Power Simon: Securities (Local Authority Exemption) Amendment Bill — Second Reading 
Power Simon: Securities (Local Authority Exemption) Amendment Bill — Second Reading 
[Volume:646;Page:15086] 
SIMON POWER (National—Rangitikei) 
: 
 The National Party supported the first reading of the Securities (Local Authority Exemption) Amendment Bill and it will continue to support the bill’s passage through the House. As the Minister said the bill provides local authorities with an exemption from the full disclosure requirements of the Securities Act when issuing debt securities to the public because of their extensive closure requirements supposedly under the Local Government Act 2002. 
I cannot help but smile when I think about the work that is being done around the Financial Advisers Bill and the financial disclosures regime as well as the non-bank deposit taking prudential supervision legislation as it seems that we are relaxing some of the matters relating to the issuing of securities in this particular legislation. Having said that the Commerce Committee made sure following the hearing of submissions that in a number of sections investors had access to adequate information including financial accounts and interim financial accounts. 
It is always a bit of a balancing act when making it easier for local authorities and for that matter other entities to issue debt securities to the public or to raise funds whilst at the same time ensuring that the protection of investors means that disclosure requirements provide them with sufficient information to ensure that they are not left in the dark when it comes to some of the finer detail. If this bill proceeds through its remaining stages it will be the case that local authorities will need only to produce an investment statement with the signature of two councillors rather than the more onerous requirement to produce a prospectus signed by all councillors. 
We need to take a bit of a step back and think about what we have been trying to do as a Parliament in other legislation that has come before us over recent weeks and about whether the test for consumer protection and disclosure is still met in a bill such as this. There is probably no doubt in the minds of those who sat on the Commerce Committee that heard submissions on this bill that local government legislation alongside this business of making adequate information available by way of financial accounts meets that test but it is important that across sectors we do not have one test for local government authorities and another entirely different test for those other houses if you like that are seeking to issue debt securities to the public. 
We want to enable local government to get on with the business of accepting investment and issuing debt securities. We certainly do not want to stand in the way of sensible legislation that would allow only two councillors to authorise such a statement. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
SIMON POWER 
: Madam Assistant Speaker I believe this is the first time I have made a contribution in the House since you have been in the Speaker’s Chair as opposed to your being in the Chair during the Committee of the whole House so I take this opportunity to congratulate you on your appointment to the role of Assistant Speaker. I look forward to working under your supervision for the remainder of your period in Parliament. I know from having observed you for some time and having been a co-presenter to the first-year politics class at Victoria University for some years that you will bring good humour to the role as well as a firm hand. 
Can we return to the Securities (Local Authority Exemption) Amendment Bill. Before the dinner break I was talking to the House about the issue of consistency. The Hon Paul Swain was good enough to say to me during the dinner break—and he will correct me if I am misquoting him—that there were some considerations as to whether the local government legislation in and of itself provides sufficient protection for disclosure and information being made available to investors and whether the new legislation in respect of amending the Reserve Bank of New Zealand Act which is designed to create a prudential supervisors role for non-bank deposit takers will have any effect on local government’s ability to issue debt securities to the public. 
With the fall of a number of investment companies in recent months we have seen a determination by Parliament—and I use the term “Parliament” deliberately—to legislate to try to protect investors with a tightened disclosure and accountability regime and National has been supportive of those moves. As I was saying before the dinner break it is a bit ironic that this legislation is designed to make it easier for local government to raise funds by way of issuing debt securities to the public in an environment where we are doing quite the opposite to private enterprise. It may well be that local government bodies and councils themselves by their statutory existence create a higher level of certainty and less risk in respect of the issuing of those debt securities to the public. But the select committee was determined that although some of those arrangements to do with disclosure and the issuing of prospectuses were to be relaxed there was no chance that investors would not receive sufficient information to make informed decisions. 
The select committee under the guidance and leadership of Gerry Brownlee and the Hon Paul Swain is to be congratulated on picking up on that particular point to make sure that we balance this delicate equation of the two elements. One of those elements makes it easier for local government to do business. In other words if a local authority is raising funds by way of issuing debt securities to the public then it does not have to have every councillor signing the offer documentation which means that the transaction would become quite frankly a very difficult transaction to enter into if one councillor decides that he or she will not play ball. This bill now provides that only two councillors have to sign. We have to balance that element against the element of making sure that individual investors are protected. 
The select committee—under quite a hurried timetable it has to be said—worked its way through this bill with some diligence and made some amendments to the process that I think have improved this bill significantly. We will watch and wait to see what effect the amendments to the Reserve Bank of New Zealand Act in respect of prudential supervision may or may not have on the securities offered. I think that the Hon Paul Swain made a very fair point and it will be interesting to determine whether those questions can be answered with any veracity in the Committee of the whole House.