Worth Richard: Securities (Local Authority Exemption) Amendment Bill — Third Reading 
Worth Richard: Securities (Local Authority Exemption) Amendment Bill — Third Reading 
[Volume:646;Page:15367] 
Dr RICHARD WORTH (National) 
: 
 In a nicely rounded and well-read speech the Minister has explained the key elements of the Securities (Local Authority Exemption) Amendment Bill. I do not want to traverse that ground at all; I would just like to deal with two points. The investment climate at the moment is particularly treacherous. I will come back to that point in a moment but let me say that the merit of this bill which National supports is undoubted. 
The bill will enable local authorities to access capital in a way that has been denied to them for a number of years. Effectively the law which is now being changed made it just too onerous for local authorities to access public money in two ways. First it increased the issuance cost with the requirement to produce a prospectus. Second it created an almost insurmountable hurdle as all councillors are now in the current legal regime required to sign a prospectus. So we had the situation of a particular councillor who had perhaps been elected to office on the basis of reducing council borrowing who was simply not prepared to sign a prospectus for raising additional debt. What was the consequence? Well the consequence was pretty much that local authorities stayed away from the retail market—it was all too hard. That is all to be undone but undone in a way that still provides appropriate protection for the investment public. The Commerce Committee made a number of changes that were intended to strengthen those public rights in what it set out in changes to the bill by way of information disclosure. 
It is as I said a very treacherous investment climate at the moment that New Zealand faces. One sees for example the collapse of Bridgecorp Holdings where 14000 investors could lose $383 million which is the latest estimate that we have at the moment. There have been 15 finance companies that have either failed or got into significant difficulty in the last 20 months—that is about $2 billion of investors’ money that has been affected. Earlier this week there was a report out that 2000 investors in the failed Five Star Consumer Finance may expect even less of their $51 million back than was forecast and there have been all the difficulties around Nathans Finance. Just today there was a media report indicating that Lombard shares had tumbled after the company had admitted strife and it has announced a moratorium on payments by its finance company—and I see just looking at the numbers there that there will be huge losses again for investors. 
So it is our hope—and I am sure it is the hope of both the Government and the National Party—that what we will see associated with the passage of the Securities (Local Authority Exemption) Amendment Bill is that the so-called mum and dad investors will take up local government stock again. That is an excellent outcome because in the current period where the quality of debt products has come under closer scrutiny local authority paper is likely to be received extremely well by retail investors. It provides a broader range of investment grade credit and that is an important initiative in improving the overall quality of savings products available to New Zealand investors. 
The Minister has said and I endorse what she has said that when good legislation is before the House the National Party will give it the scrutiny that it deserves. We have seen in a short time frame this legislation almost passed into law. What lies ahead after the completion of this third reading is simply the Governor-General’s assent to the legislation—a good outcome I would say.