Dalziel Lianne: Securities (Local Authority Exemption) Amendment Bill — Third Reading 
Dalziel Lianne: Securities (Local Authority Exemption) Amendment Bill — Third Reading 
[Volume:646;Page:15366] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Securities (Local Authority Exemption) Amendment Bill be now read a third time 
. The exemption to sections in the Securities Act provided by this bill allows local authorities to meet reduced requirements when offering debt securities to the public. I say “reduced” because although a local authority will be exempt from producing a full prospectus signed by all councillors it will still have to produce an investment statement containing specific product and provider information. 
The broad policy objective of the Securities Act is to promote confidence in the financial markets and an important aspect in achieving this outcome is to ensure that investors receive full accurate and timely disclosure of information material to their investment decisions. By reducing the disclosure requirements under the Securities Act this exemption will place more reliance on the disclosure requirements of the Local Government Act when making information available. As has been discussed during the Committee of the whole House stage the exemption provided for in the bill includes requirements relating to the investment statement required under the Securities Act to make sure that specific additional information not expressly required in the local government reporting regime is readily accessible to investors and prospective investors in a local authority retail debt security. This additional information mainly focuses on the disclosure of current financial reports and on any material adverse circumstances relating to the local authority issuing the security. 
The issuer is also required to state in the investment statement that the debt securities being offered are not guaranteed by the Crown unless of course they are being guaranteed under the Public Finance Act 1989. This would normally appear in the prospectus but without a prospectus it will need to go in the investment statement. As a consequence the bill will provide for more detail in the investment statement and for the statement to identify information available in other documents. Not only do the added requirements to the investment statement help to ensure the provision of free timely and accurate information but they do so via a less onerous approach to that mandated for full disclosure under the Securities Act. They also ensure that there is no reduction in the financial reporting stringency required of local authorities compared with that of companies. 
Access to disclosure information enables investors to make informed decisions on the potential risks and returns of their investment choices and to take responsibility for their investment decisions. By streamlining this process for local authorities the bill will positively impact the investment market in two ways. Firstly the availability of local authorities securities on the retail market will provide investors with options to expand their investment portfolios as well as give residents in a community an alternative means to participate in that community and the development of its infrastructure. I call that a win-win situation. Secondly this will also be a positive for the local authority issuers. By providing another avenue for them to access capital the bill will lead to more competitive pricing for local authorities debt and consequently will create more accurate pricing in the market for debt products. That is another win-win situation. 
Although this is a relatively short and streamlined amendment bill it will nevertheless make an important contribution to the Government’s economic transformation agenda. By providing an alternative to the current funding options for local authorities it will significantly impact regional and local development at both the business and social levels by contributing to the upgrade of available infrastructure that is necessary to efficiently service these areas. Therefore the bill will progress the recommendation of the Shand report which states that in order to spread costs over generations councils should make greater use of borrowing for long-term capital projects. The bill will also provide a valuable source of alternative funding for infrastructure assets and in so doing it will help to facilitate the growth of New Zealand businesses and encourage innovation entrepreneurialism and new product development through access to a well-maintained regional infrastructure. 
I again commend the Commerce Committee for its work in fine-tuning the bill. Also I thank all of those who made submissions on the bill. I also place on record my gratitude to the officials who assisted with the development of this legislation. I am very proud of the fact that this was raised with the Government by local government last year and now in the first week of April we will have the bill passed into law. I am confident that this bill with the changes made to provide for the availability of more up-to-date financial information will appropriately achieve the objectives of the disclosure regime of the Securities Act as well as those of the Local Government Act. I commend the bill to the House.