Moroney Sue: Securities (Local Authority Exemption) Amendment Bill — In Committee 
Moroney Sue: Securities (Local Authority Exemption) Amendment Bill — In Committee 
[Volume:646;Page:15226] 
SUE MORONEY (Labour) 
: 
 I appreciate having the opportunity to contribute to the Committee stage of the Securities (Local Authority Exemption) Amendment Bill which the Committee has agreed to have a wide-ranging debate on rather than to debate it part by part or clause by clause. This bill is easy to debate in a wide-ranging way because it is a big picture bill. This Labour-led Government is committed to strengthening the way in which councils may operate and serve their constituencies. It looks as though the Commerce Committee received very fine submissions from Local Government New Zealand and from some of the larger local authorities and they urged the House to support this approach. The bill will reduce compliance costs for local authorities and will give them greater ability to fund long-term investments such as infrastructure. 
Under this Labour-led Government we have seen significant improvements in the funding of infrastructure and certainly my own area in the Waikato is a very fine example. Work has started on many of the roading projects and that will make a big difference to economic development in the region. Additional Government funds have also come from the Joint Officials Group process. We see the effects of Government funding accelerating that infrastructure development and all that it means for the economic development of our region. The region is absolutely booming. 
A similar disclosure exemption used to exist for local authorities but it was repealed in 1996—by the previous National Government I believe. That was done in order to subject local authorities to a thing called a level playing field where they would compete with private companies. In those days the market was the best tool that National could think of in Government. It was not our Government of course; I want to be very clear that this did not happen under a Labour-led Government but under the previous National Government. Its mantra was “the level playing field” and “the market is the only thing that determines what shall go on in this country”. National sat on its hands and let the market run rampant over everything basically in the 1990s. 
However the exemption does not take into account the differences in legal frameworks between companies and local authorities. This bill seeks to redress the fundamental mistake that was made by the National Government in 1996 when it did not recognise the fundamental differences in the legal frameworks between private companies and of local authorities. This Labour-led Government understands that the current provisions of the legislation impose unnecessary compliance costs on local authorities and prevent local authorities from raising capital in an effective manner. 
The bill amends the Securities Act 1978 to exempt local authorities from the full disclosure requirements of that Act when issuing debt securities. It does that because the level of disclosure required from local councils under the original Act was burdening them with unnecessary compliance costs. Local Government New Zealand clearly outlined that issue in its submission to the select committee. The original Act required all councillors to sign off on a prospectus essentially requiring the unanimous agreement of a council to a project or to issue debt to fund the project. That does not happen with any other council decision I would say. This legislation was getting in the way of the normal democratic procedures that take place on pretty much every other decision that a council might make on behalf of its constituencies because in this case the legislation required a unanimous decision. So the changes which are intended to allow an exemption from these provisions will reduce compliance costs by easing the process for local authorities to offer securities to the public. 
This bill will provide a valuable source of alternative funding for infrastructure assets. It will also provide investors with options to expand their investment portfolios. That is a positive move for the investment market. 
Without further ado I am very happy to stand and contribute to this debate in the Committee stage. I was not on the select committee but I feel certain that it would have given due consideration to the very fine submissions that came in on the bill. It is good to see the wide-ranging level of support in the Committee for this positive move because this bill recognises that the whole mantra around the “level playing field” was nonsense and that there are differences between private companies and local authorities. Finally this bill has come forward to put things right.