Trustee (Public Trust) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeTrustee (Public Trust) Amendment Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 08 May 2013. Volume:689;Page:9810. Text is incorporated into the Bound Volume.]Trustee (Public Trust) Amendment BillFirst ReadingHon JUDITH COLLINS (Minister of Justice): I moveThat the Trustee (Public Trust) Amendment Bill be now read a first time. This bill clarifies the process for appointing a replacement securities trustee. Section 46 of the Trustee Act allows the High Court to appoint Public Trust as replacement trustee for any trustee who wishes to retire or resign. This rule was first enacted in 1899 to ensure that family trusts or estates did not fail for lack of a trustee. Trusts have significantly changed since then. Trusts have become increasingly popular for commercial uses including raising money for the public. Some of the rules applying to traditional trusts are out of place when applied to corporate trusts. A trustee of a failing or failed finance company trust can ask the court to appoint Public Trust as replacement trustee. This was not envisaged when the rule in section 46 was enacted. To date this rule has never been used to appoint Public Trust as a securities trustee. If it is used in this way securities trustees will be able to walk awayfrom their responsibilities by asking the court to have Public Trust appointed in their place.There may be very good reasons for appointing Public Trust to stop a family trust from failing but we need a different approach for appointing a replacement trustee for a finance company. That approach is coming in the Financial Markets Conduct Bill which is currently before Parliament but it will not begin to come into force until 2014 and we need change now. The law puts Public Trust on an unequal and unfair playing field. It is unequal because the existing trustee is not required to contact other trustees in the market and try to negotiate terms with them to act as a replacement trustee. It is unfair because the current legislation does not ensure that Public Trust’s reasonable fees and expenses will be met. Although the court has discretion to award costs to Public Trust it is unclear whether and how this discretion will be exercised. This is not a hypothetical risk; it is real and it is happening now.Perpetual Trust is trustee for the failed finance company Capital + Merchant Finance. Perpetual Trust has applied to the High Court to have Public Trust appointed as replacement trustee. Public Trust is unlikely to recover its expenses from the company. This bill does not seek to affect those court proceedings. Public Trust will have to wear the cost if it is appointed. The bill will remove the risk of the case setting a precedent. Public Trust could be appointed as replacement trustee for many more failed finance companies. There are 60 finance companies currently in receivership liquidation or moratorium. It would take only a few appointments of the same scale as Capital + Merchant Finance for Public Trust to incur more than $1 million of unanticipated and unfunded costs. Furthermore Public Trust may incur more than a significant financial burden. Being a trustee for failed finance companies may impact on Public Trust’s reputation and brand. It will put Public Trust at a competitive disadvantage. Its current business activities will need to be reprioritised. Public Trust is required by law to operate as a competitive business. To place on it the burden of acting as a replacement trustee for securities trustees puts it at an unfair disadvantage in the competitive market.This bill makes an urgent amendment to the Trustee Act. The amendment will clarify the process for appointing replacement securities trustees. Securities trustees are those who supervise offers of securities to the public under the Securities Act 1978 and are licensed by the Financial Markets Authority under the Securities Trustees and Statutory Supervisors Act 2011. Instead of allowing a securities trustee to merely resign or retire and ask the court to appoint Public Trust as a replacement this bill requires more effort on behalf of the retiring trustee. A retiring securities trustee must make reasonable endeavours to appoint a replacement trustee. Reasonable endeavours include offering to pay the replacement trustee’s reasonable fees and expenses. If it is impractical or difficult to appoint a replacement trustee the court may assist. Public Trust may then be appointed as a replacement trustee.The requirement on the retiring trustee does not end there. If the trust cannot cover Public Trust’s reasonable fees and expenses the retiring trustee must do so itself. These changes place an appropriate responsibility on the retiring securities trustee. The trustee of last resort should really be the last resort. The retiring trustee should demonstrate that it has made reasonable endeavours to find an alternative trustee and Public Trust should not have to incur the costs without being compensated for them. The retiring trustee should ensure that Public Trust’s reasonable costs are met in taking on this role. If the trust cannot do so it is not fair that one licensed trustee that just happens to be owned by the State should have to underwrite the risk that private sector securities trustees take on when they become trustees of finance companies and for which they have been compensated. This amendment is needed and it is needed now to protect Public Trustfrom the significant burdens of being required to act as a replacement trustee for retiring securities trustees. I commend this bill to the House.Hon TREVOR MALLARD (Labour—Hutt South): The Labour Opposition will support the first reading of this bill the Trustee (Public Trust) Amendment Bill and will be interested in explanations from other Ministers and those who are supporting the bill. I do not think there is any doubt around the principle of the bill. The fact is that currently the Public Trust looks like it is the designated receiver of hospital passes in a rugby sense. If there is something going badly wrong and there is going to be a loss involved toss it to the Public Trust because it will carry it. I think it probably comes from the days of thinking that when there is a problem give it to the Government. The private sector especially people involved in this sort of industry—and we saw it in South Canterbury Finance and a number of other places—thinks that if something makes a profit it is capital and if it makes a loss let us socialise it and get the Government to pay for it. I think the Public Trust was treated as that sort of organisation.I have had a lot to do with the Public Trust over many years. I used to get involved in delivering scripts to it when I still had short pants on. I think it is seen as an organisation that is upright and has integrity and should not be placed at risk of having to demand some sort of Government support as a result of the activities of organisations that have made a lot of money out of being trustees and have basically sucked organisations dry. When they work out that the cash flow is likely to stop they then seek to offload to what is seen to be a public organisation. I think that is wrong.My question for the Minister of Justice and for others goes to process and the necessity of using urgency to pass this bill. I mean I think the Minister does make a good point. She does not want to open the floodgates to similar organisations passing off their responsibilities as they see the gate closing. But my question to the Minister—and it goes to our support of this bill at its later stages—is for her to give a good explanation as to why an alternative approach could not have been taken. I know that she is deeply involved in important conversations but as the length of the sitting time of the House—Hon Judith Collins: I’m listening.Hon TREVOR MALLARD: Well the question I have got for the Minster is why she did not include in this bill an effective date of today for the shutting off of the gate and then send it to a select committee to make sure that there were not any unforeseen circumstances so that we knew exactly what we were doing so that the other organisations that she is seeking to shut out would have the opportunity to have their say and so that we could also make sure by getting the Law Society and others involved that we had the legislation absolutely right. Doing that—shutting the gate as at an effective date and maybe sending it off for a shortened period to a select committee and giving people the chance to have their say—in my opinion would have made Parliament look better.It would have meant that we had not rammed things through under urgency. It would have meant that the public could look at the process but we could have had the gate shut because the effective date could have been well probably today. It would have been appropriate for it to be 9 May rather than 8 May. That is the date on the wall but 9 May is the day of the introduction of the bill. In fact if the bill was tabled yesterday we could still have had the date of 8 May in the legislation as being the effective date. People know that the principle of retrospectivity does not apply when notice is properly given on the introduction of a bill. It would have been retrospective in effect in its coming into force but not retrospective in that people would have been aware of it coming into force from the date of its introduction.I know that it is you know relatively finely tuned. I know that it is certainly easier for the Government to ram it through like this. It gets it out of the way some time—you know 10 o’clock tonight or something like that the law will be changed it will go off to the Governor-General and will get signed tomorrow and that is the effect of all of that. But the question that I would like to get answered is whether the Government considered the alternative approach especially given the lack of consultation which is apparent from the regulatory impact statement—the fact that people who are affected by it have not been consulted. We know why they were not consulted because they could have shot in and lodged their papers—I understand that. But given the opportunity of having the select committee process to give the Government some consultation at that point but not to open the door to others why did the Government not take that approach?SCOTT SIMPSON (National—Coromandel): It is a pleasure to rise in support of the Trustee (Public Trust) Amendment Bill. The Public Trust of course plays a very important role and it has done so since its inception back in 1873. I am delighted to hear that the Hon Trevor Mallard is endorsing—Dr Cam Calder: Was he there then?SCOTT SIMPSON: No he was not there then but he was not far from it. I am delighted that he is endorsing the bill through its first reading. That is welcome because I think as further speakers and I go through this debate that we will be able to answer his questions.The Public Trust is the only Crown-owned trustee serving the corporate and business market in New Zealand and it is the largest trustee organisation in New Zealand. It is of course best known for services that it provides around wills and estates and administration as well as the work it does for New Zealanders around legal financial investment home loans conveyancing and estate protection.So what does this bill do? Well it will close a loophole to the principal Act the Trustee Act 1956. In particular this bill will clarify the process for appointing a replacement securities trustee for financial products regulated by the Securities Act 1978. The bill will shield the Public Trust from wearing the costs of having to step in and replace trustees of failed finance companies. Currently trustees can apply to the High Court and have the Public Trust replace them without any agreement by the Public Trust itself. Doing so exposes the Public Trust to the costs and risks of sorting out these trustees’ tangled failed financial affairs all on the tab of the long-suffering taxpayer via the Public Trust. So with 60 failed finance companies currently in receivership liquidation or moratorium the potential exposure for the taxpayer is simply unacceptable.The Hon Trevor Mallard asked why we should adopt this process. The reason is quite simple. It is that this bill provides an interim solution until the Financial Markets Conduct Bill which is currently before the House is enacted and comes into force. The Trustee (Public Trust) Amendment Bill makes it clear that if the court appoints the Public Trust as the trustee of last resort for securities offered to the public then retiring trustees must indemnify the Public Trust for its reasonable fees and expenses. This ensures that the Public Trust’s fees and expenses will be met by the retiring trustee if the trust cannot cover them itself. That seems to me to be eminently sensible and worthy of this House’s support and I commend the bill to the House.ANDREW LITTLE (Labour): I am happy to take a call on the Trustee (Public Trust) Amendment Bill. I can say this of the bill: we are supportive of the policy behind the bill and we will support the bill. I think the policy is a very sound one that if the Public Trust is to be called upon as the trustee of last resort in the case of collapsed finance companies or collapsing finance companies it is only correct that when theretiring trustees who wish to wash their hands of their responsibilities are looking for an alternative they should be required to have used their reasonable endeavours to look for an alternative other than the Public Trust. Then if in an application to the High Court the Public Trust is the only one left standing the Public Trust should be reimbursed or at least indemnified for the cost of taking on that responsibility.The truth certainly in relation to finance companies is that we are talking about corporate trustees. They are there in the good times and they charge fees and generate an income while the finance company is doing its best to take money and lend it. They may have whatever care or regard for the investors and depositors with them; they are quite happy to be there at that time and fleece the finance company and its depositors and creditors. But when it all gets too hard they want to flick responsibility and wash their hands of it. So I commend the Minister of Justice for adopting that policy and taking that approach.The question remains however as to why this bill has to be considered under urgency. There are two principal reasons. One is that the issue that underpins this bill is not new. The finance companies have been collapsing since 2008. The risk of an application to the High Court to nominate the Public Trust or appoint the Public Trust as a securities trustee for a failing finance company has been there at least since 2008. A question obviously arises as to why the Ministry of Justice the other appropriate authorities or indeed the Minister herself or her predecessor have not seen the risk and sought to move on it earlier. In that regard we have the Financial Markets Conduct Bill which is under way. In any event if it is passed it is not intended to take effect until next year.But this is not a new issue; it has been around. What we have is one application to the High Court by Perpetual Trust to appoint the Public Trust as a trustee for Capital + Merchant Finance. The other policy aspect is of course that if this bill should be passed if the Public Trust is appointed then the risk of loss to the Public Trust is mitigated by the indemnity. That however will not apply in the case of Capital + Merchant Finance and Perpetual Trust because the bill does not seek to be retrospective. That application has been with the court. It is due to be heard in a few weeks’ time. So any appointment of the Public Trust by the court cannot or will not take effect under this bill.The interesting thing about that is—and I have said this before about some of the personalities behind Capital + Merchant Finance—that one of them is Trevor Janes who was a director of Capital + Merchant Finance. Many directors in fact all the directors of Capital + Merchant Finance have been the subject if not of prosecutions by the Serious Fraud Office—and by that I mean successful prosecutions by the Serious Fraud Office—then of civil action by the Financial Markets Authority. The one director who has escaped attention for reasons that no one can understand and for reasons that have never been given is Trevor Janes.The interesting thing about Trevor Janes is that he is a favoured appointee of this Government. He was most recently appointed to the board of none other than ACC by the present Minister of Justice when she was Minister for ACC—she still is the Minister for ACC—as a consequence of the clean-out of that board following its crisis last year. Of course not only was he appointed to the board of ACC but he was made its deputy chair and the chair of the investment committee. He was a director of a failed finance company a finance company whose other directors have been the subject of prosecutions by the Serious Fraud Office and civil action by the Financial Markets Authority who found himself excluded from those actions and appointed by this Government to the board of ACC and as the chair of its investment committee. In thewords of that great English comedienne Catherine Tate I say: “What a liberty. What a liberty.” that that should happen.Mike Sabin: Give us the full version.ANDREW LITTLE: There is another word in that phrase but I understand that it is considered to be unparliamentary so I will not use it. But I simply say: “What a liberty.”Scott Simpson: It has something to do with ducks—something to do with ducks.ANDREW LITTLE: It might do. It might rhyme with it. I am not quite sure. It is a derivative of a word used I think by Aaron Gilmore not two weekends ago. But the point is that Capital + Merchant Finance and Perpetual Trust which was trying to absolve itself of any further responsibility for Capital + Merchant Finance will not have this bill applied to them. They have escaped the net. And it is only after they had escaped the net that the Minister the same Minister who appointed Trevor Janes a former director of Capital + Merchant Finance should seek to act under urgency to pass this legislation. I just go back to what the Hon Trevor Mallard said. That is not necessary. There is already legislation being considered by this House that would cover this situation and that is good. As I say the underlying policy is good but this could have been dealt with in a way that could have allowed proper and full consideration.It is interesting seeing the regulatory impact statement on this bill. It became available to us mere mortals in the Opposition only today. It is interesting seeing the regulatory impact statement because it refers to the limited amount of time the Ministry of Justice has had to consider the matter. It says that it has not been able to fully develop even one of the options that it was considering. It talks about the inability to consult with other trustees who will be affected by the proposed options and it talks about the inability to consult because of the litigation presently in the High Court. It talks about the lack of information about the financial implications of each of the options it was asked to consider before giving its report on this bill and notes that the Public Trust has had no experience up to now of acting as a trustee for a failed finance company.These are matters upon which there should have been proper evidence given to a select committee. These are matters upon which there should have been proper and considered deliberation by members of this House. Because of urgency we will not have that so we are flying blind. Not a blind trust of course but we are flying blind on this particular issue. That is a matter of concern when the issue could have been dealt with by simply saying in a bill that it will take effect from a particular given date so that should legal proceedings by other failed finance companies and their trustees follow there was then a clear signal and a clear warning that their legal action would be affected by the legislation before the House.Hon Lianne Dalziel: It has been done before.ANDREW LITTLE: It has been done before my colleague Lianne Dalziel tells me. So there is no need for urgency. All stages of this Trustee (Public Trust) Amendment Bill are expected to be passed now under this urgency motion. We will not have the benefit of considered evidence from experts and those experienced in the field. We are in that position because of dilatoriness on the part of either the ministry or the Minister of Justice and/or her predecessor and we are simply no better off. This is not good lawmaking. We are in the unnecessary position of having to consider this legislation under urgency.So although we will support the bill and we support the policy and the direction it is taking it in we do not support the process. The Minister is deserving of the harshest of criticism for adopting this process in this particular way.Hon Judith Collins: Ha ha!ANDREW LITTLE: She can laugh and giggle. She is looking after her mate Trevor Janes as she has done all the way along by appointing him to statutory roles. Of course her track record in statutory appointments this year alone is not a very good one but she has made it worse. She has exacerbated it by the passage of this legislation which was totally unnecessary.JULIE ANNE GENTER (Green): I rise to speak on behalf of the Green Party on the Trustee (Public Trust) Amendment Bill. The Green Party saw a copy of this bill only very late in the day on Tuesday. Today is the first day that I have had a chance to look at the regulatory impact statement and I would not say that I have had enough time to look at it thoroughly. As Andrew Little mentioned earlier even in the regulatory impact statement it says that officials have not had the opportunity to fully evaluate all the options they would have liked to deal with the problem that has arisen.The Green Party will be supporting the bill because we agree that there is a problem. We do think it is very important to protect the Public Trust from unforeseen financial liabilities that would arise from being appointed as a trustee of last resort for failed finance companies. However I have to agree with Andrew Little in saying that the process being adopted by the Government to put this bill through under urgency does not allow us to fully scrutinise and evaluate all the options. It is unclear to me at this point that the option that has been chosen and put forward in this bill is actually the best option for dealing with the problem.There is a very serious and significant question as to why the Government was not aware that this could become a problem until Capital + Merchant Finance applied to the High Court for the Public Trust to be appointed as a replacement trustee for Perpetual Trust. Why did it not realise that this was going to be a problem when the failure of finance companies has been going on for a number of years now? There is a huge number—60 failed finance companies as the Minister of Justice referred to and Perpetual Trust is a corporate trustee for 22 of these companies. I would have thought that it would be obvious that there would be a danger of something like this arising and the Public Trust suddenly having to become the trustee of last resort for companies that simply have not taken responsibility for their own risks and no longer have the money or resources available to handle all of the costs that are incurred as a result of their poor decisions.It is really important when dealing with the types of failures that we have seen coming out of the financial crisis that the public sector and Crown-owned entities are protected from having to bail out or otherwise incur financial liability for decisions that were made by the private sector—decisions that made some people a whole lot of money in the short term but now have resulted actually in a destruction of wealth. It is really important that the public sector is not stuck with that risk and forced to pick up the tab.We constantly hear from this Government that it is important to support the private sector and to support private business. That sort of model can work only if the risk is fully borne by the private sector and not the public sector when bad decisions are made.On the one hand we hear arguments that the public sector should not be putting money and investment into those who are the worst off and into public infrastructure that everyone can benefit from and the Government is looking for every opportunity to get private sector capital involved in what really should be public infrastructure projects like prisons schools and transport projects. It wants to get private sector capital involved not because there will be a cost saving to the taxpayer and not because there will be a benefit to the economy but because it simply guarantees a return for private investors over the long term.As we have seen the private sector has provided fewer and fewer opportunities for low-risk long-term sustained growth and returns. Now the private sector is looking for every opportunity to secure assurances that it will get returns on what are actually opportunities where the public is going to end up taking the risk and the private sector gets to benefit from it taking that risk.The Green Party is very happy to see that the Government is willing to take some steps to protect the Public Trust from financial liabilities incurred from these developments with the failed finance companies but we remain unconvinced that this is the best process that could have been taken in order to ensure that we do have a robust protection for the Public Trust. It remains to be seen whether this will indeed solve the problem. We will just have to wait and see. Until then the Green Party will be supporting the bill. Thank you.ALFRED NGARO (National): The Public Trust has been looking after the interests of New Zealanders since 1873. It is a Crown entity that is New Zealand’s largest trustee organisation and it provides for wills estates and administration services as well as services around legal matters financial matters investment trusts and home loans. The intent of this bill the Trustee (Public Trust) Amendment Bill is really to close a loophole to ensure that the Public Trust does not bear the financial burden of acting as a trustee for products regulated by the Securities Act if an existing trustee seeks to retire and apply to the court to have the Public Trust appointed in its place. In particular the main provision of the bill makes it clear that if the court appoints the Public Trust as a trustee of last resort for securities offered to the public the retiring trustee must indemnify the Public Trust for its reasonable fees and expenses. This in turn will ensure that the Public Trust’s fees and expenses will be met by retiring trustees if the trustee cannot cover them.This is a bill that has wide support across the parties. It is a good bill. It is small and technical in its intent but it definitely does serve a purpose for the wider part of New Zealand as well. I commend this bill to the House. Thank you.ANDREW WILLIAMS (NZ First): I will take a brief call on behalf of New Zealand First on the Trustee (Public Trust) Amendment Bill. We also will be supporting this bill. So it is being supported completely across the whole of the House which is a good thing. We have said in the past that New Zealand First will support good Government policy but oppose poor policy. In this case we believe this is good policy.The bill ties up and sorts out some loopholes to ensure that this taxpayer-supported entity the Public Trust is not exposed in any way. That is a good thing. It ensures that there are more safeguards to ensure that the public interest is put at the top of the list in terms of making sure that nothing untoward would happen to the Public Trust if something rebounded on it. This bill achieves that. It is only a very small technical bill. It is very much an administrative matter in that respect. It clarifies a situation and improves a situation that otherwise would have left the Public Trust perhaps exposed. In that respect New Zealand First will be supporting the bill.Hon KATE WILKINSON (National—Waimakariri): I just want to take a very short call to support the first reading of the Trustee (Public Trust) Amendment Bill. It has been very elegantly and efficiently described by the Minister of Justice earlier. There is not really much we need to do to elaborate on that. I would just like to say though in terms of process that I am not sure that there is any alternative if we are to avoid a queue of section 46 applications at the courtroom door. The Public Trust does not have a choice. It is only fair and reasonable that this loophole is closed. I support the bill.Hon LIANNE DALZIEL (Labour—Christchurch East): I have read the regulatory impact statement for this bill the Trustee (Public Trust) Amendment Billand I think that it is important to refer to it. It does traverse the history of the legislation. The legislation is doing something in this particular instance for which it was not originally intended. Originally it was intended to ensure that private trusts would not fail through the lack of a replacement trustee and I guess as we have moved into a modern environment with securities now having trustee appointments the potential for what has actually occurred in this one instance has in fact arisen. I think it is appropriate for the Government to act to cut it off at that point. So we are in agreement on this side of the House in respect of the intent of the legislation and the fact that it would apply from today’s date.But there are two different ways that you can make legislation apply from today’s date. One is to do what the Government is doing and that is to pass it under urgency through all of its stages without the benefit of a select committee hearing without advice from the Law Society and without advice from any trustee company. In fact the trustee companies could not be consulted on this bill when it was being developed because of course of the conflict of interest and the fact that it would alert those companies to the fact that the Government was going to do precisely this. So I actually think that the second option would have been the preferred way to go given those limitations and that was to announce that today would be the operative date for the legislation—that it would come into effect from today even though it would be passed in a fortnight’s time.I like everyone else would rather see the certainty of having the time-scale truncated but I for one would always prefer to hear what the Law Society has to say in a considered submission to a select committee and then have the officials respond to that and provide the committee with advice. Maybe it would have been more than a couple of weeks but with the date in concrete that would have prevented any other application being filed because at the simple transition point—and I can see Kate Wilkinson is shaking her head but the transition clause could simply say that any case filed after today’s date would not have the benefit of the application of that particular provision. So with a good deal of working through these issues I honestly think we could have come to the best of all worlds.The only thing that just concerns me is that we are now going to substitute that select committee process with a Committee stage where we will ask questions about amending the wording of section 46 of the principal Act. I guess that one of the questions that I will be wanting to know the answer to is whether this is the same provision that is due to come into effect with the provisions of the Financial Markets Conduct Bill which I understand the Government hopes to have passed by June and have come into effect later on. If that is the case I mean that would be incredibly useful information but on the face of it it does not seem to me to explain whether this is in fact the wording that has been taken out of there. I do not know. So there is detailed stuff that I would like to know because the last thing that we would want to do when we are addressing the unintended consequence of perfectly good legislation which has just become outdated because of the circumstances that we now find ourselves in is to create the potential for another unintended consequence down the track if we have not got the wording quite right. It is very difficult to amend these things. Obviously it is much easier to amend these things with a select committee process. So I agree with my colleague Andrew Little that this is very much a case where we are on all fours with the Government in terms of policy—the outcome that we want to achieve—but we are not entirely happy with this process because it just brings such risks with it.The last thing that I just wanted to comment on was the finance company failures which actually led us to this position today. I just want to make this point. I have given the odd speech in the past because I was the Minister of Commerce at the time that theoriginal finance companies started their cascading effect into failure. The point was often made that the finance companies were not regulated. That actually is not correct. The finance companies were under-regulated. The supervisory role of the trustee was what was supposed to protect the investors from what actually happened. I want to remind this House that when Neville Harris reported to the select committee that I chaired after the fact he said at the time that at least 25 of the failed companies at that point had used just two trustee companies: Perpetual Trust and Covenant Trustee.I think that we actually have to think long and hard about how we let that area which was supposed to exist as a regulatory protection for investors so utterly fail in this particular instance. I do want to place on record again my absolute concern for those who lost a substantial amount of money in all of those company failures. There were people out there who had roles that were supposed to act towards protecting those investors’ interests and they simply failed to do so.Dr JACKIE BLUE (National): I am very pleased to speak to the first reading of the Trustee (Public Trust) Amendment Bill. It is an interim bill and it amends the Trustee Act 1956. It closes a loophole as we have heard to ensure that the Public Trust does not bear the financial burden of wearing the costs of having to step in to replace trustees of failed finance companies. This is an urgent bill. We have heard that there are potentially 60 failed finance companies that are seeking to have the Public Trust appointed as the trustee of last resort. It is unacceptable that the taxpayer has to in effect pay the bill for that. It is a good bill. I commend it to the House. Thank you.Clare Curran: Mr Speaker—Mr DEPUTY SPEAKER: Is this a split call?Clare Curran: Yes a split call—Mr DEPUTY SPEAKER: No it is not. Clare Curran.Chris Hipkins: It’s going to be short anyway.CLARE CURRAN (Labour—Dunedin South): Short. Thank you Mr Deputy Speaker. Thank you “Mr Whip”.Mr DEPUTY SPEAKER: You have the call—proceed.CLARE CURRAN: Yes I have the call Mr Deputy Speaker thank you. I would just like to make a few comments about this bill the Trustee (Public Trust) Amendment Bill which Labour is supporting. As you know this amendment in front of us is not absurd. It is not preposterous. It is a sensible move and it is something that we think is basic common sense. Labour supports this bill. As you know it is necessary and logical in its provision to ensure a comprehensive trustee policy agenda. I do not really want to go too much into the substance of it other than to say those things but I also want to talk about the importance of the regulatory impact statement when tabling a bill in the House and introducing it in the House and ensuring that it accompanies a bill into the House.Although this bill cements the endowment that turning to the Public Trust must be seen as a last resort when seeking to retire there is the financial burden of finding a replacement which has grown exponentially as trusteeship becomes increasingly focused and complex. Those things are absolutely important but we have had—is it five new bills introduced into the House in the last 2 days? How many of those bills have been accompanied by a regulatory impact statement? What—[Interruption] How many? What is the importance of the regulatory impact statement? Why is it so important? In relation to this particular bill there was a regulatory impact statement introduced within just hours maybe 24 hours around the—Andrew Little: Today.CLARE CURRAN: Today?Andrew Little: Today.CLARE CURRAN: Today which—Mr DEPUTY SPEAKER: Order! The time has come for the dinner adjournment.Sitting suspended from 6 p.m. to 7 p.m.The ASSISTANT SPEAKER (H V Ross Robertson): The House is resumed. Kia ora tātou nō reira e te Whare e ngā iwi e ngā reo e ngā hau e whā. Tēnā koutou tēnā koutou tēnā koutou katoa. Prior to the House suspending at 6 o’clock for the dinner break the honourable member Clare Curran was addressing us with her dulcet tones. She has 7 minutes and 40 seconds remaining to speak. Does she seek the call?CLARE CURRAN: Thank you Mr Assistant Speaker. It is lovely to be in the House listening to your dulcet tones. As I was saying before the dinner break Labour supports this bill. Labour supports the underlying policy behind this bill but the Government on the other side has failed in a number of ways. First of all it has failed to provide an adequate assessment to justify why this bill should be put through under urgency and second it has failed as it has failed on a number of other bills that have been before this House this week to provide adequate regulatory impact assessment and to provide time for the Opposition and the public to have discussions and consideration around these bills before they are actually brought before the House for debate. This bill’s regulatory impact statement which was prepared by the Ministry of Justice reflects concerns from the ministry that National’s reactionary approach means an adequate risk assessment has not been conducted which suggests that the Minister of Justice’s public justifications are mere scaremongering.On this bill which we support there are things to be said but the fact is that on two other critical pieces of legislation before this House yesterday particularly—one around the Government Communications Security Bureau and one around our telecommunications networks—no regulatory impact statements were supplied at all. None. That meant that there was no ability to get any sort of independent assessment that had been prepared by officials before those bills were brought to the House. One of them is being rushed through with a truncated select committee process which we have said is a travesty of process and is a very strong indication of an authoritarian approach to running the Government.In this particular case the Minister’s public justification as I have said could be mere scaremongering in an attempt to gain support. The regulatory impact statement states that the nature and rigour of the analysis has been affected by the limited amount of time. This is fact. This is written down in the regulatory impact statement. Further it expresses concern that because the ministry has not consulted with trustees who will be affected by the bill the risk of further applications to the High Court has not been quantified. As we heard earlier I think the regulatory impact statement was produced yesterday or today—anyway in a very short amount of time. That has minimised the length of time for Opposition parties to scrutinise the Government’s policy rationale for this bill. This is a trend. It is a trend that this Government has I suppose we could say set in stone now. It is a trend that is being extended through other ways of withholding information blocking information and obfuscating the Opposition’s and the public’s ability to access information through the Official Information Act and through other mechanisms. It is a trend as I have said that is towards a much more authoritarian way of running the Government.Bill read a first time.Second ReadingHon JUDITH COLLINS (Minister of Justice): I moveThat the Trustee (Public Trust) Amendment Bill be now read a second time. Since the House is in urgency I do not wish to take too much time but there have been some issues raised by members opposite and I think that they deserve to be answered. For a start I do not know why Ms Curran asked whether or not I was rushing the Trustee (Public Trust) Amendment Bill through for some reason. Well yes the reason is very much is that I want to save the Public Trust actually. I am not going to stand by and I do not think Parliament wants us to stand by and let it be basically the taxpayer having to pay absolutely millions of dollars out to fund the Public Trust to take on public responsibilities around trusteeships when this was never ever intended.The question was asked tonight why this was not done before. Well actually in the 114 years that the provision has been in the law for the Public Trust to be a trustee of last resort—in 114 years—nobody has ever before sought to make the Public Trust the trustee of last resort for a corporate trustee failure. That is why. It has never been done before. Nobody ever thought this could be done and certainly in Parliament no Minister of Justice thought that—in fact that is why. As for the situation of why now it is actually because the advice is we cannot risk it. We cannot risk it.The case that has brought this to a head is the Capital + Merchant Finance case which is actually due to be heard in the High Court on 6 June. Of course this bill does not purport to apply to that case. I think that would be unfair. It has been in the court for some time. But the advice that I have been given is that we cannot risk it. Of course what has really happened in this case as well which may not have been disclosed by me yet in the first reading is that the receivers of Capital + Merchant Finance have sought to bring in and to hold to account the corporate trustees. That has therefore allowed the corporate trustees to say that actually strictly according to law and rightly they have a conflict of interest and therefore cannot retain the trusteeship of Capital + Merchant Finance. So the action from the receivers—and I am not criticising them for it they are entitled to do that under the law—is something we have never seen before actually in 114 years—so even longer Mr Assistant Speaker than you have been at this place.Chris Hipkins: Only just.Hon JUDITH COLLINS: Only just says Mr Hipkins. In addition there have been some questions raised about—and I would say too that the Perpetual Trust which is clearly not that perpetual after this behaviour has 22 other failed finance companies that it is currently corporate trustee for. We are looking in that case at 22 companies and there are actually 60 failed finance companies that this could well apply to across the board including those 22. So this is not a risk that I as the Minister of Justice believe is one that we can take to sit back and wait to see whether this test case that is before the court is successful. It might be; it might not be. I cannot risk it and I do not think the Public Trust can risk it.An issue has been raised I think particularly by the Green member who spoke as to whether or not this matter could be dealt with in some other way whether or not we could have a select committee process. Because of the nature of what we are talking about proceedings could be filed pretty quickly particularly by a company or lawyers who are currently before the court right now on a similar matter. So I am not really prepared to allow this to go on.We could possibly as Mr Mallard suggested take some moves saying it could go to a select committee and then come back and then have the effect of it backdated. I think whatever we do in this matter we would be subject to criticism be it either of a retrospective nature or the fact that we are moving to have this through in urgency.Whatever we do we are going to be criticised but I am not prepared to stand back and let this happen and do nothing about it and then say “Woe is me!”.But in addition to that we also have—and this is I think the saver for those who are so worried about process—the Financial Markets Conduct Bill which is currently before Parliament. That bill is expected to be enacted in a few months’ time but it does not come into force until 1 April 2014. The Supplementary Order Paper to the Financial Markets Conduct Bill will provide a longer-term solution by permitting the Financial Markets Authority or the FMA to appoint a replacement trustee from amongst all available licensed trustees so that the Public Trust is treated equitably and to require an indemnity from the resigning trustee as a precondition of the appointment. This provides the longer-term solution.I make no bones about it: this is a stop-gap measure but it is one that we need to have in force. When the Financial Markets Conduct Bill comes through and takes effect from April next year should it be passed by this Parliament then that will in fact supersede what we are doing this evening.I would also like to take the opportunity just briefly to thank all parties for their support for this bill. I understand it is a very difficult situation but I am sure everyone here understands this is something that needs to happen. It is not the ideal situation but frankly we have not been served up an ideal set of facts so thank you everybody. I know everyone has some concerns about some aspects in terms of process but I hope that you understand and respect the fact that there is the Financial Markets Conduct Bill and that will in fact take over from this provision. I commend this bill to the House.ANDREW LITTLE (Labour): I appreciate the opportunity to take another call on the Trustee (Public Trust) Amendment Bill. I want to take issue with some of the points made by the Hon Judith Collins in her last address and simply say that I am afraid that what was news in Ms Collins’ presentation was that the application by Perpetual Trust to the High Court has been in court for some time because that undermines the case for urgency. We know that the application is there we know that it has been prompted by the challenge that Perpetual Trust faces from the receivers and that is entirely appropriate. Hopefully that piece of litigation will be a trendsetter because for far too long we have had trustees of finance companies who have been quite happy to clip the ticket and earn their fees but when everything turns to custard they are nowhere to be seen. So I congratulate the receiver certainly on challenging the trustees because hopefully it is litigation like that that will start to lift the standard of those trustees.But that litigation as the Minister of Justice has said has been on foot for some time. So why has her ministry or why has she not taken action before now? Suddenly we are presented with this impending crisis because we are 4 weeks out from the actual trial and the application being heard in the High Court. Why has not action been taken before now? I think the fact that that application and those proceedings have been on foot for some time illustrates the point that we are making that urgency is not justified. Those proceedings have been on foot for some time in relation to a trustee company that is the trustee for 22 other failed companies about which no proceedings have been issued. So where is the urgency? There is only one case and had this legislation proceeded in the proper way with a date in it from which its jurisdiction would take effect then we would have had the benefit of a proper process proper scrutiny and most important the input of those in the sector—those experts the professionals who are routinely dealing with this—so that we could fully understand the risks. Even the Ministry of Justice in its regulatory impact statement cannot tell us what the full risks are. It has not had time. It has not had time to engage with the professionals it has not had time to talk to others so we simply do not know.The Minister is entitled to credit for taking an approach on the issue that is at least from our point of view a good approach. It is fair it is proper and it mitigates the risk for the Public Trust and therefore for the public purse and the public interest. It seeks to impose the cost where it properly belongs and that is on the periphery of the finance sector. That is quite correct; that is proper. But our job when we stand here and the Crown’s job when Government members sit over there is to protect the public purse to the best extent. Our job as a Parliament is to protect the public interest to the best extent. But we cannot properly do that until we hear from those who have an interest in this legislation—those who have a stake in it.That is the reason we have the sorts of processes and procedures that we do. That is the reason we claim to be democratic when we have select committees and we have input. Even in truncated select committee processes where we might invite just a select few who the parties can agree might have something useful to say over a couple of weeks—even a truncated select committee process would be of some benefit and of some help to us. But that is not what we have got. We have got panic reaction knee-jerk reaction and the claim that the floodgates will open when there is no evidence of that happening at all—and when there are other means to mitigate the floodgate argument—but we are rushed into a panic action and we have no means of knowing whether what we are doing is proper or fair or whether indeed we have taken account of all the risks.This is the problem. This is the problem that we face and that is the reason why notwithstanding that we support the policy of the bill and we will support it we do not wish to let it go by without putting firmly and squarely on the record our concern and our objection to the process that is being followed. It is simply unnecessary—it is simply unnecessary. We do not want to be faced with this again when there is some other unforeseen litigation happening in that sector and a Minister gets panicked and the whole House is thrown into urgency and rushed into this and we do not have the benefit of full and proper and considered scrutiny which is our job which is our duty as public servants to the nation. We have considerable anxiety about that and we received no assurance in the words of the Minister and the explanations such as she has given that this is necessary because of present circumstances.The circumstances as we see them are not as drastic as she makes out. There is one case one piece of litigation which has been on foot for some time against a company that is the trustee for 22 other failed finance companies; no evidence or indication that there are 22 other proceedings in the wings or indeed have been filed; and no indication that of the other 38 failed finance companies and their trustees there is litigation pending in relation to them. So we do not buy the argument that this is time for panic. To the contrary even if this is a stopgap measure even if we still have the Financial Markets Conduct Bill to come this is not a reason not to give proper and due consideration to the full circumstances and the full issues surrounding this bill and what it is trying to address. It is important that we get that on the record.Perhaps this can be a plea a public plea to this Minister—and frankly unfortunately and regrettably most that she touches tends to turn to custard—to let us not be put in this position again. It is not good for Parliament and its standing and the public respect—or the respect that the public ought to have of it although of course that has been sorely tested because of members on that side of the House in the last couple of days anyway. Let us not be put in the position where we are compelled because of the power of the Government of the day to have to rush through legislation without full consideration of its implications and ramifications. That is our issue. Perpetual Trust is the only trustee company facing litigation. It is in relation to one failed finance company—a finance company clearly well-known to the Minister because she knows at least one of its directors because she keeps appointing him to things. But no othertrustee company appears to be caught up in the same net so we do not see the need for urgency and we think that considering this under urgency all stages within a matter of hours is a highly improper use of that procedure of this House of the members of this House and of the reputation of this House to act properly and democratically.SCOTT SIMPSON (National—Coromandel): It is a pleasure to speak in the second reading of the Trustee (Public Trust) Amendment Bill. There is a need for urgency for this bill and the urgency that is required is to protect the public purse from flagrant abuse by negligent trustees who absolve themselves from their responsibilities financial and try to shaft those responsibilities on to the long-suffering and hard-working taxpayer. So there is a need for urgency. This is simply a prudent measure taken on behalf of a careful thoughtful and understanding Minister who has taken the initiative.I can just hear the Labour Party now moaning whinging and bleating if this bill had not been taken under urgency and we had a queue of trustees absolving themselves of their responsibilities and thrusting themselves upon the long-suffering taxpayer. It would be the Labour members then who would be whinging and moaning mercilessly about a lack of active foresight on the part of the Minister of Justice.I am very pleased that she has taken an opportunity to fix this loophole because the rule allowing the High Court to appoint the Public Trust as a replacement trustee was originally enacted to ensure that family trusts did not fail for lack of a trustee. It was never intended to operate in a commercial situation of the sort that we are seeing before the courts right now. A failed finance company using section 46 of the Trustee Act to save itself was not the intention of that section. If used it enables securities trustees to walk away from their financial obligations and responsibilities and that is just not on on behalf of the New Zealand taxpayer.So it is a great pleasure to support this bill to give it my strongest commendation and recommendation to the House and also to thank the Minister for her very good and thoughtful foresight in this matter. It is very deserving of the urgency that we are according it this evening. I commend it to the House.JULIE ANNE GENTER (Green): I rise to take just a short call on the second reading of the Trustee (Public Trust) Amendment Bill.I guess what I would like to respond to are comments that were just made by the Minister of Justice the Hon Judith Collins and the member Scott Simpson who was previously speaking. Obviously the Green Party very much supports the policy direction set by this bill to protect the Public Trust in the case of the abuse of the loophole that exists in what is admittedly a very old piece of legislation. However I do not feel that we have heard enough about why the urgency is necessary in this particular week why we were not able to find out about the bill a little bit more in advance and why the regulatory impact statement lists four limitations—I think there were three or four limitations—on the ability to assess what all the options were and all the different impacts of those options to address the problem that is at hand. So although I thank the Minister for her explanation the Green Party still has reservations about the process of urgency being used and about the incompleteness of the assessment of options.The Minister has stated that it is just a stopgap measure and I appreciate that. I think we can understand that it is necessary to have a stopgap measure until the Financial Markets Conduct Bill passes into law. It will be interesting also. One of the recommendations of the regulatory impact statement is a longer-term review of the appropriateness of the role of a trustee of last resort and we will be looking with some curiosity and interest at the Law Commission’s review of the Trustee Act 1956 which is referred to in the regulatory impact statement.So just to reiterate the Green Party supports the bill and understands that there is definitely a need for a stopgap measure but we merely question the process and we wish there had been a little bit more transparency. We hope that this bill does indeed achieve its aims and that other longer-term potential loopholes are able to be addressed as well. Thank you.Bill read a second time.In CommitteeJAMI-LEE ROSS (Junior Whip—National): I seek leave for all five clauses of the Trustee (Public Trust) Amendment Bill to be taken as one question.The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.Clauses 1 to 5ANDREW LITTLE (Labour): Thank you very much for the opportunity to speak yet again on this important bill the Trustee (Public Trust) Amendment Bill. Really I want to take this opportunity just to prevail upon the Minister in the chair the Minister of Justice to answer the question that I think has been put in both the first and the second readings even though we have not had the benefit of closely studying the transcripts of each of those readings. The question does remain of why urgency was taken on this provision when there are alternative ways that would have allowed appropriate scrutiny of it and at least have allowed members of the House if not the officials themselves through their regulatory impact statement to take a considered view and hear from the professionals who are routinely dealing with these issues in the field every day.We did not need to hear from Perpetual Trust. It clearly is taking its action. Were it not for the urgency the Minister would stand to be fully wholly and unequivocally congratulated on the stance she has taken. It is right that she has taken the view that notwithstanding how unforeseeable it might have been—the Trustee Act might have been used by securities trustees or trustee companies—she should seek to protect the public entity that is being invited to step in as the trustee of last resort. That might never have happened in the 130-odd years of the Public Trust and in the many pieces of governing legislation for that office but in any event it clearly was a possibility which is what the lawyer for Perpetual Trust is banking on and is relying on. When you look at the Act and when you apply the black-letter law of the Act there is nothing there to exclude a securities trustee. It simply refers to trustees of a trust—of any trust. That particular provision of the 1956 Act is very widely drawn. So it was certainly a possibility on a simple reference to the Act.The fact that we had a whole swag of failing finance companies from 2008 I would have thought would have prompted someone in the bureaucracy if not in Cabinet the executive to think about the potential risks of just this sort of thing happening. Each of those finance companies was required to have a trustee. The basis on which deposits were to be taken was that there would be a trust sitting over them so that the deposits could not be used for anything other than the purposes for which they were provided or sought. That clearly has been a weak regime.In any event trustees were in place and there were failing finance companies. I thought it would have been obvious that the trustees were going to be under some pressure. Receiverships have been created and receivers have been appointed since 2008. The issue should have been triggered at least within that part of the bureaucracy that deals with commercial issues—the old Ministry of Commerce the old Ministry of Economic Development now the Ministry of Business Innovation and Employment.The fact that it took until there were legal proceedings afoot for the bureaucracy to be alerted I think causes us some alarm. But even then the proceedings were afoot and it was not noticed until just recently which has prompted this flurry of activity and urgent action. That is equally alarming.But then when it comes to the executive and the Minister considering what steps to take I think we are entitled to expect alternatives to urgency to be considered. The question remains for the Minister in the chair to answer the question of what alternatives other than urgency were considered and why urgency—in the event that other alternatives were considered—was preferred because there are alternatives that would have preserved the position. Clearly Perpetual Trust in relation to its failed trusteeship of Capital + Merchant Finance is outside the net and there is a risk to the public purse at least to the Public Trust and the public purse that it holds. Perpetual Trust is off the hook in that regard and we want to prevent other finance companies and their trustees from being in the same position. That could have been achieved simply by the draft legislation having a start date and that date being effective once the legislation took effect even if it was retrospectively. That would have been a fair and appropriate signal to give to potential litigants or those who were considering following the same line as Perpetual Trust. That is the question that needs to be answered and we eagerly await the answer.Hon JUDITH COLLINS (Minister of Justice): The question has been raised again about the urgency. I am happy to address it again and hopefully more to the member’s satisfaction. I think there are always options around this and this is certainly not a step that I have taken lightly. But the advice has come to me in only the last few weeks or so that the situation could become quite serious and that this is not something that we could leave for the normal select committee process. The Committee will be aware that this Government has not taken urgency for some time which would give an opportunity for this. I would actually think that this bill the Trustee (Public Trust) Amendment Bill is exactly the sort of bill that should be going through under urgency.I take on board the concerns that Mr Little has raised about urgency and why we could not just put a start date in that is essentially retrospective to the legislation coming into force. That is absolutely an option but what we are dealing with here are 60 finance companies all failed. What is being achieved by that? I would be more inclined to do that although I am not someone who generally believes in retrospective legislation. For me that is a very difficult step to promote. I think it inherently has issues particularly around process.In addition to that in this case I was also given some comfort from the fact that this bill is only a stopgap measure. We do in fact have the Financial Markets Conduct Bill coming through the House through the normal process and it does not come into effect until April next year should it be passed by the House. As the Green member Ms Genter raised earlier will it be in contravention of this bill or will there be any issues with it? Oh no I think Ms Dalziel did sorry. Will it be in contravention of this bill? It will actually replace this bill. So really this is very much a stopgap measure.If we were looking at urgency urgency is often around issues that must be dealt with and certainly in all stages like excise tax issues where behaviours will change. I do not think I could trust frankly that the lawyers for these failed finance companies or rather the trustee companies would not charge off to court tomorrow to file proceedings under the existing law if they had the notice. We are not making this law for them; we are actually making this law for the public of New Zealand the taxpayers and the Public Trust which has actually done nothing wrong—not a thing. It has not done anything wrong. It was not paid large fees to be corporate trustees. It did not fail in its duty. It did not mislead or do anything wrong. It is an innocent bystander andfrankly I do not think that we can risk having it put further to the test when it comes to this sort of litigation that that would ensure. Yes this is a test case that we are looking at which is due for hearing on 6 June this year so we do not have a lot of time.Knowing the legal profession as I do and with the greatest respect for it I am sure that there are people right now preparing documents to be filed if this bill does not go through tonight. But I would like to take the opportunity again to thank the Committee for taking such a mature and responsible attitude to this legislation which is entirely necessary.Clauses 1 to 5 agreed to.Bill reported without amendment.Report adopted.Third ReadingHon JUDITH COLLINS (Minister of Justice): I moveThat the Trustee (Public Trust) Amendment Bill be now read a third time. This bill has gone through the House under urgency and it is urgent. This bill provides a quick interim solution to a potential floodgate of expenses for the Public Trust and to the public purse if securities trustees walk away from their responsibilities.Without this amendment the Public Trust faces a potentially significant financial burden. Capital + Merchant Finance is unlikely to be able to pay Public Trust fees and expenses so the Public Trust is likely to have to meet the cost itself. However there are currently 60 finance companies in liquidation receivership or moratorium and if even a fraction of the trustees of those companies attempt to hand their roles to the Public Trust the cost could be enormous—and of course that is not only the case should they be successful; even litigation has its expense and the Public Trust is not able to continue to fund this.It is not only the financial burden. The Public Trust faces damages to its reputation and its brand. It would be responsible for communicating with thousands of dissatisfied investors. They may not appreciate the distinction between a retiring trustee and the Public Trust as replacement trustee. By law we require the Public Trust to be a competitive business and yet our current law without amendment is putting the Public Trust at an unfair disadvantage.This is all because of one small rule—the trustee of last resort rule. Section 46 of the Trustee Act allows the High Court to appoint the Public Trust as replacement trustee for any trustee who wishes to retire or resign. The Public Trust has a statutory duty to accept the appointment. The rule does not require the retiring trustee to find other replacement trustees first by indemnifying their fees and expenses that the trust or the company being supervised cannot pay. This bill will rectify this. It will require a retiring trustee to make efforts to find another replacement trustee and to pay the replacement trustee’s reasonable fees and expenses.The Public Trust can still be appointed as a last resort trustee. I think that is a very important point. If this happens the resigning trustee will meet Public Trust’s reasonable fees and expenses as the trustee for the trust in question if the trust or the company being supervised cannot cover them. The bill will only apply to licensed trustee appointments for products regulated by the Securities Act. It will not apply to family trusts. This is only a short-term solution but it will fix the problem right now. The Financial Markets Conduct Bill will provide a longer-term solution. This bill applies prospectively. It does not affect the Capital + Merchant Finance case; Public Trust will bear this burden.The Government does not want to undermine business confidence in the law by changing the rules midstream and without notice. Instead the bill will change the rules into the future. It will stop the risk of significant burden being imposed on the Public Trust and it will be doing so in the nick of time and for that I very much thank this House. I commend this bill to the House.ANDREW LITTLE (Labour): Kia ora. I rise to once again pledge the Labour Party’s support for the bill the Trustee (Public Trust) Amendment Bill but to also express our continuing concerns about it. The Minister of Justice says that there are 60 failed finance companies now that are known and recognised. Twenty-two of them had Perpetual Trust as their securities trustee Perpetual Trust being the trustee company that is presently before the High Court seeking to have Public Trust appointed as the trustee because of the conflict of interest that Perpetual Trust now has as a defendant in litigation by the receivers of Capital + Merchant Finance for which it was the trustee. If we can get our heads around that string of relationships life would be a lot easier.But the reality is that there is only one application before the court to appoint Public Trust as a securities trustee and that is the application by Perpetual Trust in relation to Capital + Merchant Finance. None of the 22 other finance companies also having Perpetual Trust as their trustee has any application and none of the other 38 of the 60 failed finance companies has any application before the court. So let us not overstate the risks and therefore justify urgency when urgency may not be justified.Putting aside the aspect of urgency we do accept that as a matter of good public policy protecting Public Trust in relation to these applications is a good idea. Trustee companies are the very ones that are quite happy to clip the ticket and watch the lucre rolling in during the good times and then when it gets too hard when the finance companies are up against it when the borrowers they have lent money to fail to repay their loans and when the depositors are demanding their capital back they are the first ones to try to get off the scene and absolve themselves of responsibility. If they find as a little trick they can now get Public Trust to step in and therefore the public purse and the State to step in and protect or shore up the failed private sector—which the private sector is notoriously good at doing—then I agree with the Minister that they will no doubt try to do so. But at this point in time given all the facts about litigation by Perpetual Trust we see no impending sign of that. Introducing this Trustee (Public Trust) Amendment Bill with a specified date so that we could go through a proper process take advice talk to the professionals in the field and understand the true impact of what we are doing and the risk associated with it would be much more preferable.I would like to think that if the Minister or any member of this executive is in the same situation in the future when it comes to a choice between seeking the urgent attention of this House and looking for the alternatives that provide the sort of protection that could be given by specification of a date in this bill and allowing a proper process the executive and any Minister will always err on the side of a more open and fulsome process. That must be a driving principle when it comes to the management of legislation through this House. No matter how quickly it needs to pass no matter the issue and no matter the perceptions about the magnitude and the significance of the issue we must be assured and the public of New Zealand must be assured that the executive does not take for granted the time of this House our goodwill and our ability to provide proper and decent scrutiny of important legislation such as this.We understand the public policy and we hope that that will be translated into a more progressive view about regulation and intervention in the finance markets. The truth is that they have for a long time been the cowboys of our economy and many of them stillremain so. They were allowed to get away with it. We had the financial collapse in 2008. The risks that this bill is addressing have been known since then but we are still plunged into urgency to address that issue. We simply should not be put in that position. This is a bill funnily enough about last resort. It is appointing a trustee of last resort. Well when it comes to last resort urgency in this House should be an option of last resort for those who have the responsibility for managing legislation through it. We have to place that on record. That remains a very clear and unequivocal objection that we have that this House should be treated in that way on matters such as this.The risks that this bill is trying to manage and deal with can be mitigated in other processes that this House typically employs and could have employed in this particular case. We understand the issue about not wanting to expose Public Trust to having to pick up the tab for failing finance companies. The reality is that the very application that is on foot in the High Court presently will not be covered by this bill so Capital + Merchant Finance once again will find itself off the hook Perpetual Trust will find itself off the hook and Public Trust will no doubt be put to expense and inconvenience in picking up this role if indeed it is appointed by the court as the trustee for Capital + Merchant Finance. That is a cost that will be borne. That one has escaped the net. The public purse will be affected. We have not acted fast enough to prevent that from happening. But there is no evidence of any other proceedings on foot or that could be on foot. The regulatory impact statement acknowledges that it is inadequate but it also does not advert to any other proceedings on foot. So we simply do not accept that there is that level of risk there.We just want to make the message very clear. We understand the importance of this. We understand the importance of having good regulation around the finance markets. The last Minister of Justice shepherded through legislation in part to achieve that. This Minister of Justice is managing through the Financial Markets Conduct Bill. That will make a difference too. But the question remains whether this particular bill being dealt with under urgency is a matter that needs to be dealt with as urgently and as precipitously as it is being dealt with at the moment. That is what we object to. Good parliamentarians should always object to being put upon by the executive in this sort of way. Perhaps backbench members of the party opposite the party in Government will as good and honourable parliamentarians express the view that they also do not wish to be treated in that sort of way. Urgency I repeat ought to be a procedure of last resort and not a matter of first resort as it appears to be in this particular bill.We will support the bill. We support the underlying policy in the bill. But let us not again be put in the position of dealing with these issues when we have not had the benefit of hearing from others in the sector apart from Perpetual Trust even the receivers of the various finance companies others in the finance sector and indeed trustees who have been put in the position of being a trustee of a finance company on the implications for them. We have not had the benefit of their insights and their experience. That is a dangerous position for us to be in. So we underscore that clearly we highlight it with the biggest highlighters and we underscore it with red ink. Please ensure that this House and every member in it is not again put in this position because it is not good for Parliament it is not good for parliamentarianism and it is not good for New Zealand.ALFRED NGARO (National): Kia orana. I rise to take a call in this third reading of the Trustee (Public Trust) Amendment Bill. I want to acknowledge the previous speaker Mr Little. He talked about the honourable backbenchers being in a sense cognisant of their responsibility to be prudent and wise when enacting the political mechanism of urgency. I do agree that it is important that we do this as a matter of last resort. I think we have been cognisant of that. The Minister of Justice has and has actedprudently and wisely. The reason why we know it is the right thing is that despite all the talk about concern at the end of the day there is still support and the support is right across all parties because there is greater gain to be had than there is risk. I think that is what we are talking about. We have traversed all the key issues around closing the loophole. We have talked about the provisions of the legislation that will protect the public purse. We have also talked about the importance of the concerns from the regulatory impact statement not being such that they have warranted a vehement response or opposition from the parties opposite. Instead they have noted their concerns but most important they will support this bill.There is much less to be said now. I simply say that we see this as an important bill. I want to acknowledge firstly the Minister who in her wisdom sought to ensure that this would go through in urgency. It is the right move. It is the right thing to do. The New Zealand public will not be upset about this; in fact they will see this as the right step for us to take. We commend this bill to the House. It is the right thing to do for New Zealand. Thank you.CHRIS HIPKINS (Labour—Rimutaka): I am happy to take a brief call in this debate under urgency on the Trustee (Public Trust) Amendment Bill in what has been a relatively civilised and dignified debate so far. This being urgency I object to that so I thought I would make a brief contribution to this particular debate.I want to pick up on a comment that the Minister of Justice made in her speech when she talked about finance company directors jumping ship and not being held accountable when the companies collapse. That is certainly the public perception and in many cases people have lost significant amounts of their money—[Interruption] It might have been someone else in the debate so I might be attributing that comment to the wrong person. OK it was Andrew Little. I accept that.Andrew Little: Andrew Little Judith Collins—it’s an easy mistake to make.CHRIS HIPKINS: That is right. But actually it does stick in the public’s throat. When people invest their money with finance companies the directors are quite happy to accept that money while the going is good and then when the proverbial hits the fan those people take the money and run. They disappear. The people who have lost their savings are left with nothing while there seem to be very few consequences for the people who have ultimately presided over that failure. That does really stick in the throats of the people at home who are investing in those companies.It is not just the finance companies that frustrate people in that area either; it is regular companies that frustrate people. For example when a construction company collapses and the directors jump ship immediately before it collapses and the subbies lose access to their tools and lose all of the payments that they are due—the directors have jumped ship and abandoned them right before that company collapses—that really sticks in people’s throats as well. What is the National Government’s approach to that? Well it has done absolutely nothing about that. It does not really seem to care about that—Andrew Little: Half of the directors are members.CHRIS HIPKINS: —because half of the directors are National members. In fact the National Party’s approach to that is to appoint those directors to State-owned enterprise boards in preparation for the privatisation of those State-owned enterprises. One of the worst examples of course is the former Prime Minister Jenny Shipley who when Mainzeal Property and Construction collapsed literally hours before it went under jumped ship. She was quite happy to take the directors’ fee when the going was good quite happy to have the status of being a director of a big construction company but the minute the proverbial hit the fan or actually before the proverbial hit the fan—right before—she jumped ship. She did not want to know about it. She took the money and ran. That is the sort of thing that really really annoys the New Zealand public.Actually it is more serious than that. When people take on these responsibilities that is exactly what they are doing—they are taking on responsibilities. Finance companies regular companies—it does not matter which they are; if people take on a responsibility and they are willing to accept the directors’ fees then they should accept the accountability that goes with that. They should not be jumping ship when the going gets tough because that is just fundamentally wrong. Too often that has happened recently. Finance companies have been the worst example. Mainzeal is another example that has been a shocker. It is happening across the board. The people at the top of the pile the people who are getting those directors’ fees should be held accountable and they should accept some responsibility for that.The Labour Party is supporting this bill through all stages today with some reluctance because although we understand the problem and we see the need to plug the gap and we do not want to see exploited this particular loophole that has been established we are very uncomfortable about the notion that a bill will be put through all stages in Parliament under urgency. I do not think that in the time I have been in Parliament 4½ years now I have attended a select committee for any bills—I have sat through some pretty turgid bills including some Statutes Amendment bills and the like which are very technical bills and generally pretty dry—where there has not been something useful that has come out of that process whether it is a very minor technical amendment or some other clarification. There can in fact always be improvements made to a bill through the select committee process.I guess the clincher for me though in agreeing that the Labour Party should support this bill through all stages is that it is very much a short-term measure and it is going to be replaced by another bill that will go through the proper process in a very short order of time—although having said that Gerry Brownlee is still in charge of the House so we do not quite know. There are no guarantees that anything will progress particularly fast while Gerry Brownlee is in charge but we live in hope. We live in hope that through the gerrymandering process something useful might finally come out at the other end. The Labour Party is supporting this legislation with some reluctance but we do agree that the loophole should be plugged.JULIE ANNE GENTER (Green): I rise to take a short call on the third reading of the Trustee (Public Trust) Amendment Bill. The Green Party will be supporting this bill. Under current law as we have heard a retiring trustee may make an application to the courts under section 46 of the Trustee Act to have the Public Trust undertake the trust in their place. This very old law was originally designed to protect the interests of beneficiaries and the continuity of their family trusts. This legislation is before us today because of other cases in front of the courts in which the trustee of a failed finance company Perpetual Trust has declared that he has a conflict of interest and has applied to the court to have the Public Trust appointed as the trust of last resort. This would incur some financial liabilities for the Public Trust for a problem that was not its problem in the first place.The legislation is very short and simple. It adds a few new tests to help ensure that the Public Trust does not bear any financial burden of acting as a trustee for a failing investment for a failed finance company of which we know there are very very many. There are already 60 so we could see more litigation of this type incurring financial liabilities for the Public Trust. The changes in this bill say that the court may only appoint the Public Trust as a replacement trustee if the resigning trustee has made reasonable endeavours to appoint a replacement trustee and the resigning trustee indemnifies the Public Trust for reasonable fees and expenses and provides security forthat indemnity. The Green Party looked at the proposed legislation and thought that although we have concerns about the process because we saw this draft legislation only on Tuesday evening and I saw the regulatory impact statement only today actually this is quite a reasonable test that should be considered by the courts. This stopgap measure could prevent potentially the floodgates opening up for other failed finance companies to apply to the court to have the Public Trust take on their trusteeships.The Green Party is very happy to see the Government acting in the interests of the Public Trust and taxpayers to protect them from financial liabilities caused by failed finance companies. We think that is actually quite a different move a different direction for this Government which up until now has not really proposed legislation that would protect the taxpayer. In effect it seems to systematically prefer to protect the interests of monopoly private interests. For example earlier today we had the Committee stage of the Land Transport Management Amendment Bill where we have seen changes to the regulations for public transport that will actually entrench the dominance of existing bus operators and the Government has declined to alter the transitional measures in that particular legislation in a way that would actually save taxpayers’ money save regional councils ratepayers’ money and result in lower bus operating costs. Presumably it has done this because it is really on the side of the shareholders of the private bus companies not on the side of the ratepayers and the taxpayers who deserve to get good value for money.Similarly there are changes in that legislation that will open up the possibility of going to the private sector to finance some very dodgy motorway projects like Transmission Gully which essentially means that we get the same projects but we pay an extra $2 billion. So instead of paying $1 billion for a project that is worth about $500 million in benefits we will get to pay $3.4 billion—that is future New Zealand taxpayers will pay $3.4 billion for a project that is worth $500 million so that the private overseas banks financing the company have a nice solid and safe investment over a 25-year period and they can earn 10 to 12 percent returns.It is an unusual step for this Government and I commend the Minister of Justice for looking after the Public Trust and trying to put in place a stopgap measure even though it will not affect the case that is currently before the court if the court does decide to appoint the Public Trust as the replacement trustee of last resort for Capital + Merchant Finance. There will be costs incurred and this legislation will do nothing to protect the Public Trust from this particular case but we do hope it will protect the Public Trust in future cases. Thank you very much.Bill read a third time.