Chauvel Charles: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
Chauvel Charles: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
[Volume:654;Page:3098] 
CHARLES CHAUVEL (Labour) 
: 
 It is a pleasure to follow the previous speakers including the deputy chair of the Commerce Committee. I am a member of the committee but have not had a chance to attend it yet because of the Emissions Trading Scheme Review Committee meetings conflicting with the meeting dates of that particular committee. I must say that for all sorts of reasons I am looking forward to the conclusion of that process and rejoining the Commerce Committee. 
As my colleague David Parker indicated Labour supports this bill. Its purpose is to amend both the Securities Act 1978 and the Financial Advisers Act 2008. Right up front I will say just a word about the amendments to the Financial Advisers Act. I see that there are members of the Finance and Expenditure Committee from the last Parliament in the House this evening. They will remember that the Financial Advisers Act 2008 was a piece of legislation on which submissions were heard by that committee last year and Parliament managed to pass it through all its stages prior to the last election. I think it is fair to say there was broad support for that Act as well as for the suite of measures of which it formed part. There will be members in the House who remember also the Financial Service Providers (Registration and Dispute Resolution) Act and the Reserve Bank of New Zealand Amendment Act 2008 which extended the prudential supervision regime of the Reserve Bank to non-bank deposit takers. 
Listeners might be wondering why legislation passed so recently by this Parliament requires amendment. A couple of technical amendments are required to be made to the Financial Advisers Act. As the report of the committee records the amendments were of a minor technical nature that really does not cause any difficulties. I think probably the first thing to say is that there should not be a concern about amending those minor technical errors. It is pleasing to see that the House is addressing them in a good-natured way. 
Overall the bill responds to the international financial crisis which we are all currently doing our best to cope with by removing unnecessary impediments to capital raising but at the same time ensuring the timely disclosure of relevant information to prospective investors. It also makes a number of minor tidying-up changes as I have said to the Financial Advisers Act. As I have indicated the bill is to be seen in the context of the Financial Advisers Act the Financial Service Providers (Registration and Dispute Resolution) Act and the Reserve Bank of New Zealand Amendment Act. All of this legislation is designed to tighten the oversight regime for financial institutions in New Zealand which for far too long was a Wild West regime and which for far too long did not do good things for this country’s reputation as a safe place in which to invest money. 
It is intended that the bill will be divided into two separate pieces of legislation at the Committee of the whole House: the Securities Disclosure Amendment Bill and the Financial Advisers Amendment Bill. Part 1 will amend the Securities Act by providing three main things. First simplified disclosure prospectuses instead of investment statements will be sent to investors. We heard David Parker speaking on this earlier. That will be a good way to reduce the legislative burden and the duplication of requirements that currently exist. It will also provide for all prospectus amendments to be sent to investors before subscription and it will provide for additional Securities Commission powers to ensure that these prospectuses are used only by appropriate advisers and that potential investors will have sufficient time to consider advisers’ information before subscribing. I have said before that members on this side of the House support the legislation because basically the proposals arise out of the outcome of recommendations made by the Capital Market Development Taskforce in November 2008. The taskforce was set up by my colleague Lianne Dalziel in July 2008. 
Labour launched that task force to identify ways to improve access to capital. Probably all members in this House know that the need to be able to access capital in appropriate ways that are not at a ruinous cost is a perennial problem for New Zealand business. That is one of the major motivating features of course behind the setting up of the KiwiSaver scheme which was an attempt to broaden and deepen the amount of capital that is available onshore. It is one of the reasons why it is essential to retain in public ownership the State-owned enterprises and the great capital accounts of the Government. The task force provided some other ideas on that matter. 
The main proposal in the bill is to provide for the use and regulation of a simplified disclosure prospectus by stock exchange - listed issuers offering certain debt and equity securities. The proposed requirements do not reduce the amount of information required to be disclosed in total. They simply remove the duplication requirements of information already provided under the continuous disclosure requirements that apply particularly to listed companies. Similar recommendations were consulted on in the review of financial products and providers and this is included in the current review of the Securities Act. It also tidies up the rules for exempt persons and people deemed by the Act not to be members of the public for the purposes of disclosure. As I said there are some minor amendments to the Financial Advisers Act that are purely technical. 
I would just like to speak for a moment or two on the Capital Market Development Taskforce because as I have said adequate amounts of capital is one of the continual bugbears of New Zealand businesses that need to access capital at reasonable cost. I have mentioned some strategies that were put in place by the previous Government to try to address that problem. Let us remember another one and thank goodness for the decision to support the existence of an independent New Zealand stock exchange. I think if we look back now at the prospects for this country had there been a merger of the Australian Stock Exchange and the New Zealand Exchange we would see a much less vibrant and much less interesting business community onshore. 
The Capital Market Development Taskforce had some other ideas about how to deal with that perennial problem of cost and shortage of capital in New Zealand. The task force was set up to identify some of the key constraints and key opportunities for the development of New Zealand’s financial system to identify and debate options to improve the performance of the financial system and to develop a blueprint for the development of New Zealand’s financial system. Originally a year was given to the task force to produce its specific outputs but because of the global financial situation it produced an interim report in November 2008. That report outlined a package of proposals designed to boost access to capital for New Zealand businesses and reduce the cost of raising capital. Rob Cameron who was the chairperson of the task force noted in the interim report that in response to the financial crisis access to capital would be a key issue in the survival of many businesses. Indeed a number of members of Parliament who met with Mark Weldon on Thursday night had the truth of that observation made back in November last year confirmed to them with the experience of the past 6 months of weathering this crisis as to how far-sighted the recommendations of the task force were. In the time available I will not seek to run through the recommendations of the task force. I simply note that many of them are embodied in the provisions of the legislation. 
As I have said this bill furthers the strengthening of the New Zealand financial system a task that was taken up in earnest by the Hon Michael Cullen and the Hon Lianne Dalziel in the term of the last Government. It is pleasing to see this legislation being carried forward. It is a good bill. Labour will support it and I commend it to the House.