Ryall Tony: Securities Legislation Bill — First Reading 
Ryall Tony: Securities Legislation Bill — First Reading 
[Volume:622;Page:18049] 
Hon TONY RYALL (National—Bay Of Plenty) 
: 
 I was pleased to receive a call this evening to come down and participate in the debate on the Securities Legislation Bill. I would like to talk about the import of securities legislation to the performance of Ministers in the House. We have seen the performance of Ministers in the country today. The Prime Minister gives huff and puff about what she will do to the directors of Television New Zealand in terms of the impact they have had on various securities associated with Television New Zealand—in particular the payment of those securities to one Mrs Judy Bailey. We have all the huff and puff and what happens? We have Steve Maharey on television parroting exactly what the chairman said to him. 
It is important that Ministers in this Government are particularly aware of what is being proposed in the securities legislation because on numerous occasions Ministers in this Government have broken the basic rules of securities legislation. I will give a couple of examples. 
Darren Hughes 
: Always ready to give a cheap shot. 
Hon TONY RYALL 
: Well actually it is not a cheap shot; they were both very expensive shots that resulted from breaches of the Securities Act. 
Let me just go through the first example. Jim Anderton the then Deputy Prime Minister of New Zealand appeared on the  
Holmes  
show to talk about the fact that he could fund Kiwibank through a redeemable preference share issue. A redeemable preference share issue was a proposal that had been floated by New Zealand Post and a considerable amount of work was being done on it by Treasury under both Governments. Mr Anderton was quite convinced that he could fund the growth of Kiwibank through the issue of some redeemable preference shares which would be a security that would be listed on the New Zealand Stock Exchange. What he was not told was that it would have provided market disciplines that would have affected the operation of the whole company. But Mr Anderton was convinced about its worth and because he likes to pretend to be informed he said on television that there could be redeemable preference shares and that they would be a really good deal. He scuttled the whole thing over night. Those few words on the  
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show stopped the deal with New Zealand Post to issue redeemable preference shares because Mr Anderton broke a basic premise of the securities legislation. 
When National was last in Government and was working with Mr Peters as Treasurer to privatise Auckland International Airport—and he as Treasurer signed the prospectus for privatising Auckland International Airport—we were under very clear legal advice that we could say nothing about that security. Mr Peters who as Treasurer was privatising Auckland International Airport could say nothing about the sale of Auckland International Airport shares in terms of what benefit there might be to shareholders. Similar restrictions applied to the other wildly successful privatisations of Contact Energy and Capital Properties. 
Here is the second breach of the Securities Act. It involves the Prime Minister and Air New Zealand. She gave a television interview and made a statement about the likely future of Air New Zealand and the value of its shares. She said that people should hang on to them. That had an immediate impact on the share price. If that was not a breach of the securities legislation then nothing is. So if Labour members want to bemoan the fact that there have been no prosecutions as a result of breaches of the Securities Act they should wonder why the Prime Minister was not prosecuted. Mind you we have seen “paintergate” and now “motorcade” and in both cases the Prime Minister has not faced any prosecution whatsoever. My point is this. It is vital that Ministers know what is in this securities legislation because they have a history of breaching those regulations. They need to be aware of the legislation so that they do not do that again. 
Quite a lot of good information was given by Brian Connell earlier in the debate about the importance of making sure that the remedy is not worse than the illness. The criticism I made of the last piece of securities legislation that came into the House which I see the Government has tried to remedy was about the quite superficial analysis of the regulatory impact statement. It is quite superficial. There are very few numbers. There is a sort of calculation about how much it will cost to get an exemption from the Securities Commission. But the analysis is very poor and it does not include the impact on the costs of the general purchaser of securities. I would have thought that would be quite an important feature of any analysis that would be done. 
The third issue I would like to talk about is the fact that there is nothing in this legislation to deal with one of the major crises with securities in this country that the Government is doing nothing about and that is the number of people who sold their houses to trusts and companies which would then provide them with the security of an income stream as a result of the transfer of the title of their houses. I have people in my electorate as will most members who were approached by promoters by investment advisers who said that if they gave them their title to their homes they would in turn give them a guaranteed income stream for the next 3 years—that they would use that title to issue securities and create money in order to pay them. Hundreds and hundreds of people have fallen for that scam. 
Dail Jones 
: And lawyers have let them do it. 
Hon TONY RYALL 
: Lawyers and investment advisers have let them do it. In fact I tell Mr Jones that most of those people did not see their lawyers and that was the problem. Most of them did not see their lawyers and they were sucked in by those investment advisers those promoters of these securities. 
It does not seem that the Government is doing much on that. I have made some inquiries of the Ministers involved and there is no sense of urgency to assist those people to recover their homes. There is no action being taken by the Securities Commission that I am aware of to help those people get back their homes. They have been ripped off by people holding out false securities and the Securities Commission should be in there boots and all—not just saying that they are trusts and it is all too difficult. It has been going on for 3 years now and nothing has been happening. If the Securities Commission and this Government are determined to have some prosecutions they should prosecute those people who have ripped off the homes of people—tradespeople blue-collar people ordinary New Zealanders—who have scrimped and saved for 40 years to get a house then are sucked in by some conman. But the Government does nothing to assist them. We need in terms of this legislation to find out from the next Government speaker what will be done about the securities issued to those people in various parts of the country. 
Also there are a number of questions to be answered by Ministers about the role of investment advisers. The Government has a couple of options in the bill about how to deal with investment advisers. One is the quite stringent disclosure regime set out in the legislation and the alternative is the use of occupational licensing. What is an investment adviser? Is it the individual who provides the investment advice or is it the company or the sharebroker for which that individual works? The Government needs to realise that increasing numbers of people are handing over their financial security to investment advisers. There are considerable questions to be asked about the backgrounds of many of these people. Most who are high profile for example are perfectly legitimate investment advisers who deal with people’s retirement savings and their life-savings but others need further investigation. The issue of whether the adviser is the individual or the company has significant impact as well. A burden and an onus needs to be put on the employers of investment advisers to make sure that their investment advisers are performing within an appropriate standard. 
In summary my contribution today is to highlight to Ministers that they themselves need to know what is in this bill rather than their just reading the departmental speech. Ministers deal with securities every day depending on their responsibilities. We have seen the Prime Minister breach the Securities Act. We have seen Jim Anderton prevent the issuance of securities because of something he said. It is important that once this bill is passed Ministers are given a lesson on what not to say and what they can say.