Nash Stuart: Financial Markets (Regulators and KiwiSaver) Bill Securities Trustees and Statutory Supervisors Bill — Second Readings 
Nash Stuart: Financial Markets (Regulators and KiwiSaver) Bill Securities Trustees and Statutory Supervisors Bill — Second Readings 
[Volume:671;Page:17654] 
STUART NASH (Labour) 
: 
 As my colleagues have alluded to all parties are supporting this legislation through the House for a number of reasons but the main one is that it is common-sense legislation. This is very good work undertaken by the Minister of Justice Simon Power which is simply a continuation of the work that Lianne Dalziel started. I am slightly concerned because as Simon Power mentioned a couple of weeks ago Simon Power has been the hardest-working National Cabinet Minister—in fact he is responsible for over 40 percent of the bills before the House—and he has decided to leave. I am not sure why; I can only speculate. I suspect that the reason he has decided to leave is that he is the only one doing any work on that side of the House. He is the only one with a little bit of a plan. Mind you Simon Power’s plan was to sell State assets. But when one takes away the man who brings 40 percent of the legislation to the House one is left with a bit of a vacuum in the National Government. One is certainly not left with any sort of plan to drive economic growth. 
I was interested to hear Katrina Shanks stand up and say that this bill is a part of an economic plan. I am sorry but this is not part of an economic plan. This is good common-sense legislation that we worked together on to help New Zealanders regain trust in the financial markets but it is not a plan for economic growth. 
We heard that the other reason why Mr Power is leaving is that Mr Joyce and Mr Power had an argument and Mr Joyce came out on top. It was about the leadership and I understand that Mr Key is going to leave soon. I see Mr Joyce in the front row. It is only one more step to the leader’s chair and he is there. When Simon Power leaves Mr Joyce comes in—but I digress. 
We are debating two bills together. We are talking about the Financial Markets (Regulators and KiwiSaver) Bill and we are also talking about the Securities Trustees and Statutory Supervisors Bill. Initially they were considered as single bills but they were brought to the House together. I think we all agree with that because the objective of these bills is similar. I will talk very briefly about each bill. 
The Financial Markets (Regulators and KiwiSaver) Bill establishes a Financial Markets Authority—or the FMA—and sets out wider enforcement and surveillance powers than are currently available to regulators. It boosts their power basically. It also makes changes to the regulation of registered exchanges and improves the regulation of KiwiSaver schemes. This is good for all New Zealanders. Well over a million New Zealanders are enrolled in KiwiSaver and it is up to us to ensure that they are well protected. KiwiSaver of course was an exceptionally good Labour-led Government scheme that was put in place and taken up by the vast majority of New Zealanders. As I mentioned Labour started the financial markets reform process and we are pleased that the Government has decided to continue with Labour’s good work. As I mentioned Lianne Dalziel set up the Capital Market Development Taskforce in 2008 and she did that so she could develop a blueprint and an action plan to develop New Zealand’s financial system. She saw what was going on and she knew something had to happen so that is what she did. 
As I mentioned we are very pleased that Simon Power has decided to act on the recommendations of the task force’s report one of which was to have a single market regulator. The Labour-led Government took a number of measures aimed at strengthening our financial markets and this process was accelerated of course by the global financial crisis and a spate of finance company collapses. 
I would not mind outlining some measures that the Labour-led Government took that led to this bill or were the genesis of this bill. Let me give members a couple of examples. One example is regulations giving trustee companies robust powers to supervise finance companies on behalf of investors. That does not really need much explanation. As we know about 40 finance companies collapsed and that took about $4 billion out of the pockets of good hard-working New Zealanders and set a hell of a lot of them backwards. In fact I have talked in the House about four or five times already about the numerous cases where that situation cut to the core to the extent that people committed suicide. This was an insidious process where men and women who were in charge of monitoring the governance of finance companies did not carry out their roles and the result was catastrophic. 
In other measures we allowed criminal prosecutions against finance companies that had misled investors to be funded from the Security Commission’s litigation fund and we are beginning to see this at the moment. Directors are in front of the courts now. Some of them have been tried and some of them have gone down. We cannot comment on that but I do not think anything can make up for or replace the losses suffered by Kiwis who have worked incredibly hard. But we put in place processes to ensure that New Zealanders can have a degree of confidence in the financial markets. 
We regulated financial advisers and financial service providers. Another point that is important is that before that legislation was brought in anyone could call themselves a financial adviser. A person could have done anything but still tout himself or herself as a financial adviser and if consumers did not know any better then they were open to abuse. As we know many were rorted and it was incredibly sad. 
A review of financial products and providers and financial intermediaries commenced in 2004-05 and this was done to improve the regulation of non-bank financial institutions financial products and financial advisers. We amended the Securities Act to strengthen rules around insider trading and market manipulation and we passed securities markets legislation that introduced a co-regulatory framework for supervising registered exchanges. Some of this stuff can get quite complicated—of that there is no doubt—and I will try not to get too complicated. But I think it is important that New Zealanders know that all members of this House understand that work needed to be done. People also need to know that when this happened—and we wish it had not happened of course—we all wished the regulations had been in place but they were not. What we need to do now is say to New Zealanders that they can have confidence in the financial markets because we have introduced legislation and we are working really hard to rebuild that trust. 
I will speak very briefly about the Securities Trustees and Statutory Supervisors Bill. The main aim of this bill is again to protect the interests of investors and enhance confidence in financial markets by requiring persons who wish to be appointed as trustees statutory supervisors and unit trustees to be capable of effectively performing the functions of trustees statutory supervisors and unit trustees. The aims of the bill are also to require trustees statutory supervisors and unit trustees to perform their functions effectively and to enable trustees statutory supervisors and unit trustees to be held accountable for any failure to perform their functions effectively. 
As members can see there is a lot of crossover between the two bills which is why the Minister suggested they be read together and it is why Labour agreed with that. But it is important because people need to know that we will ensure that anyone who acts outside the law or in an unscrupulous manner will be held to account. There is great concern still around the country that many who perpetrated the ills that resulted in finance company collapses have not been held to account—and I hope they will be. This bill also requires that the Securities Commission be notified by trustees or statutory supervisors when any issuer or supervisor gets into difficulty and it gives the Securities Commission enhanced power to intervene in those circumstances. 
So this is not the ambulance at the bottom of the cliff; hopefully this is a safeguard so that when someone does get into trouble they can hold up their hands and say there is an issue there. The experts can be brought in and they can save it. Again that is just another step to ensure that good hard-working New Zealanders who have saved for their retirement do not get rorted. This is all very important. The role of trustees and statutory supervisors is very important in ensuring that the interests of investors are properly protected from the unscrupulous the incompetent and the inept. The trustee’s role is basically to monitor the issuers of certain types of securities to ensure that the issuer is complying with the terms of its offer to investors as stated in the issue document or prospectus. 
I will make a couple of further points. Although this is very good legislation—as already mentioned it had its genesis in Labour policy and Labour actions—it is not a plan for economic growth. There is no plan for economic growth there yet that is what the people of New Zealand really want to see. They want to know when the Government is going to present something that they can grab hold of and say is a vision for the future. There is no vision. I commend this bill to the House. Thank you very much. 
Financial Markets (Regulators and KiwiSaver) Bill read a second time. 
Securities Trustees and Statutory Supervisors Bill read a second time.