Parker DavidHon DAVID PARKER (Labour): The Labour Party is supporting this bill to select committee. I want to endorse the Minister of Justice's comment that of course no political party in this House wants to see New Zealand abused as a centre for money-laundering and to make a couple of more general points before referring to the specifics of this legislation.The first point to note is that it is pretty clear New Zealand has been used as a place to launder money. I think that was made clear from the Panama Papers which disclosed that offshore trusts investing money outside New Zealand through trusts that were operated from New Zealand were at times being used to hide money that was being invested through those trusts from the authorities in the home countries from which the beneficiaries of those trusts came. Some of that was legitimate—in that some people did not want their financial affairs disclosed to the authorities back home—and they were not doing anything illegal. Some of it was about tax avoidance and it is pretty clear that we have got a big problem around the world with some of the 1 percenters" in the world. Notwithstanding the fact that they have had more wealth than everyone else they seem determined to pay lower rates of tax than middle-class people in most countries. That was bad and that was being facilitated through those trusts.Then the third class of transaction which I am sure was occurring was the laundering of illegal money—money-laundering—from the proceeds of crime. That money was being invested overseas in a way that was not transparent to law enforcement authorities around the world because the opaque arrangements in respect of New Zealand - based trusts investing money offshore from New Zealand were not clear enough. At the time the Government said that there was nothing to look at there. It had a report by John Shewan and he came back and said that yes the criticisms were true and that New Zealand was being used as a destination for those improper transactions. It is to be hoped that we tidy that up and adopt the recommendations that John Shewan recommended.This legislation is slightly different in that it is looking at investments that are made in New Zealand rather than outside New Zealand using New Zealand - based trust transactions. This Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill as the Minister said intends to do that by extending the purview of the Act to amongst others accountants and lawyers who are not currently caught by the Act and then it makes other changes which the Minister has adverted to.The Minister said that the 10-year cost of compliance as originally designed was $1.6 billion which was worked out to be $160 million per annum. She said that the revised estimate given changes that have been made is between $800 million and $1.1 billion over 10 years which is between $18 million and $110 million of extra compliance costs for New Zealand businesses per annum. It is not an insignificant sum. If that $100 million per annum was being spent in another part of the economy well that could go a long way whether it was towards alleviating some of the problems that we have got in housing through to perhaps greater support by the Government of those sectors or indeed just through people having that extra money in their businesses to spend into the economy which would go around. We should be careful that when we are imposing new requirements we are actually meeting the purpose without imposing an extreme or higher cost than is warranted.I want to give two examples where I think that in the last decade we have gone too far in respect of regulation of the financial services. The first is in respect of financial advisers. Post the collapse of finance companies and the losses that were suffered by people who were investing in those finance companies this Parliament chose to look again at the regulation of financial advisers and imposed further regulation upon them. Some further regulation was necessary but we got to the ridiculous point in this country where we said that some of the people who are logically financial advisers through the decades like lawyers and accountants could not act as financial advisers to the people who came into their office without going through this great hoopla which they could not or would not go through.The net effect of that was brought out when the Government wrongly in the view of the Labour Party sold down shares in the major energy companies: Meridian Energy Mighty River Power and Genesis Energy. Because so many of the people who were left as qualified financial advisers were conflicted—because they were acting as brokers for the Government or as agents for the brokers who were appointed by the Government—there was virtually no one left in New Zealand who could legally give financial advice to New Zealanders as to whether they should or should not invest in those shares that were being sold by the Government in those energy companies. The people who were conflicted were virtually all of the major sharebroking houses in the country plus all of the banks which were the other route. It meant that in practice the ability of New Zealanders to get sound advice from financial advisers as to whether they should invest or not was prevented because of the over-regulation of who could be a financial adviser in the legislation that was passed by the National Government—actually led by Simon Power—post the finance company collapses.The second example I will give is in respect of the over-regulation of ordinary capital raising. Now there have been some good things done in respect of ordinary capital raising so I do not want to say that it is all bad. Small capital raising through crowdsourcing of relatively small amounts of money—actually the appropriate limit for crowdfunding has been allowed through changes to our securities laws in recent years and that is a good thing. But the over-regulation of the raising of ordinary capital by small to medium sized companies—or mainly medium-sized companies that are growing—has meant that very few of those companies are now raising money from the public.Why has that happened? Well it is because directors' duties have been increased. If you are an experienced director your director's duties in respect of the money that an investor invests in an ordinary capital-raising—your risks are heightened compared with what they were in yesteryear and they are now so high that you cannot insure against those risks. You cannot at a realistic price get insurance against liability for prospectus risk in New Zealand and the consequence of this has been that those very companies that we want to have a low cost of capital when they are fund-raising in order to expand as they exploit some of these global opportunities arising from new technologies cannot raise money from the public. Instead of regulating and properly describing risk to those people who are proposing to invest in shares we are actually stopping them doing it because no one is using that route now because it is over-regulated. That has got to be an absurd policy outcome.Coming back to this legislation I am worried and I think that the select committee should be ascertaining whether in pursuing the ambition—which I think everyone in this Parliament has—that we should be countering money-laundering and the financing of terrorism we are not going so far as to impose a silly level of compliance that really does not achieve much more in the pursuit of anti - money-laundering but none the less sucks out of the economy $100 million per annum in compliance costs. I will probably not be on the select committee considering it but I would hope that the select committee that considers it really drills down into it. Will this achieve its purpose or will it as in those other two examples that I have given over-regulate this space at the cost of the New Zealand economy and make New Zealand a more expensive place for no real gain? With those comments can I say that the Labour Party supports the ambition of this legislation to clamp down on money-laundering and can I note that we are supporting this at first reading."