Hague Kevin: Securities Disclosure and Financial Advisers  Amendment Bill — First Reading 
Hague Kevin: Securities Disclosure and Financial Advisers  Amendment Bill — First Reading 
[Volume:652;Page:1552] 
KEVIN HAGUE (Green) 
: 
 The Green Party will oppose the Securities Disclosure and Financial Advisers Amendment Bill. I spoke earlier in this House in support of the Government’s assistance package for small business but at the same time I expressed frustration at the lack of coherence in the Government’s response to the overall financial crisis. At the same time that small business was being lent a helping hand in the form of relief from taxation and over-regulation an extra obstacle was being put in its place in the form of the withdrawal of the research and development tax credit. I said that the response to the crisis from this Government and indeed from other Governments around the world would in fact stoke the fires that will lead to the next larger financial crisis. An economy based on the paradigm of continuous economic growth through consumerism irrespective of the environmental and resource constraints within which it must operate is doomed to failure. 
It is typical of such paradigm failure that Governments also fail to make important distinctions. Green Parties around the world have been campaigning for the use of more useful indicators of the health of an economy than the GDP. GDP makes no distinction at all between economic activities that are helpful and productive and those that are damaging and destructive. Both count equally towards GDP. It is like using both wellness and sickness indistinguishably to measure someone’s health. Yet that is what our Government does. Any kind of economic activity and any kinds of goods that consumers are persuaded to buy are equally encouraged. 
We see the same failure to make a critical distinction in relation to jobs. In the House the Green Party has asked how many of the jobs the Government hopes to create from its infrastructure package would be green-collar jobs—in other words jobs that would form part of a sustainable economy. The Prime Minister’s response to that indicated that the Government neither knew nor cared; a job is a job as far as it is concerned. There is not time in this speech to really unpack the idea that anything that one person is prepared to pay another to do is of equal value to something else but only a moment’s thought should be sufficient to see that the question goes to the heart of what kind of society we wish to live in let alone what kind of natural environment we want to leave for future generations. It seems extraordinary that the Government does not care about that. 
Once again in this bill we see the Government’s failure to make appropriate value judgments and recognise that a more sophisticated response is needed. Not all deregulation is created equal. Some regulations are more trouble than they are worth and by all means let us get rid of them. That is why we supported the Government’s small-business package. But other regulations serve a useful purpose or as in this case provide an important safeguard for New Zealanders. 
The speculative economy perches vulture-like bloated and flatulent upon the shoulders of the real economy weighing it down. It is failure in that speculative economy that now threatens the real economy in which people actually make products or services that others really need. The succession of burst bubbles in the speculative economy has been fuelled by greed. But the reality is that productive businesses will need capital particularly as it happens because of the withdrawal of Government assistance for research and development. The goal of the bill to remove unnecessary impediments to raising capital is therefore a sound one. 
But given the dynamics that led to the credit crunch we have to wonder whether the Government has been seeking guidance from the Red Queen in  
Alice in Wonderland 
 in bringing this bill forward. Requiring less disclosure to potential investors and providing fewer safeguards are the absolute reverse of what is required. It is important to recognise that giving good businesses access to capital requires a rebuilding of investor confidence. That will not be achieved by providing less information; rather that will require greater transparency greater Government scrutiny and increased regulation. Unsurprisingly that is what most Governments around the world have been doing. I guess we should like the fact that our Government is prepared to think for itself but the outcome in this case is bizarre. 
I want to say a word or two about those special investors the sophisticated habitual investors who are putting in $500000 or more for whom even less disclosure is proposed. My mother used to talk about some people having more money than sense. Perhaps in this case it would be more correct to talk about having had more money than sense. If the unmitigated and still ongoing series of corporate failures arguably starting with Enron and the credit crunch have taught us anything it must surely be that the so-called experts show exactly the same lapses into gullibility and greed that Roosevelt railed against in launching the New Deal. For example how about all the good and the great the experts who have lost their shirts investing in Madoff’s transparent Ponzi scheme? That is just like the aeroplane game and numerous other pyramid-style investment and moneymaking schemes that plagued New Zealand in days gone by. 
The lack of expertise by so-called experts was also demonstrated in the audit and accountability mechanisms in many of those cases and indeed at international level also. As recently as 2006 the International Monetary Fund was pointing to Iceland as one of the absolute stars of the world economy. The most recent number I heard was that at the point of collapse of Iceland’s economy its financial institutions owed six times the entire economic product of the country. 
The point is that the decisions made by those special investors have been proven again and again in recent times to be ill-judged and to have in very large measure shaped the crisis we are now experiencing. Their bad decisions affect us all profoundly. More disclosure and regulation is required not less. Clearly in Iceland’s case a lot changed between 2006 and the present day. Actually the same applies here and with all due respect to the consultation work done by the Ministry of Economic Development which is referred to in the explanatory note of the bill consultation undertaken on these matters in 2006 is almost certainly completely worthless. It seems extraordinary that a Government that was paying attention to international events would apparently be unaware of that. I am drawn to an irony in the fact that the Minister says this bill has been drafted in a hurry in response to the crisis but the Labour members instead talk about the Government having inherited Labour’s bill. I suspect that the latter explanation could be the real one. 
Right now the priority for consultation on how to improve the sector is consultation with the many thousands of New Zealanders who have been victims of the numerous collapses of apparently sound investment and finance companies. When I first started drafting this speech it appeared that there had been 26 of those collapses. More recently I have been informed that the number had grown by yesterday to 45—and counting. It is good that the bill is going to a select committee and I praise the Minister for that. If the bill passes its first reading then I urge the select committee to seek out the views of those investors who have lost their money and if it does not then the Green Party will. 
Ever since the economic crisis first struck the Green Party has been speaking about the need for a Green New Deal: a raft of measures intended to address the crises in the environment and in energy concurrently with the financial crisis moving our economy on to a long-term sustainable basis. To pretend that it is possible to do otherwise is ultimately futile and will condemn New Zealanders to more and more severe consequences for our way of life including bigger and worse financial meltdowns while mortgaging our kids’ future. The Green Party has for example supported the call for a new Bretton Woods agreement. Our central bank needs to be more proactive in supervising our own financial industry. 
We also support the very sensible recommendations of the bank workers’ union FinSec for the reform of the finance industry including the establishment of an independent financial consumer agency establishing a New Zealand code of lending practice establishing a code of responsibility for the finance sector and strengthening the role of the Reserve Bank in licensing and supervising financial institutions’ lending practices. In many cases the interaction between an institution and a person who is borrowing money is similar to that between an institution and a person who is investing. Both transactions require full transparency full disclosure understanding consent and ethical behaviour from both parties with appropriate independent oversight and enforcement. 
The Green Party will be voting against the first reading of the bill. It is an artefact of the past left behind by changed circumstances and it needs to be consigned to the dustbin of history save for the minor amendments to the Financial Advisers Act. The Green Party wants to see investor confidence rebuilt because that is the only way that we will reduce the barriers to raising capital for good sustainable businesses. That will be accomplished only through greater disclosure not less and by a more active role being taken by the Government.