Young Jonathan: Securities Trustees and Statutory Supervisors Bill — First Reading 
Young Jonathan: Securities Trustees and Statutory Supervisors Bill — First Reading 
[Volume:661;Page:9730] 
JONATHAN YOUNG (National—New Plymouth) 
: 
 I am pleased to speak on the Securities Trustees and Statutory Supervisors Bill which as we have heard tonight is intended to protect investors’ interests and to enhance market confidence. At least 6 years ago we were warned by the International Monetary Fund and by the World Bank that there were some weaknesses in our system. As the previous speaker Clare Curran mentioned the Ministry of Economic Development repeated those warnings and identified weaknesses in our regime. Those weaknesses as set out in the explanatory note of the bill include: “a lack of capability or capacity: trustee statutory supervisor and unit trustee company resources and expertise have not always matched the size and complexity of the securities they supervise: —weak trust deeds: there are insufficient minimum protections for investors in some trust deeds: —a lack of role clarity: a lack of clear definition of trustees’ statutory supervisors’ and unit trustees’ role has resulted in inconsistencies” and the list goes on. 
We understand that we are coming through a time of recession and are still fighting our way back to strength in our economy and that as a nation we are short of investment in capital markets. A tremendous amount of investment in the past has gone into the property market which though it generates income for property owners does not build accumulating wealth that can go on to create jobs for the future. It does not build the real wealth that this nation needs. It is a debt-hungry sector that drives borrowing mostly from overseas. But one substantial disincentive for people to shift from a borrowing-based way of thinking to an investment-based way of thinking is a lack of confidence in a system that fails to ensure professional effective ethical and accountable oversight of that system. Earlier this year on 9 February the Prime Minister in his statement to Parliament stated: “The Government will be focusing this year on ways to promote investment in capital markets while also strengthening protection for investors. We want New Zealanders from all walks of life to be able to invest their savings in productive businesses either directly or through funds with more confidence in the regulation of those capital markets and with the knowledge they need to make informed choices. That is important if New Zealanders are to diversify away from their heavy reliance on property investment.” 
The Prime Minister also spoke of an opportunity for New Zealand. Referring to the report from the Capital Market Development Taskforce he stated: “The Taskforce also concluded that there is an opportunity for New Zealand to become a hub for financial services in the Asia Pacific region specialising in providing high-value middle and back office functions for the funds management industry. The Government is keen to see if this or similar new industries could be developed here and we have asked officials to determine what steps we would need to take to make that a reality.” When we shore up our regulations and build a robust credible effective ethical and accountable sector this sector will not just protect New Zealanders and give them confidence to invest in those capital markets; it will be able to export itself. 
We can take this one step further and look at the possibility of becoming such a financial service hub in the Asia-Pacific region. When it comes to investment the most highly valued commodity is trust. A robust licensing regime will promote trust. Trust is based on the integrity of a system from the top down and from the bottom up. Tonight we have heard the word “guardianship”. It will require trust for New Zealanders to move from a borrowing-based thinking in terms of property to an investment-based thinking in terms of business and investment in infrastructure and the future of this country. In order to have trust a strong system of guardianship is required. This bill proposes that. 
I turn now to the provisions of this bill. The first thing the bill does is create accountability through a licensing process. The bill requires corporate trustees statutory supervisors and unit trustees to be licensed. It also requires the Securities Commission to oversee how trustees and statutory supervisors act in situations where investors’ interests may be at risk. Greater accountability will ensure that corporate trustees and statutory supervisors act in the best interests of investors. Licensing will require trustees and statutory supervisors to be capable—it sounds so basic does it not? It will require them to perform their functions effectively. It will also enable the Securities Commission to hold them accountable for any failure to act according to the expected standards. The new licensing regime will help ensure that trustees and statutory supervisors are competent. This regime will fundamentally improve trustees’ performance around this country. This bill will lift the bar. For those who are already performing to a very high level of proficiency and standards this bill will enhance their already professional manner. Those who are performing well below the bar will either lift their standards or be weeded out. This is how investor confidence will grow—by having a very high standard of capability and a very high standard of accountability where substantial penalties await those who contravene such standards. The Securities Commission will administer the new regime granting license applications and receiving mandatory reports from licensed trustees and statutory supervisors. The commission will have more powers to require information from trustees and to direct them to act in emergency situations. 
The future is as bright as we want to make it. This Government is focused on building an economy that will deliver to New Zealanders real wealth that will improve our access to medical care our access to high-quality and world-class education and access to social services that support every New Zealander. I am very pleased to commend this bill to the House.