Dalziel Lianne: Securities Trustees and Statutory Supervisors Bill — In Committee 
Dalziel Lianne: Securities Trustees and Statutory Supervisors Bill — In Committee 
[Volume:671;Page:17707] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I rise to speak on Part 1 of the Securities Trustees and Statutory Supervisors Bill. One of the concerns I have regarding this legislation is the same concern that I expressed when we debated its first reading in the House—that is whether we are following the right sequence or the right order of play. To my way of thinking the  
Review of Securities Law  
should have come first followed by the establishment of the Financial Markets Authority followed by consideration of this bill. This bill should have been wrapped up in the review of the legislative framework. 
When the Commerce Committee sat for the first time after the 2008 general election it was not very long before we had a briefing from the Ministry of Economic Development. I will never forget the briefing we had from the Registrar of Companies because it really opened our eyes to a lot of the things that none of us had really seen before. It was a stark picture of who was supervising the finance companies that failed. There were two issues of concern: one was the trustees and the other was the auditors. We will still be dealing with those issues in our select committee over the next few weeks. 
The issue for me was that we always talk about there being no regulation for finance companies but that is not true. There was regulation for finance companies; it just was not strong enough. The regulatory supervisors under the former regime were the securities trustees. They were the ones who were responsible for overseeing decisions that were being made by finance companies and for what was not being advised to the public by way of very convoluted arrangements inter-party lending and all sorts of things that should never have been allowed to escape the scrutiny of the supervisors. That is what made me wonder whether this was the right thing to do. 
I am kind of agnostic about it. The Labour Opposition will not vote against the legislation—we will let it go through—but I think it is important to remember why it is important to do a proper regulatory impact analysis whenever one is dealing with the regulatory frameworks that have to stand the test of time. What preceded the finance company failures obviously did not stand the test of time and that is my strongest concern about the approach that we have adopted with this legislation. Labour will not oppose it but I just think we have to be very cautious. 
I would almost say to the Government that it should hold this bill back on the Order Paper. There is nothing wrong with getting the Committee stage out of the way so that it has just a third reading to go but the Government should just wait until after the exposure draft comes out on the securities legislation which will perhaps be introduced in October we now hear. The exposure draft is coming out in August so my strong advice to the Minister of Commerce is that he hold this bill at the end of the Committee stage and then have a serious rethink as to whether this is the structure to take us forward. 
I have some serious doubts as to whether the securities trustees regime is the right one for New Zealand particularly in light of the legislation that we were debating only a few minutes ago. The Financial Markets Authority will have a new role and I am just wondering whether we have created an unnecessary tier of supervision when it could be undertaking that role directly. 
Labour will not be opposing the passage of this bill but I make a plea to the Government to think very carefully about whether this is the direction we want to go in. I have no objection to the philosophy of supervising the supervisors but also I like to make sure that compliance costs are reduced. An unnecessary tier of bureaucracy may in fact be just as bad.