Shanks Katrina: Third Readings — 
Text is incorporated into the Bound Volume 
Shanks Katrina: Third Readings — 
[Sitting date: 07 April 2011. Volume:671;Page:17855. Text is incorporated into the Bound Volume.] 
KATRINA SHANKS (National) 
: 
 It is my pleasure to take a call this afternoon on the third reading of the bills arising from the Financial Markets (Regulators and KiwiSaver) Bill. I would like to thank the officials who were present during the process of getting this legislation back into the House and also the submitters to the Commerce Committee. The securities legislation is very complex legislation and it took those of us on the select committee a fair period of time to actually get our minds round where we were going with it and some of the consequences that might have come out of it. So we went slowly and very thoroughly through this legislation. I would like to thank the officials for the patience they showed because they had a fair bit of patience as we kept going back to them for more explanations and more explanations because we really wanted to get a good understanding of what we were doing with this legislation. 
The programme of reforms this Government is going through with its securities legislation is to get confidence back into the market. Confidence in our markets has been hit for a number of reasons and over a prolonged period of time. The previous speaker Hilary Calvert was correct: New Zealand hit a recession before everybody else in the world and our finance companies were struck down for a number of reasons. I know that in the electorate of Ohariu where I represent this Government I had a number of mum and dad investors coming in and talking to me about their losses in finance companies and they did not know where to go. These people do not have a lot of money; they have a little bit put aside. These are the people who invested in 1987 in the sharemarket and it crashed. They then left the sharemarket after they got burnt and they went to managed funds. We all know that managed funds took a massive dive in 2000 and people lost a huge amount of money. These people thought their next best bet to get a bit more of a return off their money after the banks was to go to finance companies. So they invested in finance companies not really understanding the risk involved or the way they were advertised. In many cases the advertising was misleading. They put their money in the finance companies only to find once again for the third time they had lost their investment. We are talking about mums and dads who are on fixed wages and salaries and it is really hard for them to recover when an investment goes south on them. They wonder where to invest that is safe. 
This legislation is about putting a framework in place so our mums and dads can invest in New Zealand and invest in our capital markets. We need them to have confidence that although there is always risk with investment they understand better that risk and we have processes in place through this reform programme which protects them better. Part of this is the Financial Markets Authority to be set up to make sure they have the correct tools. One of the really important tools I think coming out of this is the right of individuals and companies to take action to try to get results. Hopefully we will see some of that coming through in the future. We cannot reverse a lot of the harm that was done and a lot of the losses that happened because the reforms were not fast enough and did not come in fast enough to help those people. Hopefully now that we have these tools in place for the financial markets this will not happen again to many of the people who lost their money. 
The other area I would like to touch on is in the Securities Trustees and Statutory Supervisors Bill which will help significantly the confidence of the mum and dad investors in our markets because the people they thought were looking after their money—the trustees or statutory supervisors—whom they were trusting to keep an eye on these finance companies actually could not do anything. We have beefed up the requirements significantly. They now have to be capable trustees or statutory supervisors. They have to perform their functions effectively and they have to be accountable to the Securities Commission for any failure to act to expected standards. That is a significantly higher bar. This legislation is positive and with the reforms in our markets will give confidence to our mums and dads to invest. I commend this legislation to the House.