Hague Kevin: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
Hague Kevin: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
[Volume:654;Page:3104] 
KEVIN HAGUE (Green) 
: 
 Some months ago the New Zealand public was treated to the image of a rolling maul—a rolling maul of initiatives from the Government to tackle the financial crisis that faced New Zealand and indeed the world. It seems to me that it has been some months since we have heard that analogy being used. I guess that perhaps that is because it called to mind the suggestion that there was some kind of plan of attack. I think events have shown that that seems to be not the case and that on the Government benches we are faced with a team that is out of ideas. Certainly in my speech notes I have written “All Blacks—Rugby World Cup 2003” because that seems to be the kind of situation we are facing. 
I think that a more apt analogy would perhaps be the idea of speed to the breakdown because if we think about it we realise that it requires a team to show an overall understanding of the game situation and it requires capabilities of strength speed and vision in order to see the opportunity to score from the breakdown. The Government’s response to the crises that are besetting New Zealand suggests instead the lumbering loose forwards of yesteryear: not understanding the dimensions of the problem lacking the strength to be able to respond to the problems with sufficient vigour hopelessly off the pace and lacking the vision to see this as an opportunity to make the big changes required to transform our economy. 
It is possible to think about money and debt in the same picture. Most of the money supply is created by banks and at the same time that they create money they create debt so money and debt get transferred to a person. Of course that creates an even balance sheet—it is double entry bookkeeping. In order for people to become wealthy from this situation money and debt need to become de-linked. The speculative economy can be viewed as a mechanism for this de-linking. The money is siphoned away from ordinary New Zealanders and productive New Zealand businesses into the hands of a wealthy few while the debt goes nowhere—it stays with those ordinary New Zealanders and decent businesses. 
Some of the individual investment schemes we have seen in New Zealand over the past several years can be viewed as channels for exactly that mechanism. The process that we have witnessed in New Zealand and indeed in other countries—and we think of Madoff and his Ponzi scheme—has involved a fundamental betrayal of trust. But from the point of view of the luminaries who ran some of the many finance companies and investment schemes I guess they would say that one cannot make an omelette without breaking some eggs—or perhaps they might more honestly say that one cannot rort people out of their life savings without losing a bit of trust. 
In the first reading debate on this bill I highlighted three issues. I said that the aims of the bill were indeed laudable—to secure easier access to capital for good businesses—but in order to rebuild trust and confidence and thus enable good businesses to gain access to capital we needed greater transparency and greater disclosure not less as this bill proposes. The second point that I raised in the first reading debate referred to the provisions for special habitual investors where even less disclosure is proposed. I said that the history of the past several years showed that these special habitual investors in fact showed exactly the same mix of gullibility and greed as did anyone else. Indeed poor decisions on the part of precisely that group of people have profoundly negative consequences for our economy and for all of us. The third main point I made in the first reading debate was that it was woefully inadequate for the Government to rely on research and consultation undertaken by the Ministry of Economic Development in 2006 as this bill does. In my notes today I have one word written next to this point and that word is “Iceland”. In 2006 just to remind the House I note that Iceland was considered by the IMF to be one of the wealthiest nations in the world. 
Since the first reading debate on this bill some greater detail has emerged around some of the practices of the finance companies that have failed. I will mention just a couple of them. First of all there is the widespread rolling of defaulting loans into new loans. It is a win-win situation for lenders who want their books to look good for potential investors and for those borrowers who are defaulting. But it is a losing one for the public and for potential investors because the effect of that practice is to obscure the financial health of those companies and institutions. Sunlight is the best disinfectant. 
I referred in that first reading speech to the example of Enron. Those of us who followed the debacle of Enron will have a sense of déjà vu when reading in the newspapers about the practice pursued by some of New Zealand’s finance companies of taking the defaulting loans on their balance sheet selling them to another company days before balance date and repurchasing them several days later. Precisely those kinds of shenanigans were indulged in by Enron and there are many other shonky practices that these New Zealand companies engaged in. My point is that these companies were not just light or hazy on the disclosure of their financial health and the risks that were being taken by investors. They actively set out to deceive potential investors and to deceive the New Zealand public. 
I am aware that there are still some miles go to in investigating what has occurred in the New Zealand financial sector and I look forward to the further disclosure of that history with some trepidation. In my first reading speech I indicated the Green Party’s commitment to hearing from New Zealanders who have been victims of this extraordinary scandal and of course the people who stood behind those finance companies owned them and reaped the profits in the first place do not typically stand amongst those victims. I will offer in this House today the Green Party’s support for John Boscawen’s call for a proper inquiry into the collapse of these companies. 
The select committee’s report on this bill calls effectively for a form of written consent from some of the special investors in relation to the fact that they will receive a lower level of disclosure than other investors. The obvious parallel is with the health care setting—a situation that I know well. Even in health care we know that informed consent does not always occur. That is a situation where typically the health care provider or health care professional does not have an enormous incentive to secure the consent of the patient. The health care professions also have a long history of professional standards and indeed of ethics. That history and culture seems to be sadly lacking in the financial sector. 
We have spoken many times of a Green New Deal. Although we have mainly concentrated on the need to tackle the financial crisis simultaneously with the environmental crisis other aspects of the original New Deal also apply. The New Deal re-established and redefined the social contract between State and citizens. One of its tenets was the reform of the banking and financial sector. That is an aspect we require of the new Green New Deal. The Green Party in this case will continue to oppose this bill.