and the fool should take those consequences but the reality in this case is that actually we all pay for the cost of those poor decisions. In excess of $7.1 billion worth of New Zealanders’ wealth was invested in the finance companies. Now at least $1.7 billion worth of that wealth is tied up in the various finance company moratoria. That represents an enormous erosion of national wealth. In other words we all face the consequences of the poor decisions made by those individuals. There are other consequences. Those individuals who were relying on those investments for their retirement savings will now be coming to the State and saying they need support. The issue is not as simple as saying the individual must face the consequences of his or her actions because we all face those consequences. 
I want to draw the House’s attention to the report by the Morningstar Group which reviewed a number of countries for their friendliness with regard to investment. The report looked at Australia Canada China France Germany Hong Kong Italy Japan the Netherlands New Zealand Singapore Spain Switzerland Taiwan the United Kingdom and the United States and it looked at a variety of criteria. Overall New Zealand ranked dead last of all of those countries in relation to our friendliness to investment. In particular the issues on which we ranked the poorest—with a D minus—were in relation to our disclosure provisions and investor protection. Those are the very provisions that this bill seeks to relax. 
I know that the Government will say that the bill does not represent a relaxation of the disclosure provisions because investors can still find the same information through the continuous disclosure procedures. However the reality is that that represents an erosion of the accessibility of the disclosure information and a reduced accessibility of the information effectively amounts to the same thing as a relaxation of the provisions. The bill is relaxing the disclosure provisions at the precise time when around the world everyone is saying we need to increase transparency and disclosure. It is clearly the wrong direction for New Zealand to be moving in to relax those provisions. 
I will conclude by also referring to the wealthy investor provisions and to heartily endorse the comments made by Lianne Dalziel. There is no place for those provisions. I have spoken previously in the Chamber about Madoff’s Ponzi scheme and about the very compelling demonstrations that have been provided both in New Zealand and around the world of the relative inability of wealthy investors to make wiser decisions than the rest of us. Once again I say we all face the consequences of their poor decisions. 
The question was put that the amendments set out on Supplementary Order Paper 30 in the name of the Hon Simon Power to Part 1 be agreed to. 
Amendments agreed to. 
Part 1 as amended agreed to. 
Part 2 Financial Advisers Act 2008 
DAVID BENNETT (National—Hamilton East) 
: 
 It is a pleasure to speak on Part 2 of the Securities Disclosure and Financial Advisers Amendment Bill. Part 2 deals with some amendments to the Financial Advisers Act 2008. It seeks to correct some small errors in that legislation and to make sure that those minor and technical changes are made in a way that ensures the Financial Advisers Act is complete and effective. 
Some of those minor issues relate to bigger issues. I refer to some of the issues that were discussed in the last term of the previous Government in regard to financial advising. “Retirement villages disclosure statements” is one of the headings in the commentary. When we looked at retirement villages we saw that there was quite a bit of debate about retirement villages in the last term of the previous Government. Any constituent MP has probably dealt with retirement villages and the need for disclosure that came about in the last term of the previous Government. Some villages felt that they needed an exemption from that disclosure and felt that the rules were too onerous. This legislation inserts a new clause 16A “clarifying that the disclosure statement which operators of retirement villages must make under the Retirement Villages Act 2003 does not constitute financial advice for the purposes of the Financial Advisers Act.” This new clause just clarifies the requirements in respect of disclosure statements for retirement villages. 
Another minor change that Part 2 makes to the Financial Advisers Act covers some minor drafting errors. Clause 16B corrects a minor typographical error in section 17(1) of the Act and clause 16C amends section 18(1) of the Act to reflect that an agent is engaged rather than employed. That may seem like a very simple difference but it is reflective of the nature of Labour Party members. They could only ever expect somebody to be employed. They would never expect someone to be engaged because they do not have the level of understanding of business that National members have. I think that change is very symbolic as it shows the fundamental difference between the two political parties. One political party understands business and is doing what is in the best interests of New Zealand companies and New Zealand investors so that we have a strong investment climate in these economic times. Members on the other side of the House try to play on keeping people under the thumb of the Government and under too many rules and regulations. It does not like to see people succeed and make choices and make investments because it wants to be able to control those things. 
Todd McClay 
: They don’t trust New Zealanders. 
DAVID BENNETT 
: They do not trust New Zealanders as the member for Rotorua rightly points out. Although the change in that clause is a minor one it is actually quite a major shift in the sense that it shows the balance between the political parties and it reflects the nature of business. 
Another slight change is the alignment with the Financial Service Providers (Registration and Dispute Resolution) Act 2008. It removes an unintended conflict between the registration requirements under the Financial Advisers Act and the Financial Service Providers (Registration and Disputes Resolution) Act which stated that it did not apply to employees of financial service providers when operating in the capacity of employees. However the Financial Advisers Act generally requires individuals to be registered in their own right. It is a matter of dealing with that inconsistency and that is what the amendment does. It proposes that employees of financial service providers would not be required to register and belong to a dispute resolution scheme unless the individual were required to do so under the Financial Advisers Act. 
That is another very important change. It may seem minor in its effect but it is about balancing the equation and making sure the rules and regulations around financial disclosure and financial advisers are correct and are suitable for the economic environment we are facing. There is nothing worse than having technical errors in legislation that deals with quite important issues and with people’s money and the economic future of this country. 
AARON GILMORE (National) 
: 
 It is a pleasure to rise and talk about Part 2 of the Securities Disclosure and Financial Advisers Amendment Bill. 
Hon Clayton Cosgrove 
: What a genius! 
AARON GILMORE 
: The member for Waimakariri called me a genius and I think that is quite interesting because I taught that member when he did his MBA classes a number of years ago and he was not very clued-up at that stage. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Chairperson. I just want to advise you that I slept through the lectures he gave. 
The CHAIRPERSON (Lindsay Tisch) 
: I am sure that is pertinent to the debate! 
AARON GILMORE 
: Thank you Mr Chair. That was a wonderful contribution by the member! We are talking about Part 2 and I want to talk about some of the issues that were touched on by my colleague Mr Bennett. He touched on a couple of really important aspects particularly the issue of engagement versus employment. If members have worked with any sort of financial adviser they will know that advisers have letters of engagement not letters of employment for their activities. That is actually quite an important subtle and technical change. I think that even lawyers or accountants generally do not believe they are giving letters of employment; they give letters of engagement. So this is an interesting bit of clarification in the bill. I think it is an important change and a good change. It is a wonderful step to take if it means that we again move a little bit of the red tape that exists in the system and give a bit more clarity. 
The next issue I want to talk about is a related point that exists around the issue of liability and the exemption of liability for some financial advisers. We are making it quite clear what this bill applies to in terms of whether a person is a financial adviser and we are making it quite clear as to when a liability may or may not arise. It is one matter to say it does not apply; it is another matter to say that a liability may or may not arise. New section 75 inserted by clause 16E clarifies that quite significantly and makes it quite clear when a financial adviser is exempt from liability. 
Mr Bennett touched on some of the subtle tidy-up issues that exist in this bill such as little typos and issues about what area is covered. I notice that some changes have been tabled. One in clause 19 is the omission of the words “by a person in New Zealand” which is an interesting aspect as the current Act currently states “by a person in New Zealand”. The other aspect is around the dispute resolution service. That is quite important because some of the issues that arise around dispute resolution for financial advisers can be quite complicated. Letters of engagement rather than letters of employment can be quite unclear and uncertain and quite short and there can be some issues between the client and the provider of the service. 
Clause 19A provides some clarity by inserting new section 161A and I think that is another positive step to reduce some of the red tape and some of the confusion that exists in the capital markets. As somebody who has operated in the capital markets—and I enjoyed the hilarity from the other side of the Chamber when my experience in the capital markets was pointed out—I was pleased to work under the gentleman who was the chairman of the Capital Markets Development Taskforce Rob Cameron. He was my boss for a number of years and he was a good boss to work under. 
Charles Chauvel 
: Were you employed or engaged? 
AARON GILMORE 
: Some of these changes that were put forward are wonderful things—I will ignore that comment from that gentleman. One of the issues we have here is that if these changes in Part 2 bring in more clarity and get rid of a bit of red tape and allow some of our capital markets to be able to get into a position where they can raise funds faster more cheaply and more efficiently it gives more capital to other firms and gives them the ability to get into the markets faster and to help create jobs. That is what we are worried about in this day and age in some shape or form. 
There is a myriad of other minor amendments in this bill and we could touch on them. But I think that one of the big issues goes back to such things as a clarification between engagement and employment; when a liability does and does not apply; and clarifying whether someone is a financial adviser. One of the issues is about clarifying when dispute resolution may or may not apply. I think they are all very good and positive changes and I think the bill is one we on this side of the Chamber definitely applaud. We believe it is a step however small it may be towards improving some of the issues in the capital markets. Thank you. 
AMY ADAMS (National—Selwyn) 
: 
 I will make a short contribution on Part 2 of the Securities Disclosure and Financial Advisers Amendment Bill this evening. As I look through the bill and the revision-tracked version that has come back from the Commerce Committee one thing jumps out about Part 2 which is the tremendous amount of work that the select committee did on amending it. We can certainly see as we look through the revision-tracked version that the select committee has worked hard and has contributed significantly to Part 2. 
I know that when the bill first came before the House for its first reading Part 2 was much shorter. It was designed just to catch one or two small technical drafting errors. But in all seriousness I think the select committee is to be commended for taking the time to pick up address and deal with other errors that came to light. 
The Financial Advisers Act 2008 which Part 2 amends is a new Act but notwithstanding that clearly some errors slipped through the original consideration of it through whatever means. It is incumbent on this House not to just charge ahead and make new laws; we need to take the time to look back reflect make improvements and correct errors when we find them. 
The speakers before me have touched on a few of the provisions of the bill and there are just one or two more that I want to come back to. We have heard about a retirement village’s disclosure statement and we have made it quite clear that that is not financial advice. The bill clarifies the liabilities of employees of qualified financial entities employees agents and the like. 
It sounds like pretty dry stuff but when one is working with companies in this space that are trying to sort out their liability any confusion around the wording of the legislation and any lack of clarity through an insufficient process on our part in this House has very serious consequences for those companies. It creates huge amounts of doubt and it costs them consultant time and lawyers bills to try to address the issues. It is really incumbent upon this House to make sure we go back and make our intentions very clear in order to remove doubt so that those companies do not have to live under the fear that they are somehow committing an offence that was not intended. The natural meaning of the legislation’s wording as interpreted by the court could well make someone liable for something that was not intended. That was certainly potentially the case for employees and agents of qualified financial entities. Now we have clarifications in Part 2 that address that side of things. 
In this regard I will touch on some of the earlier contributions. A lot of the discussion has been based on whether the bill is about protection or about toughening up and about what we are doing with the bill. It is not a case of good and bad. It is not just about whether we should be tough or weak. It is as much about saying that here is a particular issue that we should address on its merits. We are not taking a broad-brush approach. We are not just cracking down on everything or loosening up on everything. Part 2 shows us specific situations of where what is there now in the legislation is not quite right. Whether those situations have come about as a result of policy change or circumstances change or whether the bill is simply picking up oversights it does not matter. If something is not right it needs to be addressed. 
When the Minister of Commerce introduced this bill and then in his second reading speech he made it clear that this bill was put together quite quickly in response to severe and urgent financial times and that it is part of a more comprehensive overview. So let us not look at this bill and wonder about what it is not doing; let us recognise that it is highlighting deficiencies and seeking to address them quickly. It is ensuring that the people who work in this space can do so with a very clear understanding of what this House intended in the legislation and of the liabilities it sought to impose where they have to comply when they had to be registered and when they did not. 
In particular one of the oversights or loopholes that has been corrected and clarified was the change to the Financial Service Providers (Registration and Dispute Resolution) Act which would have meant people were exempt from the obligation to register as financial advisers. That was a loophole that was not intended. With the correction that has been put in place in Part 2 we can be sure that a more comprehensive regime is in place that will ensure that financial advisers who are to be registered properly under the intent of the Act now will be when they would not have been before. 
I know I have made this point in respect of other bills and this bill might not change the face of business in New Zealand as we know it but for the people who are affected by this legislation once again I say that it is important. It is significant. We should not measure the worth of our legislation by the thousands of people who are affected by it. To those people whom the legislation affects it is real it is serious and it deserves our consideration. For that reason I am very happy to support the Part 2 amendments that have been reported back to us in the Committee stage. I have gone through them and I think the Commerce Committee should be commended for its work and for picking up the additional errors and addressing them. In doing so the committee has saved a huge amount of time cost concern confusion and compliance time that would otherwise have resulted. 
The question was put that the amendments set out on Supplementary Order Paper 30 in the name of the Hon Simon Power to Part 2 be agreed to. 
Amendments agreed to. 
Part 2 as amended agreed to. 
Clause 1 agreed to.  
Clause 2 agreed to.  
The Committee divided the bill into the Securities (Disclosure) Amendment Bill and the Financial Advisers Amendment Billpursuant to Supplementary Order Paper29. 
Bill reported with amendment. 
Report adopted.